I was looking at this stock for a couple of days thinking it was going to breakout which it unfortunately did today. I didnt want to put in a oder until i was sure that this stock was going to do what i thought. However i had to leave for an emergency and came back to this. Im just curious is it bad to chase after a stock, some pros have told me dont do it even if it continues. just leave it. Be disciplined. Its an absolutely important rule Others have told me do what your gut and ta says. What do you guys think?
You've figured out the behavior of the stock. Unless the behavior changes, don't bother with it. If it broke out to the upside, then...maybe...chase it. But the high volume at the price spike already tells you that there is resistance to it breaking out again. Find a stock with upward momentum and ride it...waiting for breakouts is risky.
thank for that! but how would you figure out if price has spiked? Should i relate that to the daily chart and check previous highs?
What causes stock prices to spike is simply more buyers and sellers. This typically happen when positive news about the company that was previously unknown suddenly enters into public knowledge.
Ah i see. How do you know a price has reached its top?? Is there a good way to tell when the price has peaked? I know that watching for signs is a sure way but what about if i want to place a sell order. How do i tell how high i should put it?
"Chasing" is one of the fine arts of trading/investing. Every big move involves one/multiple breakouts of support/resistance. If you didn't get your play on sooner, your choices are to either chase or pass. Of course you can chase and get sucked into a whipsaw. Then again, if you don't chase you can miss a big move. Two sides to every coin.
Can't be known until looking in the rear view mirror. You can play possible tops, but the percentage of success likely will be low. Best not to get your bear mind-set on until the market/issue has actually done something which is possibly bearish. When you know the top is in, the market/issue is waaaay past a good place to play it.
If the price is rising much faster than normal and Volume is rising super fast, it's a spike. Where it will end will always be the hard part. That's why many traders set a trailing stop, and tighten it as the price goes higher and higher. Here's what I suggest. The stocks that are most likely to have a nice price spike during the day are stocks that are recovering from the week. Find your stocks by first looking at a candle chart where each candle is one day, or one hour. When you see that the stock is on an upward trend, only then should you look at the minute by minute candles and play your hunches. The odds will be more in your favor if you are trying to day trade a stock that is on a day-to-day upward trend.
Watch the rsi rise above, say 80, for the overbought signal and consider buying some puts. Grab some profit on the decline.
see my post linked below on breakouts. http://www.elitetrader.com/et/index...potential-breakout.293197/page-3#post-4157562