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Questions
&
Answers
When is it a good time
to buy? When the stock trades above the 20-day moving average (EMA).
see trading model. Remember to place
the order on the day when the market was down - place a stop order
for next day's order if you can't buy during the day before the
market closes (the stop order will not execute should the market
trades lower the next day).
When NOT to buy?
Even though the trend chart truly
favors the stock, it's not a good time to buy if the stock trades
below the 20-day moving average (EMA) signals
a down trend.
In what increments should I
buy a
positions? I like to buy equity positions in 2
increments, a core positions and a position trade on a dip after having a profit.
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Portfolio Funding page.
Why should I use a limit orders
instead of a market orders? market order are
OK when trading when the stock market is open - it's easy to see the
current price. But most of us put in orders the night before which
should be controlled by limiting the purchase price. Let's say, the
market opens really high and then shortly after it drops a few points,
you would have set a limit of how much you're planning to pay for the
stock.
Why should I use a stop order? when the stock just starts trading above the
EMA, we don't know whether the stock will continue to go up or will be
go down again the next day. When it's going down, I don't really
want to buy the stock (also one could get the stock at a lower price). I
always trade with the trend (uptrend that is). The stop price when
triggered changes to a market order.
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