Phase II : Stock Trading Strategy

Stock Trading Strategy: Breakout Theory

When buying and selling stock, you must take a systematic approach to reduce risk and maximize profit. Make sure that you have followed the guidelines in Phase I of the stock trading guide. The following stock trading strategy is the actual action of making a trade. The factors discussed below are a exact and precise to ensure success, please read carefully. This is the core of the trading system.

Phases of Stock Trading

Phase I : The Basics

Phase III: Advanced Methods

Breakout Theory Trading System

Note: At this point you’ve done all your home work. Phase I is no joke and you’re ready to implement the stock trading strategy. You’ve built a list of stocks with companies that show exceptional growth in their financial statements. Annual and quarterly reports of revenues, sales, earnings are growing and accelerating. You have analyzed the charts of these companies, and applied technical analysis to find breakout prices. Once you know the breakout prices, you’ve set alerts with your broker to notify you when the stocks hit their breakout prices. You now have been alerted that the stocks are trading at the breakout prices …….and now the moment of Truth. It’s time to buy Stock.

Click On Topics Below To Learn More

When To Buy Stock Buying stock is about timing. The right moment, is crucial in success. When you buy a stock deciding on the exact moment to make the trade is when the breakout happens. Usually the breakout happens after a technical signal of some sort, like a chart pattern or a breach of resistance to new highs. Its the market’s signal to you when all probabilities sway to your favor. The odds of a successful trade increase significantly. This stock trading strategy signals us exactly when to buy stock. Only buy when there is a technical signal to buy. Learn More

When To Sell Buying and selling play hand in hand with the stock trading strategy. Knowing when to sell is the first step in buying.  Read the previous sentence again. Anytime you buy stock, you must know exactly when to sell. Using technical analysis and technical indicators will tell you exactly when to sell. There will be no second guessing, or asking fellow traders their opinion. Selling must be swift, immediate, and automatic.  All buy orders will be paired with an order to sell using a stop loss. Hesitation will kill your account. Learn how to properly find the selling point and place your stop loss order. Learn More

How Many Shares to Buy You might think going by your gut is the way to go. WRONG. Never bet your whole account on one trade. Knowing how many shares to buy is a science. This stock trading strategy takes many factors into consideration. Your account size, market volatility, and selling point are a function of how many shares you will buy. It’s the secret mathematical formula for success. If you don’t like math, you’re screwed. No joke. Your “position size”, ie. how many shares you will buy on the breakout is critical. It’s a MATHEMATICAL FACT: If your position size is too large it will blow out your account over a series of trades. Take your time to do the calculations in the example and master it. Learn More

Managing The Trade & Selling For Profit One of two things will happen. The breakout will fail, and your stop loss order to sell will execute. On the other hand after buying the breakout, you might have profits immediately. The stock may start trending upward. You must be careful an not sell too soon. The excitement of a winning trade can be psyche you into selling like a fool. Never stray from this stock trading strategy. The pros buy more when they see a profit. When selling for a profit, you must be systematic, and unemotional. Only sell when the trend is over. There is usually a technical signal of some sort. Learn these selling techniques to have perfect timing. Learn More

Risk Management If there is a holy grail, a secret to make millions trading stocks risk management is the foundation.  This aspect of Breakout Theory’s stock trading strategy is the the most valuable aspect of the system.  Breakout theory has done intensive research on the subject of investing and trading. In our very, very humble opinion, risk management is the key to trading like a true professional. If you look in the biggest trading firms, risk comes first. If ask the best traders in the world, risk is the center of attention. Risk management is simple, and precise. It will ensure that you live to trade the next day, because even the best go through losing streaks. Learn More

Comments on this entry are closed.

Previous post:

Next post: