What are some things to watch for when trading stocks?
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.