(2018-08-22, 05:02 AM)tomyoung Wrote: Looking at the base it does seem like the stop loss would be quite far from the breakout point (~32%)
2x 52-week ATR is closer at 6.56, but still around 21%, but not around any support. It does seem like many stage 2 I've looked at has far away stop loss, is there any way to remedy this other than taking a smaller position size?
The stop loss should always be set at a point where you'd definitely want to sell to the stock. So for a trader position it should really be at least under the 50 day MA, and preferably a recent level of support as well. The purpose of the 2x 52 week ATR is to judge whether the entry point is then close enough to be tradable, based on the stocks average volatility over the last year. So this often leads to me passing on stocks until there's a reasonable consolidation, which can then provide a level of support that is close enough to make an entry viable. This is why when using the trader method you'll find cup and handle patterns, or volatility contraction patterns the best imo. As they provide the lower risk entries that you need to increase your chances imo.
Smaller position sizes definitely help, but there's not enough info on the trader method in the book, but other traders like Mark Minervini have expanded on it over the years, and he also wrote a very good book which can help learn the proper entry points, which was called Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market by Mark Minervini
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
OKTA is in a good position again, nice and tight to the 50 day MA and near the breakout level. Highest weekly closing price was 57.35 back in May, so I'm adding it back onto the watchlist as potential for a Stage 2 continuation attempt.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
(2018-08-22, 08:21 AM)isatrader Wrote: So this often leads to me passing on stocks until there's a reasonable consolidation, which can then provide a level of support that is close enough to make an entry viable. This is why when using the trader method you'll find cup and handle patterns, or volatility contraction patterns the best imo. As they provide the lower risk entries that you need to increase your chances imo.
Smaller position sizes definitely help, but there's not enough info on the trader method in the book, but other traders like Mark Minervini have expanded on it over the years, and he also wrote a very good book which can help learn the proper entry points, which was called Trade Like a Stock Market Wizard: How to Achieve Super Performance in Stocks in Any Market by Mark Minervini
That's very cool. I've read Mark's book but I never thought to use VCP or cup and handle pattern for stage 2 entry. It does make a lot sense consider the range is tighter with lower risk. I imagine you'll have to manual scan for these pattern? or is there a way to locate these pattern easier?
(2018-08-23, 06:14 AM)tomyoung Wrote: That's very cool. I've read Mark's book but I never thought to use VCP or cup and handle pattern for stage 2 entry. It does make a lot sense consider the range is tighter with lower risk. I imagine you'll have to manual scan for these pattern? or is there a way to locate these pattern easier?
If you look closely at the ideal trader entry point chart from the book, or page 1 of this thread. You'll see that it is a VCP pattern basically.
There's not many shortcuts in finding the patterns we look for, I scan for strong relative daily volume and a rising short term MA etc, and then manually go through the results from there, as your eyes are best at finding them. So just give myself a few hundred results to start with instead of 5000+ in the US markets.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
(2018-08-23, 06:14 AM)tomyoung Wrote: That's very cool. I've read Mark's book but I never thought to use VCP or cup and handle pattern for stage 2 entry. It does make a lot sense consider the range is tighter with lower risk. I imagine you'll have to manual scan for these pattern? or is there a way to locate these pattern easier?
If you look closely at the ideal trader entry point chart from the book, or page 1 of this thread. You'll see that it is a VCP pattern basically.
There's not many shortcuts in finding the patterns we look for, I scan for strong relative daily volume and a rising short term MA etc, and then manually go through the results from there, as your eyes are best at finding them. So just give myself a few hundred results to start with instead of 5000+ in the US markets.
