Top 5 Stock Entries: #1 - Change from Open
And the top decision maker for a stock entry positions is... Change from Open.
Not many traders would think that Change from Open is the most important determinate for a stock entry position – of course we’re talking about the average, not rich, trader. Here’s why it is so important:
The core principle for becoming successful in stock trading is to look past the rampant greed and the fear and instead make your investment decisions based on basic business concepts.
Most traders cannot control these basic emotions, which results in significant spikes and dips in the market without substantiating news.
Their uncontrollable emotions presents a golden opportunity for us. We sell when greed is high and we buy when fear is high. Later when the average traders are calming down and the stock price corrects itself, we have already made our profit and exited the position.
To identify these golden opportunities we need to be on the lookout for significant Change from Open movements. On my online brokerage I maintain a Watch List of undervalued stocks. When one of these stocks takes an unexpected dip down I buy in (assuming no substantiating news came out that warrants the dip).
Not long after the stock usually corrects itself, moving up a few percentage points. This is where I sell and reap a profit.
Performing this tactic on a frequent basis means you are frequently compounding your gains, which as you know from my book, is the way people become rich in the market.
Invest wisely and earn your freedom.