Ask Colin

How wide must a trading range be for a breakout to be significant?

It all depends on your trading or investment plan. Trading ranges form in all time frames from one minute intra-day charts to long term monthly charts.

My personal investment plan calls for trading ranges to be at least one year in width. However, I will trade somewhat shorter ones if there has been a big decline before the trading range or in a growth model chart - especially where the trading range has taken the price sideways to near or just across the 260-day moving average.

In other time frames, the parameters will be different, but essentially, what you would look for in adapting my approach would be by reference to the value and growth models that I use as a basis for stock selection.

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