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