Have you ever asked yourself whether a stock you own could have been bought much earlier than the buy point Investor’s Business Daily or some other stock pick service suggested? When market volatility hits, it’s hard not to think to yourself that if you had only bought your stock earlier, you would have had a cushion to weather market conditions better.

Most stock pick services only give stocks buy points when they’re near their highs, hence the cup-and-handle, flat base and other chart patterns that you always hear about. Stock Confidential provides its subscribers with these, too.

But the truth is that there often are MUCH earlier buy points that begin with a stock’s initial reversal move off its lows, followed by a series of what are called “measured moves” as the stock’s momentum carries it higher.

More and earlier buy points as provided by Paul Johnson’s Stock Confidential mean that by the time a stock is getting ready to break out to new highs, you’re often already sitting on some nice profits, and about to enjoy even more!

The earliest buy point is when a stock gives every appearance of exhausting its downturn and is about to reverse directions and start to move higher

Among other things, Stock Confidential looks for three different reversal candlestick patterns—all of which gain in predictability the greater the number of down days that precede them. You don’t have to use candlesticks to spot these reversal patterns, but some investors find that candlesticks convey a lot more of the emotional context behind a move.

They include the inverted hammer, the doji, and the hammer reversal chart pattern.

In Paul’s opinion, the inverted hammer is the most potent and reliable chart pattern analytics signal of a pending reversal move, and I’ll show you two examples shortly. Note that it looks pretty much like an inverted hammer, with the handle or “shadow” as it’s called above the head of the hammer. It shows that the stock tried to move higher at one point during the day but was forced back down. Think of it as a coiled spring that’s been pressed down and is ready to spring back up again.

After a stock flashes one of these early reversal candlesticks, it often goes on to move higher in stages. These are called “measured moves.”

Here’s cloud-based human capital management software company, PayCom Software, symbol PAYC, showing Stock Confidential’s early $120.96 buy point and the other measured move buy points.

The stock formed a descending trend line and an inverted hammer reversal candlestick pattern just one day later. Then, Paycom formed a short, “buttonhook” consolidation pattern, giving subscribers a second buy point, and yet another measured move buy point a little above $137. This chart shows a 19 percent total gain—all of this while IBD had not even given the stock a buy point and was telling subscribers that a “new base was forming.”

Here’s patient monitoring products company, Masimo Corp, symbol MASI, forming a buttonhook chart pattern with an early buy point at $107.60, then another measured move buy point at nearly $113.

The gains reflected in this chart? Over 13 percent! Meanwhile, IBD’s buy point was over $5 higher, at nearly $127!

And if we had the time, I could show you dozens of other highly-profitable early trading opportunities that others overlooked.

Volume plays a big part in chart pattern analytics, but there are a lot of misconceptions about it, and sometimes it’s hard to know what it’s telling you.

The truth is that it doesn’t always accompany a stock’s early moves off its lows, probably because it takes a while for investor sentiment to change, and few understand the significance of the reversal chart patterns I’ve shown you.

On the other hand, when a stock is near its highs and breaks out of an explosive chart pattern—like a cup-and-handle, a flat base, etc. you should expect strong volume. But here’s a little secret. Sometimes it doesn’t kick in on the day of a breakout move, but a day or two before, or a day or two after!

Volume typically grows quiet just before a stock breaks out of a chart pattern. Isolated spikes in volume while a stock is setting up— sometimes accompanied by a pullback in price— is usually a shakeout of the last few weak holders or some last-minute buyers stepping in.

Technical indicators play an important role in chart pattern analysis because in moving to or remaining at high levels when a stock is setting up in a bullish chart pattern, they’re confirming the likelihood of a big stock move.

Paul Johnson uses a wide variety of moving averages and technical indicators to spot the biggest movers before they take off, but the three he considers the most useful are money flow, relative strength and stochastic indicators.

The money flow indicator takes both price and volume data into account, letting you know how aggressively investors are buying or selling a stock.

Relative strength tells you whether a stock is outperforming or underperforming the general market..

The stochastic measures a stock’s momentum and has two lines that compare each day’s closing price with the stock’s previous trading range over a specific period of time. As with the other indicators, staying at a high levels or better yet, an aggressive move to higher levels is bullish.

It pays to follow leaders with strong track records for earnings growth, or up-and-coming companies that dominate their industries. That’s because the big institutions that dominate market action want to invest in companies with the most promise-- even when their stocks have pulled back temporarily.

It’s these institutional investors’ buying power that shapes the chart patterns I’ve shown you— and ultimately causes stocks to explode higher.

Paul uses IBD’s proprietary rating system on stocks, and looks primarily at a stock’s EPS or earnings-per-share rating, and its “SMR.” The SMR bundles sales growth, profit margin and return on equity ratios—all into one metric. Most of the stocks on Paul’s twice-weekly watch list have EPS ratings in the 80s and 90s (99 being the highest), and A or B-rated SMRs. By the way, Paul Johnson checks the EPS and SMR ratings for each of the stocks on his watch list, saving you the trouble of having to do this yourself.

Most, but not all leaders have these strong fundamentals because some are busy reinvesting what they make into future growth.

Most investors don’t realize that there are times when it’s relatively easy to make money in the stock market if you’re following the right stocks.

The fact is that three quarters or more of all stocks move in tandem with the market indexes, so it makes little sense trying to swim against the current. That’s why performing chart pattern analytics on the market indexes is important.

Market indexes, like stocks, move in trends. In an uptrend, a market index makes higher daily highs and higher lows. Here’s a chart of the Nasdaq Composite’s rise at the end of 2018 and the first part of 2019, courtesy of StockCharts.com.

The rally was kicked off by climactic volume and yep, another inverted hammer reversal pattern. Meanwhile, our three technical indicators all hit oversold readings at about the same time, then started moving higher. Note that several of the moves higher are confirmed by higher volume, indicating strong institutional buying, and on some days, the index was closing very close to its intraday highs—a very bullish signal.

There is money to be made during any market conditions for highly-experienced traders, and Stock Confidential brings these trading opportunities to its subscribers, but in most cases, you want to avoid placing trades during downtrends, which are simply the reverse of what I’ve shown you, or during markets where there is no clear trend.

Chart pattern analytics is a great way to spot stocks setting up to make explosive moves, but to maximize your gains and minimize your losses, you need a clear selling strategy. Paul suggests limiting your losses at three to five percent in choppy market conditions and seven percent, or less in strong, up-trending markets.

Hopefully you’ve found these “Six Steps to High Profit Trading & Investing” helpful in achieving your investment goals. However, if you’re still not sure of yourself, or you’re looking to jump-start your education by seeing these strategies in action, why not try Stock Confidential free for two weeks? Or, take advantage of the big savings and free “earn-while-you-learn” tutorials you get with an annual subscription!

Sign up right now and become a confident, more profitable investor.