How To Trade Stocks Like The Pros

Trading Tips and Tactics of the Wall Street Prosthink of support as a floor that the stock hasn't
Trading is a different game altogether thanseemed to crash through in a long time.
investing. When you're investing, it is best to lookStaying with the above example, "resistance" is
for companies with solid business fundamentals,like a ceiling. It's the price level at which the stock
possibly near their 52-week lows.seems to bounce back down once it's hit.
Your objective is to hold the stock for a minimumThe good news is that once a stock finally pierces
of one to five years, or even longer. Anthrough its resistance, it can go to the moon.
undervalued stock with a price unfairly beatenTraders love a stock that breaks through the
down is a beautiful thing to a patient investor.ceiling because there's nothing holding it back from
By contrast, stocks that reach new 52-weekgoing higher.
highs are more appropriate for trading. This isBy the same token, once a stock falls through its
because traders care more about the technicalfloor, it is likely to go down and down until it finds
chart patterns of the stock than its actualnew support. This might be a support level at
business. As a trading pro, you're looking to hold awhich it previously bottomed out several times in
stock for a maximum of a month or two, butyears past.
more likely for days, hours, or even just minutes.Stocks that face resistance or support are
Trading can be exciting, and it can be stressful.unlikely to break through. Trading pros typically like
Not everyone is cut out for trading - it takes ato buy stocks that are in a long-term uptrend and
person with an iron gut and nerves of steel. Mostare just bouncing up from support. Or, even
of all, however, trading requires discipline.better, they like to buy a stock as soon as it
Is The Stock Trending Up or Down?breaks through its resistance.
You might get a trading idea from a news storyStick To Your Plan
or even a hunch, but you should never actuallyBefore you buy a stock for trading purposes,
execute a trade without analyzing the stock'sdecide at which price level you will sell it for a
chart.profit or loss. Trading pros typically let winners run
A stock that is in an overall downtrend is rarelyfor 20 percent or more, but always cut their
appropriate for trading.losses at 7 percent with no exceptions.
You can determine the stock's trend by looking atRemember, you bought this stock for trading
its one-year chart, and connecting the spikes uppurposes, not as an investment. If your trading
over time (its peaks) and its spikes down overstrategy doesn't work, don't compound the
time (its troughs). Generally, trading pros only riskproblem by failing to stick to your plan.
their capital on stocks that are trending up overTrading takes serious discipline, and if you can't
time.commit to your strategies, then you should
Is The Stock Facing Support or Resistance?probably stick to less volatile wealth building
"Support" and "resistance" are popular jargonstrategies.
among Wall Street trading professionals.But if you have the necessary discipline, and the
"Support" generally applies to a stock that isthought of your net worth going on a
headed down over the short-term, but may be inrollercoaster of ups and downs doesn't make you
either a long-term uptrend or downtrend.nauseous, then active trading just might be right
It refers to the price level at which the stockfor you.
seems to bounce back up over time. You can