Methods of Taking entries in stock: Breakout trading vs Pullback trading

There has always been debate on the method of taking entries on stock. Some traders say they trade when breakout occurs, some say they take entries when stock gives pullback or rallies against the trend. Both of these methods works, but it depends on the stock’s beta value. If stock is high beta stock then I will take entries on breakout, as high beta stocks will not give me pullback to for some time. Below is example for trading a breakout.

Trading a breakout

Where as for low beta stocks, I will wait for stock to rally against the trend to take my positions, point is since it is low beta stock breakout will not attract much of attention as breakout will soon fade. Now in this we use Nifty spot to compare the beta value, if you are using Amibroker, here is  freely available AFL for getting beta value. See how to trade a pullback.

trading a pullback

General rule must be If stock has beta value less than 1 it is low beta stock, and if it is higher than 1 stock is high beta stock. Now you can learn technical analysis online from us, for  more details call +91-9970777789.

About Bhaveek Patel

Bhaveek Patel is a technical analyst and investor, his areas of interest includes stock market, forex, gold.


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