First never buy a stock after a 3rd day run-up.
Here is a usual scenario on how this may come about..
After a stock has been going down or trading flat it suddenly one day starts going up. It continues up that day. And the next day it also continues up. Then on the 3 day it goes up but for only the first 15- 20 minutes then it drops for about 30 minutes then turns back up but doesn't quite reach the morning high. Then it turns down and it is over and in most cases this stock has finished it's 3 day run.
This program will work in most cases and does apply.
If you're a buyer it keeps you from getting emotional into buying a stock that is ready to peak and drop right after you bought it,which I'm sure many of you had this happen when buying stocks. If you already own it it gives you the timing to get out with usually the best profit or close to it. Which ever you are, decide whether you want to buy it after the drop. Depending on the stock it can drop for a few days, and may take some time until the next 3 day advance.
The rule is here to simply let you know it is over for now.
The next time someone mentions a stock look at a chart and see how many days it has been going up. If it's not the first day or maybe second day of the run-up stay away for now.In the 15-20 minutes after the open of the 3rd day it usually will drop or in most cases.
Although the system is not perfect it does help in timing.
Sometimes a stock continues up until 20 minutes after the open of the 4th day before it drops. Selling your stock 15-20 minutes after the open of the 3rd day of the run-up is usually the top or close enough. You will go broke trying to find the exact top or what many refer to chasing,forget about it and leave your emotions out of the trade.
And how does this help in buying??
Well, that is a little more difficult,but the system does work.It is mainly there to protect you from being a "stock chaser". But I do use it to buy.
Go to any stock website and look up a few stocks that are up....Jot them down...I only do this with OTCBB market stocks.
Next, I take stock picks and go to stockscore (this is what I use) or any other chart to look at a 5 day history. The 5 day gives you a nice feel of the trading chart of the last 5 days. Notice why the 5 days compared to the 3 days,this is so you will see the up or down on the 2 extra days and can avoid the pick. Look to see if it is the first day of the run-up. If it is the second or third day on an up swing forget about it since the above method is done on these stocks.
If I have any choices left then go to a chart to see a 1 year and a 30 day chart to get a feel of what the stock has been doing.Keep in mind that the past is no bearing on what a stock will do in the future,but it will give you an idea...This also helps in determining what if any reason for volume and price spikes or drops..Stockscore allows your cursor to move along the graph for pertinent data with actual numbers.
My last stop is always the message boards and my favorite is RB but there are others.It is here where you can get a real good idea why there is interest or reason for lack of..
After you have made your picks on which ones to buy,I have found that mid-afternoon is always an excellent time because of lunch and the morning rush has calmed down.And mid-afternoon is slow before a strong rally that many times comes before a close.I have found mid-mornings are also good for buying,but it still leaves many with high expectations that moves a stock for no other reason than emotional buys and it is this play that you want to stay away from.
Now stay on top of your picks and see if the next day it has moved up and volume..Determine if the highs are higher than the close and higher than the highs of the previous day.
On the third day I sell it 15 to 20 minutes after the open to take advantage of the morning gap. That's it.If your inclined to trade the same issues again,wait for the next above program cycle.
Not all stocks go up for 3 days. Some just flatten out.when this happens just get rid of it after about 15-20 min. after the open on the 3rd day.If you fail to exercise this you will be left with major % loss and may never recover..So the little loss is much better than an overall wipe-out.
Stocks that suddenly go up if you see there has been almost no volume the days before the sudden rise. That is usually a sign that a newsletter picked the stock or all of a sudden it is being pumped or hyped.The lack of previous volume makes the stock Spike up.
This 3 day rule is a universal application and to each it's own method of how one should conduct such a process..
Good luck and solid trading and as always apply sound DD..
Here is a usual scenario on how this may come about..
After a stock has been going down or trading flat it suddenly one day starts going up. It continues up that day. And the next day it also continues up. Then on the 3 day it goes up but for only the first 15- 20 minutes then it drops for about 30 minutes then turns back up but doesn't quite reach the morning high. Then it turns down and it is over and in most cases this stock has finished it's 3 day run.
This program will work in most cases and does apply.
If you're a buyer it keeps you from getting emotional into buying a stock that is ready to peak and drop right after you bought it,which I'm sure many of you had this happen when buying stocks. If you already own it it gives you the timing to get out with usually the best profit or close to it. Which ever you are, decide whether you want to buy it after the drop. Depending on the stock it can drop for a few days, and may take some time until the next 3 day advance.
The rule is here to simply let you know it is over for now.
The next time someone mentions a stock look at a chart and see how many days it has been going up. If it's not the first day or maybe second day of the run-up stay away for now.In the 15-20 minutes after the open of the 3rd day it usually will drop or in most cases.
Although the system is not perfect it does help in timing.
Sometimes a stock continues up until 20 minutes after the open of the 4th day before it drops. Selling your stock 15-20 minutes after the open of the 3rd day of the run-up is usually the top or close enough. You will go broke trying to find the exact top or what many refer to chasing,forget about it and leave your emotions out of the trade.
And how does this help in buying??
Well, that is a little more difficult,but the system does work.It is mainly there to protect you from being a "stock chaser". But I do use it to buy.
Go to any stock website and look up a few stocks that are up....Jot them down...I only do this with OTCBB market stocks.
Next, I take stock picks and go to stockscore (this is what I use) or any other chart to look at a 5 day history. The 5 day gives you a nice feel of the trading chart of the last 5 days. Notice why the 5 days compared to the 3 days,this is so you will see the up or down on the 2 extra days and can avoid the pick. Look to see if it is the first day of the run-up. If it is the second or third day on an up swing forget about it since the above method is done on these stocks.
If I have any choices left then go to a chart to see a 1 year and a 30 day chart to get a feel of what the stock has been doing.Keep in mind that the past is no bearing on what a stock will do in the future,but it will give you an idea...This also helps in determining what if any reason for volume and price spikes or drops..Stockscore allows your cursor to move along the graph for pertinent data with actual numbers.
My last stop is always the message boards and my favorite is RB but there are others.It is here where you can get a real good idea why there is interest or reason for lack of..
After you have made your picks on which ones to buy,I have found that mid-afternoon is always an excellent time because of lunch and the morning rush has calmed down.And mid-afternoon is slow before a strong rally that many times comes before a close.I have found mid-mornings are also good for buying,but it still leaves many with high expectations that moves a stock for no other reason than emotional buys and it is this play that you want to stay away from.
Now stay on top of your picks and see if the next day it has moved up and volume..Determine if the highs are higher than the close and higher than the highs of the previous day.
On the third day I sell it 15 to 20 minutes after the open to take advantage of the morning gap. That's it.If your inclined to trade the same issues again,wait for the next above program cycle.
Not all stocks go up for 3 days. Some just flatten out.when this happens just get rid of it after about 15-20 min. after the open on the 3rd day.If you fail to exercise this you will be left with major % loss and may never recover..So the little loss is much better than an overall wipe-out.
Stocks that suddenly go up if you see there has been almost no volume the days before the sudden rise. That is usually a sign that a newsletter picked the stock or all of a sudden it is being pumped or hyped.The lack of previous volume makes the stock Spike up.
This 3 day rule is a universal application and to each it's own method of how one should conduct such a process..
Good luck and solid trading and as always apply sound DD..
