Look for low risk entry setups | stockbee


Look for low risk entry setups

You can not completely eliminate risk in the market but you can control and minimise it by doing better job of selecting the right stock, selecting the right time, and selecting the right place to enter it. This is part art and part science. 

As far as possible look for a entry where you become quickly profitable post entry and your stop is very close to entry. If that happens you have a very good setup.

The low range anticipation setup is that kind of setup. In this setup you have to identify a low risk entry point in an established trend. It involves some  elbow grease to find these kind of setups. 

The big advantage is you get very good entries and stops are in most cases less than 4% or so. As a result if the stocks make 8 to 20% move your risk reward is very good.

In order to find these kind of setups I focus on stocks with established momentum. That increases your probability of success. On that I scan for low open to close situations. This brings depending on market conditions 100 to 300 candidates to study. After that in first cut I eliminate the  extended and very volatile movers. That narrows the list down to around 10 to 20 stocks with linear trends and orderly pullbacks or sideways moves. 

On that narrow list then I look for some sort of catalyst like earnings surprise or earnings or sales acceleration or new orders or new drug trial . That gives 1 to 5 high quality setups or next day entry.

The focused list then I enter in my trading platform and set alerts on are in some cases create limit  orders at my buy points. For first 30 minutes I watch and enter them. Most of these kind of setups breakout early in first 40 minutes. Once in I put in a stop near low of the day or low of last 2 to 3 days. Once stock starts moving it attracts breakout buyers and once it is up 3 to 4% I move my stop up further to try and be as close to break even as possible. Once trade had 8% plus profit then I aggressively move stops t lock in at least part of the gains to ensure it does not turn to loss. As stock moves in my favor I move stops to lock in profits or sell in to strength.

 Not every stock sets up perfectly and acts according to plan but because the risk on these trades is very low you can have many shots at these setups. 

Using low range bars to anticipate entries is one of the ways to look for low risk entries. It can supplement other setups like breakouts and help lower risk. 

Stocks on my anticipation watchlist today


If you are serious about swing trading develop anticipation setups , that will help you find low risk entry points. Especially in market where many moves have been of smaller magnitude , anticipation is better approach. 

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