RulesTo Trade When The Stock Is At An All-Time High
The all-time high of a stock is considered to be its resistance level and is tough to break through. Those who are holding on to the position either sell off their stocks or just wait to see what happens. They definitely do not think about adding on to their portfolio. There will not be a lot of buyers in the market at this level and this causes the prices to come down a bit.
However, if the company has strong fundamentals which are supporting its bullish move then the stock again resumes its up move and breaks the high and also sustains it this time. If that is the case you do not want to miss out on this opportunity.
Understand the breakout
When the stock moves past its last high, then that is the action that is going on. It then comes down to the newly formed support level which is the market reaction. The resolution phase, Bitcoin Loophole full review, is when the stock takes in all the losses and again makes a new high. Those who are already in the stock should now set their stop losses and follow it strictly.
If the pattern of the breakout is such that the price straight away breaks out without consolidating then the trader has to be cautious. However, if you see that a basing is formed then this means that the stock will most likely sustain its bullish move.
Set a profit level
If the stock is unable to sustain the uptrend and starts to reverse then set a level where you will get out of the trade. This is important to protect your profits.
Add on to the stocks
You can add on to your portfolio when the stock falls to such levels that you can take a trade where the risk to reward percentage is met. Like if the stock comes down to a moving average level on a high time frame chart.
It could happen that the trade is a false breakout. So it is important that you trade cautiously at such levels. Historically it has definitely happened when the price has broken its all-time highs and sustained them to make even higher highs. So it does not make sense to leave these trades but at the same time bear caution when you take a trade at these levels. Always have a strict stop loss in place to protect your capital in case the market does not work as you had speculated.