Today we are going to be talking about the exact point from which you should buy a stock when trading within the stock market. This isn't a secret by any means, but I know for a fact that a lot of traders get in when they feel like it's a right time. Unfortunately, the stock market does not care about your feelings, so instead I'm going to be presenting to you a very practical solution to this problem. and this is the point at which you have the maximum amount on average of potential in terms of they continued run-up.

and as always the only thing I ask of you and return for this video is that you hit that beautiful and charming like button. And also if you see value in the following video, go ahead and subscribe. So instead of buying into a stock whenever it feels right, you need to pick the point at which you have the maximum chance on average of a continued run-up. So the exact point at which you want to buy a stock is very simple and that's when you see the confirmation of a reversal above the SMA line.

What we are looking for exactly is the point Right after the price action crosses the SMA line and then holds above it. The price action crossing the SMA line says that yes, there could be a trend reversal, but when the following price action holds above this line, that's when we have a confirmation of a trend reversal. It confirms that the price action is strong enough to hold the uptrend and it confirms that even if it doesn't hold the uptrend, in the next few candlesticks and we see a decrease in value, we'd still be able to exit out of our position at a higher price point compared to when we got in. And that's really the beauty of this system.

and that's why it's so important to wait for confirmation before getting into a position. I Know a lot of people will just buy in after it crosses the SMA line and that's a somewhat ok strategy, but the problem is that a lot of times it'll cross the S&A line and then it will struggle back and forth and that's why it's so important for you to go and wait until you have that confirmation. In fact, if you understand this, I want you to take a moment, pause this video and comment below. Charlie I Promise you I will always wait for a confirmation and there's something really magical about writing something down.

and I think the comments section is a great place to do this because if you don't normally comment on videos or even if you do, you'll remember that one time that you commented then you'll be like oh, I commented that because of the fact that I wanted to remind myself that I need to always wait for confirmation I don't just go in because it feels good I wait for confirmation Ok, but I want to go ahead and dive into some of the examples. so the first example I'll give is Tesla To the untrained eye, this chart of Tesla may look random and unpredictable, but we know that in reality it's anything but. So zooming in a bit, there were a few decent opportunities to profit off price appreciation as we saw several periods of sustained growth. However, two of these appreciations offered an ideal entry point for us.

Now, the first one was following a struggling back and forth over the SMA line. But like I said, just because it breaks the SMA line doesn't mean that it's time to take a position. For me though, it's all about figuring out a strategy that works over a hundred trades versus what works in ten trades in a specific niche. When I put money into the stock market, it's always money that I worked very hard for.

So I want to make sure that I have a confirmation before I risk it. So again, when I say confirmation I don't just mean crossing above Besame line but also having me following candlestick close above it as well. Even though this was a red candlestick, we stayed above the SMA line and later continued to grow farther. And it doesn't matter if it's a red candlestick.

In this situation, it was a red candlestick but it didn't break. so we stayed above the SMA line and then later it continued to grow farther and eventually it did break. But in the meantime we grew some real estate between the SMA line and the price action which as we know is a beautiful sign of strength. One of the most beautiful, but it was at this part that we started seeing that price action show signs of weakness by heading closer and closing the gap between the real estate MSM a-line and this is where I like to watch like a hawk I want to make sure that I'm watching exactly so I see the exact point where it breaks below the SMA line.

it breaks below the SMA line. That's where I cut my profits because that's the point at which I could survey tively declare the trend reversal to be over. However, that didn't happen in the price action was strong enough to continue. It didn't cross over the SMA line so you should stay in the position if it doesn't and while we can't time the top of the run up, thankfully we can sell out once we see the crossing back over the SMA line.

so it kind of works in Reverse like we're looking for the price action to cross the SMA line to take a position and then confirm and then when we're exiting into position we just wanted to cross and you couldn't wait for confirmation on the way down. but it really depends on the strategy that you're employing. But anyways, following this strategy would have allowed us to take most of the chunk of this move and it would have been quite easy to implement as well. So the next crossing over the SMA line and Confirmation happened here and we saw another opportunity to profit.

The same strategy would have worked perfectly here as well, although it didn't run up as much. So while again, this would have been a worthy position to take. Pairing our knowledge of perfect entry points with a basic understanding of upward versus downward potential allows us to take a great position point, but also to focus the skill using better opportunities. and there are a few reasons that this opportunity doesn't look as good as the other opportunity did.

The first reason is that at this point we had already seen price depreciation good Morning Of and a declaration of higher resistance at that time. The sharp selling off below the SMA line here is completely different than the struggle of price strength over and under the SMA line that happened in the later stage. So the second reason is that we were also below fair value on the RSI, whereas in a later stage we were already above fair value. Okay, so based on what you know so far, why is it that we shouldn't take a position and say this point, you may say to yourself, hey, there's a lot of upward potential here and we are also seeing this break above the SMA line.

We are even also below fair value on the RSI as well. This looks like a great position. why should you not take a position here? Let me give you five seconds to figure this out. The reason that we don't take a position here is because we don't see the confirmation.

