Ask Colin

If I place a limit order after a breakout, I often never get a fill. What is the best way to get in after a breakout?

I don't think that there is any perfect answer to this question. Usually, Murphy's law applies. The ones you miss never look back. The ones you get into fall through your stop.

One reason this happens is that the really strong ones never have much of a correction. The ones that fail always come back and are easy to buy into. The majority form a correction that allows a good entry. The trick is to make sure you get on your share of the really strong ones somehow and let your money management deal with the ones that fail.

The way I do it is to buy an initial lot on the breakout (usually one third to one half of my ultimate position). I buy it "at market". You can give exactly that order to a broker on the phone or just hit the offer if trading live on the Internet.

If you put the order in on the Internet before the market opens, you need to check it after opening, as some markets can change very quickly. Also there are some tricks traders get up to before the market opens - placing orders that give a false impression of market depth, but pull the orders off just before the opening.

Then I complete building my position on a pullback and/or when a new high is made after a correction, thus confirming the trend. I describe this process on my videotape.

The idea is to get set in case the market never pulls back, but keep the risk smaller if the breakout fails.