Tips For Trading Breakouts From The Benzinga Options Boot Camp

This special presentation from Gianni Di Pocce is from Benzinga's first-ever virtual Benzinga Options Boot Camp, which took place April 18. Click here for more coverage of this event with options trading experts giving traders of all experience levels real, dependable strategies for hitting the ground running or expanding an existing portfolio.

Gianni Di Pocce, a financial analyst and chief editor of Benzinga’s Breakout Opportunity Newsletter, presented his strategy for acting on the most rewarding opportunities in the market at the virtual Benziga Options Boot Camp on Saturday.

Di Pocce's Trading Principles

When trading an almost $200-million portfolio at a large institution, Di Pocce said that consistent profitability comes with risk-oriented, rule-based trading plans.

“My principles provide a framework in which to operate in the market,” he said. “I’ve studied dozens of hedge fund strategies and tied it together to create my own strategy centered around buying breakouts.”

Pocce’s key trading principles include the following:

• Trade only identifiable chart patterns.
• Never risk over 20% of an account.
• Stop losses at 7-8% away from the entry.
• Never add risk to losing positions.
• Place less emphasis on the daily news.

After developing an executable plan, Pocce said he uses the Benzinga Delta Factor Analysis to trade only stocks with an identifiable chart pattern, volume accumulation and relative strength.

“The three Delta Factors are our bread and butter,” he said. The Delta Factors put traders on the side of institutional interest, he said.

“We want to trade with institutions, not against them.”

An Actionable Trade From Di Pocce

Di Pocce highlighted NIC Inc. EGOV, a digital service provider for federal, state and local governments, during the Boot Camp. 

The stock suffered a massive fall before making a 100% retracement to its highs.

“The story makes a lot of sense,” he said. “As we’ve faced quarantine and mandatory shutdowns, businesses have been forced to digital solutions.”

The stock is primed for a breakout due to an identifiable broadening bottom pattern, increasing volume and relative strength compared to the rest of the market, Di Pocce said. 

If the stock were to break resistance on increased volume, he said he'd trade it on the long side.

Photo by Lukas from Pexels.