Qullamaggie breakout planner

A momentum swing trading method built on breakouts, episodic pivots (gap-ups on news) and stocks riding their 10-day or 20-day moving average. Key rules keep the stop within 1x ADR and the risk at 0.5% to 1% per trade.

Average Daily Range, a stock's typical daily move as a percentage: the average of (High - Low) / Close over 20 days. The method uses it to size stops, which should not be wider than 1x ADR.

A stock that gaps up 10% or more on unexpected news or earnings, with heavy volume. The method buys near the opening range high with a stop at the day's low, and favours stocks that were flat for 3 to 6 months before.

The method risks 0.25% to 1% of the account per trade, and 0.5% is a common starting point. Small risk protects the account through losing streaks.

Positions are typically limited to 10% to 20% of the account, and no more than 30% overnight, so one gap down cannot do too much damage.

The method sells a third to a half after 3 to 5 days or at 2R to 3R, moves the stop to break-even and trails the rest with the 10-day or 20-day moving average.

For breakouts: ADR above 4%, price above the 10-day and 20-day averages, a prior move of 30% to 100% or more in 1 to 3 months, and 2 to 8 weeks of consolidation. For episodic pivots: a gap up above 10% and volume above 2x average in the first 15 minutes.

A breakout comes after a big move and an orderly pullback, as the stock leaves a 2 to 8 week consolidation. An episodic pivot is a sudden gap-up on news in a stock that was flat.