Hello Mike,<\/p>\n
An appreciative follower here. There\u2019s this question that has been floating in my head. I\u2019m reaching out to you for abetter answer.<\/p>\n
When do you pay for breakout plays out of a range or through a key resistance? Do you:<\/p>\n
1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0get in earlier at a better price anticipating the breakout<\/p>\n
2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0hit the offer as soon as the key level breaks<\/p>\n
3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0sit back on the bid waiting for a pullback from that breakout<\/p>\n
Now I understand that it all depends on the trade or confidence in the trade. But how do you measure that?<\/p>\n
Here are the things I personally identified:<\/p>\n
1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Market and sector condition tells me whether I should anticipate the breakout.<\/p>\n
2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0How extended that stock is and where it came from before taking out that key level. This should tell me whether there is a good chance of a pullback or we are still at the base of a run.<\/p>\n
3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Volume on breakout tells me whether I should pay the offer or wait for a better entry.<\/p>\n
I\u2019d love to hear your take on this.<\/p>\n
Still working on my game. It\u2019s a never ending journey but I will never quit. Preserving my capital has been my number one rule so I can sustain long enough.<\/p>\n