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Stocks when to buy, when to sell


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When to buy and when to sell ?

How do you determine what price to pay (buy-side) or get (sell-side) for a particular stock ?

Many traders do not understand the meaning and use of price support and resistance, or trendline support and resistance.


They can very well be the traders best friend. Trading on the use of these key price areas when they hold and when breakouts occur can be the most rewarding of all trading strategies.

All to often traders fall into the pit trap of buying on the dip, you know a stock price pulls back, greed then comes into play and traders buy because they think the stock price will quickly return to previous levels and beyond. Don't get me wrong many times buying the dip will get some positive results, but to do it blindly can often create financial loss.

Remember as the saying goes " stocks go down for a reason ".


Buying stock because the price has pulled back and now seemingly cheap from what it was, can be a very quick way a trader can lose their capital. You see if the stock price is falling in price and keeps dropping what has really happened is because of some sort of negative news, the stock share probably broke key support levels and is now spiraling downward.(this can be a bottom fishers worst nitemare.)

the same holds true on the upside. A stock share price keeps moving higher and higher, so shorts want to move in thinking the stock will pullback. But in this case the stock may have broke through key resistance levels, in which case a pullback would be minimal, and a very dangerous situation for the short.

When a breakout occurs the old support/ resistance now become the opposite of what they were, an important point to remember....

So before buying on the dip, or going short on the high....look first to see if the the most current trendline/ or key support/ resistance has been broken.... and don't forgetb those Moving averages particularly the 50 and 200 are they support or resistance



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Page Updated Mon Jul 2, 2001 11:03am EDT