TEDU is an example of a kind of setup that makes me money trade after trade. TEDU had a breakout yesterday morning and bought. Stock is already up from buy point.
Before the breakout day it was in anticipation scan I run. The anticipation scan looks for stock with narrow range days that are likely to breakout in day or two.
This is how TEFU looked before breakout day:
As you can see it was down .56% or 8 cents before breakout day. If you have identified such setup pre breakout through your daily scans and homework, you are ready for it next day as soon as it starts making even a 1% move you know this is likely to go up.
Anticipation of breakout allows you to narrow down your list of candidates to just a handful good quality setup and then you enter either before the breakout or as soon as breakout happens. the threshold for breakout on these kind of stocks is lower as you know it is having range contraction prior to breakout. This gives you a very close stop in case tarde does not work.
If you want to be a swing trader study thousands of such past setups. The essential element in success of these kind of setup is range expansion at the beginning of a swing. That is the essence of swing trading. Swing trading tries to capture part of a trend move or a range move. If you buy at beginning of swing you can sell near end of swing.
Look for stocks that are currently not having range expansion and are consolidating with narrow range days. Orderly consolidations are low volatility periods where buyer and seller at equilibrium. A range expansion from that phase indicates fresh buying pressure. That is noticed by swing traders and momentum traders and they then further extend the move as they buy the setup.
To find such buy points you need to do your homework and identify 10 to 12 good pre breakout setup and then watch them next day and pre decide where you will buy. Alternatively you can develop a automated program to buy them on breakout.
If you are a motivated and serious about making money trading , you can set up this entire process in few days and find daily buy or sell candidate. It is not very difficult process once you understand how to do it and put in around 20 minutes of homework.
No comments:
Post a Comment