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Band Break System trading

Avoiding losing trades Part 1

BBS - Intro - Results - Template - Basic - More_money - Selecting_stocks

Avoid losing trades PART1 - PART2 - PART3 - PART4 - Stock_Selection

You will agree that the perfect mechanical trading system without losing trades does not exist.

This means that even a good basic profitable system can give better results by using technical analysis techniques to avoid some of the non-profitable trades.

To help you in making a decision to override BBS we will use some simple basic technical analysis techniques like support and resistance lines, trend lines and averages, together with the special indicators used in the BBS template.

It should be clear that it is not possible to avoid all losing trades. So there will always be losing trades!

Lets' first review the basic BBS trading example for a long position

trading example long

The moment we get the buying signal beginning of March, we can see some positive signs to support a buying decision. The medium term slow stochastic oscillator is moving up from low levels. Even the S10_Stoch_Xtreme indicator is already turning up.

The S10_RSI_Xtreme moved up from the bottom, but is already making a top. Price is also very close to the 50 day average resistance. This means you can expect some reaction now. This allows you to enter the market most probably at a lower price on one of the following days.

With the selling signal near the end of June there are positive confirmations in the form of the slow stochastic moving down after a top and even the S10_Stoch_Xtreme already making a downturn.

The S10_RSI_Xtreme moved down from the top, but is already making a bottom. Price is finding support on the 50 day average.  This means you can expect some up reaction now. This will allow you to close the position most probably at a higher price on one of the following days for more profit.

Now let's review the basic BBS trading example for a short position

trading example short

The moment we get the selling signal beginning of May, we can see some positive signs to support a selling decision. The medium term slow stochastic oscillator is moving down from a high level. Even the S10_Stoch_Xtreme indicator is already turning down.

The S10_RSI_Xtreme is moving down from the top. Price is below all the averages and the down move started with a big gap down. The high price of the day found resistance against the 165 day average. It looks like the down move will continue. You better do not wait or at least wait no longer then the day after to open the short position.

With the buy-back signal the second half of June there are positive confirmations in the form of the slow stochastic moving up after a bottom and the S10_Stoch_Xtreme already moving up also. 

The S10_RSI_Xtreme moved up from the bottom, but is already topping. Price will probably encounter resistance against the 50 day average.  This means you can expect some down reaction now. This will allow you to buy back the short position most probably at a lower price one of the following days for more profit.

 

 

 

Avoid losing trades part2 NEXT -BBS basic trading

STOCATA Stocks Technical Analysis HOME

 
 

Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

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