Break Out Trading Rules

Last update: September 04,2009

Tiger Gao's Break Out Trading Rules Set A (complex pattern play)

• Buy in only a new higher high is made (at least 1 cent higher than the breaking point)
• If the breakout is fake, cut loss when the price is 5% off the breakout point.
• If the breakout is real,take profit according to the technical target.
• Always measure the reward/risk ratio.
• Price above 200MA, (without the golden crossing is also preferred.)
• Previous attempting to form a golden crossing failed.
  
• Keep each trade the same size for every 10 trades.
• The fundamental analysis of the stock should be good.
• Play only the 1 year chart breakout (the formation time should be ~ 1 year)
  
• Complex pattern only(up pole + round bottom + multi-level ascending triangles must mixed together)
  

Tiger Gao's Break Out Trading Rules Set B (trend reversal play)

• Use weekly chart to spot the entry point
  
• Down trend - no trend fluctuation - down trend again
  
• MACD divergence below the zero axis
  
• Breakout the overall down trend line
• Then a new uptrend line (linked the previous low and the correction wave low) is formed
• Buying when the price touches the new uptrend line
• Target: the previous no trend fluctuation area
• Cut loss at the new up trend line if broken down the uptrend line

TJTS pattern breakout completion key trading points

• Straight up poles (two with triangles) with violence (such as gap ups, movement strengths) after a substantial down trend
  
• Round bottom formation is followed then
• Stock price stands above 250 MA
• MACD above zero
• Breakout target is at least double the breakout point price
• Cut loss point is the round bottom support line
• Patience is the key, time has its power
• The pattern setup time should be more than 6 months
• Enter once the bottom line of the V pattern is formed, at a price about the bottom line
• Multiple V bottoms are more reliable, therefore, it can be traded several times before the real breakout
• It's especially good for the people who don't want to spend too much time on trading
• Above 250MA, any breakdown of V bottom line is a sign of weakness, and better to sell in order to protect the profits
• The /\ top should create a new higher high, after a V bottom, otherwise, a sign of weakness too
  

Finally, if the weekly chart shows the topping sign (3 lines topping plus the breakdown of the low point of the 3 lines topping) then sell all position for safety. Otherwise, sit tight for the technical target!