How To Spot The Turn In A Dip Buy

Every trader would like to know what’s the perfect time to buy a stock, I mean, who wouldn’t?

If we all knew how to spot the perfect opportunity, we would all be rich.

Unfortunately, none of us can be 100% on every trade, even the best traders will have losing trades…

It depends on how you manage your losses. 

Trading isn’t an exact science, but there are tools traders can use to help them predict what may be the best time to buy.

Over my teaching career, I have helped make over 30 millionaire students achieve the one million dollar mark…

And all of these students had one major thing in common, and that was dedication.

Trading requires you to study, understand the past, and know how these patterns are still the same from two, five, or even ten years ago.

We can thank promoters for that, and it’s not going to change, as their stunts help create predictable patterns, such as the morning panic.

Even though the pattern has become so predictable, you want to be able to spot the turn as it’s about to happen…

And If you are guessing, it’s simply like trying to catch a falling knife.

So if you have a small trading account and you’re looking to grow it, be sure to pay close attention to how this pattern can help traders like you!

The Framework

After you have studied my 7-step Penny Stocking framework, you will notice a lot of these stocks have a similar pattern.

A lot of these stocks hit their peak sooner than others, but even with these multiday runners, they will start to panic before they hit the top.

Let’s take a look at  Cloudweb, Inc. (OTC: CLOW).

This multiday runner has panicked several times on the way up, so be sure to go back and look at the chart history…

But notice that it’s only in phase 2 of my penny stocking framework.

CLOW has recently broken through its highs from earlier in the month, but when will the top be?

That is yet to be determined, but here is how you can potentially spot the top.

Even though the stock is continuing its upward trend, we noticed a perfect morning panic yesterday morning.

Let’s take a look…

This stock sold off from its all-time highs and bounced back near its previous breakout level.

But with these types of trades, you want to spot them before they happen…

So what can you do to be prepared to catch a stock before it turns?

Don’t Try To Catch A Falling Knife

Many traders can use support and resistance to help determine if the stock is approaching a key level.

But even then, stocks may eventually break through those barriers.

With any type of trade, you never want to “think” now is the right time to buy.

If you are guessing with every trade, you may get lucky once and a while, but the other times you won’t.

The market will just eat you alive.

What we want to do is to make these trades as predictable as possible.

So how do we do that?

Well, one of my favorite patterns I like to trade often is the morning panic.

But many of you may ask what makes it so predictable and how can I predict when the stock has hit the bottom?

These types of panics are common with these multiday runners and it fits my penny stocking framework perfectly.

And yesterday we saw a perfect example with CLOW.

The one thing traders try to do is recognize where the stock is starting to turn, and that is where you will be able to catch it as it starts to bounce.

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So don’t guess as to where the stock is starting to turn, instead, try to practice using this…

Upgrading To Level 2

This is why I like to use in StocksToTrade as it has a box called Level 2 that shows both buyers and sellers, and what price they’re willing to pay.

This list shows traders’ orders that are waiting to be filled, both long and short, which can help you spot whether a stock is bullish or bearish.

But these columns can move quickly as there are hundreds of trades happening every minute.

Here is a perfect example of live trade from a few years ago where one of my students captured the turn on a dip-buy.

If the Level 2 box shows a lot of orders stocked in the bid column, with the current price close to that bid, it can indicate a bullish sign for traders.

These buyers are lined up to buy the stock, and the same thing happens with the ask column.

If the Level 2 box shows a lot of orders stocked in the ask column, those sellers can act as resistance which could prevent the stock from going higher.

Final Thoughts

Trading is all about preparation and finding those opportunities…

This is why I continue to encourage my students to start small before they go big.

I want you to focus on perfecting one specific pattern before you move on to the next.

There is a lot that comes with Level 2, and there is more than I can share with you today…

So be sure to study everything you can and do yourself a favor, and be sure to learn how you can spot the turn the right way!

And if you want to treat yourself this holiday season…I’ve got this for you!

Until next time

Tim