Find a stock
that has the (red) ADX line between 30 and 40 and
for which the +DMI line has recently crossed to
the upside over the -DMI line.
B.
Check that the
average size of the most recent 5 volume bars (e.g.,
15-minute volume bars for swing trading, 1-minute
volume bars for day trades) are at least 30% greater
in size than the preceding volume bars. (Example:
If volume bars 7 - 8 periods ago were 100K, it is
preferred that you see 130K+ size volume bars at
time of entry.)
C.
Confirm that
the ADX line is making its first move over the 40
value and is not in the process of pulling back
or retesting the 40 on a subsequent move after an
earlier breakout.
Click the image for a larger
view.
A.
Buy the first
higher candle/bar that's breaking out as the ADX
gets over the 40 value on increasing volume.
B.
Set an initial
stop at the low end of the price that the issue
was trading at when the ADX broke over the 40.
C.
As the position
moves in your favor, trail a protective stop at
the low end of the prior bar/candle.
D.
ADX-based
stop (breakout entries): For breakout wins, trail
a stop at the point at which the ADX line loses
5 points (Example: If the position was initiated
when the ADX was at 42, and it subsequently trended
in your favor to 63 before starting to flatten
out, trail a stop for the issue being trading
at the point at which the ADX drops back to 58.)
ADX-based stop (trending exits): If in an open
position in a slow-trending stock and the price
action starts to flatten out, exit the position
immediately if the ADX starts to lose 40 because
this helps confirm the loss of the trend.
E.
Volume-based
stop: Confirmation for all exits occurs if the most
recent volume bars start to lose 30% or more of
their value as the issue continues to trade.
Disclaimer:
The strategies are believed to be accurately presented.
However, they are not guaranteed as to accuracy or completeness.
Nor is it guaranteed that using them will result in profits
or that they will not result in losses. Past performance
is not a guarantee of future results. Only risk capital
should be invested in the market. All investments and
trades carry risk, and all trading decisions of an individual
remain the responsibility of that individual.
If you have any questions, or for more information, please call: 1.866.367.9296.
From outside the U.S., call 1.510.723.1737. Or,email us. In Europe, call +44 (0)20 7825 8770. In Australia, please call: 1800
089 275. In Asia, please call: +61 2 8668 1600.
