Buying Lesson
Buy now or wait till it's more expensive?
I know your thinking "This guys an idiot, thats a no brainer"
Well, I once thought that way myself, but have come to realize that buying cheap right now is not necessarily the smart thing to do in all cases.
Suppose your looking at a stock that is trading at .11. Your liking this stock and are thinking it may go higher. The boards are buzzing with hype, rumor is news is coming, email campaign is coming, every Tom, Dick and Harry is pumping this thing "To the Moon". You think I need to act NOW. What to do?
Turn to T/A. Pull a chart and find support and resistance. Check the indicators. Are they showing over bought?
Suppose in this case that you pull a chart and find that the 200 MA is sitting at .12, a previous high of .123 is next resistance, then .013 is next previous high, with the 50 MA sitting at .13 as well. You look for support and find that the first area is all the way down at .04 which the stock has held at the last 4 times it has tested it.
Now would buying at .11 in a heated rush be the best thing to do in this case. IMO the answer is no. It would be better to wait till the stock broke resistance at .13 (On the BID Side) before entering.
If you decide to enter at .11 during the pump, it is likely or at least very possible that people are beginning to dump because resistance is showing to be to strong for a break through. Remember if the stock sells off, its not gonna have any support until it reaches the .04 area.
So always know support and resistance before entering a stock, and buy where your chances of a successful trade are the greatest. Don't become a bag holder. Been there and done that. Not a fun place to be. Hope this helps someone. GLTA
Tarheelblue
