The Big Trade: Simple Strategies for Maximum Market Returns

Appendix B

Trading Examples

Example 1: Consolidation Breakout from Range

In Figure B.1 and Table B.1, we come back to Apple (AAPL). At the end of the text for this example are some supporting statistics (Figure B.3), which I will refer to. After a steep sell-off during the financial crisis of 2008, AAPL spent a few months consolidating between $80 and $103 per share. Classic opening range trading would have set the month of January 2009 as the opening range, and that would have worked out just fine in the long run. The January high was $97.17, and a buy would have been made during the week of February 2, 2009, when that price was broken and Apple closed at $99.72. The weekly average range was $11.06, but the stock was not done consolidating; it spent the next two months with that trade in a losing position.

Figure B.1 AAPL 2008–2009 Weekly Chart

Table B.1 Apple 2008–09 Weekly Data

Source: Data from Yahoo! Finance.

Figure B.3 Supporting Statistics for AAPL

Taking the opening range concept to the next level of using the entire consolidation period as the opening range (the box on ...