Fake Breakouts

Hi Shabbir,

How to check whether breakout is fake or Original ? some times it breaks and Immediately stock retraces.

Regards
Sujan

 

Good Question.

 

How about pull backs ? Is it advisable to trade in pull backs ?

 

Thanks Shabbir. I would come back to you if i have further Qs.

 

I do analyze my buy/sale after concluding to get more profit and reduce losses.
You know when I took position in bata @ 929 on 6/8/12 I wrote in my analyzing sheet (same day closing below break out) and samething again on 8/8/12 when I took position in nifty future 30 sep @ 5407 on 8/8/12
Now my ques is bata is now @ 911.6 and my stoploss is 890-860 should I exit from bata ?
Nifty future 30 sep is now @ 5432 and made a high of 5442 should I close this call too or revise my stoploss from 5298 to my cost or little bit higher?

Other than this what I analyze when I consider high top high bottom pattern I earn more compare to W break out.

Also one more thing I like to discuss is I take reward ratio as 1:1 for 50% then 1:2 for 25% and 1:3 for 25% is this right strategy to book profit or i will try something else.

And last what return of investment u consider is good cause my percentage of success in trading is around 81-84% but when it comes to return it is around 3.5 to 4% out of that profit we have to pay 30% to income tax and around 1% to broker after cutting all this we have left with 2.5 to 3% on monthly basis.

 

We can see less volume and I think it will consolidate before again it resume up trend.
But it has got support from 860 - 890 levels as you said.

 

One more ques. should I start considering Breakout point as my stoploss to minimize my losses cause what I have noticed that if a stock goes below the breakout point 50% of the time it hit the stoploss also, right now I consider stop loss as previous low of the stock.

 

Thanks Shabbir.
And Income tax is flat 30% for future and options and intraday trading.
For long term it is nill but long term is minimum 1 year.
For short term it is 15% means less then 12 months

 

Dear shabbir is this the way I should consider for breakout, if no then plz tell me which way u consider for good results.

 

Dear Shabbir
Option 1) I have checked On some previous w breakout pattern and finely you know what the result came If I taken previous candle closing out of 11 calls
5 hit the stoploss and 6 hit the target which is double but when I calculated profit/loss it is just like same, means no use.

Option 2) On the other way when I choose 2/3 points down from breakout point for stoploss and double the target the result came, out of 12 calls 5 hit stoploss and 7 hit the target and when I calculated profit/loss profit is almost double then loss.

I am attaching few w break out which I use on my 2nd option also make me understand how to initiate w break out properly.
You can use this W break out on option1 also which I also did for previous candle closing.

Also attaching the calculation sheet of option 1 and 2.
I hope u will surely help me to handle w break out properly.

 

Remaining attachments.

 

Sure I will call u between 8 to 9 pm
Is it ok with u?