We do see the rise above the SMA line, but then we see some struggling. We'd ever see that confirmation with a candlestick closing higher and above the SMA line. Okay, so the next example that I'll give is B PTH So this stock Spike's massively yesterday from like twenty dollars to over seventy dollars. and there's naturally always that one dude that's in the comment section that thinks that the stock is rigged by the deep state or like some sort of sky people.

And while he may or may not be right, it doesn't matter because it's not about the catalyst in the situation, it's about figuring out if the price is going to move from the catalyst and the way to do that is with confirmation. So once we saw the original push here, we then saw a sell-off and we saw this struggling back and forth over the SMA line. and then once we started seeing candles close above the SMA line, we started seeing the run up and using the strategy, you would have known where to get in and naturally I Understand that a lot of people will see this and they'll be like oh well. Okay, it makes sense that if I was watching that particular stock like, a hawk, that I would have known where to get in.

But the problem here is that if you're not watching the fundamentals and you don't have an automatic watchlist setup, how are you going to find these stocks before they break out? Well, there's a few different solutions to this problem. Solution number one in terms of finding the fundamentals is you could do fundamental scans for earnings FDA approvals, a bunch of other different criteria. You can also join a Facebook group. There's thousands of Facebook groups out there on my Facebook group zip trader circle I post nightly watchlist and we get many posts every day of the different stocks that are trending.

so it's also a very good resource to spot stocks as they go up. And if you want to set up an automatic watchlist that scans for you in real time, there's also a resource in the link below I Made a video on that a little while ago. but anyways, there's many opportunities to find these before they gap up. I Still think that the best way to do it is through an automatic watchlist that updates in real time and also scanning the night before.

but let's say you don't want to take my advice. That's fine. Charlie's a weird dude using the estimator I could still help you to profit off the later sell-off. And the reason is because when a company starts increasing this quickly, that means that once that periods done and it starts selling off, everyone is going to over freaked out.

much like how they freaked out and drove up the stock price in the first place. and this rapid over selling creates the opportunity to get in at a discount and profit off the later correction from that discount and you can figure out where to buy in from the confirmation on the SMA. Now once a stock has gone up dozens or even hundreds of percentage points, it appears on all the top gainers lists, so it wouldn't be hard for you to find these thoughts. So even if you're a lazy dog, you'll still find these opportunities.

That's ok because using an automatic watchlist or some sort of regular top gain or scanner could have showed you this opportunity even after the original gap ups and it was still an opportunity to pull 30 to 40% of the movie. Probably wouldn't been able to take all of it. but anyways, this is why I Love the power of confirmations because there's just so many opportunities and you can really be lazy with a lot of these things. Ok, so I want to give you another example of this.

The next example is Pul M So this was a big runner today. If we zoom in, we see once again that bind after the break above the SMA line and that first candle held above, giving us the confirmation for what would have been another great position. And in terms of exit points, you could sell out once the price action returned and broke down through the SMA line. Now there are better strategies for exiting out of positions such as taking into account a few indicators such as the RSI as well as upward versus downward potential.

But my point is that understanding the SMA right in the utility of confirmation sort of serve as the bread and butter to make money trading. I Think you should start by learning this stuff and then fine-tune your strategies as you get better. So many people try to tackle everything within a month. It's just how do you do that I didn't do that I Don't know anybody that's done that.

You have to start somewhere. Don't be hard on yourself, just start from a certain point and work your way up. Once this works, then fine-tune it so that you do something else and you combine it to make things work better for you. And the reason it is important to fine-tune your methods is because it allows you to not only identify the points to buy at which we now know, but also to identify points that offer more profit potential than others.

It helps you to filter out the bad opportunities from the good opportunities so that they don't distract you. There are many opportunities to buy in using the strategy and you will experience price appreciation by the nature of it, right? Because if it's moving up and the price action is trading above the SMA line, that means the SMA one's going to be trending up. But the problem is that if you're not filtering out some of the opportunities with less upward potential, you'll be wasting time trading price action that has 10 to 15 cents of movement at the expense of not catching opportunities with 50 cents or more of upward potential. So anyways, I encourage you to practice this for a little bit in terms of paper trading in terms of on-demand trading and see if it helps you with your positions.

Also invite you once more to comment below: if you understand that you should wait for confirmations I think that it's really important to put that in the back of your mind. Of course everybody has a different strategy for picking an entry point and that's totally fine. Pick something that works for you. but in my experience I found this on average over the long run to be one of the best strategies out there.

But before I conclude this video I want to answer a few questions. So for those of you who are unsure how to set up the SMA line I have a complete video on thinkorswim and how to use it. I'll put a link in the description for you below, but just a quick brief summary I have it set this way. Most notably, I have the aggregation period set to one minute and everything else is set to default I'm not sure if the default is 1 minute anymore or not, but in any case, I have it set to default.

And also if you don't have access to thinkorswim for some reason or you're in a different country, that's totally cool. A lot of other platforms have the SMA feature right. Most of them should I think the only ones that don't are really bad discount brokers, but I encourage you to look into it a little bit. unfortunately.

I don't know that many brokers in Europe and Canada I get a lot of those questions and sucks because I don't really know how to answer them. but if you join Zip Trader circle, you could ask the group and there's bound to be somebody who uses a broker in a different country. Anyways, Have a great day folks and I'll see you in the next video.