Consistent success in the stock market comes from buying leading stocks at low-risk entry points and letting the charts tell you when to sell. Entry points close to levels of support significantly raise the odds of success versus buying stocks breaking to new highs nowhere near any support level.
GasLog is a terrific example of when to buy, and when not to buy.
GasLog began a correction in May and formed a cup-shaped base. The green line shows a resistance area that formed the bottom of the cup. The break above the green line was the signal that GLOG was ready to build the right side of its cup-shaped base. Buying at this low-risk, alternative entry point produced a gain of more than 25% over the next week. Compare that to buying when GLOG made a new high on June 19, triggering a traditional CANSLIM style buy at $28.99, 10 cents above the prior high.
That breakout was short-lived as GLOG began to digest its run from the $24 range to over $32. Digestions of gains aren't always a negative. In fact, they are necessary for stocks to maintain a confirmed uptrend. And after running so far, so fast, a digestion of gains was to be expected. While GLOG digested its gains, the stock remained in an overall uptrend.
If you bought at the green line, you have a nice profit cushion that allows you to handle the digestion of gains if you haven't already taken profits. The stock hasn't broken any support levels and the uptrend remains in tact. If you bought the breakout, you got stopped out with a loss -- and you were stopped out based on price vs. a technical breakdown.
Buying stocks at low-risk, alternative entry points isn't so much about buying early, just closer to support. If the trade goes against you, you are selling because the stock broke support instead of selling because it's down a certain percentage from your buy point. Your loss is much smaller than using an 8% stop loss.
Here's a stock that is presenting a current alternative entry point,
A break above the pink line triggers a buy. A close below the blue line is your stop loss.
