What makes our Buying Range better than your Buy Below Price?
When someone gives you a Buy Below Price of P100, that means you’ll have to find out on your own where to buy between P0.01 and P100.00. Even if you’ll say that it’s not likely for a stock to move from P100.00 to P0.01, that’s literally what a Buy Below Price means.
On the other hand, our Buying Range is an exact range where our customers should position their buying price.
Our customers do not need to ask, “Okay, where exactly below the Buy Below Price should I buy?”
We give them a definite price range that is based on data; not on guesses.
Our Buying Range is based on the prices that got the BIGGEST VOLUME and the HIGHEST NUMBER OF TRADES, relative to the prevailing price of the stock, as of the date and time of the last update indicated on our Top Stock Picks table.
What’s the rationale behind a Buying Range?
When you know the price points where the biggest volume and the highest number of trades are registered, you are not going to set your buying price at any random price.
When the current price of your stock is 5% higher than the range where 80% of the trades and volume happened, would you hurry and buy on the price at the very top of the ASK bid or you’ll park your buying price and wait within the range where 80% of the trades and volume happened?
Of course, you would not want to hurry. In your mind, you’re saying to yourself, “Aha, the current price is above the range where the majority of the trades and volume happened. It’s more likely that the traders, especially the institutional investors, will pull down the price back to the range where the majority of trades and volume happened. If I would only wait some more, I could buy more for less.”
For example, if STOCK ABC is one of our Top Stock Picks stocks, and its current price is at P50.00, you would not buy at 50 per share because we gave you a Buying Range of 49.40-49.70.
Instead, you will position your buying price within the P49.40-P49.70 range because of the big possibility that the current price of STOCK ABC will go down within that range.
On the other hand, if you are following the Buy-Below-Price (BBP) system and your BBP for STOCK ABC is P51.00, you’ll most likely to buy at ANY price below P51.00.
That word ANY is costly. I’ll tell you why later.
But how did we know that there’s a “big possibility” that the price will go down to the P49.40-P49.70 range?
Remember, we have taught you that our Buying Range is based on the price points that got the biggest volume and the highest number of trades relative to the prevailing price of the stock.
Let’s apply this on actual stocks. Shall we?
I’ve randomly picked DD, DMW, and NOW from today’s top gainers and losers to prove my point.
Let’s assume these three stocks are part of our Top Stock Picks for demonstration purposes only.
Look at the bid-ask spread Doubledragon Properties Corporation (DD) as of closing on June 29, 2018.
Let’s assume this was the bid-ask spread as of recess. When trading resumes at 1:30 PM, would you hurry up and buy at 25.50?
An average trader might buy at exactly 25.50.
In his mind, he’s saying, “Wow! There’s 2.9 million shares being sold at 25.50. This 25.50 is also the cheapest price in the ask column. Might as well buy at 25.50 now.”
On the other hand, our Top Stock Picks customers won’t buy at 25.50.
They won’t hurry.
Because we gave them a Buying Range of 24.00-25.40.
When I see that the majority of trades and volume are parked on the lower half of my Price-Volume Distribution, I position our Buying Range near or within the intraday support and the median of the intraday support and resistance.
Why do I think that way?
My explanation does not need Mathematics but basic psychology.
The longest green bar you see on my chart is at 25.50. Being the longest bar, that means it’s the price point that got the biggest volume.
If the traders’ sentiment is at 25.50, which happens to be the intraday low, that means the participants have the tendency to think that the share price might go below 25.50 either within the day or by the next trading day.
I can tell that exposure on equities helps a lot when it comes to having a good feel of the participants’ psychology.
But even if you’ve been just trading for a few months, if you have mastered your own psychology, that’ll help you in anticipating what the other traders might be thinking.
Let’s move to NOW Corporation (NOW).
With the assumption that NOW is a stock for long-term investing, an average investor might hurry and buy at 9.04 since it’s the cheapest price he sees on the Ask column.
But that’s now how we do it at Equilyst Analytics.
What is NOW’s current price?
Where is 9.03 located on the Price-Volume Distribution?
It’s very close to 9.02, the intraday low.
Because of this, I give my customers a Buying Range of 8.90-9.00.
It’s very important that you know where the biggest volume and the highest number of trades are and the psychology of trading participants.
It helps you come up with a data-driven and more profitable trading strategy.
Lastly, let’s check D. M. Wenceslao & Associates (DMW).
A regular trader is more likely to hurry and buy at 10.26 just because it’s the cheapest price he sees on the Ask column.
That’s not how it works for an Equilyst Analytics customer.
Based on my Price-Volume Distribution chart, I would give my customers a Buying Range of 10.00-10.20.
My Buying Range for DMW can go lower or higher depending on the new price-volume distribution when I update it and on the prevailing price of DMW by the time of the update.
We are the first to provide this kind of guidance to stock traders.
Most, if not all, brokers would just give you a Buy Below Price.
I am not saying a Buy-Below-Price buying system is a bad strategy.
It’s a good one.
But we have innovated the system and made a better one.
A better system means more profits (over time) for our customers like you.
I have already demonstrated to you why our Buying Range is more powerful than your Buy Below Price system.
You now know whose service you should try if you want to become a better investor.
Latest posts by Jaycee De Guzman (see all)
- Why Equilyst Analytics and Not Truly Rich Club or Pinoy Investor? - August 14, 2018
- Bakit Kailangang Gumamit ng Trailing Stop-Loss at Paano ang Computation Nito? - August 13, 2018
- EDC Will Be Delisted: What Should You Do? - August 9, 2018