Continuation XTL

[PRH]

Mark R. is doing a super job on this board. He is always keen to help and discuss ideas. In my opinion he is THE master trader and teacher with tremendous insights into markets. Read all of his posts, save them, and re-read them.

I found that continuation XTL trades are about the most reliable ones. The initial XTL signal usually does not have a good follow-through, and the market tends to return to its previous range quite often. The second XTL breakout is usually better, but I like to wait for a pullback after the second XTL breakout signal, in the form of XTL continuation trade, both up and down. The risk is easily defined and a reasonable initial profit target is adequately defined. For stocks I would go with the daily chart continuation XTL signal whereas for futures the 60min charts gives you some good clues. If time permits I will post some charts later. I use Adv GET EOD, latest version with Esignal wizard data.

Happy as a clam,

Philippe

[PRH]

Here is a Continuation XTL example that we took.
DLX short on daily basis. We will lower the buy stop next week.

[marginman]

XTL confirming on a Type 1 sell trade increases probability of success. Same would also apply on a Type II trade.

Any observations on using XTL continuation trades riding a 60 minute or Daily wave 3 in progress? What do you use for setup, what do you look at to decide to stay in it?


Here are also a couple of online web training sessions to check out at webex sessions

XTL with Fib-TJs Web class
XTL Breakout Trades

Look forward to your comments

[PRH]

I use the standard search

XTL up
Auto Channels close break - intermediate

and

XTL down
Auto channels close break - intermediate

Save the results as a portfolio
Then for each result check the higher time frame - has to agree with lower time frame. Will only enter in trend under way.

Remember, making money with this should be easy, so we go for the easy money.

No other indicators, no CCI, no MACD, only take a look at stochastics 14,3,3 and false bar for confirmation.

Evaluate risk and potential target and the ratio.

The rest is money management. Set the trigger for the trade, enter the stop when triggered, sit back and relax and see what happens. Take some of the positions off when it has moved well in your favor, and/or raise the stop. That is how I look at it.

Easy Lizy
Lemon Squeezy

Good luck.

Philippe

[PRH]

Here is some other thought.

A XTL continuation trade is essentially the still stronger trending cousin of the type 1 trade. XTL continuation can turn into a type 1 if the market keeps correcting. Strongly trending markets rarely offer type 1's but lots of XTL continuation trade opportunities. So relate the type of opportunities to the strength of the trend.

A type 2 is a rare event with a fairly low probability of first hit success but can be phenomenal when successful and well managed. Essentially a countertrend trade.

Fib retracements and MOB's are very useful. So is Stochastics and false bar, and the oscillators. My main tool is the auto channels with Pearson's coefficient on. I look at it if > or equal to 0.9, otherwise not.

Hope this helps.

Philippe

[epiphany]

Hi Philippe,

Just curious if by saying "use standard search" are you talking about the AGET scanner?

Thanks,

Ric

[PRH]

No I am not talking about Aget Scanner, but about the Search module in the End-of-day Aget program. The Aget scanner looks more powerful indeed,but I do not subscribe to that.

Using the Search in the Aget EOD program is very useful, yet to compare different time frames, one has to do that by hand (or mouse) by clicking on the higher time frame. The scanner has all that built in.

Philippe

[marginman]

Philippe,

Ran a serach using just the two paramters u suggest on a dily time frame looking at just the last bar.

XTL settings are
Period: 35
Direction: up
Breakout: blank
ATC settings are
Type: Close break
Break direction: up
Source: H-L Flip
2 std sev checked
Min Pivot: Intermediate


Here are the results when scanning all optionable stocks on 10/17/03 close. Is this what you have in mind when you look for XTL continuation? Notice how some of these results are breaking down from the ATC based on intermediate pivot.

Plz elaborate....



Kindest Regards, Dean

[PRH]

I re-ran the search and do not get your results. The results I get are for the following stocks (yesterdays data)
FTE
IBC
IRIC
MSO
TDS
TE
TLK
VOD
WEC

Of these, I liked best: IRIC, TDS and WEC because they closed on their highs yesterday.

