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Stock Upside Trade and Breakout
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Disclaimer: This is NOT investment advice, just general help and opinions. Please check with a registered investment advisor before making any investment decisions. This document may contain errors. Chapman Advisory Group LLC employees are not investment advisors. Please review:
Upside Stock Trade Indicators
Upside Trade Information
  • Provide upside trade information to gauge the quality and profit for short term long stock trades that take place from 3 days to 6 weeks.
    Upside Stock IndicatorInformation
    Trade Quality
    • A stock indicator that analyzes Target 1 profit, potential and profit/loss ratio.
    • Good Trade Quality means there is good target 1 profit and target potential along with a high profit/loss ratio (a tight stop loss is available).
    Target 1
    • Target 1 is a stock price that a typical short term rally may achieve.
    • These typical stock rallies can last anywhere from 3 days to 6 weeks and occur approximately 6 to 12 times a year.
    • The Target 1 percent stock profit is also listed.
    Stop Limit (Stops)
    • The stop price is provided along with the percent loss from the current stock price.
    • A stock stop limit is either a mental or automatic (placed with a broker) sell order placed below the current stock price to limit ones loss.
    • Stock stops are only adjusted in one direction (up) and trails the current price.
    Profit/Loss Ratio
    • The stock profit/loss ratio indicator is the ratio of Target 1 profit divided by the stop loss.
    • Higher profit/loss ratios above 2.5:1 signify higher quality stock trades.
    Target 1 Potential
    • Analyzes stock resistance areas that block the rally to Target 1 and helps the investor gauge if Target 1 is possible.
    • It may be unreasonable to expect a stock to reach the Target price (low potential) if blocked by one or more strong double or triple resistance areas.
    Target 1 Resistance
    • Lists the resistance areas between the current stock price and Target 1.
    Target 2
    • Target 2 is a price which may be reached on an extreme stock rally which occurs only 5% of the time or approximately 1-2 times every 6 months.
    • A stock rarely remains at Target 2, some investors may want to sell at Target 2 to lock in good short term profits.
Upside Trade Tips
A stock trading system based on high profit/loss ratios and diversification
Stock Breakout Trade
Breakout stock trade details
  • Stock Breakouts are quick rallies that occur when it moves upward through a resistance area. Typically the next resistance will be far away or a new high area.
  • A stock usually starts to rally and breakout once it moves above a trigger price. This trigger price is typically close to the upper edge of the current resistance area.
  • Upon a breakout a stock can be expected to reach the breakout target price. Also listed is the stop limit and profit/loss ratio for the breakout.
  • Breakouts vary in how quickly they rally and reach the breakout stock target.
    • True Breakouts are the strongest breakouts made from type double or triple stock resistance areas and their rallies typically last a short time of 3 to 5 days.
    • Continuation Breakouts are made from single resistance areas and their rallies typically last longer at 1 to 3 weeks.
  • Breakouts fall into three categories depending on their state:
    • WATCH: A watch breakout is currently at resistance and may breakout above a trigger stock price.
    • CONFIRMED: A confirmed breakout is a stock that has started to breakout and is above it's trigger price and resistance area.
    • POSSIBLE: A possible breakout is a stock which has started to breakout(above it's trigger price and resistance area) but has a mixed possibility of continuing higher (lacking bullish indicators).
Breakout Trade Tips
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