How to Identify good momentum burst and make millions

Momentum Burst Basic LogicStocks move in momentum burst of 3-5 daysStocks move in 8 to 40% burstsStocks move in 5 to 25 dollar burst if priced higher than 40For more details see this post on momentum bursts:Stocks move in short term Momentum BurstsHow to Identify good momentum burstA good momentum burst candidate will have following characters: The day prior to range expansion day will be narrow range day or negative day The stock will have 3 to 20 days consolidation prior to range expansion day The stock will have series of narrow range days prior to breakout On breakout day volume is higher than previous day On breakout day stock closes at or near its high for the day (preferred) Stock is not extended. First or second breakout at start of an …

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Momentum Burst Basic Logic

Stocks move in momentum burst of 3-5 days

Stocks move in 8 to 40% bursts

Stocks move in 5 to 25 dollar burst if priced higher than 40

For more details see this post on momentum bursts: Stocks move in short term Momentum Bursts

How to Identify good momentum burst

A good momentum burst candidate will have following characters:

1. 
   
   The day prior to range expansion day will be narrow range day or negative day
   
   


2. 
   
   The stock will have 3 to 20 days consolidation prior to range expansion day
   
   


3. 
   
   The stock will have series of narrow range days prior to breakout
   
   


4. 
   
   On breakout day volume is higher than previous day
   
   


5. 
   
   On breakout day stock closes at or near its high for the day (preferred)
   
   


6. 
   
   Stock is not extended. First or second breakout at start of an up trend is preferred.
   
   


7. 
   
   Stock should have linear and orderly move
   
   


8. 
   
   A very volatile stock exhibiting drunken man walk kind moves should be avoided
   
   


9. 
   
   Low float below 25 million is good. Below 10 million float leads to explosive moves
   
   


10. 
    
    Low priced stocks (below 5 dollar) tend to make very explosive moves of 40% kind in 3 to 5 days.
    
    

Become an expert in momentum burst setup

Identifying good setup is a skill developed through practice. If you go through 5000 to 10000 old setups and identify good from bad and see what worked and how it worked, you will gain expertise in identifying and trading these setups in real time.

More time you spend going through past history, more efficient you will become in instantly identifying setup in real time without trying to remember the rules. Automaticity or procedural memory is developed through solved examples and practice.

Go through hundreds of setups daily. Try and identify good setups on them. Study what was the pre breakout situations. Study how it acted post breakout. Find out how much % move it made in 3 to 5 days post breakout. Study failed breakout.

Your objective should be to become an expert in this setup. If you do that you can make millions of dollars over your trading life time. In a year you will find 500 to 1000 such setups on bullish and bearish side. This is one of the setups I use daily along with other setups.

If you are serious about your trading and want to build an enduring edge the Stockbee Member site might help you. The most recommended site for learning to trade. www.stockbee.biz 2100 members and growing everyday…

For more info: How to Identify good momentum burst and make millions

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How to Identify good momentum burst and make millions

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