ForexTrading

company announces a two for one stock split. The next morning the 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 stock is now safe to buy, using the 10 A.M. rule.

Using a version of the 10 A.M. rule, you could watch for a hot sector to appear in the morning and follow the stocks in the sector that are up for the day. If the 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 that gap down, opening at prices lower than where they closed the previous day. In this situation, you should not short a stock that has gapped down unless and until it makes a new low for the day after 10 A.M.

Using the 10 A.M. rule ensures that you will never end up chasing and buying a stock when your chances of making a profitable trade are low. Remember, trading is all about probabilities. The more 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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