I am going to put my effort into learning how to trade breakouts. Why do I like this setup? It’s fast and happens in the first 5 minutes of trading. It will provide me with some profits at the start of my day. If I do well, I know I can continue to trade in a discipline manner for the rest of the day.
I started dummy trading on gaps in January. I thought I was catching on when I had some good days. In February I had a lot of losing days and I began to have some doubts. A lot of my weaknesses began to appear and I lost confidence. This month has also been tough. What bothers me is that I have not done anything to fix this situation. I just sat on my ass thinking that I can trade my way out of this slump. I have been doing the same thing everyday without any progress. I need to take action and start studying again.
One of my big weaknesses is the lack of patience. Trading gaps using dummy entries require good patience and stock selection. I found out that I like to be in quick moves and I want to get some good trades by 10am. As I wait for the gappers to setup I get tempted by my trading demons. Most of the time I end up going into impulsive trades because I crave the action. I am not going to abandon trading gaps. I will still observe and maybe put on some trades that look good.
From observing the markets daily for the past few months, I see these breakouts happening very frequently. I see a couple everyday.
Check out Pinoy Trader's blog and learn from him. He has a lot of examples of breakout trades. High Chart Patterns also use this strategy and you can find good insights in their blog.
Please feel free to leave any comments. I am a beginner in this strategy. Any insights would be very helpful.
- I have been trading for 5 years. It took close to a year before I became profitable. I find that I am improving gradually each year. My method of choice is scalping. My edge lies in tape reading NYSE stocks and staying on the side of the specialist. That is the method I learned when I started. As I build up my capital I will try new styles and trade new markets. In late 2006 my trading hit a rough patch after the introduction of the NYSE Hybrid system. For most of 2007, I have been on a search for new strategies that would help me adapt to the market.