Is it really possible to catch bottom for stocks? (With Case Studies)

Catching bottom for stocks has always been an illusive goal for all traders. Everyone wants to buy at the lowest and sell at the highest in the stock market. However, often in the stock market, low will get lower and often many experienced traders will tell you not to catch a falling knive.

However, this blog think that with these few points it would be possible to catch bottom for stocks.

Point Number 1: Good risk reward ratio.

For instance if you were to catch a bottom at $1, your target should be a gain of twice or more than the loss you may incur when your stop loss is reached. E.g You catch a bottom at $1, your target should be $2 and your stop loss should be at $0.50. As such your possible gain would be $2-$1=$1 while your loss would at most be $1-$0.50=$0.50.

Point Number 2: Having a stop loss

Having a stop loss is like having an emergency exit, when things are wrong, you can quickly cut loss and move on. It is EXTREMELY important for a trader who is attempting to catch a bottom to have an exit plan should things go wrong.

Point Number 3: Be Disciplined with Point 2

ALWAYS BE DISCIPLINED WITH YOUR STOP LOSS. When attempting to catch a bottom, keeping to your stop losses are extremely important as fall in prices can be fast in the last phase of a downtrend.

Point Number 4: Wait for SELLING CLIMAX and reversal

https://satkitrader.wixsite.com/website/single-post/2017/09/10/Raffles-Medical-Bottomed

The above post is one good example of how a selling climax and a reversal bar could signal a trend reversal and a strong rebound. Always wait for extreme panic selling before looking picking a bottom for the stock.

Point Number 5: Try to catch bottom near previous strong support/consolidation zone

Previous consolidation zone always offer a good buying zone due to a strong support formed,hence picking a bottom near these zones offer a lower risk entry

With the above 5 points, it is definitely okay and possible to attempt to catch a bottom of a stock. The key thing again is to ALWAYS have a good reward to risk ratio, a stop loss and you will be fine. Having said that let us take a look at some case studies of our blog catching the bottom of various popular counters

1) Cosco

https://satkitrader.wixsite.com/website/single-post/2017/12/28/Cosco-Possible-bottom

2) Alliance Mineral

https://satkitrader.wixsite.com/website/single-post/2017/12/01/Alliance-Mineral--Retracement-ended

3) Raffles Medical

https://satkitrader.wixsite.com/website/single-post/2017/09/10/Raffles-Medical-Bottomed

4) UnUsual

https://satkitrader.wixsite.com/website/single-post/2017/11/06/UnUsual--Retracement-ended

5) Straits Times Index

https://satkitrader.wixsite.com/website/single-post/2017/10/02/STI--End-of-Correction-And-some-counters-turning

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