In a Bull Market, new stocks break out on high Volume every day. One of the challenges of a breakout trader is find the best BreakoutStocks to buy because they go up so fast that often it is hard to get a low-risk entry.
To find the best breakoutstocks, one has to focus on the right sector and then monitor stocks within that sector for volume breakouts. Eg. PSU Banks did a very strong breakout recently with most of the stocks within NIFTYPSUBANK index giving a 50% gain in a short time!
First let’s see what happened in this sector in terms of the sequence of breakouts. NIFTYPSUBANK broke out of a sound base on 24th Oct, 22 as below. The leaders within this sector broke out even before the index broke out, e.g. INDIANBK, CANBK, UNIONBANK, BANKBARODA.
After that, one by one, stocks did a high volume breakout as follows:
MAHABANK: 24th Oct-22
UCOBANK: 2nd Nov-22
SBIN: 4th Nov-22
IOB: 4th Nov-22
CENTRALBANK: 9th Nov-22
PNB: 9th Nov-22
So, how would one go about catching breakouts at the right time in this sector. One of the favorite scans I use to find volume breakouts in Investar is either the “Resistance or Supply Zone Breakout on strong volume” or “Multi-timeframe Daily-75min Volume Breakout”.
As soon as you see more than one stock that is breaking out in one sector, it is a great idea to put a Scan Alert on the entire sector. E.g. in this case, a) Add “NIFTYPSUBANK” as Industry Index, 2) Then put a “Scan Alert” by right-clicking on it, and “Set Scan Alert”.
Let’s say you put a scan alert as follows on 21st Oct-22 when NIFTYPSUBANK broke out, you would still be able to get alerts on all the stocks that broke out after 24th by a pop-up and sound alert in Investar, in market, as and when they happen and enter at right time.
To summarize, once you see a narrow index that’s breaking out,you will always see stocks in that index breakout one after the other. Set alert on all stocks in the index! Even if you miss a breakout, you can always find another good breakout by setting up the right alerts!
Most breakout traders face FOMO (Fear of Missing Out). Maybe the technique shown above will help you avoid that and capture the maximum profits!