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Understanding How And At what time to Purchase a Stocks Make your Trading Rules to enter stocks very simple and easy to implement. Only trade on breakouts which are in fact added corroboration of an upward pattern. Don't worry, there are way more than enough of those going around. Trading on reversals, though potentially tremendously profitable, calls for one to be quick. Numerous reversal signals on an established uptrend sometimes present only a quick and small opportunity for profit as the equity often yet again reverses and continues on its upward march. Some reversals on a robust and firm uptrend are in fact simply Bear Market Traps. Similarly, a number of reversals on an established sliding trend are essentially Bull Traps. Stick with your Trading Rules and trade on Breakouts which are confirmed by higher than average volume. Enter stocks with half of your position. Put in the other half only when this breakout trend is confirmed. This is very distinct from Dollar Cost Averaging where you put in a certain amount of money at given intervals whether or not the equity is moving up or down with the idea that the exact same sum of money buys more as the equity gets cheaper and less as it gets more pricey. In trading, there are no predetermined time to originate or add to a position. The stock's chart pattern tells you when to enter stocks and when to sell them. At that moment, come in on the trend or breakout continuance of that trend. The best way to do this is to observe multiple stocks that are building trend patterns and making new highs that can result in a breakout. Set Alerts just higher than probable breakout points. Once an alert goes off, check to see if there was more than normal volume. If corroborated with above average volume, there is your breakout and your entry point!!! Knowing When To Exit Stocks For an Open Position A primary part of your Trading Rules are your exit stocks rules. These are quite as essential as your entry rules and must be established at the time you institute your position. Listed beneath are some rules to follow. - Do not let your human emotion get you attached to any stock or position. - Do not continue to hold them if they violate the parameters you set. Don't hold them just 'cause you like 'em. Leave the emotion out. Period! You should get out when a stock losses its momentum and starts to move side ways or down. - You also want to protect yourself in the event the stock moves against you. Sometimes they move against you right at the start of your position. Yes, you will have some of those. One way to do that to use Stop Losses. Set your stops about 3% under support. As your position improves, place you Stop Loss higher. Some Brokerages have Trailing Stop Orders that could automatically do this for you. - The moment you start your position, enter your exit stocks position with a Good Till Cancel order. Have a profitable stock trading folks. Further Reading:
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