Chapter 5

The purpose of the target price is to achieve a profit based on reasonable expectations of reaching it. There's no point in expecting a stock to go up 100% in one day. Very very unlikely. That makes in unreasonable goal. Not likely to get paid on that expectation.

Many decades ago, some people developed some formulas for a reasonably achievable price for a stock during the present trading day. There were also target prices (expectation formulas) for a stock movement covering a multi-day period.

Here we will look at the single day target prices.

The prices are set once before the market has opened. The normal formula have a center price called the Pivot price, and upto 4 additional turning points (where the stock might reach and then stall or reverse). They have also been called Support and Resistance lines because they act like them. The good news is this formulas are known to many traders.

There have been many indicators and theories over the decades, but this one is worth mentioning because it works well. Some theories work for a few years and then fail. Some never worked very well but were still popular. This one works for a specific reason: many professional people (with large accounts) trade according to it. If you consider that markets are driven by people, and the bigger accounts have more impact on the market, then any popular theory will affect the market because the trader will act accordingly. This is why some theories work for a while; until they people stop trading accordingly.

It worth noting that there are a few unpublished formula for these target prices. Those unpublished ones are also in the Wall Street Genius software Day Trading program. They are one of the most helpful tools available to Day Traders.