(((50% Rule)))) using candlesticks.
Dont open the chart link until instructed.
This is an explanation using a real trade recently on the stock symbol YPNT.
I bought the stock at the EOD thinking it was going to gap up the next day. I am in for 5k shares @ 2.10. I felt good about holding over night it closed strong right near the highs within 10% of high every thing look good. I felt it was money in the bank right, wrong.
keep in mind I am in at a 2.10 for 5k.
The next moring the stock gaps down and opens @1.92 dammmmmmmmm
market maker games here we come. now with candles sticks the opening price is very important to me in the fist 15 minutes of the day. stay tuned for more on the opening prints.
50% rule saves my butt.
YPNT: the low of the day becomes roughly a 50% retracement of the prior days action. (A big real-body). The low of the day was 1.82, so I buy another another 5k block @ 1.85 as I see the 50% rule setting up on my intraday charts. now my average price is 1.97. I am now holding 10k at average price of 1.97.
here is were the opening price of the day becomes very important 1.92. It gets through 1.92 and just explodes straight up 2.50 I get out 2.35 and I am the happiest guy in town. I"ll let you guys figure out how much i made on the trade. all this happend I belive in less than an hour.
The 50% rule was the diffrence from me taking a big loss and turing it into a profit.
Lets go to the charts and see if we can make any sense on what just happened. http://share.esignal.com/groupcontents.jsp?folder=&picture=snapshot-3.png&groupid=227