If I have to categorize all the breakouts in terms of descending order of strength, it would be as follows:
1. Breakout with Gaps - If the gap is unfilled, forget about the pullback. This is the strongest. eClerx, LTTS, Rolex
Rolex Rings - in my laboratory for the testing. :)
What do I do? Add 25% the next day of the breakout.
Rolex Rings - in my laboratory for the testing. :)
What do I do? Add 25% the next day of the breakout.
2. Breakout with no pullbacks - they move up furiously and consolidate at the same level. The price never comes back to the retest zone.
Again Minda Corp & Greaves Cotton - in my laboratory for further observation :)
Again Minda Corp & Greaves Cotton - in my laboratory for further observation :)
3. Breakouts with pullbacks - you have grown up seeing this every time here and there. In here, I add more shares once it bounces back from the retest zone.
PIX Transmission
PIX Transmission
4. Failed breakouts - they come back within the range despite breaking out initially. I close my 25% positions added at the breakout. The loss is minimal.
Jubilant Ingrevia
Jubilant Ingrevia
Basically, there are 4 categories. What separates an amateur trader from a pro is - patience to wait for the right price and focusing on the risk before reward. An amateur acts prematurely in every BO and loses more if it fails. whereas pro goes systematically.
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