One of the less known stock market secret that lies right in front of our eyes is the 45 degrees stock. Not many people are even aware of this concept. Even those who have been studying the market and dabbling in the market for years forget about this simple secret.
I think its not really a secret when it is so obvious to the eye. But when so many people are not aware of it, I guess we can call it a secret. And at the end of every chapter, I would like to highlight one stock market secret so that you the reader can benefit from these simple truths that others ignore.
Take a look at the charts below. What do they all have in common?
If you thought that a stock that is making a 45 degrees is too expensive, you would have missed out on big moves to the upside. The reality is that there are many people who are trying to find bargain stocks and bottom fish. You will make more money in the stock market by looking for stocks that are in a weekly uptrend making a 45 degrees upwards slope.
The same principle holds true for trading stocks. If you look at daily charts, your odds of making money will increase if you only trade stocks that are making a 45 degree uptrend on the daily charts.
The charts below show JPM and NVDA making a 45 degree angle on their daily charts. If you were a trend and momentum trader, you could buy the stock and hold it for a few months and make a lot of money.
The beauty of trading only 45 degrees stocks is that it not only works on weekly and daily charts. In fact, you can apply it to lower time frames such as the 60 min chart.
Try and trade only stocks that are making a 45 degrees angle on the 60 min charts. Watch how your success rate goes up.
The chart above shows how FB was in a 45 degrees angle on its 60 min chart. Look how beautiful the stock rose.
This principle works as well for indexes. The chart above shows the SPY in its 60 min time frame. When the SPY is making a 45 degrees angle, the whole market will rise and many stocks will rise with it.
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