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validity of a breakout

Discussion in 'Technical Analysis' started by ajaysinghchand, Oct 10, 2012.

  1. ajaysinghchand

    ajaysinghchand New Member

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    dear shabbir,

    i have a basic issue for clarification

    say a script breaks out from a price say Rs100 when the SL is at Rs20 below with a target of Rs120 and scales to 115 but later then retraces to 95. Which is a better option

    - that one buys the script at Rs102/103 and wait for the target but then sit with a loss of Rs5.

    - or wait for the retracement and buy when the price consolidates near Rs 95 after the breakout

    also please give your views all
     
    ajaysinghchand, Oct 10, 2012
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  2. shabbir

    shabbir Administrator Staff Member

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    First Option.

    Now you are assuming your target is not reached and it retraces back and so ideally make your target feasible.
     
    shabbir, Oct 10, 2012
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  3. verenmitter2001

    verenmitter2001 Member

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    Good question.
    Shabbir in the ebook you suggested that the target should be 2 or 3 times the stop loss . In this case target is same as stop loss and ideally in this case what should be done.
    Target should be more feasible but how? In the above case he should stick to lesser stop loss?
    Does it happen that breakout is achieved with lots of consolidation first? probaily a stock may take 3 months to achieve the breakout..
    Shabbit please advise and correct me on the wrong understanding I may have.

    Regards n Thanks
    Veren
     
    verenmitter2001, Oct 10, 2012
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  4. shabbir

    shabbir Administrator Staff Member

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    This would mean this is in no trade zone. If your SL is 20 Rs down and target is not something greater or equal to your stop, you should avoid the trade.

    Regarding breakout there is no time frame but only based on price.
     
    shabbir, Oct 10, 2012
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