Entry Point...

As in the case of timing the exit point , the entry point poses equal challenges....

No matter how 'hot' a stock is ,if you don't get the right entry point( price ) you will either

not make profits or worse can actually end up with a loss instead. Many years of watching how

retailers invest or trade have reaffirmed this...." I will only buy in when a definite uptrend has been

established " This train of thought seems logical in the context of a healthy robust or outright bull

market where demand breeds on itself  ,becomes a self fulfilling prophecy and until the music stops

everyone goes home happy ! ...Regardless of the trading technique ie chart or fundementals etc, the

average investor normally loves the surging volume and price as the "trigger " point for entry and more

often than not would end up buyimg near the peak if not the peak price itself and watches with despair 

as the price inevitably recedes over time or collapses  within a blink of an eye....the more savvy would

probably escape this "sickening feeling"...

There is no iron clad method of preventing a bad entry point ( and consequently a bad trade ) but a few

basic pointers may include the following.....( assuming current market conditions )

a ) if a share has already moved up by one to two bids ,chances are the PDTs or the bulk purchaser ( day trader ) will probably unload the share for a quick profit ...

this action will naturally dampen sentiment and put an end to the uptrend unless a real basis for a push exist eg major contracts , super profits etc...

It may be better to skip the counter altogether than chance an entry at the higher end....and get caught...

 b ) Watch out for counters whose price seems to hold steady in a broad market weakness and depending on your

 risk appetite make an entry if volume continues to increase steadily over the day....could certain parties be collecting

 during market weakness and thus giving an air of steadiness to the share price ?

c ) If a disclosure before or during trading hours on a particular counter seems positive ( in your best judgement ) eg profits

above analysts' expectations ,then you may want to make a calculated entry risk..if the counter has yet to move up in a

meaningful way ,or better still not at all....

d) on the other side of the spectum ,a counter that has seen continuous price drop over a few sessions or within the same

trading day could provide a good entry point if there are no exceptional reasons for its drop  ( eg adverse financial condition ) other

 than profit taking or contra due date selling....

Last but not least it is always prudent to remember that what goes up must come down ( somewhat ) and with that in mind never hold on to a share forever ( except possibly a handful of super high yielding blues chips ) ...if u miss the first ride ,wait it out....

Note : 

Chris Choo will be giving a talk on Price Action Technique (PAT) on Saturday 15th December 2012.

Date : 15th December 2012

Time : 9:30 am - 1:00 pm

Venue :

Unit 809 Block A

Lift Lobby 3

Damansara Intan

No. 1, Jalan SS20/27

47400 Petaling Jaya

Fees :

RM 250

For further inquiries, please contact Julie (012-2009389) to reserve your seat. First come first serve basis.

Thanks.

Chris Choo