Saturday, March 13, 2010

Morning Breakouts: Trading Plan

I have a few other posts' here dealing with my trading plans in the past. The same idea permeates the plan throughout: morning breakouts. I tend to gravitate toward trading the open of particular stocks that I fancy. What I intend to write here is explain what it is I'm looking for and to record for myself and have a place to come back to and keep myself in check.

The technical part of the charts I'm looking for is quite simple. The stock itself should be in a tight price range over the last 3 months at least and be between 1 and 10 dollars per share. What will attract me is a nice large price spike accompanied by a huge volume spike to confirm the new move. The picture below will serve as an example of this idea.

One can quickly see the exciting price move, represented by the white candle, and the nice tall green volume bar. What I plan on doing after finding this particular pattern is watching the stock pre-market so I can get an idea of how it's behaving and see if there are any certain support or resistant barriers. That's my pre-market routine. My End of Day routine will be to first find this pattern, then look at the intra-day data and see what the support and resistant levels are and measure any pontential moves in between those ranges.

So far, this is a rough sketch of what my trading plan will be as far as selecting stocks go. Later on I'll be fine tuning my entry and exit points more than what I use now, which isn't really worth writing down.

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1 comment:

Anonymous said...

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