Mastering the Minervini Low Cheat Entry
I use several entry strategies and setups in my trading, and I thought it would be useful to start a series covering the ones I actively trade and look for. You can find all current and future posts on trading methodology and strategy in the archive under the section “Trading knowledge”
One of my favorite entry strategies is the Minervini Low Cheat Entry. When it works, it allows you to enter a stock early, well before the actual base breakout. This means you can add to your position when the breakout occurs, maximizing potential gains. But price action analysis is key in trying to find a proper Minervini low cheat.
Why the Minervini Low Cheat Works
Early entry: Puts you ahead of the crowd before the classic breakout and therefore enables add-on buys if you are right about the setup.
Fast feedback: You know quickly if your trade is working or not which means no wasted time holding dead money.
Tight stop-loss: A well-timed entry allows for a small risk if the trade fails, because you focus on one distinct breakout candle and put your stop loss at the low of that candle.
High potential: When successful, the stock should move quickly away from your entry.
I’m currently watching a stock with very strong growth fundamentals that looks like it’s setting up for a Minervini Low Cheat move, I’ll share my analysis about that in the coming days.
How the Minervini Low Cheat Works
This setup is essentially an early entry within a cup-and-handle formation. Instead of waiting for a breakout from the handle, you enter at the bullish character change while the stock is still in the lower one-third to one-half of the cup.
The key is identifying a change in character, the moment when selling pressure is exhausted and demand is in control. When timed perfectly it is usually a great trade because you get in for a bigger move in a strong stock.
What to Look For:
Low volume at the bottom of the cup, signaling that sellers are exhausted.
Alternatively a shakeout, which is a quick drop of price on high volume below the lows, followed by an immediate bullish response. Sometimes the stock puts in a higher low on lower volume after that, before the setup is activated with the breakout candle.
A strong bullish candle on higher volume, breaking the low pivot.
A successful shakeout is a sign that institutions are testing supply. If weak hands are still selling, the stock will plummet further. But if buying pressure emerges immediately, it means the stock is ready to run and the stock is in demand.
Executing the Entry
Wait for the stock to bottom out in the cup.
Watch for volume patterns that confirm selling pressure is fading as described above (shakeout or very low volume low).
Enter on the first strong bullish candle, ideally on increased volume, that breaks the lower pivot point. It is common for stocks to tease the pivot point, therefore I personally always wait near the close before I buy to be sure that the cheat entry will be activated.
This setup takes patience and discipline, but when timed correctly, it positions you ahead of the breakout in a bullish stock and thus in a very powerful trading position. Lets look at some real examples.
Freshworks Inc.
Coca-Cola Consolidated Inc.
Nucor Corporation
Key Points
The stock must be in an uptrend, over MA 200 and preferably over or close to MA 50
Specially powerful when you see the setup in IPO-bases
Decent cup formation with round bottom, shallower cup is better.
As you can see it is the same pattern time after time. The same pattern will be present when we all are old and grey. Learn to master the Minervini low cheat entry to elevate your trading.
Daily charts. Good Hunting!
Charts from TrendSpider.
Disclaimer:The Setup Factory is not licensed to give any investment advice. The content provided in this email and from this Substack-account is my own thoughts and ideas about the stock market. It is for educational purposes only and should not be considered as any form of investment advice. Do not invest in any stock based solely on the information provided here. Trading stocks is highly speculative and involves a high degree of risk of loss. You could lose some or all of your money. You should conduct your own research and due diligence in any investment you do, to verify any information provided.