December 11, 2020, 2:27 pm EST
2020 Actual Trade: BILI +24% Profits
Ideal Entry Point After Breakout
Breakouts are very important events for trading. Ideal entry point for trading is to get as close as possible to the breakout day both to minimize the risks and maximize the profits.
However, what should we do if we miss the breakout point ? It is not too late to get after the breakout but there there are few points to remember:
- Do not chase the stock in the middle of the rally because any pullback could give you tough time holding on a losing stock in red color
- Do not wait too long as the most profits will happen in the short period of time
- Ideal entry point is during mild pullback or tight consolidation period. Usually, it means about 3-5 days or 1-2 week time after the breakout
It is important to monitor the target stock in both price and volume behavior for this period of time in waiting for adding the stock to the portfolio:
- Pullback should be mild in volume
- Pullback should not wipe out most of the gains (more than 61.8% Fib level) from the breakout point
- Consolidation should be in tight range near high level of the breakout area
- Entry point should be the day that clear up its consolidation range
Following these basic principles, it would be easy to see how we made trade on BILI:
- Notice BILI made a 4.5 month base from July to November in the range of 42-52
- Marking 52 as the resistance, 11/19 earring report boosted BILI with +22% gains to 58 level
- Opening your eyes and following BILI like an eagle because the time will come soon
- In the next 9 sessions, BILI stayed in the tight range for consolidation between 59-64
- Then, opportunity arrived on 12/03 when BILI decided to move out this range so opening at 63.69
- The next 6 days were fast and excited to ride uphill to the top on 12/11 almost +7% intraday high
- Took profits on 12/11 for 6 trading days, +24% profits
