Wednesday, June 27, 2007

Great Example of a Breakout Trade

I waited quite a bit this AM to catch this trade and it paid out handsomely. Note on the Market Delta chart (click on chart for greater detail) that selling is terminating at higher price lows and that we get a pickup of volume at the offer prior to the breakout. Down on the bottom, X-axis, you can see how total volume expanded on the breakout, indicating institutional participation. The key, however, was seeing the prior trading range and the shift in distribution of volume as the range progressed. If you study many examples of such moves, you can become increasingly sensitive to them in real time.

3 comments:

x said...

Thank you Dr Brett. This chart is ES on central time?

Any chance you integrate this example with TICK readings for us to study?

Thank you
Jordan

Brett Steenbarger, Ph.D. said...

Hi Jordan,

Yes, this is CST. I will see if I can integrate the Market Delta information with the NYSE TICK data in a future post. I find that integration to be quite helpful in my own trading--

Brett

robin said...

Hello Brett.
Thanks for all your helpful charts and comments. I have tried MarketDelta but I am late on the draw. It seems that I know it is either a fade or breakout at a certain level...but I seem to notice the breakout late as according to my rules I must stand aside and watch at that point. Can you walk thru your thought process when the volume is starting to fill in? Perhaps I am not seeing or looking at the right spot. Are you leaning to the breakout as it happens or just quick enough after time to see it? Thanks, Robin.