HOW to Buy a Pull-back
You’re never gonna know “where you are” fixated on where you’re standing.
We’ve all heard the mantra,
“Buy LOW, Sell high.” (Terrific.)
And when adding to a Stock position:
“Always wait for the PULL-BACK”
That’s great, Einstein !
When? and How? are questions that come to mind for the average investor OR trader. Because LOW is relative.
LOWS are relative…to time and prior highs and lows.
Whooph has a METHOD for buying a pull-back which doesn’t have anything to do with Price itself.
You’re looking to BUY, don’t stare at Price.
You’re never gonna know “where you are” fixated on where you’re standing!
To BUY a price pull-back is to simply,
Get a Bargain - True?
But Whooph says “Ya gotta do it according to some MEASUREMENT other than price”.
You WANT the stock, but buying rashly only to have it turn over and go lower is never fun for anybody but the seller.
Anybody can pull up a stock PRICE chart of NVIDIA and say THAT’s an UPTREND. But will it turn down as soon as I buy it ?
So… we need a METHOD!
(Whooph specializes in deriving methods.)
Cool Thing about Stochastic
When you pull up a chart, pull it up with Price and STOCHASTIC. The cool thing about the indicator-oscillator, Stochastic — invented by George Lane — is that:
• It shows you where you are in the Push Cycle;
• It confirms you’re STILL in an uptrend
• It can foreshadow continuance of an UP-trend.
Having observed Price and Indicator in 40,000+ charts since 1999, Whooph is a self-proclaimed expert at answering the question:
“What always precedes a swing or reversal?”
It’s a GREAT QUESTION to be asking before you hit BUY. And the answer is a handy piece of information to have!
Whooph has therefore invented several CONCEPTS of CORRELATION.
Simply observing two associated objects moving at the same time. Over and over.
In this case, PRICE and STOCHASTIC.
Whooph’s UOA of Stochastic
Whooph says Uptrends are MARKED by Stochastic operating in the UOA — Upper Operating Area as he calls it, which is from 25 to 100. (Refer to the chart below.)
And likewise:
• REJECTION of the 0 to 25 zone or failure to breach well below the 25 suggests an uptrend will continue for a spell or at least the current push or cycle.
and
• CAPTURING or occupying the 75-100 zone or successfully breaching the 75 level confirms a healthy uptrend for the near future.
Take a look at the chart below. A little busy, my apologies.
Ask the questions:
1. BEFORE Price began pulling-back, was Stochastic operating above 75 (Indicative of a healthy uptrend).
2. What preceded a price LOW or reversal? Is Stochastic tapping the 25?
3. Where was STOCHASTIC operating when PRICE hit a LOW, reversed, and headed up? Roughly around 25?
Formulate your BUY price around Stochastic’s tap of the 25 level. Or in proximity to it.
If Stochastic WAS operating in the UOA (bullish) or above 75 and on the pull-back penetrates below the 25, this may only be a function of volatility, not to worry. This alone is not necessarily bearish. Whooph would typically buy this bargain as it crosses back above 25.
More to come on this subject. Always looking to simplify concepts presentation. So, please ask questions and offer your criticisms.
Thank you for reading.
— Charlie Whooph
NOTE: Whooph teaches methods. Mention of any specific equity is incidental. Nothing should be inferred from any chart example herein to formulate a “recommendation” to Buy, Sell, Stop, or derive a target price. Whooph Trades Lessons like this one are prior trades and unsynchronized with current or real-time market conditions.
Learn from the METHODS shown, but please let your trade be YOUR trade.
