Forex Trading at the Right Moment - How to Use The 10 AM Rule
Sometimes it`s wise not to be the early bird when stock investing, instead wait and see what the day will bring before you take action. bonuses The 10 A.M. rule is a great example of this concept, and is an example that protects your capital. You want to invest in a stock for any reason. It could be a trend, or you might think that a hot sector is going to participate in a rally.
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. This rule protects your capital and can be a good example. 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. The gap up trade is not a good one. Now what do you do?
The 10 A.M. Rule is used to determine the best time for investing in forex stocks. You should only trade if the forex stock reaches a new daily high after 10 A.M. You will, of course, use stops as you would with any other trade.
Anyone who has followed the forex market knows that the stock price will often spike up in the early morning hours, before suddenly falling and reversing into negative territory. You can avoid this risk by following the rule of 10 A.M. The forex stock may reach a new high even after 10 A.M. There is still interest from traders in the stock and it has a good shot of going higher.
Here's an example of how the rule at 10 A.M. can be applied to a gap-up: A foreign stock closes its day at $145. The company announces the split of two forex stocks for one after hours. The next morning the forex stocks gaps up to open at $161. Before 10 A.M., it reaches $166. After 10 A.M., the price drops and does not reach $166 for two hours. It reaches $166.50 at 2 P.M. Using the rule of 10 AM, it is safe to purchase forex stocks.
You can use a variation of the rule 10 A.M. to watch for a sector to be hot in the morning, and then follow the forex stocks that are rising 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. You should not short forex stocks that have gapped lower unless they make a new day's low after 10 A.M.
The 10 A.M. Rule will ensure that you never chase and buy a foreign stock when the chances of making a successful trade are low. Trading is all about probabilities. The more stock trading forex trades that you do with a high chance of success, you'll be more successful. The 10 A.M. Rule is an important addition to your forex trading plan. It will help you avoid costly mistakes, and increase the number of stock investments that are profitable.