Looking at the three stocks you list, they closed below the trend channels, so you may want to verify your search settings.

As an experiment, I also ran the same search with Minor instead of Intermediate. Excellent results as well.

Philippe

[mattsb]

Phillipe and Dean,

I too have been trying to learn all I can about XTL breakout and XTL continuation trades.

An important rule I just learned from listening to the recorded XTL breakout trade lesson is that there can't be any change in color of the bars before the trade is triggered, i.e. if looking at an XTL breakout buy, then there cannot be either a red OR black bar before the trigger level is reached.

I believe this rule doesn't apply to XTL continuation trades, where there can be a black bar, but no red bar, in the case of a continuation buy trade. This trade would be triggered when the high of the intermediate channel breakout bar has been exceeded.

I ran the XTL breakout search on today's eod data and get the following results:

Breakout UP: AEG, AXA, LUV and WAG (I'm not sure why WAG is a result as it doesn't break the intermediate ATC.)

My search settings for XTL breakout Up are:
Bars=1, Period=Daily

Auto Channels
Type: Close Break
Break Direction Up
Source H-L Flip
Min Pivot Intermediate
Std Devs = 2

XTL
Period 35
First Breakout Checked
XTL Direction Up


My Breakout DOWN results: ATRX, MDT, MRNT, SAFC, TUP

My search settings are the same as above with the following changes only, : ATC Break Direction = Down and XTL Direction = Down.

As an aside, I put in search criteria for price range and volume, but had them turned off for the results given above.

TUP and MDT look like a good XTL break and continuation trades.

LUV looks like an XTL continuation trade. I have some question about it conflicting with a Type 2 trade on a daily basis, but the weekly chart still looks bullish to me.

I'd LUV some feedback on this!

Thanks,

Matt

[PRH]

Here is the outcome of the daily Continuation XTL searches from yesterday in today's market:
FTE: long
IBC: not triggered
IRIC: long at the open (gap up)
MSO: not triggered
TDS: long
TE: long
TLK: not triggered
VOD: not triggered
WEC: long

Will post charts on the three that I liked.

Philippe

[PRH]

This is the second favorite I posted

[PRH]

And now the third one

[PRH]

Matt:

In your search you combine first breakout and ATC break. That implies that the bar before the breakout bar is NOT blue (in case of searching for upside breakouts). That search does not find the ones in which the previous bar was also blue. That may indeed produce interesting results.

When running the classic XTL breakout (first breakout un-checked) we get the following results:
Continuation XTL UP:
AEG: same as you
AXA: same as you
CPRT
DPL
DTPI
HGR
ITG
JBLU
LUV: same as you
N
NOK
PGN
RIMM
RSTO
SKM
WAG: same as you. Curious that it does not break ATC...?
ZIXI

Continuation XTL DOWN:
ATRX: same
BPUR
FBN
LLL
MDT:same
SAFC: same
SRDX
TIVO
TRMS
TUP: same
WFR

Which ones to take?
Here are my choices:
TUP short sell 14.23 stop
DTPI long on 8.52 buy stop
JBLU long on 68.15 buy stop
PGN long on 43.62 buy stop
RIMM long on 43.70 buy stop

LUV looks good as well 19.01 buy stop

These are all XTL continuation trades. We will see how they pan out.

Philippe

[mattsb]

Philippe,

I ran the search for XTL continuation up without the First Breakout and got the same results as you with 2 additions, LEND and RRA.

Running XTL continuation down w/o First breakout gave exactly the same results.

I agree with TUP. The only negative is the lack of a pullback on the daily 5/35. Everything else looks good.

What have you experienced regarding stock pullbacks for continuation trades? Have you found that a continuation after a 38% pullback from the most recent high or low gives a more explosive move?

What do you typically use for a target? MOB or in the case of a type 2 the Wave 4? Andy has talked about using the fib extensions for targets, but the question remains whether those extensions can be realized. Thoughts?

Matt