A lot of traders are afraid of buying stocks when they see that the price is already high and the RSI level is already overbought (RSI is greater than 70).

What’s my take then? For me, it is okay to buy stocks even on high prices, so long that you are confident that you can sell it higher. You have to take a look carefully at the chart before doing so, and you should know the possible target price where you can sell.

Yesterday, (June 08, 2016), my personal “screener” gave me a signal to buy Double Dragon (DD).
stmp_screener
I tried to look and examine the chart.
dd_chart_1
At first, I was hesitant because the price is already high. Then I made up my mind and decided to bid during the Pre-open today (Do not do this if you do not know how and you do not know what you are doing! You might lose some money. ).

When the market opens, I then have DD in my port:
DD_covered_green_enter_price.png
and since my mind set for this is “swing trade”, I already made an exit after several minutes and took my 8.82% gain.

DD_covered_green_exit_price

DD_covered_green_exit_price

Why? Because I do not want to trend follow this stock. Well, I could have. But I do not want to change my trade plan. When I say short term, I have to stick with my plan, and there’s no looking back para hindi ako manghinayang later on (LoL!) . :D

What’s my point of doing this article? Para magbida na nakakuha ako ng 8.82% gain in a few minutes? Hindi. The main point here is, you can buy a high priced stock IF and ONLY IF (Naks natutunan ko yan sa Geometry namin nung H.S.) you are confident that you can sell it on higher price.

Isa pang lesson? Don’t listen to hypes ng ibang traders. Because you might find yourself “ipit” in a bull trap.
bull-trap.jpg
Masakit ang maipit. In DD’s case, kawawa yung mga nakabili sa bandang price na 80 at nag-cut loss dahil natakot na baka lumaki pa yung loss nila noong biglang bumagsak ang presyo (Look at the wick or yung shadow na na-form from price 80 pababang 70. Meron bang hindi magho-hold at matatakot? Yes, meron. At sila nga yung mga “naipit”.


Keypoints:

  1. Buy Low, Sell High. That’s the basic rule. But you can also Buy High, Sell Higher.
  2. Stick with your trade plan. If trend follow, go for it and continue to follow the trend. If swing trading, “just swing it baby!” (Napakanta pa ako ng kanta ng VST & Co. Hehehe…)
  3. Be careful of Bull Trap. Do not listen to hypes in the internet (e.g. Tsismis Analysis and Facebook Analysis ). Huwag kang papayag na “maipit” at magbenta ng palugi. I made a Tagalog article about this, you can read it HERE.

I hope you learn something from this article. Happy investing and trading! :)

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