subject: Learn breakouts in stocks [print this page] Learn breakouts in stocks Learn breakouts in stocks
The profits of waiting for the retest is that the weak traders who were shaken out will now want to re enter and will strengthen the trend as you gain in profits. You also have additional confirmation of your trend and a higher success. The biggest set back to waiting?There is no one perfect way to trade and no one perfect entry. traders must take into account several factors including the current trend, the larger time frame trend, the strength of that supply or demand level, and even the time of day for intraday trading, or time of year for swing or position trading.
That's why the failure rate among new traders is so high. For a new trader, they are taught to buy at high levels and sell at low levels. Think about how you were taught to buy into a market. Most traders around the world buy stocks so let's think in these terms. We were all taught to buy a profitable company, with a strong balance sheet, excellent management, and good profits ,earnings, and when the price of the stock is in an "uptrend." Think about it, where do you think the price of the stock is when all these items are true? It can't possibly be anywhere close to wholesale demand levels. The stock can be expensive to buy at these levels.
Many trading books teach buying the breakouts of resistance being the area of supply . Think about this: If everyone buys the breakout, then what traders are left to help push prices higher? This is why many stock market breakouts tend to fail. Aside from the overall trend influence, if the buyers have bought immediately on the breakout, the prices will stall as there is no one left to buy and move the stock higher. This can also cause panic selling.Stock market news releases are one aspect of the market that most new traders miss read as useful in making trading decisions. That's because most unsuspecting investors don't realize that the market looks forward and is anticipatory in nature. When was the last time that you recall the stock market putting in a major low on a wonderful economic news release? The same is true if a stock reports bad news.
