BUY HIGH SELL HIGHER – Strategy For Big Gains
Many investors have a hard time wrapping their mind around this concept. They want to wait for the stock to drop so they can buy low sell high. Unfortunately, stocks on a big run, don’t go back to old lows. Buy High Sell Higher can keep you from missing some of the biggest gains in your life.
Take a look at every stock that has gone on to make gains of 500% or more. What did they all have in common?
They all made one new high after another. So it would only make sense that if you want a big winner, you need to look at stocks making new highs. But you also don’t want to be late for the party. You want to get in on the ground floor.
So I made this list of rules to help guide you through the maze of stocks making new highs and to focus on those ready for a big rally.
Here's What To Look For
- Look for a stock making a new 12 month high
- It must make the new high on BIG volume
- It must be higher than $2 in price
- This new high on big volume must be the first new high within a 12 month range of the last new high (more in the example below)
- Ideal buy price is last new high plus one penny
Real Results with Buy High Sell Higher
I’m going to use TSLA (Tesla) as an example (see chart below).
On March 27th 2012, TSLA hit a new high of $39.95. Using the rule #5 above, I set an alert to buy TSLA should it hit $39.96. It must hit $39.96 by March 27th 2013 (according to rule 4 above).
11 months later on Feb 8 2013, TSLA did hit this mark. TSLA made an intraday high of $40.00. Trading volume that day was just average (see height of black horizontal bar) and did not qualify under rule 2 above. So this new high does not qualify as a BUY since it didn’t pass all the rules.
Since I did not buy TSLA on the first new high, I now must wait for the 12 month trading range, ending March 27th 2013, to pass. Any further new highs during the original 12 month period would be the second and third new highs and NOT the first as the rules require.
OK I hope you are still following. Now comes March 28. The 12 months are up. The only new high in the last 12 months was the one on Feb 8 2013, which did not qualify because of low volume. Now that the 12 month trading range is over, I need to start another one. The last new high was the one on Feb 8 that didn’t qualify as a BUY but it was a new high. From that date I start a fresh new 12 month trading range ending Feb 8 2014.
Since TSLA’s last new high was $40.00 set Feb 8 2013, I set an alert for $40.01 and give TSLA 12 months to hit that price. If it occurs on BIG volume, that’s the signal to buy.
I didn’t have to wait long. TSLA triggered a new high on April 1 2013. TSLA broke past $40.01 on big volume (see how much higher the black horizontal bar is showing that trading that day was huge). It qualifies under all rules and is a buy at $40.01.
TSLA closed that day at $43.93. Seeing that it broke past $40.00 and did so on BIG volume, TSLA became a BUY. You can see in the chart from there TSLA went up to around $285 (700% return).
UPDATE: As of June 2017, TSLA is at $377.49 for a 943% return since the breakout. To put that in perspective, the S&P 500 has only achieved a gain of around 80%.
If you are looking for more trading strategies with a history of outperforming the S&P 500 by 600% or more, check out my premium service.