An individual stock almost never goes up or down more than 5% in a given month.

Which means that if you but XYZ stock on the 1st day of the month for$100, the odds are very good that on the last day of the month, your stock’s price will be somewhere between $95 and $105.

Not guaranteed, of course, but this is a phenomenon that repeats over and over. And it’s a phenomenon that can be very useful to an investor.

First, as a panic control. If you’ve bought an investment that you know to be good and solid, this rule can help to keep you from selling at just the wrong time.

Let’s say you buy at $100, and the next morning the stock opens at $94. Maybe some bad news, or maybe no discernable reason at all. In this case, resist the urge to sell. Because very likely, the price will come back. Probably not immediately, but often in the next week or two.

And an investor can often use this rule to sell covered call options. In our hypercritical case, you buy 100 shares at $100 per share, and immediately sell, for example, that week’s $102.50 calls for -again, an example – $2 per share.

And because of our 5% rule, it’s likely that your stock won’t change enough (that is, go over $102.50) to trigger a sale. You can go on to do this over and over until the stock breaks out of the 5% channel.

Bottom line: look for numbers. Statistical odds can be found on many things in life. Find those odds and use them to make your life better.