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What do you use to identify your breakouts? Are you buying any stock that breaks out and from what period?
 
ryandj2222 said:
What do you use to identify your breakouts? Are you buying any stock that breaks out and from what period?
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I look for stocks that are making new highs on higher volume and if they appear to have broken out of a range I get involved. I like them to have been in a range for at least 6 months but I am flexible on this.

I also keep a list of stocks I come across which are forming ranges.
 
China Diapers said:
I look for stocks that are making new highs on higher volume and if they appear to have broken out of a range I get involved. I like them to have been in a range for at least 6 months but I am flexible on this.

I also keep a list of stocks I come across which are forming ranges.
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I realise this is probably a different approach to what most people do, but then most people lose money.......including me.
 
Long GEMD
 

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Honestly, it was a lucky break. I don't tend to follow ZZZ, but I was at my computer, happened to notice an odd time trading update (9 am or something) watched it go up for a bit then bought in. Initial capital locked in now plus a bit, so might as well trail it up...
 
Another miner on the watch list
 

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China Diapers said:
Long eBay
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I don't want to influence your trade. But in general, one thing I've learned about trading breakouts in stocks is that the most successful breakouts are backed by a significant increase in volume on the breakout day, week, and month. So with Weinstein's method that I use for example, it suggests you look for at least 3x the average daily volume on the breakout day, with strong relative performance versus the market overall and a close near the high of the day. Then it must also have at least 2x the average weekly volume as well by the end of the week to help confirm the breakout, and have no significant near term resistance.

Making sure the stock has this will greatly decrease the chance of a false breakout and it will have even more chance of success if the monthly chart also has an increase in volume of at least 2x times it's average volume.

So if there's no significant volume increase on the breakout as described, move on, as you only have limited capital and so you need to consider the opportunity cost of each trade.

A few stock books which compliment each other that might help you:

How to make money in stocks - William O'Neil
Secrets For Profiting in Bull and Bear Markets - Stan Weinstein
Trade like a stock market wizard - Mark Minervini
Insider buy superstocks - Jesse C Stine
 
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isatrader said:
I don't want to influence your trade. But in general, one thing I've learned about trading breakouts in stocks is that the most successful breakouts are backed by a significant increase in volume on the breakout day, week, and month. So with Weinstein's method we look for at least 3x the average daily volume on the breakout day, with strong relative performance versus the market and a close near the high of the day. Then it must also have at least 2x the average weekly volume as well by the end of the week to help confirm the breakout.

Making sure the stock has this will greatly decrease the chance of a false breakout and it will have even more chance of success if the monthly chart also has an increase in volume of at least 2x times it's average volume.

So if there's no significant volume increase on the breakout as described, move on, as you only have limited capital and you need to consider the opportunity cost of each trade.
Click to expand...

Hey thanks for the feedback always welcome. I was actually expecting a comment about volume, surprised it took this long :)

I currently look for volume of the breakout to be 150% of the average of the last 100 days which I know if far less that what is suggested by people like Weinstein. I can't remember where I got the 150% from, came up with it years ago and seems to work OK.

For the moment I will keep doing what I am doing and if my am getting lots of false breakouts I will consider your suggestions.

Yes I have limited capital but I am not holding the positions for long and with my position sizing and use of leverage I can safely have three positions open so I don't see the opportunity cost as that much of a factor.

Thanks again, interesting stuff.
 
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