If buying a spike best to assume it will retrace 50% of the...

If buying a spike best to assume it will retrace 50% of the height of the rally once the short term excitement fades. So what does that mean ?

Lets assume that the rally is the start of a longer uptrend.... If the rally started at 20.5c and if you bought at 27.5c (then assuming the stock will retrace 50% of rally) the stock would need to hit 34.5c so that when the inevitable retrace occurs it does not fall below your entry price...

Or Conversely ...Wait for the retrace to occur and enter once the sell down appears to run out of steam and new buyers start bidding price up again.

Ask yourself which is the greater risk at this price buy in now or wait??

It really comes down to how far you think this spike will go... If it goes higher then 34.5c then your clearly better to buy now. If you think it won't then better to wait. If the buying interest is super strong it may not retrace 50% maybe only 40% or less...


Now if your a long term holder then it doesn't matter so much where your entry is... But no sane person would want to pay more than they have to ...

Just a bit of advice for the Novice traders ..is all.