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Breakout Systems
Breakout
systems are often the basis of many trading systems.
The concept is simple - trade the trend breakouts (of
a specific indicator or system). In the example chart
below, I'm using a simple "Envelope" system
to illustrate this technique.
Using
the envelope system, you can see the price swings above
and below the upper and lower envelope lines. This is
the basic trigger point for this type of system...
Now,
we've added a longer term Stochastic system to the chart
and we can use this for confirmation of the signals.
Notice how the breakouts occur best when stochastics
are moving in the same direction and below the 80% level
or above the 20% level.
There
are other types of breakout systems though. Some are
far more complicated than this example. This example
is only for the purpose of showing you how they work.
I
offer two types of breakout systems...
Feel
free to investigate this type of trading system further
and email me if you have any questions.
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