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Figure 13.9
The Smart Buy
Copyright 2000, TradeCast® Ltd. |
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three days of lower and lower prices, the buyers are poised to jump in to take advantage of these bargain prices. You want to be ready when the buyers bring their pressure to bear on this stock. |
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Then you want to see higher than average volume on the last trading day, which is a good indicator that a change of direction is at hand. |
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How Do You Trade the Smart Buy? |
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You set an entry point at 1/8 above the high of the last trading day (see 5 on chart). This is to be certain that the old high has been taken out, which indicates that the buyers are ready and willing to move the stock higher. |
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You set your initial protective stop (IPS) 1/8 below the last day's close (see 6 on figure). If that is too big of a risk for you, you may choose to set your IPS 1/8 below the low for the current trading day. In either case, you set this IPS to give enough room to |
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