5. Determine your price scale

Once you have determined how many steps you want to take to enter your full position, you need to decide at which prices you want to enter each of those steps. You can determine these price levels using various strategies.

Some investors like to set their price scale by a specific dollar amount. For instance, you could determine to buy more shares every $2 or every $5 the stock moves up.

Some investors like to set their price scale by a specific percentage. For instance, you could determine to buy more shares every 5 percent or every 10 percent the stock moves up.

Some investors like to set their price scale by conducting a technical analysis and selecting individual entry points. For instance, you could conduct a Fibonacci analysis and buy more stock at each retracement level.

Let's use the technical analysis method in our ADM example. Looking at the chart of ADM, it seems to lend itself well to the following three entry points:

- The 38.2% Fibonacci retracement level at $27

- The 50 percent Fibonacci retracement level at $31

- The 61.8 percent Fibonacci retracement level at $35.50

This special report continues on the next page...

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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."