Let’s say you want to buy a stock for a trade because it had excellent earnings and think it will trade higher. But you are not sure how to buy it.
You fear buying too high and then getting stopped out.
Your fear buying too high and the stock tanking.
You want to start buying these stocks at better prices so you make more on each trade.
You wish to get in at better prices so you can trade these ideas bigger.
I work with a savvy CPA who wanted to do this very thing in LULU this Friday. He did and made a nice profit.
But where should you buy? And how? And why?
Let’s say this savvy CPA thought LULU would trade higher based on the earnings. They were indeed strong.
If the stock is going to be strong often there will be buying that hits the market right on the open. You should see a price surge and elevated volume right after the opening bell rings. This is very important to understand. Now that you know this you will know what to look for right on the open and can place a trade- Opening Drive.
We saw this in LULU. There was a price spike and elevated volume right on the open. So we can buy on the open for an Opening Drive. We have Trade 1 (see the chart below).
If the stock is to be strong intraday, you ought to expect for it to trade above VWAP. After a strong Opening Drive, we want to see a pull in on light volume, and a hold above VWAP. We get this in LULU. So we can also buy on this pull in for a PullBack Trade. We have Trade 2 (see the chart below).
If the stock is to be strong intraday, it will trade above its opening range. When it does we want to see elevated volume into the breakout and a price spike. We see this in LULU. So we can also buy an Opening Range Breakout in LULU. We have Trade 3 (see the chart below).
You could have made all three of those trades. You could have decided to make less than all based on your trading system. But those were three opportunities that professional traders look at to buy a strong stock.
*no relevant positions
