Anticipating a breakout helps you get an early entry and can improve your per trade profits. It also can lower your risk as your stop is closer.
It can help you profit from even smaller moves.
Anticipation requires more pre planning and effort than buying a breakout. You need a process flow to do that. The process should be efficient and done daily after the market close.
A stock in established uptrend having a "A" grade pre Momentum Burst setup should be your first priority and those breakouts are easier to anticipate.
Same logic applies on bearish side. Anticipating a breakdown helps you find low risk short entry.
In order to do anticipation a daily process flow must be followed consistently.
If you do a thing daily for 90 days it becomes part of a habit. If you want to build an enduring habit committing to it publicly helps. Doing it publicly is even better , it forces you to be disciplined.
Everyday a post is made on Anticipation breakout in the morning on Stockbee members site. If you want to build your own skills , you should develop a skill for anticipating a breakout.
If you a motivated enough trader interested in making millions then you should develop a anticipation based setup.
For both discretionary as well as mechanical traders , development of process loops is important skills.
Many new traders or investors have no set process loop for making their decisions and as a result they jump from one thing to another.
Hallmark of successful traders in the Stockbee Advance Boot Camp was their focus on process flows. It had traders with 5 years plus trading expertise who had cumulatively made big returns. They presented their trading setups and steps to their success.
All those who made big money trading had mastered a process flow and as a result become efficient. All the good presentations in Advance Boot Camp had simple easy to explain and follow process flow and they had taken an existing setup ideas like EP or momentum burst or anticipation and created their own process flow to suit their personality and working constrains.
If you have a good process flow and setup you can explain it to five year old and he or she will understand it.
For breakout anticipation you need to look at a universe of stocks based on some criteria. For example growth investors look at universe of growth stocks and then try and find stocks likely to breakout from it.
IBD kind of investors look at the 85/85 scan and the list is published in Friday edition to anticipate breakout. The IBD method stresses anticipation as key element of their strategy. IBD kind investors go through 1000 plus stocks to identify pre breakout patterns. Essence of the CANSLIM method is to find a good growth stock with momentum and that is setting up and enter few cents above buy point. The anticipation skill is key to success for that.
Some traders scan for stocks within 10 to 15% of new high and then look for a stock setting up for possible breakout. Again this is based on momentum as fundamental way to scan for stocks and then look for a good entry point.
Darvas used to look at stocks that doubled and are within 15% of all time high and that had something revolutionary and then enter orders in anticipation of a breakout above the box base.
Jesse Livermore used to look at stocks that have gone up 20% plus from the bottom. He also had other setups near high or long term range breakout. But again his emphasis was anticipating a breakout and also anticipating a possible big move and entering as close to breakout as possible.
Many look at stocks that had earnings surprise in last 40 days or stocks that have analyst predicting a surprise and that have pulled back and then they anticipate a breakout on them and enter as they breakout.
There are many ways to skin the cat if you are serious about your trading. But the first step starts by developing process loops for structural setups.
If you have a good process flow and setup you can explain it to five year old and he or she will understand it.
For breakout anticipation you need to look at a universe of stocks based on some criteria. For example growth investors look at universe of growth stocks and then try and find stocks likely to breakout from it.
IBD kind of investors look at the 85/85 scan and the list is published in Friday edition to anticipate breakout. The IBD method stresses anticipation as key element of their strategy. IBD kind investors go through 1000 plus stocks to identify pre breakout patterns. Essence of the CANSLIM method is to find a good growth stock with momentum and that is setting up and enter few cents above buy point. The anticipation skill is key to success for that.
Some traders scan for stocks within 10 to 15% of new high and then look for a stock setting up for possible breakout. Again this is based on momentum as fundamental way to scan for stocks and then look for a good entry point.
Darvas used to look at stocks that doubled and are within 15% of all time high and that had something revolutionary and then enter orders in anticipation of a breakout above the box base.
Jesse Livermore used to look at stocks that have gone up 20% plus from the bottom. He also had other setups near high or long term range breakout. But again his emphasis was anticipating a breakout and also anticipating a possible big move and entering as close to breakout as possible.
Many look at stocks that had earnings surprise in last 40 days or stocks that have analyst predicting a surprise and that have pulled back and then they anticipate a breakout on them and enter as they breakout.
There are many ways to skin the cat if you are serious about your trading. But the first step starts by developing process loops for structural setups.
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