How To Invest In Stocks

How To Invest In Stocks For Perfect Exists

Exiting a Trade.

Unlike entries that are best taken off the 21, 50 or 200 period moving average, preferable exits are executed away from the moving average.

How you intend to exit a trade should be apart of your day trading rules.

How does a trader determine his profit target?

1. A stock market trader would look to take profits at an area below minor or major resistance.
The astute trader would look to the left of their chart or time frame that they are trading in order to determine any potential resistance areas ahead

If the trader does not find a resistance area ahead the trade would then look on a long time frame to see if the longer time frame has any resistance levels ahead.

For example: trader Joe takes an entry in ANGR stock near the 21 day moving average on the 5 minute chart.

Trader Joe sees that ahead is some resistance that was built up 3 days earlier where the stock failed 3 times to make higher highs or a new high when it reached that resistance level price level.

When trader Joe enters his trade, he anticipates that the stock will either blast through the resistance level ahead, however, he is not holding his breathe as history has shown that once the stock reaches the prior resistance level the stock fails to trade higher than the resistance price.

Instead the stock begins to trade in the opposite direction.

One of trader Joe’s day trading rules would stipulate that once the stock approaches the specific resistance area, Joe would either sell all or 2/3 of his position, in anticipation that the stock will reverse.

If the stock does indeed continue to rally, Joe is still in the trade and he has not violated his day trading rules by putting all his profits at risk.

He continues to derive benefit from the trade as it increases in price. However, if the stock does reverse, Joe has protected his initial profit and reduced his risk.

This behavior is typical of an astute and disciplined stock market trader.

We do not claim to foretell the future, but we do take precautions to ensure that the future is a profitable one.

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