How to make out on a breakout!
Alright first I have to admit that it must seem like i have absolutely no life at this point being that we are probably the smallest followed board with only 3-5 active members yet we are currently I think one of the most active boards for daily posts. With me being... half... of the ... posts... :(.
Just tell me to shut up whenever. However if anyone else would like to jump in on something and push my name off the board I would be estatic!
Besides i need to reup my subscription as of right now after this post i have 1 post remaining for the day lol.
Anyways.
Another observation I have had is this, the stocks you see up 10-15-20% a day are most likely either getting very close to a breakout of 50% plus or they are about to fizzle out. Now hear me out on this.
If you go over huge watchlists every day you will see that stocks that have held a 10%+ gain (usually more like 15-20) are getting ready to have a bad day coming soon. Vice versa a stock that has been doing horribly soon seems to reverse out of no where and receives a huge gain for one day. NO DO NOT THINK THE CRAPPY STOCK IS YOUR NEXT BREAKOUT!
It is just stabilizing based on the markets feelings of it being either OB or OS (over bought or over sold, half of your indicators are based on this concept)
The real trick to making a killing on a stocks breakout is first, follow it based on my evidence provided in the last post but two watch your smaller gains.
Want to track momentum over time? Positive news and other implications on a stock that is continuing to grow in gains each day or week is a good sign that the enthusiasm is building and more people are getting in and waiting for the perfect moment.
Also realize that prior to a breakout there is a good chance that stock has already gone up 50-100% over the last 2-3 weeks. Kinda.. like... the ones on the list I provided ;).
Now remember my examples of how 1% a day could make a LOT of money in 252 days or 1 year of trading?
Think about a stock going up 3% on average a day for 3 weeks? By way this will be approximately 21% if anyone has a strenght meter on their platform or trading site.
3% compounded over 20 days. One initially thinks 60% gains but it is actually 80% or 1/3rd more. A $1 stock increasing 3% for 20 days is
$1.806
So in reality in 1 month you received 80% on that stock. So a 10k investment would have made 8k that month. This is also without margin by the way.
So you already doubled your money. However as more positive forces such as good media coverage or earnings or what not come out, the $1 stock will increase in momentum as more people learn about it. Eventually the 3% gains turn to 4% and 5% and 8% then at 10% or so thats when people start noticing.
Here is a legit question and is anyone willing to give a legit answer? How many people have gone through a watch list and the first and sometimes only thing they see is the daily gain? How many people say they won't touch anything less than 10%? I am guessing out of us 9 at one point all 9 of us did it. I can verify that I am as guilty as they come in this regard. Its okay so aren't most people. Thats why at this point the stock really begins to take off.7
Now for the next 4 weeks you might see days with 3% 5% 7% 5% 8% then 10-12-15. So in a month your average daily could really be more like 5-6%. Lets be conservative and say week one average is 4.5% week 2 5.5% week 3 & 4 - 6% week (this could be much higher but I am only at 5.5% and the number already seems to big. so i reduced the initial averages down)
At 1 week of 4.5% and 1 week of 5.5% the stock went from $1.80 to $2.94.
By the end of second month the stock is now at $4.96 or almost 5X its value from 2 months ago. Now this isn't a perfect world and say throughout this there was a 50% loss.
That would still put you near $2.50 or 150% gains. Not bad. I also just figured something else out thats cool. Playing with the numbers,
1.05858188 or 5.858188% a day doubles your money in one week with compounding. If anyone has ever heard of the rule of 72 its a good rule to follow. Basically with compounding if divide 72 by say 3 (3%) you get 24. If the compounding affect is in months then it will take 24 months to double your money. I just tested it on the excel to verify and it was 3 cents over so its pretty accurate.
Anyways, its at this point that people pay attention. This is when the momentum has really built up and people are getting in. Now everyone is waiting and anticipating that earnings report or the news article that comes out to show the company is just crushing it. When the expected earnings or media comes out and it is positive boom, you have the day with 30-40-50 or even 100-200-300% gains. If it doesn't then you have a day with -20-30-40 loss.
The example above is actually ACIA to a tee. Go through its 3 months historical data. The loss example is just like what happened to GEVO. Just prior to its earnings it was 3X higher than analysts had predicted 2 or 3 months ago. It had a bunch of good press and was doing quite well. Earnings came out and it was almost twice as bad as expected. AHT right after the report dumped GEVO by 25%
Anyways my point is the best time to get in is before ayone notices it. The stocks on that list are the primary stocks that will be next up for breakouts.
However there is no guarantee on that so please do not take my sole word for it. However together I believe we have good odds of eliminating the ones that won't make it and narrowing down on the ones that will.
Any feedback from anyone is always welcome... please!
