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On my previous blog post, my topic was on “What goes up Must come down!” which if you’ve missed it you may read it by clicking on the link above.
What happens when you BUY stocks at its Price Retracement?
- The stock prices does not move up on a straight line as it will consist of rallies and price retracement.
- Being an investor/trader you will want to BUY when stock prices are at their price retracement. This is to ensure yourself that you can set your Stop Loss point easily at a lower risk COMPARED to buying at high which increases you risks of losses. Being able to buy at a price retracement will put you at a position of buying low which, as the price starts to rally up you will be the biggest winner sitting on profits instead of thinking if you should chase the rallying price of the stock.
- If you pick the right trend of the stock when it comes to buying at its price retracement, for example; (An Uptrend Stock will create Higher Highs and Higher Lows over a period of time.) You know for sure that as you buy at its price retracement it’s price will eventually create higher highs for you which mean you will make bigger profits in a matter of time! Compared to, for example; (A Downtrend Stock will create Lower Highs and Lower Lows over a period of time.) You will know that despite buying at every price retracement, each rally will be short lived and eventually falls back lower creating lower lows causing you to make ample of losses.
- Don’t be too short term minded in terms of whenever your stock starts making profits you will wish to sell it off A.S.A.P. Look at the bigger picture of the chart through using Technical Analysis and it will helps you to understand what you are doing in the stock market.
Stocks mentioned on our previous blog
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“What makes me determine the stock is a UNPRODUCTIVE STOCK vs PRODUCTIVE STOCK”
(10 Years Position Stock Trader | Founder of trendfollowingmalaysia.com)