Hi Stu (
@srm777 ), sorry to hear you got stopped on part of your position.
Just out of interest, what sort of (rough) timeframe do you usually trade in ??
I mean, are you doing shorter term swing trading ?? - like trading over days or weeks, or is it a bit longer than that ??
Are you trading just one account ??
If so, then you will do well just trading the mark up phase in stocks, like Richard Wyckoff did back last century (and he made quite a fortune doing it - over time). It can be a little dull, but once you understand the principles and the risks, it is simple and works pretty well.
The idea is to look for stocks that have a probable accumulation phase already completed in the background, you will never know an accumulation has taken place 'for sure', but after a while you get an eye for them, and just have to trust your judgement.
Stocks like this will often come to light when they actually breakout (they might make the news, get mentioned on Hot Copper, hit 'market mover' lists on websites, or turn up on breakout scans etc).
Then when you check the stock's chart you may see a probable accumulation in the background, and the potential breakout above the zone. Then put the stock on a watchlist and keep watching in more detail.
And if the stock is breaking out at the same time the broader market or sector (or both) is also trading positively (has also broken out or is in an uptrend), then that is even better, and is preferable if possible.
Yes you will miss out on buying the stock 'at the accumulation zone lows', but buying before the mark up phase begins, usually means you also hold more risk. Remember - once the mark up phase begins the recent buyers (accumulators) become more committed and will help to defend the price against supply (not 'any' amount of supply, but will be willing to absorb some supply regularly when necessary, and will also give price a little push to keep it moving when supply is relatively light).
As a shorter term trader you should be just trading for small gains regularly (with the odd larger profit at times).
The idea is to get in for a shortish period, and when price hits you target, or increased supply is drawn out (as it will from time to time when other traders take profits, or when price comes up to an older congestion zone, where stale supply can get out), then you also get sell out. Then follow the stock again on a watchlist, waiting for another opportunity for another trade (effectively you might do it many times over, before the uptrend is finally over).
So after the initial breakout, watch to see if the breakout level will be tested, then either way, once the mark up phase begins start looking for a high probability entry.
Once the stock has a positive influence established, an uptrend will develop, and then the broader market will begin buying the dips, which will also offer price support whenever supply is drawn out and price come back a bit.
You won't believe how long some mark up phases go on for, much longer than most expect, so there is no need to rush in all the time (unless you are day trading), just wait for high probability entries, and trade to your target price or until some serious supply gets drawn out. Then sell your position and watch again.
The idea is that over time, you will have quite a number of stocks on a current watchlist, all with a probable accumulation zone in the background, a breakout, and a positive influence established (eg- a mark up phase or uptrend), from which you look for high probability short term trade entries.
There is obviously a learning curve to overcome when you start out, and there is no substitute for experience, so you just have to get through that period (with your bank balance still intact).
I did something like this for a while, and went through the learning curve myself, it does take some time. This strategy does work - although I eventually changed the strategy a little, to better suit my own trading personality and time constraints.
If you are interested, let me know if you need any more detail on this strategy, or how you could adjust it to suit your own style.
cheers
.
(20min delay)