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