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My process loop to trade 4% b/o and $ b/o

Posted on 7/13/2017


Stockbee Youtube Channel

Most stocks start their swing move or big move with a 4% breakout. You can validate this for yourself by looking at every big winner last year.
Stock moves start with a momentum burst and that basic tendency of the stock moves has not changed since stock markets started.
If you just do a good job of focusing on 4% breakout you will find the best opportunities in market every week.

Process Loop

I run scans like 4% and $ breakout along with my anticipation watch list and low threshold breakouts throughout the day and trade candidates as and when they show up and meet my criteria.

The 4% scan and process loop

c/c1>=1.04 and v>v1 and v>100000
The scan looks for a stock with price and volume surge.
The stock should be up 4%,
volume should be higher than yesterday
and volume should be greater than 100000.
Once you run the scan you will get several stocks meeting the scan conditions , but they are all not buy candidate.
A buy candidate should meet the setup definition for a breakout swing trade. If the context of the breakout is right , it should be bought for 3 to 5 day hold trade.

A good setup should show following characters:

stock should close near high
prior to b/o day there should be a narrow range or negative bar
stock should not be up 3 days in a row
stock should have a narrow range sideways consolidation or narrow range orderly shallow pullback prior to b/o day
the previous leg of up move should be linear
the breakout should be first to third setup since start of the move
as far as possible look for young trend and not extended trend ( youngsters defined by number of days stock has been rallying in overall move)
first and second pullback/consolidation in rally are preferable
extended rallies are vulnerable to correction and b/o failure
In process term I run the above scan from 9:30 onward and look for candidates meeting setup definition. As and when they show up I enter. The stop is low of breakout day
This is an example of process flow to find swing trades daily.

The $ b/o scan and process loop

c-o>=.90 and v>100000
The scan looks for a stock up 90 cents plus. It is more useful on high priced stocks above 40 as they do not often breakout with 4% move.
The stock should be up 90 cents plus.
volume should be greater than 100000.
Once you run the scan you will get several stocks meeting the scan conditions , but they are all not buy candidate.
A buy candidate should meet the setup definition for a breakout swing trade. If the context of the breakout is right , it should be bought for 3 to 5 day hold trade.

A good setup should show following characters:

stock should close near high
prior to b/o day there should be a narrow range or negative bar
stock should not be up 3 days in a row
stock should have a narrow range sideways consolidation or narrow range orderly shallow pullback prior to b/o day
the previous leg of up move should be linear
the breakout should be first to third setup since start of the move
as far as possible look for young trend and not extended trend ( youngness defined by number of days stock has been rallying in overall move)
first and second pullback/consolidation in rally are preferable
extended rallies are vulnerable to correction and b/o failure
In process term I run the above scan from 9:30 onward and look for candidates meeting setup definition.
As and when they show up I enter. The stop is low of breakout day.
I am looking at hold periods of 3 to 5 days on these trades or even lower as long as they give 8% to 20% profit. For $ b/o I am looking for 5 to 20 dollars move in 3 to 10 days. Once I am profitable I am looking to move stop to break even and protecting open profit aggressively once it is more than 8 %.

Where to exit

image
These exit guidelines are specific to swing trading and 4% and $ b/o setups.
Exit at least 50% of position on third day at close. by third day the moment stocks goes up start protecting profit by moving stop 25 cents below the high.
When swing trading it is critical to take profits in to strength.
After your entry next day or same day if the stock goes up 8% or more exit 50% of the position and move stop 25 cents below the high of the day to protect profits.
Exit a stock in pre market or at open if it gaps up 20% or more after your entry next day or third day.
The essence of swing trading is about capturing such explosive moves and selling in to strength.
If a stock does not follow through in 3 days exit or move stops to break even If stock starts to fade gain after entry exit same day.
If you study the stocks up 25% or more in a month you will see that they make bulk of their move in 3 to 5 days out of 21 trading days in a month.
Typically most of them go up for 3 days after breakout and then spend next few days going sideways or giving up part of the gains made during those explosive 3-5 days.
These are exit guidelines for swing trade not absolute rules..

Best breakout candidate typically show up in first 30 minutes

Swing trading using momentum burst moves of 3 to 5 days

Posted on 7/12/2017
Stocks move in sharp momentum bursts of 3 to 5 days. During this burst move stocks make 8 to 40% move.

If you study this phenomenon and understand it and develop trading methods to exploit it you can find hundreds of opportunities in a year.



Momentum burst moves are signalled by range and volume expansion. You can easily find stocks like these by running a scan for breakout. 

Once you find a candidate like this you need to qualify them qualitative. Look for stock in established uptrend. Look for stock that has orderly pullback or consolidation. 

If you want to make money trading , focus on momentum burst. 

Bullish Anticipation Setups : July 5, 2017

Bullish Anticipation Setups for Today

ATRS WUBA TTD QVCA WAT MOH BX AAOI CLVS LZB ATHN CYOU HOME NUS LUV COH CRY VHC SITE BABA CBM NSM ATR MCO IBB ALLE AMGN ZGNX TAN CSRA ZTS FSLR COT EXEL ASGN CSIQ PBYI XENT ATHM SPWR CMTL NRCIA BPMC SOHU

To anticipate a breakout look at stocks currently not undergoing momentum burst.

Stock should be in extremely low momentum phase for anticipation .
It can be a shallow pullback or consolidation in established momentum phase.

To anticipate look for stock with extremely low volatility

A stock with low volatility in last 5 to 10 days is ideal candidate as part of a continuation setup.
Look for series of low range bars in last 5 to 10 days
Look for stocks with bollinger band squeeze.

Avoid Anticipation setups on extended stocks

First or second anticipation setup in established trend is best
Extended trends needs to be avoided for anticipation as failure is high on them

Look for early entry on anticipation candidates

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.
For that entry without waiting for breakout is best.

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.
The suggested process flow is a template you can develop your own process.

Only 3 to 5 quality ideas should be tracked

"A" grade pre Momentum Burst setup should be your first priority
Once you have list of anticipation setups narrow them down to 1 to 5 for next day action.
Quality is more important than quantity

In order to find Bullish Anticipation setup use DT and TI 65 lists in Telechart

Double Trouble Scan

US common stocks
c/minl252>=1.8 and minv3.1>=100000
Price % change Today between 1 to -1%

TI65

US Common stocks
avgc7/avgc65>1.05 and minv3.1>100000
Price % change Today between 1 to -1%

MDT Above 1.19

US Common stocks
c/avgc126>1.19 and minv3.1>100000
Price % change Today between 1 to -1%

After running these three scan merge them together as some stocks will be common.

Go through the list to find setups that are setting up for possible b/o

What to look for in good anticipation setup

series of narrow range days in pullback/consolidation
orderly pullback with no 4% b/d during the pullback or consolidation
low volume pullback
low volatility during pullback
linear first leg if looking as continuation setup
Stock should go up smoothly and not in volatile manner
3 to 10 days consolidation/pullback
not up 3 days in a row
This entire process once setup tales just 20 minutes daily. 
You can find 5 to 10 good set ups using this process daily. In good market conditions these setups can make 8 to 20% in just few days. 
So if you are serious about making money swing trading setup these scans and practice finding good setups.
You can find your own stock picks daily once you master this method and perfect it. It will help you develop your own trading skill  and you will not have to depend on anyone.