| Trading Tips and Tactics of the Wall Street Pros | | | | think of support as a floor that the stock hasn't |
| Trading is a different game altogether than | | | | seemed to crash through in a long time. |
| investing. When you're investing, it is best to look | | | | Staying 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 minimum | | | | The good news is that once a stock finally pierces |
| of one to five years, or even longer. An | | | | through its resistance, it can go to the moon. |
| undervalued stock with a price unfairly beaten | | | | Traders 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-week | | | | going higher. |
| highs are more appropriate for trading. This is | | | | By the same token, once a stock falls through its |
| because traders care more about the technical | | | | floor, it is likely to go down and down until it finds |
| chart patterns of the stock than its actual | | | | new support. This might be a support level at |
| business. As a trading pro, you're looking to hold a | | | | which it previously bottomed out several times in |
| stock for a maximum of a month or two, but | | | | years 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 a | | | | to buy stocks that are in a long-term uptrend and |
| person with an iron gut and nerves of steel. Most | | | | are 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 story | | | | Stick To Your Plan |
| or even a hunch, but you should never actually | | | | Before you buy a stock for trading purposes, |
| execute a trade without analyzing the stock's | | | | decide 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 rarely | | | | for 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 at | | | | Remember, you bought this stock for trading |
| its one-year chart, and connecting the spikes up | | | | purposes, not as an investment. If your trading |
| over time (its peaks) and its spikes down over | | | | strategy doesn't work, don't compound the |
| time (its troughs). Generally, trading pros only risk | | | | problem by failing to stick to your plan. |
| their capital on stocks that are trending up over | | | | Trading 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 jargon | | | | strategies. |
| among Wall Street trading professionals. | | | | But if you have the necessary discipline, and the |
| "Support" generally applies to a stock that is | | | | thought of your net worth going on a |
| headed down over the short-term, but may be in | | | | rollercoaster 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 stock | | | | for you. |
| seems to bounce back up over time. You can | | | | |