Explaining my momentum trading strategy based on O'Neil and Minervini concepts adopted to CSE. DIAL.N chart is used for explanation purpose. It includes technical stock selection, entry, risk management and exit. A thread 🧵:
Stock selection: (Based on weekly/monthly charts) 1. Find a BO in weekly basis with volume support. 2. Price should trade above 200 DMA. Better to find more confluence to enhance win probability. Let's find out.
Yup. We may notice a classic VCP highlighted in Minervini concepts. Look how price consolidates in phases near by the key resistance creating HL's to the pivot point. Read the volume behaviour. That's our confluence. But, when to enter?
1. Entry - At or 1-3% up from BO level. 2. Initial stop loss - 7-10% below the break-even price. (Better just below the low of the BO move) 3. Position size - Calculate 1-2% of total capital (Y). Position = Y / Risk per unit 4. Initial target - 20-30% from the pivot
Exit strategy: 1. Take partial profit at 20-30% from the pivot (Wait for 8 weeks following the BO to move there. If it reached to the zone within 2 weeks, hold total position for entire 8 weeks) 2. This is to avoid the opportunity cost as stock generally consolidates in here.
Re-entry: 1. Identify the key pivot when price consolidates. 2. Wait for a volume supported BO. 3. Pyramid up the position. 4. Sell 1/2 at 20-30% from the pivot. When to exit from the other half?
Identify the key MA respected by the stock in the entire up move. In here, it's 13 WMA. See how the price never closed below in the entire move. This is the dynamic stop. If price closes below in weekly basis with high volumes, exit fully.
Any queries are welcome. Please consider that I used DIAL.N just for illustration purpose only. Thread is for strategy explanation only. Strictly not an IA. Follow O'neil + Minervini concepts to refine.