Thursday, April 24, 2008

Trading Technical Breakout

We have witnessed many technical breakout in the present market rally. How do you trade a technical breakout? I have come across this article in Investopedia entitled "Anatomy of Trading Breakouts" by Jeff Kohler, which I find to be very good. In summary, the steps to follow when trading breakouts are:
  1. Identify the Candidate
  2. Wait For the Breakout
  3. Set a Reasonable Objective
  4. Allow the Stock to Retest
  5. Know When Your Trade/Pattern Has Failed
  6. Exit Trades Toward the Market Close
  7. Be Patient
  8. Exit at Your Target
You should read the entire article to enhance your trading skills.
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