"House of Pinchers"

[Sgreg]

One thing is that I never buyin all at once, never. Usually I have 3 or 4 buyins and sometimes even more. When a pinch gets its bounce it really needs to break the 20sma to change the trend. The ADX is strength of trend so for the ADX to stop the incline there needs to be a good enough bounce/run/counter trend whatever to halt the ADX and make it start going down and that is what actually breaks the pinch.

MTG is up nicely today and so I'll use that as an example. I had two buys in there yesterday. Current average is 5.75. It was a failing knife so if say I was willing to put 6k in there I am not going to do it all at once. My first buy was $750 worth and second buy was $1000 worth. If it continued to move down then I would have continued to follow with bigger buys at maybe 15 cent increments. Each stock is different and my strategy differs with each. MTG fundamentally is a fine company and had a RSI of 6 with an ADX close to 60 so I didn't think it could fall below $5. 60 ADX is very extreme and RSI of 6 is almost never seen it is so low. The downtrend looked over exhausted to me so I went for it. To me it looked like low hanging fruit.

I keep my buys strategic and I make sure at all times I keep my dollar cost average well below what the 20sma is. That way when the pinch finally gets its bounce as long as my dollar cost average is well below the 20sma I get a profit.

One thing I have come to learn is that a pinch almost always gets its bounce. It always has to eventually. The pinch has to get broken at some point and the only way to do that is for the downtrend to take a hit. A counter trend or pop or whatever that takes the pps up to the 20sma at least to start to make the ADX line come down.

Final thing is that when something is pinched it usually isn't an "if" but a "when" as far as a bounce goes. The pinch will gets its bounce but it can take weeks and even months to do so. Eventually they always pop though and the pps can keep falling as it stays pinched. Sometimes people give up on a pinch if it has been a long while but that doesn't mean that eventually it won't pop because it will. Sometimes though it could be better to move on if waiting on a pinch is getting exhausting. Sometimes it is better to just try another stock because there are plenty of fish in the sea.