Enter the Trade

As with when to trade, how to enter depends on whether the stock gaps up/down
or not. Typically, the stock price doesn’t gap up or down and the entry price is
based on the previous day’s prices. When the stock gaps up or down, the entry price
is not based on the previous day’s prices, but on the current day’s prices. Whetherbased on the previous day’s prices or the current day’s prices, the entry rules are the
same. The most common occurrence – the stock opens within 50 cents
($0.50) of the previous day’s close – buy the stock the moment it trades
6 cents (1/16) above the previous day’s high. This can be accomplished by
using a buy stop order. This increases the likelihood that the price is moving
in the direction of the bullish (long) trade. Occasionally a stock gaps up or down 50 cents or more – buy the stock
the moment it trades 6 cents above the high of the new day. This would be
30 minutes after the market opens for a gap up or 5 minutes after the
market opens for a gap down.