Sometimes it`s wise to not function as the early bird when investing in forex, instead wait and find out what the day will bring prior to taking action. The 10 A.M. rule is a good illustration of this concept, and is an example that protects your capital. Let`s say you want to buy a forex stock, for reasons uknown; a trend play, or a market rally that you think a currently hot sector will participate in. You will know a great time to buy would be on the gap down, however the marketplace is in rally mode and rather than gapping down, the forex stock gaps up. But buying the gap up is really a bad trade. Now what do you do?

You use the 10 A.M. rule, and hold back until after 10 A.M. for the best forex stock investing time to purchase the stock. When the forex stock constitutes a new high during the day after 10 A.M., then, in support of then, in the event you trade the stock. Obviously, you will employ stops to safeguard yourself, like you would on any trade.

Anyone who`s followed the market recognizes that a forex stock will often gap up at the start of the morning, only to suddenly sell off and reverse into negative territory. By following the 10 A.M. rule, you steer clear of the risk of this sudden reversal. When the forex stock does reach a new high after 10 A.M., there is still trader curiosity about the forex stock, also it stands a high probability of gaining momentum and heading even higher.

Here is a good example of the 10 A.M. rule on the gap up: A forex stock closes the day at $145. After hours, the company announces a 2 for just one forex stock split. The following morning the forex stocks gaps up to open at $161. It trades up to $166 before 10 A.M. For 2 hours after 10 A.M. it trades lower and doesn`t reach $166. At 2 P.M., it hits $166.50. The forex stock is now safe to purchase, while using 10 A.M. rule.

Using a version from the 10 A.M. rule, you could watch for a hot sector to look each morning and stick to the forex stocks in the sector which are up for the day. If the forex stocks are still making new highs at midday, they stand a good chance of finishing the day near their ultimate highs during the day, and could do well trading opportunities. This also applies inside a down market and to stocks in forex that gap down, opening at prices lower than where they closed the prior day. In this situation, you should not short a forex stock which has gapped down unless and until it constitutes a new low during the day after 10 A.M.

Using the 10 A.M. rule helps to ensure that you will never end up chasing and purchasing a forex stock whenever your likelihood of creating a profitable trade are low. Remember, trading is all about probabilities. The more forex stock investing trades you make having a high possibility of success, the more successful you will be. The 10 A.M. rule is a valuable addition for your trading plan, giving you a straightforward way of preventing making costly mistakes and also to improve your number of profitable stock investing trades in forex.

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