Use the Stop-Limit order to trade a short term trap-zone breakout

Use the Stop-Limit order to trade a short term trap-zone breakout pattern!

The Stop-Limit order means

• Once the stop price is reached it will become a limit order to buy or sell at the limit price
• It's good to catch the quick move momentum
• You can relax and let the market to fill your order according to your will

For example, one stock ABCD Inc. is forming a potential short term trap-zone breakout pattern in 15m chart:

• Forming a UP pole from 10-12.50
• Forming a trap-zone with width of 2.00
• MACD is bullish up during the trap-zone
• 5ma and 10ma becomes bullish after a golden cross
• Apparently, two or multiple bottoms have been formed
  

Assuming the breakout point is 12.00, then put in a stop-limit buy order with stop at 12.01 and limit at 12.01 will means:

• Once 12.01 is created in the market
• The order will buy ABCD Inc. at 12.01

The expected profit taking target is: 12+2=14 or 12+2.5=14.5

If you want to watch the market, then you can exit when next trap-zone is formed.

You also can use the stop-limit order to sell and take the profits.

For shorting a DOWN trend stock, the same rules can be applied because there are bearish trap-zones as well.

KEY things to remember:

• Put the position open and position close orders when the market is closed so that the market fluctuations won't hurt your judge
• Never be emotional, stay cool ( greedy ? or fear ? too happy ? too sad ?)
• Just let the market carry out your orders as you planned (even you missed a big GAP)
• Each trade could be done in 1~3 days, sometimes, but very rare, may be 5 days (or even longer)
  
• Signals show up pretty often
• Profit margin not very high, but pretty reliable, so could be scaled to large principles
  

After each trade or each week (may be each month, each year)

Review your trades, think hard and improve the trades! Especially, if the market can not carry out your trade plans as you planned ahead.