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Stock Split Trading System

Stock Split Trading Strategies

Stock Splits occur because shares are priced high, and the company issuing the stocks wants to make the stocks more easily available to the public.

This is a self-fulfilling prophecy because the public loves it when stock they already own splits.

There is of course, no intrinsic value to a split, because the underlying value of the company does not change.

Most stock splits take place when a stock is priced at around $100 - but there are exceptions, e.g. K-Tel which split when it was around $40 - a share.

As time goes by you'll see more and more stock splits, because the price of stocks keeps on going up.

So the theory is that Stocks are more affordably prices so Private, Online, Young, Investor Clubs, Small Business, Institutional, Individual, Multex & First Time Investors can buy them.

In practice, however, especially in the short run, the price of a stock most times increases dramatically upon the announcement of a stock split.

So the earlier you find out a stock is splitting, the more money you can make because of the anticipation of the stock split.

Keep track of the stock prices of any high-priced stock for a day or two and see if it increases. If it increases in price consider buying it at 9 am on a day when all economic indicators are positive.

Where to get the Stock Split News, Upcoming Stock Splits, Calendars, Information, Reverse Stock Splits, Recent Stock Splits and Announcements for investing?

Briefing.com
Cnnfn.com
Bloomberg.com
CNBC

Check out "streetq.com" for rumors.

When to buy:

If an announcement happens during normal trading hours, buy immediately "at market".

If the announcement happens after trading hours make sure the following day you wait until 9 am to buy, and then only buy if the stock shows some upticks and the Market as a whole is positive.

Generally a stock will show the biggest increases within the first 4 or 5 days of   the announcement.

Then it will slow down a bit and then it usually keeps on increasing, also depending on general Market conditions until the day the stock actually splits.

On the day Investors actually receive their split stocks the price of the stocks may drop dramatically because speculators cash in their money.

However, most of  the time the stock after this slump will out-perform the Market, because they keep rising for the same reasons that caused a high valuation and the split.

So you should continue to watch it for good Day Trading investment opportunities.

After Hour Buy?

If you hear at 4:30 PM that the ABC company has declared a 2 for 1 split, and you know this has been a good company with a nicely moving stock, you probably should try and get in after hours. More times than not split announcements are met with next day buying. Try a few paper trades first and see how it works out.

There are several trading techniques, strategies and systems and you need to determine the most appropriate for your trading personality. We know it will take some time and you want to start making money tomorrow but Rome was not built in a day. Please take a deep breath, relax and check out the links below: