Ever had that feeling of watching a train leave the station just as you got there? Well, missing out on a big stock move can be a bit like that – you see a stock soar, and you’re left thinking, “Could I have hopped on that rally too?”
Don’t worry, you’re not alone. Loads of traders have been in the same spot. But guess what? There’s a way to catch up, even if you missed the initial move. It’s all about having a plan that can help you tackle this kind of situation like a champ.
So, what’s the game plan for this blog post? We’re here to guide you through the nitty-gritty of jumping into a stock after it’s already made a big splash. It’s not magic, but it’s a bit like solving a puzzle. We’re gonna lay it all out, step by step, so you’re all set to take on the challenge.
So, if you’re up for turning those “should’ve, could’ve, would’ve” moments into actual wins, get ready! We’ve got some trading wisdom that might just change your game. Get comfy, because we’re about to roll out some serious knowledge. Let’s do this!
How to assess the situation?
1. To start off, we need to grasp the situation. Picture a jigsaw puzzle, and we’re trying to fit the pieces together. When a stock makes a significant move, it’s like a puzzle piece finding its slot. First, check if the stock had a volume breakout, price breakout, gap up, gap down, pattern breakout etc.
2. Now, let’s play the role of an investigator. Our task is to uncover why this stock suddenly shook things up. Was there a major news event driving the movement? It could be the release of the company’s earnings report, a surprise announcement, or a shift in the overall market sentiment.
3. Moving on, let’s analyze the broader landscape. Imagine looking out at a panoramic view of the sector, local market and global market. Is the stock riding an upward trend, suggesting confidence and growth? Alternatively, is it caught in a downward trend, signalling caution and potential decline? Additionally, tune in to the general vibe – are investors treading lightly, or taking bold steps?
If you’ve spent years backtesting, paper trading, and monitoring stock trends, you likely have the ability to predict stock movements based on these factors. Therefore, evaluating the situation holds significant importance.
What are some things to watch for when trading stocks?
When you trade stocks, it’s important to consider things like your trading psychology, money and risk management, and your trading plan. But the most crucial thing is to enter at the right time.
Unfortunately, nobody can predict the exact timing all the time, but there are some rules you can follow to increase your chances of entering at the right time.
Why you might miss a big move ?
One reason you might miss out on a big move is if you’re not paying attention or if you’re looking at other stocks, taking a break, or reading the news. Another reason is you might miss a breakout with volume and momentum.
How to trade if you miss a big move?
To avoid missing out on big moves, it’s a good idea to try to identify potential entry points into the stock and to enter at the beginning of a move, even if there’s some risk involved.
If you miss a big move while trading, there are a few strategies you can consider:
- Look for a pullback: If you missed the initial move, you can try to enter the stock at a pullback. This is when the stock retraces some of its gains and provides a good entry point. Look for the pullback to be near a level of support or resistance, as this can be a good area of value to enter.
- Wait for a breakout: Another option is to wait for a breakout and try to enter the stock at a new high or low. This can be risky, as breakouts can often be false and the stock can reverse direction. However, if the breakout is strong and supported by volume and momentum, it could be a good opportunity to enter the stock.
- Consider other entry points: If you missed the initial move and the pullback, you can look for other entry points that might offer good value. For example, you can look for a trendline break, a breakout from a pattern, or a move through a key level of resistance.
- Don’t chase the stock: It’s important to avoid the temptation to chase the stock and try to enter at a high price. This can be risky and could lead to significant losses if the stock doesn’t continue to move in the direction you expect.
Risks and rewards of entering the stock late
If you’re not confident in your strategy and you keep waiting for confirmations, you may end up entering late.
If the stock continues in the same direction, you can book your profits and leave, but if it reaches its maximum price and starts to reverse, you could end up losing money.
If you have a stop loss in place, you’ll only lose a small amount, but if you don’t, you could lose a lot.
And if you hold onto the stock with the hope that it will reverse back, you could end up losing even more.
So, It’s safer to enter at the pullback of a breakout or trend.
Ultimately, the best approach will depend on your trading strategy and the specific circumstances of the stock. It’s important to remain disciplined and stick to your plan, rather than getting emotional and making impulsive decisions.
Lessons learnt
After many trials, errors and losses, I came to the realization that without controlling my emotions, nothing will change. ENTERING LATE is the No. 1 trap any beginner can fall into. I was so confident in my strategy that I solely focused on using it, but I overlooked the crucial fact that TIMING MATTERS!! Timing matters for both your entry and exit. You dont need to have a perfect entry or exit. Entering 1 or 2 points later is acceptable. I cannot stress this enough. Always stick to your strategy and enter and exit at the right time.
About Post Author
Resources & Links
Tradingview – Charting Platform
Zerodha – Trading brokerage platform (India)
Disclaimer
Trading involves substantial risk, and past performance is not indicative of future results. Always conduct your own research and consider seeking professional advice before making any investment decisions. The information provided on this platform about digital entrepreneurship is based on the author’s experiences and industry knowledge. It should not be considered as financial, legal, or business advice. Please consult with experts in these fields before making business decisions. This blog may contain affiliate links, and we may earn a commission if you make a purchase through these links. Your support is appreciated.
