I received these questions from Reader Renato:

Hi Mike,
Hope this mail will find you well.
I watched your stocktwits video on breakout trades (AEM trade). Since that is one of the setups I find most appealing, decided to ask you something.
Very often, breakouts don´ t offer a lot of opportunities to enter the trade, since there is a huge move up/down with a lot of volume. Do you usually wait for retracements to the breakout level? or do you rely on your quickness to buy/sell at market after the level is breaked?
Other thing that I find most challenging is to determine the level it self. The 62 level for AEM was determing on a long term basis, so it is a rough number. Do you setup the exact level based on the tape from previous days/the trade?

Coach Bella Responds:

I love how you have identified a trade that is most interesting to you. We get better by finding the set ups that make the most sense to us and trading them with more size and more often. So excellent work here.

We just got out of a long teaching session with our new June class, where we discussed momentum trading. This was the first lecture I got in there grill for slow answers. I am sure some wondered why the shift to my demanding tone. The answer: to be an excellent momentum trader requires quick decision making. And it starts in our training room……today.

You must be fast to trade a breakout. Yesterday in V there were some scalp momentum trades to be had for the quick intraday trader. When the seller lifted, you paid, sold when the stock slowed and captured multiple 30-50c moves in V.

To answer your question about where to buy- you must buy immediately, right when the resistance lifts. This is how you buy a traditional breakout trade. If you are waiting for the pullback now this is an entirely different trade. You might have guessed it- Buying Into a Pullback Trade. That has a whole series of different if/then statements.

62 was a long term important technical resistance level for us in AEM. So when this level lifted we immediately bought. The less important the level the more confirmation you should seek from the tape as to whether the stock is truly holding above the resistance level.

We will be discussing momentum trading in more detail this week in our Trade of the Week and SMB University StockTwits TV Sunday show.