Support & resistance...how I pick safe entries (with good risk/reward).
Coming from a former account blower upper (i'm trademarking that!).
After 10 years of trading, my first instinct is always *how do I best protect my money?*, and THEN it's *how to I multiply it?*.
Not the other way around.
I'm guess I'm kind of a doomsday prepper, but the trading edition? Anyways...
I always protect myself by adding at:
- areas with previous price support & buying activity
- which typically acted as resistance first.
This gives me both a line in the sand (I get out if it's broken), and a low-risk add area.
$Palantir Technologies Inc.(PLTR)$ is a beautiful example.
If I'm looking at the chart, I say..okay price rejected $150 in late June, resulting in a big red reversal candle.
Gotcha, now I know this is a strong area of contention.
Fast-forward to mid July, PLTR breaks $150 to the upside, then re-tests the level on a downside flush in early August.
It holds.
As a bull, now I have a level.
Set an alert, and next time it comes down to that level, that's your chance to enter long with low risk.
The $150 level was just seen AGAIN in late November, and look what happened.
+15% in a few days.
Strong levels will be obvious...but remember, they act as rubber bands and can stretch, so wait for candles to close.
For SG users only, welcome to open a CBA today and enjoy access to a trading limit of up to SGD 20,000 with upcoming 0-commission, unlimited trading on SG, HK, and US stocks, as well as ETFs. Find out more here.
Complete your first Cash Boost Account trade with a trade amount of ≥ SGD 5000* to get SGD 688 stock vouchers*! The trade can be executed using any payment type available under the Cash Boost Account: Cash, CPF, SRS, or CDP.
Other helpful links:
💰Join the TB Contra Telegram Group to Get $10 Trading Vouchers Now🎉
How to open a CBA. How to link your CDP account. Other FAQs on CBA. Cash Boost Account Website.
Comments