My Breakout/Breakdown Trading Strategy for Using eSignal

Strategy: 2-Day High/Low Breakout Strategy

Using eSignal on 6 monitors, I combine this breakout strategy with several of eSignal's advanced
chart indicators to identify breakout-long and breakdown-short trading entry opportunities.

Advanced Chart Indicators Used: 1-minute candlestick chart, Fibonacci retracements, stochastics
and volume bars with time and sales (expanded view).

Market Charts Used: 1-minute line TRINQ chart, 1-minute line COMPQ chart, 1-minute line
$SOX $GSO $NBI sector chart indicators. I use a quote box with ranked sector percentages
(change from open) and a 2-day, 2-minute candlestick chart to identify when a stock is moving
outside of the previous day's trading range on higher volume.

Timing: Trades of 1- to 15-minute round-trips executed primarily during the 9:40 a.m. to 10:30
a.m. (Eastern Time) time frame on days on which the Nasdaq composite (COMPQ) is trading
outside the previous day's high/low range.
Trade Entry Using eSignal: Starting at 9:35 a.m. (ET), scan for stocks that are making the
strongest percentage change (from the open) in a quotebox. Pull these up on a linked chart to
identify those that are moving outside their previous day's trading ranges (screenshot 1). The
goal is to identify stocks for long/short opportunities once they have moved above the previous
day's high or below the previous day's low.

Filters: To avoid false breakouts/breakdowns, use the following indicators: (a) The stock must be
in one of the strongest 2 sectors for the day (as measured by percent change from open), (b) The
stock's volume bars on the advanced chart must be increasing during the 3 minutes prior to the
trade entry, (c) Time and sales must be speeding up (faster transaction rate) at the time of entry,
in the direction of the trade, (d) Entry should be no sooner than .3 points higher than the previous
day's high for a long or no sooner than .3 points lower than the previous day's low for a short
(screenshot 2).

Trade Exit Using eSignal: One of eSignal's many strengths is the ability to use an expanded time
and sales chart in combination with the Advanced Chart indicators. Use a trailing stop of no
greater than .2 points for all daytrades, and look for an exit when the expanded time and sales
chart starts to show a slower rate of transactions and/or a "green and red" pattern, where
transactions are beginning to reflect equilibrium between buyers and sellers; this provides an exit
signal.

eSignal's Advanced Charting: Using Fibonacci retracement lines and stochastics on a closeup 1-
minute candlestick chart is an excellent indicator for spotting reversals and trade exits. Use the
market charts (sector charts, TRINQ, COMPQ) and time and sales to help spot entries, use the
closeup 1-minute Advanced Chart with time and sales to help spot trade exits.

Tip: Keeping several dozen small 1-minute line charts open (thumbnail sized) on several
monitors helps the astute daytrader spot momentum entries, which can then be examined more
closely using the 2-day, 2-minute and 1-minute candlestick closeup advanced chart.