Sometimes it`s wise not to be the early bird when investing in
forex, instead wait and see what the day will bring before you take
action. The 10 A.M. rule is a great example of this concept, and is
an example that protects your capital. Let`s say you want to buy a
forex stock, for whatever reason; a trend play, or a market rally
that you think a currently hot sector will participate in. You know
that a great time to buy would be on a gap down, but the market is
in rally mode and instead of gapping down, the forex stock gaps up.
But buying the gap up is a bad trade. Now what do you do?
Cheap Sale You use the 10 A.M. rule, and wait until after 10 A.M. for the
right forex stock investing time to buy the stock. If the forex
stock makes a new high for the day after 10 A.M., then, and only
then, should you trade the stock. Of course, you will use stops to
protect
yourself, like you would on any
trade.
Bargain fares are worth watching for—outside of Hot Deals these are typically our lowest fares, and because of limited availability, they go fast.
Discounted Digital Cameras Anyone who`s followed the market knows that a forex stock will
often gap up early in the morning, only to suddenly sell off and
reverse into negative territory. By following the 10 A.M. rule, you
avoid the risk of this sudden
reversal. If the forex stock does make it to a new high after 10
A.M., there is still trader
interest in the forex stock, and
it stands a good chance of gaining momentum and heading even
higher.
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Best Buy Gadgets Here is an example of the 10 A.M. rule on a gap up: A forex
stock closes the day at $145. After hours, the company announces a
two for one forex stock split. The next morning the forex stocks
gaps up to open at $161. It trades as high as $166 before 10 A.M.
For two hours after 10 A.M. it trades lower and doesn`t reach $166.
At 2 P.M., it hits $166.50. The forex stock is now safe to buy,
using the 10 A.M. rule.
Here are a few rules about investing. The longer you invest (leave your money in the market) the lower your risk.
Hot Deal Using a version of the 10 A.M. rule, you could watch for a hot
sector to appear in the morning and follow the forex stocks in the
sector that are up for the day. If the forex stocks are still
making new highs at midday, they stand a good chance of finishing
the day near their ultimate highs for the day, and could be good
trading opportunities. This also applies in a down market and to
stocks in forex that gap down, opening at prices lower than where
they closed the previous day. In this situation, you should not
short a forex stock that has gapped down unless and until it makes
a new low for the day after 10 A.M.
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Closeout Sale Using the 10 A.M. rule ensures that you will never end up
chasing and buying a forex stock when your chances of making a
profitable trade are low. Remember, trading is all about
probabilities. The more forex stock investing trades you make with
a high probability of success, the more successful you will be. The
10 A.M. rule is a valuable addition to your trading plan, giving
you a straightforward way to avoid making costly mistakes and to
increase your number of profitable stock investing trades in
forex.
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