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TASC 2017-11 | Swing Trading Four-Day Breakouts (Calhoun)


Traders' Tip text

I was busy with some programming project when this Tip article came in. As the trading idea by author Kent Calhoun looked so simple, it was a pleasure to take a break from coding and show our users how to get it done by example – this time without the need to write any code.

Wealth-Lab's "Strategy From Rules" allows to produce a complete trading Strategy from building blocks known as Rules. To start, either choose "New Strategy from Rules" or strike Ctrl-Shift-R. Firstly, drag the "Buy at Stop Channel High" entry and set "Channel period" to 4. As a quick approximation, this should buy at stop next bar if the price simply exceeds the 4-day highest close.

Now, let's add required conditions. Adding "Price above (below) a value (backtest)" from "Price (or Volume) Action" with $20 and $70 as the parameters (respectively) will set the desired price range. The multitude of Rules allows to choose your own definition of uptrend. I'm going to stick with a plain vanilla one and throw in "Price is above Moving Average", setting the MA Lookback Period to 50-day. To make my trend detection more robust I pair it with "Moving average is trending up" from the "Moving Average" group, choose 50-day as the SMA period again and set Lookback Period to 10. This means that the moving average itself must be higher than it was 10 bars ago – which typically happens in established uptrends.


Figure 1. Setting up “Strategy From Rules” for the swing-trading pattern.

Time to drag and drop the core condition: "Price increases a consecutive number of bars". To catch four or more green candles, choose settings as shown on Figure 1: Price = Close, Number of Bars = 4, and Lookback Period = 1 (this is what makes them consecutive). Finally, I drag "Sell at dollar based Trailing Stop" but you're free to choose from Volatility stops, percent-based stops, channel exits, Parabolic exits, or different profit target and stop losses.

Our walkthough took only a couple of minutes and a pleasing end result can be seen on Figure 2:


Figure 2. Application of the Strategy to WTW (Weight Watchers International)

C# Code


Eugene (Gene Geren)
Wealth-Lab team

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