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Buying
Stocks On Breakouts Page
3 |
- Step
Six: The next step is to
identify when you will add additional
capital to your trade. First you will want
to see the stock follow through on the
breakout, putting in at least a couple of
positive days, adding to the stocks gains.
The second half of your capital should not
be invested until you see the stock pull
back slightly and then resume its up-trend.
Like the original breakout, the resumption of
the uptrend would be identified by the
stock trading at a level higher than the
high of the most recent uptrend. The chart depicts a pullback and a resumption of
the uptrend in Apple Computer (AAPL).
- .
- The chart below depicts a move of approximately
20 points in Apple Computer after it made
its initial breakout in August 1999. This
trade would have yielded a tidy profit for
the investor who identified it. Check back
with us next week when our discussion shifts
to the difficult decision of when to exit
this trade.
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