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The Rules of a Professsional Stock Market Trader

Posted on March 6, 2023 by Donald Travers

In today's market the large institutions are buying shares by the millions. This can be a huge demand on the stock so when demand is high the share price rises. THEREFORE I be sure that the stock has been bought by institutions. This appears as high volume. Because the institutional buyer doesn't need it each one of these shares simultaneously and drive the purchase price too high in a single day, they'll normally purchase shares as time passes, sometimes weekly or perhaps a month as well as several months. You can find so many institutional buyers that while they're purchasing the volume increase dramatically as time passes.

This volume is seen on charts easily. I watch out for a rise in cost on increased volume at least four days in a row. I sometimes use three days, but that's much riskier. On a chart you will notice the rise in stock price and the increased volume for only three to a week. Then your stock may cool off a little or flatten out for from a couple of days to per year or even more. This flattening is named a base if the share price remains in a good trading range. This appears to supply the share price energy. If the business continues to execute well you will have a breakout on the price tag on the stock also it could skyrocket dramatically in a brief period of time. A breakout is once the high indicate the left of a base is reached again and on large volume rises above the prior high. It is a perfect buy point.

Try never to choose the stock after it reaches far above this buy point. You'll usually only have each day or two to get the stock at an ideal buy point. If it extends too much there exists a chance the breakout will fail and the price tag on the stock could easily fall back again to or below the bottom, so be cautious. An extremely strong stock will rise, flatten for a short while of from 3 days to 3 weeks and breakout and skyrocket again. This can happen many times so are there what looks to be tiers to the chart.

These are breakouts with different buy points. The more breakouts you can find the more risky the purchase in the event that you purchase following the 3rd breakout. The institutions may begin taking profits in larger groups now and the purchase price will begin to fall or flatten into another base. The amount of time of the bottom varies so a solid company share price may progress quickly just like the example I give above or the bottom may last for an interval of months or years and become harder to identify. Look at different schedules of the charts which means you have an obvious overall picture of where in fact the technical clues stick out. Needless to say any stock may skyrocket just like a rocket and appear to go forever, but what rises must drop and a stock that rises such as a rocket usually falls like one too. The hard part is guessing when this fall may happen. As possible probably tell, I can't stand to guess where money can be involved.

When you've got a profit of 20% in a stock be sure you never contain the stock before profit is erased. Sell before that occurs. I'll sell a stock once the price backs off on higher volume for 3 to 5 days. If the stock loses 5% to 8% soon after I purchased it, I am going to sell the moment I can. For those who have that 20% profit though, await the bigger volume sell signal. Sometimes the institutional traders will attempt to shake loose the weak, timid and scared shareholders from their shares and drive the purchase price higher again. That is called a shakeout. This can only happen on low volume so watch out for the falling share price on higher volume. This can be a true sell signal.

The higher your percentage gain the more room you need to maneuver so far as selling or holding the stock can be involved. If the sell signal doesn't come it is possible to allow it ride but watch carefully in the later breakouts. After three or even more breakouts the steam could be gone. You might desire to recoup your original investment by selling a few of your shares and letting the others pick up any longer gains or hold for an extended term investment. Or you can sell enough to get a decent profit and let an inferior percentage ride. Watch out for the sell signals and allow rules show you. In the event that you sell all of your shares for a 20% or even more gain, don't worry. Nobody gets broke going for a profit. Five of the trades per year and you also have doubled your cash.