Featured Tactic: Lowball Orders

One of the simplest yet most powerful orders any individual investor can use is the "lowball." I love 'em - especially in market conditions like these - because they can help you grab quality stocks on the cheap at exactly the price you want. Moreover, they're one of the few orders that cannot be gamed by institutional traders who would otherwise love to separate you from your money. And, finally, there's no risk in "hanging" the orders out there because you miss 100% of the shots you never take - to paraphrase hockey legend Wayne Gretzky.

Here's how they work.

1. You line up with one or more of the Unstoppable Trends we're following.
2. You select a stock that's beaten down or otherwise out of short-term alignment with long-term valuations, fundamentals, and earnings potential. Ideally, it's not just any old stock. I talk constantly about maintaining a "buy list" of companies you want to own if you get the opportunity to pick them up at a dramatic discount. To me, this is Apple at $70, Tesla at $200, or even Facebook at $60. Your list may differ; my point is that you have a list... at all times.
3. You pick an entry price that matches your expectations, your risk, and your belief about what your intended purchase is really worth. In most cases, lowball orders align nicely with logical "support" or previous lows that can be chosen based on the time frame you're trading. While there is no hard-and-fast rule here, many traders find being within 10% and 15% of the most recent annual low is fertile hunting in choppy markets.
4. You place your order to "buy XYZ at $ or less GTC" - meaning "Good till canceled."
5. Then you wait for a price dip. Why really doesn't matter. It can be an overreaction to "bad" news, a sector pullback, a down day in the market, or anything else.

What you're hoping to catch is exactly the type of unusually large market move that happened yesterday at a point in time when other traders are not thinking clearly and have unfairly punished prices along the way. Your goal is to buy at levels others believe are "impossibly low." You'll know you're in the neighborhood if your friends tell you as much.

I call this "capitalizing on chaos," and it's something you'll hear me talk about a lot for one simple reason - days like yesterday are a great way to maximize your profit potential, even if there's more selling to come and even if you're early to the trade.

Buy low and sell high is how the game works.