There’s a saying that goes something like…
“A smart person learns from their mistakes, but a truly wise person learns from the mistakes of others.”
If you’ve been reading my advice for any length of time, you know how obsessed I am with my Trading Roadmap.
I consider it a life saver to help me navigate the rough and bumpy roads of the markets.
If you want to find lasting success in any endeavor… you need a map so you know if you’re heading in the right direction.
But everyone makes mistakes, takes a wrong turn, or needs a course correction.
The key is, you’ve got to find a way to learn from them.
Or, if you’re really savvy… to learn from the mistakes other people make so you don’t have to shoulder the cost yourself.
Let’s take a recent case study in Rivian (RIVN) as an example:
Stock Chart
This is a classic pattern we’ve seen for the last two years…
The stock has a huge IPO, it rallies for about a week, and then it finds itself at much, much lower prices.
Yet during that time, it’s developed a new “Point of Control,” which we can see by the large volume peaks on the right:
Stock Chart
Now, let’s step through some simple concepts.
If you bought this stock right on its IPO, you were happy for a week, and you’ve been miserable ever since.
Heck, you’ve probably been waiting for a pop to sell into.
When the vast majority of your investor base feels like that, you get a strong bear trend.
But… for every seller, there is a buyer. And if you had an investor that panic sold at 30 bucks, it means there was a buyer who now owns at that price.
If you get enough changeover in the investor base, then the stock’s behavior changes.
It no longer operates from a position of weakness, and breakouts start to work a lot better.
Now here’s where it gets fun… a lot of people don’t want to buy the stock at 100 bucks… but when it trades at 30, it means you could buy 3x the amount of stock for the same capital that someone else put in.
Volume can change hands much more rapidly, and now you’re set for huge breakout potential.
This is another one in our VWAP clearout strategy
If you want to know more about how we discover big market moves on key volume levels in the markets on a consistent basis:
