How are “buy points” determined?

Aug 05, 2021 08:47 PM 0 Answers
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Thanks so much this excellent service and sharing your insights/analysis.  Really enjoying it!

Can you please provide some information about how "buy points" and "sell points" are determined?




Thank you for this excellent question. I am sure many in our community have this same question.

I will include the AMD chart because it had three possible buy points. The standard buy point is the old high of $99.23 before it formed a base. This is the safest buy point because there is no overhead supply. That also makes it a far less risky buy. Many growth managers will NOT buy a stock until it can make a new high.

The "early entry" buy point of $89/20  is most risky because it is still in a base. This buy point is far more risky because the stock has not proven itself, and has overhead supply to absorb.

The high in the handle is another buy point and the risk is less than an early entry of $89.20 but more than the standard buy point of the old high $99.23.   The decision to buy is all about how much risk you want to take. I like being aggressive and got shaken out the first time buying at $89.20, and had to buy the stock back when it traded through that area a second time.

The swing trader is likely to sell at 10% and almost surely at 20%. It has been proven over time that most mature stocks break out of a base and run 10%-25% before forming another base. AMD was up more than 20% from a standard buy point, and many folks were selling as you saw today.  If you are NOT a long-term holder, then a 20% gain is phenomenal. Take the money and move on to your next trade.  The  20% trades will compound in your account quickly. There is nothing worse than watching a 25% gain turn into a loss. That is why we take profits at 10%-25% most times.

I hope this answers your buy/sell question.

Now let's find the next AMD...



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