Qullamaggie breakout
After a strong move, a tight consolidation that respects the short averages often breaks out again. Buy the break with a stop at the low of the day.
Try Qullamaggie breakout on a real day
A real market day with the date hidden. Run the checklist on the chart, then buy, sell or stay out: the real candles answer.
Check every point of the list before you decide. Stay out if the setup is not there.
Kristjan Kullamägi has shared his breakout setup openly on streams and his blog. It is a swing-trading method for momentum stocks, close in spirit to the work of William O'Neil and Mark Minervini.
Why it works
Leaders make big moves, pause in tight ranges and move again. The consolidation is where the shares change hands from short-term traders to longer-term holders.
Small, tight candles with falling volume during the consolidation show that sellers are absent.
The rules
Setup
- A prior move of 30% to 100% or more in the last one to three months.
- A consolidation of 2 to 8 weeks with higher lows, riding the 10 and 20-day moving averages.
Entry
- Buy on the break of the consolidation high, using the opening range high of the breakout day.
Stop loss
- At the low of the breakout day; never wider than the average daily range.
Exit and management
- Sell a third to a half after 3 to 5 days; trail the rest with the 10 or 20-day average.
Filters that improve it
- Trade only when the general market is in an uptrend.
- Prefer the strongest stocks of the strongest groups.
Worked example
Illustrative stock example: a stock rallies from $20 to $35, then consolidates between $31 and $35 for four weeks, holding the 20-day average. On breakout day the first-hour high is $35.40: buy, stop at the day's low $34.20. A third is sold at $40, the rest trailed.
Illustrative numbers, not a recommendation.
Common mistakes
- Buying loose, wide consolidations.
- Holding through a break of the 10 and 20-day averages.
How to practise it
In Candlemind choose a stock market, write 10 and 20-period averages in My indicators on the daily chart and grade each consolidation as tight or loose before acting.
Pre-trade checklist
- Strong prior move
- Tight consolidation with higher lows
- Price riding the 10/20 averages
- Buy the opening range high
- Stop at the low of the day
Frequently asked questions
Who is Qullamaggie?
Kristjan Kullamägi, a Swedish swing trader known for sharing his momentum setups openly.
What are Qullamaggie's three setups?
Breakouts, episodic pivots and parabolic shorts.