Preparing For Entry Signals – 3 Line Price Break System
Jim Makos | Jan 27, 2013 05:24AM ET
Our trading strategy picks 5 stocks to enter long and 5 stocks to sell short on a specific day. How should we get prepared before the stock market’s open in order to buy and sell the securities in a timely manner? For instance, according to the Three Line Price Break trading system there should be confirmation with a new daily high for long entries or a new daily low for short ones before actually making the trade. This is how I got prepared on Friday when I was supposed to trade long Williams-Sonoma (WSM) and Concur Technologies (CNQR) stocks, while at the same time the system advised to sell short 4 other stocks.
We will need to create 2 watch lists. One list would be for long trades and one for short ones. As I am supposed to be monitoring the market for a new high regarding the stocks I am going to invest money in, a quick glance at the “Long” list showing daily losses for the specific stocks is enough to not even bother with those stocks. Respectively, if the stocks included in the “Short” list are gainers, I don’t need to check out their intraday charts.
Should the situation reverse, I often find myself checking out their charts from time to time during the day, in case they print new highs or new lows. Yet, there is an even easier option and it’s called “Alerts”.
Placing alerts for new highs/lows
The majority of trading software allows traders to place alerts at certain prices for each stock they are interested in. For instance, Williams-Sonoma stock (WSM) printed a new high in the first half hour of regular trading, while Concur Technologies shares (CNQR) managed the same in the afternoon around 14:00. Placing alerts at both stock charts allowed adopters of the 3 Line Price Break strategy to enter the market at the most crucial point.
If you developed a stock trading strategy that considers entry signals’ confirmation necessary, you may need to get prepared before the market’s open in order to trade more efficiently. Otherwise you are likely to miss an entry point or even worse to trade at a much higher or lower price than expected. And that would most probably have a negative effect to the system’s profitability.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.