The Best Time to Enter a Trade

“Opportunity is missed by most people because it is dressed in overalls and looks like work.”

Those very words of Thomas Edison still hold true today.

But rest assured, that’s a mistake – a potentially costly one that’s cost investors millions, especially when they overlook game-changing opportunities.

Far too often, traders will ignore opportunity because the chart may appear ugly.  Look at AT&T (T) for example.  The stock was a brutal disaster since falling from $42 to $36 on an earnings decline.  Revenue had fallen for the third consecutive quarter.  It was even in a brutal price war with T-Mobile (TMUS) at the time.

No wonder traders were running towards the exit doors.  It became the most hated stock around.

Plus, this was AT&T.  It’s not going out of business.  It’s not an unknown small cap dud going nowhere.  It’s a large cap stock that was simply down on its luck, temporarily.  Again, though that’s when you want to buy.  When it’s hated and when sellers are showing signs of exhaustion.

Here’s a two-year chart of AT&T:

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Look at what happens when we begin to see selling exhaustion. The stock begins to move higher.  We can see that just by looking for agreement among three technical indicators.  In our case, each time relative strength (RSI) dips to or below its 30-line, the stock is considered oversold.  We can confirm that with sharp pullbacks in MACD, as well as a test of 80 on Williams’ %R.

Every time those three indicators aligned, the stock bounced back.  We could tell with a good deal of certainty that the sellers overdid it.

In July 2017, not only did we have confirmation of potential trend change with those indicators, but the stock also caught strong support dating back to its last chaotic sell off in late 2016.

Not long after spotting these technical pivot points, buyers the stock ran from $36 to about $40.

Granted, anyone can look at a chart after the fact and say, “If I bought here, I could have done XYZ.”  That’s not what we’re doing here.  Look at how long it took after spotting those technical pivots for the stock to move higher, too.  It took a few days, not a few seconds.

Does that strategy work all the time?  Nope…

If it did, we’d all be trading. We’d all be worth billions.  And we’d all own our own island.

For example, for years, the same technical pivot points would display themselves with the U.S. Dollar.  For years, when RSI, MACD and Williams’ aligned in overbought or oversold territory, we’d see a strong pivot not long after.

At the moment, though, it doesn't matter what those technical patterns say. 

The dollar is a disaster.

However, I can say that after using such pattern recognition, it has worked well for me for the last 20 years.  Pull up your favorite charts and see if you can spot it, too.

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Apply What You've Learned and Get Paid To Trade! Learn How Here