There are clearly many ways to execute buys in the financial markets but few of them are scientific and systematic. Let's explore this for the purpose of defining proven systems.

 

This section is under development but it is being worked on. Fear not and remember these wise words: "those who return to this page for review will be rewarded". - Grasshopper

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Buy strategies in the stock market are under evaluation in the research constantly. The process involves ranking the useful of indicators first before screening for stocks that fit. Over time they may change in their effectiveness based on market behaviours..

 

Historically, the break-out from a completed base has proven to be the most reliable and profitable buy strategy. 

 

There are other buy strategies that may be used at different price points in a stock's cycle beyond the break-out price. 
 

Some strategies are not applicable at all times. The strategies will detail when to use them in real time.

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1. Buying at the 50 day moving average

2. Adding to a position.

3. Follow up buy strategies.

4. The Stop Buy order strategy.

5. Higher priced stocks including stocks crossing above $100/share.

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How to set trade (limit) price

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A market order is a generally acceptable trade parameter for higher priced higher volume stocks. One feature of using a market order is the trade gets done right away. However, some investors may want to work the pricing on their buys and sells based on the real time spread of a stock. 

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There is the argument that using a limit order runs the risk of "nickel and diming" the transaction and potentially getting a fill price that is worse than the original bid or ask. 

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On the other hand, investment industry participants are typically setting up the spread. The market you see on one trading platform is not necessarily the same as another one. So how might this be handled?

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It is important to understand there are the exchanges executing orders and there are E.C.N.s or Electronic Communication Networks. E.C.N.s are independent exchanges processing buy and sell transactions that have been routed to them. A trading platform makes a decision to send customer orders to the E.C.N.s they have chosen. It is typically a business arrangement with the intention of profiting from every transaction possible. 

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Over time one cent on every order is an easy and profitable proposition for the trading platform and the E.C.N. and it may be considerably more than one cent on some transactions. 

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Let's use an example to illustrate a possible market for a stock in real time. In this case the trading platform has a market of $328.45 on the bid and $328.62 on the offer or ask. It translates to, the best available visible price for a sell is $328.45 and the best available buy price is $328.62. This is in real time as the order is set up in the trading platform's trade system. 

On the right hand side of the image you will see the last reported trade price for the same stock as $328.65. This is from the chart from stockcharts.com. Experience has shown the reported prices from stockcharts.com to be accurate even though the pricing is technically delayed. 

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Suppose you are going to buy this particular stock and you are setting up the order to get it filled in real time. There are two apparent possibilities based on available markets. One is the trading platform's asking price of $328.62 or $328.65. In this case, the trading platform's ask is lower so this would price is better as it is lower than the other indication. Technically, even a market order (for the quantity offered at $328.62) would get the order filled. But what if you were selling the stock?

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If you were attempting to get a better price on a sell, $328.45 is considerably lower than the $328.65 shown as the last trade from our other source. You could attempt to get $328.65 by entering that price in the limit order field in the trading system. It is possible it may get filled at $328.65. 

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If the order doesn't get filled (at $328.65), then it has to be modified to some other price if the intention is to get it filled immediately. The price could be changed to just under the platform's offer which would set it at $328.61 or near this price. 

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This game of trading poker can be worked with numerous price modifications but remember the bid and ask offered by all platforms will change over time and it can easily change quickly. Some stocks are more challenging than others for this strategy.

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Work with what the market spread is on the stock and see if you may save small amounts on each trade over time. In the long run, it may turn out to be a considerable amount of money to you. It's better in your pocket, than it is in someone else's. After all, investment industry organizations are not your friends and they most certainly aren't charities. 

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If you are unsure of this or would like to discuss please email info@craveinvestor.com at your convenience. 

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