[ Note: I personally do not recommend that you buy stocks that are subject to auto reject, because they are highly volatile and train your heart. Stock prices subject to AR left can go up, but can go down even more / subject to suspension. If you buy a stock price that is subject to AR right, and it rises very quickly at the beginning of session I, you might not get the item, if you chase it at a high price, it could mean that the stock price has stuck, or even corrected. Because AR stocks fluctuate quickly and are usually used for short trades, if you want to buy AR stocks, you are at your own risk and profit. ]
Before going into the main topic of this post, if you don't understand the term auto reject (AR), please read the post: Meaning and Illustration of Auto Reject Stocks. In the previous post, I have detailed about auto reject. After you read and dive deep into my writing, suddenly you have a good question:
"Brother Heze, can I earn money by buying auto reject shares?"
Before you know the answer is yes or no, you must understand the trend of stock price movements the next day after being hit by an auto reject. And most importantly, you should pay attention to the first paragraph of my writing: Notes.
You need to know, when a stock is hit by auto reject above / right auto reject, the next day's price movement will usually tend to strengthen significantly up to 6-7%. But this increase took place very quickly, even within minutes of the first stock market opening (at 09:00). After a 6-7% increase, the stock price will slowly decline slowly but surely.
Notice, the trigger word in the sentence above is "usually". That is, what I wrote above is not an absolute formula. Remember, there is no definite formula in the capital market. Stocks that are affected by the above auto reject, will generally experience a significant price increase at the beginning of the trading session the next day, but not always 100% the same thing happens to the above auto reject stocks.
So in conclusion, if you want to buy auto reject stocks above, I suggest you trade for scalping (trading for a matter of minutes) only. With a note, the stock did show a significant increase in the early session, meaning that the stock will be lifted fast for the next few minutes. However, if the stock is illiquid, the bid and offer queue is small, I suggest avoiding the stock.
I give an example of a stock that has been hit by auto reject above, namely: PT PP Properti Tbk (PPRO). On April 13, 2016, I observed this stock until the first session the price increase was still normal. In the afternoon, PPRO's stock price has been hit by auto reject right. Because I was very surprised and happy because I held quite a lot of PPRO shares, I immediately looked for information about PPRO issuers, and it turned out that the PPRO share price increase was hit by auto reject right due to the significant increase in PPRO issuer's profit. The closing price of PPRO at that time reached 290.
The next day, during the first 15 minutes of the stock exchange, PPRO's share price immediately jumped to a high of 320. After that, PPRO's price fell to 276.
Then what about stocks that are subject to auto reject below / right auto reject? Stocks that are subject to auto reject below are what I actually don't recommend for you to buy.
Stocks that are auto-rejected on the first day, the next day's trading are usually prone to auto-reject left again, or don't auto-reject but experience a drastic drop in stock prices, or don't even trade on the next day (usually fried stocks). Stocks that are subject to auto-rejection are generally due to bad news that causes a large negative sentiment, resulting in a massive selling action that causes stock prices to drop drastically.
But right, if the stock gets auto reject, it means the stock price is already low, why not just buy it if the price is really low? Your protest.
You're right. Stocks that are subject to auto-rejection go down, especially for a few days if you look at the chart, the stock price will look very visible dropping through its supports. However, if you take a closer look at my words above: "Stocks that are auto-rejected on the first day, trading the next day are usually prone to auto-reject left again, or don't auto-reject but experience a drastic drop in stock prices, or don't even trade on the next day. day", then stocks that are subject to auto reject are very risky for you to buy even though the price is already low.
For example TAXI stock. In December 2015, TAXI shares were left auto reject, due to bad news. This auto reject apparently lasted for 4 consecutive days. Try to imagine, if you buy TAXI shares on the second day of autoreject, your shares will definitely bounce, because on the third and fourth days they are still subject to auto-rejection.
Does that mean you can't get money from stocks that are auto-rejected below, don't you think?
Not really. Back again to the TAXI stock example. After 4 days of auto reject left, the next day on 17 December 2015, TAXI suddenly increased to 34%. This means, if you buy TAXI shares when TAXI is up 8%, and then you sell them that day, then you can earn 15% more, right?
So, if you want to buy a stock that has auto reject left, my advice is that the stock is still liquid (from the bid-offer side), and the stock at the beginning of the session has already given signs of rising stock prices (can be marked by a fairly rapid increase in stock prices at the start of the session).
I think that's all I can say about auto reject in this post. Hopefully useful for you.
