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

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

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.

 

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