Elan Corp (ELN) Stochastic Buy

One of the stocks that we looked at during our free "Learn Successful Trading" seminar in New York City over the weekend was Elan Corp.

ELN was in a perfect False Bar Stochastic Buy opportunity with an entry at the cross of the Regression Trend Channels.  Our ultimate target for ELN is 38.85 which is our MOB level.  I've also added a Gann Box which helps me manage the stops and provides some additional trade targets that can be used to exit out of parts of our position before the MOB.  The aggressive trader can use the first Gann Level of 35.47 (the blue 2X1 Level) as a initial target and a place to adjust the stop to the entry price.

Ron Wheeler

Comments

[Don V]

If one used the conventional trigger of waiting for a close outside the RTC then the R/R would only be about 1.3. It looks to me like the cross of RTC was at 33.77 which is not even above the high of the previous bar. This is certainly a more aggressive entry than I am willing to take. At a minimum I would wait until it broke 33.97 which was the previous bar's higth so we at least have a buyers bar.

[Ron Wheeler]

That is correct, to achieve the optimal reward/risk you would need to trigger at the cross of the channels which is the more aggressive method.

[marc]

How many bars are necessary to trace a suitable trend regression channel? are they enough in this case? thanks

[Ron Wheeler]

There is no specific rule that we use, but I personally prefer 5 bars as a minimum for drawing the Regression Trend Channels.

[marco]

thanks