When you state specific volumes to watch for on breakout, or a buy point, is that a volume number for the time of breakout or buying, or is it on the entire day's volume? (April 30, 2001)
It is the volume for the entire session. We are looking for the volume to be in that neighborhood when the day is done. Of course, that means we will many times be taking positions without really knowing what the final volume for the day will be when we see an early breakout over resistance levels. At that time we look or ask our broker what volume is; we already know what we want it to be for the day and we can make a comparison. Most likely it won't be near where we want it to be, but we can ask if there are a lot of block trades or at least a good jump in volume. If we are not comfortable, we can wait a bit and see if volume is jumping. We can check www.investors.com (for IBD subscribers) to see where it is this session in relation to the 50 day MVA. We like it best when volume is strong and the stock breaks out later in the session; that is a clear buy.
In summary, when a stock breaks through the buy point, we usually look for a surge in volume. We either see it on our screen or our broker tells us that is happening. We then make the play. We also put in buy stop orders a quarter point above the breakout when we are not going to be around based on the idea that if it breaks that level it will most likely be on strong volume. If we are wrong we simply have to use stop losses to protect us. It is reality that we cannot watch the market all day every day; we do not want to. We pick our buy points carefully as we want to be able to buy with confidence whether we can watch closely at the time or if we are relying on our brokers.
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