Big vernacular examples explain the biggest advantages of VCP ๐
This is a recent tweet from Mark Minervini on Twitter ๐
Since the day after the contraction was the quarterly earnings report, we have no way of knowing whether Mark traded this stock, but we can do it according to $Blueprint Medicines(BPMC.US$The chart shows some telltale signs of why Mark is paying attention to this stock.
First, take a look at the IBD chart. The two recent sharp declines have produced a bullish divergence from the RS line ๐
Some other important metrics ๐
Back to the MOOMOO chart:
The figure uses purple lines to connect the high and low points of the finishing area, as follows:
101,84.81
97, 84.33
94.67, 88.46
94.98, 90.745
The difference is obtained by subtracting before and after:
16.19
12.67
6.21
4.235
High and low point gap%:
16%
13.06%
6.56% (met the conditions)
4.46% (conditions met)
Finally, a white line is drawn to break through the buying point, and the recent low uses a red line to indicate a stop loss.
Next, we use a $100,000.00 account as an account model. Swing trading corresponds to a reasonable stop loss range of 1% to 0.25% of the account
1% account stop loss = $1,000.00. You can buy 236 shares with a price difference of 4.235. The amount used: $22,427.00, accounting for about 22.42% of the position
and so on:
0.5% account stop loss = $500.00, corresponding to a price difference stop loss of 4.235, you can buy 118 shares. The amount used: $11,213.00, accounting for about 11.21% of the position
0.25% account stop loss = $250.00, and the corresponding price difference stop loss of 4.235 can buy 59 shares. The amount used: $5,606.85, accounting for about 5.6% of the position
The above uses the three predetermined account stop-loss percentages and the final price difference after the stock shrinks, so it is easy to calculate the size of the corresponding position that should be opened.
Obviously, the core of VCP is contraction. The main purpose of contraction is to reduce the price spread and reduce the stop-loss percentage, so that under the same risk management conditions, it can carry larger positions and obtain more potential profits.
Simply put, under the same risk of losing $1,000, $20,000 is obviously more profitable than $10,000 ๐
Finally, let's talk about account stop-loss percentage settings. There is no correct answer to this. As for daily chart swing trading with a cycle of 2 weeks to 2 months, it has been verified that it is reasonable to control it between 0.25%-1% according to personal style habits. Of course, you can also adjust this percentage according to the corresponding market situation and the excellent level of stock settings, so as to calculate the position you should use every time.
Joke: In the eyes of swing traders, VCP is everywhere ๐คญ๐
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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