Channel Breakout Trades

A very popular component of trading systems is the “channel breakout entry”.

A channel breakout entry is one where you enter into a new position when price exceed a recent range of prices. For example, let’s say that price of the S&P futures over the past 20 days has been between 1175 and 1200. If you buy when prices exceed 1200 you are buying a breakout past the high of the range. If you sell short when prices drop below 1175 you are shorting a breakout below the low of the range.

There’s many variations of the channel breakout entry. For the following examples, assume that the upper range is1200 so that if price goes above 1200 you have an upside channel breakout.

...cont'd tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
eMail me Comments