Breakout Strategy turned 9k into 82 Million!
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In this video we review the trading strategy and concepts from the Swedish swing trader Kristjan Kullamagi.
Kristjan is a self-funded independent trader who has amassed tens of millions through his breakout strategy.
To measure the magnitude of Kristjan’s success we found that his trading account in 2013 stood at $9100. By 2018 this grew to 1.4 million, and in July 2019 it grew further to 4 million dollars.
As of March 2021, Kristjan’s account stood at 82 million, an astonishing achievement by anyone’s standard.
Today we look at his specific setup criteria and concept.
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Like most of us, Kristjan’s path was far from plain sailing. He started in 2011 as a day trader, and managed to blow up his trading accounts on four occasions during the first two years.
He later moved away from the lower time frames and viewed the action from further out to become a swing trader.
“I started moving away from day trading to swing trading since I realized the potential is so much bigger there”
Before we look at the strategy which has netted Kristjan a fortune, let’s first determine what he says about position sizing and risk.
Kristjan says you should never have more than 30% of a position held overnight, suggesting that his position sizes fall between 10 and 20% of account size, and his risk per position ranges from 0.25 to 1%.
Therefore, if we assume an account size of $100,000, the position size would be between 10 and 20 thousand dollars, and the risk per position would be between 250 and 1000 dollars.
Kristjan does however point out that when his account was less than a few million dollars, he used a slightly higher risk of between 0.5 and 1.5% risk per position, a risk percentage I tend to use myself.
Alluding to his failures in the early years, Kristjan said:
“At the very beginning I risked more still, but honestly I had not a great grasp of the concept risk and position sizing”.
Now let’s look at the set-up he uses.
The breakout trade is Kristjan’s preferred strategy, and he lays the foundation for his approach by saying:
“If you study thousands of the biggest winning stocks over the past 100 years they tend to move in stair steps, meaning they will make a 20-50%+ move, pull back and go sideways for a while, then make another move.”
Kristjan uses the daily chart, initially looking for a big move within the last 12 weeks, ideally moving between 30 and 100%.
The next step is to look for an orderly pull back into a consolidation, the consolidation can run between 2 and 8 weeks.
During the consolidation the price surfs a rising 10 and 20 day moving average, with the 50 day moving average not too far behind.
Kristjan’s advice is to enter the long trade as the stock starts to break out of its consolidation.
He uses the low of the day as the stop loss position, also considering the range of price movement to ensure the risk reward metrics remain sensible. For example, if the Average True Range of a stock is 5% then the stop loss should never be greater than 5%.
In terms of managing the trade thereafter, Kristjan suggests selling between one third and one half of the stock between 3 and 5 days after entry, and then move the stop to breakeven.
The remainder of the position should then have a trailing stop governed by the 10 or 20 day moving average, depending on how fast the stock moves.
The trade would be closed if the price closed under the moving average.
That is the concept behind Kristjan’s approach, but before we move on to some of his real chart examples, I would like to take the op