How To Invest In Stocks

One of the biggest challenges that stock market traders and investors face is answering the important question of when and how to enter trades.

The 3 most important parts of a stock trade is the entry, exist and the management of a trade.
When dealing with the first part of the trade, the perfect entry, traders and investors have to follow their trading plans.

So let’s assume that you have not developed a trading plan, how would you determine how to enter a trade?

1. An astute trade would seek to find an entry point at or near an area of heavy support.

In earlier lessons we concluded that areas of heavy support would be the 50 day moving average, and the 200 day moving average.

a. These areas would be perfect entries for swing traders who are looking to hold the trade for 2-7 days from the 60 minute chart.

2. For the day trader, the best entry would be taken from the 15 minute chart and the closest area of support would be the 21 day moving average.

3. For those of us who enjoy scalping the stock market, the best entry would be taken from the 2 or 5 min chart and an ideal area of support would be the 21 period moving average.

Why would traders decide to take their entries of moving averages?

As explained in the lessons on moving averages, traders always want to take their entries at or near the moving averages as the moving averages act as areas of support and resistance.

If a trader wants to go long ABGD stock, the trader has to evaluate their risk versus reward before entering the stock trade.

As you know have learnt, the 21 day or 40 day moving average will act as a support to push the stock higher.

Buyers reside at the moving average, so if the astute trader wants to reduce the risk on the trade, their will opt to enter a trade where they know they have support from other buyers.

Please check the below example of a long buy, at or near the 21 day moving average. An astute day trader would enter the trade in this area.

• How To Invest In Stocks : Existing Stocks For Maximum Profits
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