Hubert Senters here.
Let’s take a look at AAL also known as American Airlines. So when you’re looking for a breakout stock that’s either going to go up or down in this example, we’re going to use the down moves, we’re going to short this thing.
So on AAL, first you want to see something that’s below the cloud and is breaking and continues to break below the cloud even if it goes below and then tested again. Then you just got to find out what your risk parameter is that you’re cool with, your risk will probably be different than mine maybe slightly higher or slightly lower.
And then you got to know what your first initial targets are and then you want to trail to stop it’s that easy. What you’re looking at here is a simple mathematical equation. And don’t worry if you suck at math, I suck at math too in both high school and college. I got D’s in Algebra.
You do not need to know a lot about math in order to do this. So what I’m looking for here. First, I haven’t initiated or found out that AAL is in a downtrend then I want to short it when I have a favorable risk reward ratio and it’s super simple.
So it’s telling me right here and you can see this is the day, day before, and before. So this is a swing trade that I’m trailing the stop-loss on in this example. So you can see here, it’s telling me I should have short this bad boy at $52.89 and my ATR risk right here, this number right here is $0.59, that’s a good low number.
It’s also telling me I need to short $6,000 shares. You don’t have to short that means you can short a lot more, a lot less and then it’s telling me my first target is here target 1, second target is here. And then it’s trailing my stop-loss for me. So in this example, once I get out of this thing it will tell me how much X percent, I would have made on my entry of $52.89 and my stop-loss of $53.06 which is not a very large stop-loss so that’s why you can do it.
This is a 10 minute chart. If you want to dial down and make it a little bit smaller risk you can. It’s very easy to do so. All you have to do is change the timeframe frame. I’m just going to go up here. Let’s go two minutes. So it looks like on two minutes.
Two minutes back here. You would have a short here, stop, target 1 and target 2. Let’s go all the way down to 1 minute. You got to have all kinds of signals on this thing. There you go. So here you had a couple of other opportunities today that you could have made.
So short here, stop right there, target 1, target 2, trail and stop-loss right here. Let me mark it on the chart. You probably can’t see my mouse wiggling around properly. So in this example right here, you shorted at the white line right here at $47.38, stop-loss is $ 47.45 so we’re not risking much at all.
The ATR risk is point $0.64. That’s nice and tight. Target 1, target 2, trail the stop-loss. And on that trade you would have made $6.6 X of your risk amount. That’s pretty good. Here’s another one. The risk is $0.63. That’s good short it at $46.92. Target 1, target 2 and then trail the stop-loss, it’s currently at $45.79. Keep your breakout trade simple. Know what your risk is. Know where your targets are and know how to properly trail a stop-loss.
Good luck. Hope it helps. And I’ll see you on the next video.
Hubert.
