I’ve got an easy question for you: Would you rather see your stock trade close out for no gain, or watch it climb into double digit gains?
The later sounds infinitely better to me, which is why I follow a strict rule when my money is on the line.
It could add thousands of dollars to your profits, and it’s as simple as this…As you already know, a stock’s price has all day to rise and fall, jump and dip, etc.
And sometimes those swings can be violent—a change of several percent both positively and negatively.
But much of that movement is really just nonsense in the bigger picture. Let me explain what I mean…
Let’s say Stock xyz ended yesterday’s trading period at $40 per share. Stock xyz then opens this morning at $40.50. At first that price holds steady, but it then begins falling before long.
By noon, the price of Stock xyz is all the way down to $39 per share, a drop of $1.50 or nearly 4% since it opened this morning.
For the next couple of hours the price remains relatively stagnant. But in the final hours of the trading day Stock xyz sees a wave of buying hit it and climbs all the way up to $42.
If you’re in that trade and watching intently throughout the day, you may have reacted to that sharp drop in the morning. It easily could have caused plenty of experienced traders to bail on it.
However, if you only look at the closing price, you just see that Stock xyz closed higher than it did yesterday!
If you closed out the trade in the middle of the day you may have still earned a profit (all depending on your entry price for the trade), but who knows how high Stock xyz will climb after finishing up for the day?
It may rise to $50 or $70 in the next couple of months, and that could easily be thousands of dollars you could have made.
Be much more interested in the day’s results than what happens throughout the open trading period (when you can be tricked)!
