What I look for in a good setup | stockbee


What I look for in a good setup

Good setups have orderly behaviour. I do not like to trade stocks that jump all over the place. That is not my area of expertise.

A recent trade shows you what I look for in a short term momentum burst setup.

This recent IPO had a breakout on July 30th. It showed up in multiple swing trade scans and I entered it on that day. Prior to entry day it had low range day , which I like. The overall consolidation prior to breakout was orderly.

In next 5 days in spite of market weakness the stock went up 3 dollar plus from entry. I hold these kind of swing trades 3 to 5 days . Yesterday was 5th day of this trade and as market started to show weakness I closed the trade. In a better market environment it would have probably done much better.

This kind of trade is an example of momentum burst pattern seen in stocks. Stocks move in short term momentum bursts of 3 to 5 days and for swing traders they offer thousands of opportunities in a year.

In order to find trade like these i run a very simple daily process flow that i detailed in my post few days ago:  My Swing Trading Process Flow

No comments: