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Entry, When Should I Buy?Now lets take a look at timing our entry. All good strategies have plan for buying into the stock or option. Buy too early and you can be fooled by a false signal. Buy too late and you can miss out on some of your profit. So, how do you time it right? Look at the chart below. This is a weekly chart of RIG. You will see that in April of 2007 price and On Balance Volume broke through their breakout lines, and also notice that it broke out on strong volume. All good breakouts will be supported by strong volume. If you don't have strong volume then DON'T BUY!!! You have to have buyers for the stock to make a good strong move up, without it the stock may drift in any direction. 
Now, lets move in a little closer. Here is a Daily chart of the same breakout. Again you will notice that the price and the OBV broke through their breakout lines, and again we see good volume on the breakout. Do you see what happened on the breakout? The stock gapped up at the open. This is a very good sign. This signifies that buying pressure is increasing and that the upward trend is likely to continue. 
This next chart shows where we enter the stock. The breakout line is set at $83.70, because that is the closing high of the last rally. We want to buy at around $84.00, just slightly above the breakout line. You must use your own judgment here, depending on the price of the stock. Something else to consider. Take a look at the MACD, it moved above its 9-day EMA and gave us a buy signal. RSI is showing strength, it is above 65 and moving higher. 
STOCK TRADING TIP - STOCK INVESTMENT GUIDE Pre-market analysis should be part of your online trading system. Check to see what the stock market trend is likely to be for the day, and trade with the market not against it. Remember, "The trend is your friend". Trade trending stocks that are going in the same direction of the market. Thats the entry, now for the exit.
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