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Definition of
Recommendations
Buy the Dips -
Traders ought to just buy this stock whenever it goes down, as long as
its trend is still up. In this case, watch the indicated support level
to determine if the strategy of buying the dips is still appropriate or
not. During uptrends, support levels should not be violated or else the
trend may change to sideways or even down. Buying on dips, during an
uptrend, is the safest way to get into a stock.
Sell on Strength -
Traders ought to just sell this stock whenever it goes down, as long as
its trend is still down. In this case, watch the indicated resistance
level to determine if the strategy of selling on strength is still
appropriate or not. During downtrends, resistance levels should not be
violated or else the trend may change to sideways or even down. Selling
on strength, during a downtrend, is usually a good way to get out of a
stock.
Hold - The stock is
very much in an uptrend but is already too high to buy. In this case, if
you have a position on the stock, you ought to just hold in order to
maximize the uptrend. I usually place an asterisk (*) beside the support
whenever I give a hold recommendation. The reason for this is that the
support may not necessarily be a major one but only a suggested stop in
order to protect whatever gains you may have had already.
Take Profits - The
stock is still in an uptrend but the suggested stop got hit. In this
case, I am trying to protect whatever gains one has had already. The
worse thing that could happen to anyone in the market is turn profits
into losses. When I recommend taking profits, it does not necessarily
mean that the stock would go down, eventhough it could.
Buy on the Breakout
- This tells you to buy if the resistance is taken out to the upside. In
cases like these, the stock is usually in a downtrend or in a sideways
trend and it is assumed that a break of the resistance will cause the
stock to change its trend into an uptrend. Although quite risky at
times, buying on the breakout would mean buying on the first sign of an
uptrend. The reason why this is quite risky is because one is assuming
that a change in trend will happen. In the stock market, one ought to
just follow the trend, and not assume that a change will happen. On the
flip side, if the breakout is indeed legitimate, one would be able to
buy at the earliest sign of an uptrend. I usually place a plus sign (+)
beside the resistance whenever I give a 'buy on the breakout'
recommendation.
Sell on Breakdown -
This tells you to sell if the support is taken out to the downside. In
cases like these, the stock is usually in an uptrend or in a sideways
trend and it is assumed that a break of the support will cause the stock
to change its trend into a downtrend. Although quite risky at times,
selling on the breakdown would mean selling on the first sign of an
downtrend. The reason why this is quite risky is because one is assuming
that a change in trend will happen. In the stock market, one ought to
just follow the trend, and not assume that a change will happen. On the
flip side, if the breakdown is indeed legitimate, one would be able to
sell at the earliest sign of a downtrend.
Trade the Range - In
this case, the stock is usually in a sideways trend. During sideways
movements, the stock simply oscillates or range trades between its
support and resistance. Traders who specialize in buying lows and
selling highs usually thrive during these situations. Just make sure to
respect your stops, in case the stock starts to trend.
Buy if Support Holds
- In this case, the stock is usually in a sideways or upward trend and
is currently approaching or testing support. When this happens, I
recommend a buy on the first bullish candlestick reversal. This
recommendation is similar to "buy the dips", except that one
will be buying when the stock is already moving up. If buying the dips
is a safe way of going long, this recommendation is even safer. Remember
though that a stock in an uptrend is always safer to buy as opposed to a
stock in a sideways trend.
Sell if Resistance Holds
- In this case, the stock is usually in a sideways or downward trend and
is currently approaching or testing resistance. When this happens, I
recommend a sell on the first bearish candlestick reversal. This
recommendation is similar to "sell on strength", except that
one will be selling when the stock is already moving down. If selling on
strength is a good way of selling, this recommendation is even better.
Remember though that a stock in a downtrend is always more probable to
go down as opposed to a stock in a sideways trend.
Trading Buy - This is a
situation wherein the stock is trending down but is already in an
extremely oversold condition. This type of strategy is quite risky for
those who do not know what they are doing since one is going against the
trend. Mind you, when going against a stock that is trending down, one
may never know where the bottom is. However, one may profit quite
quickly and significantly using this strategy since a stock that is in
an extremely oversold condition has the potential to rebound rather
strongly. While this strategy may be the most risky of all, because of
the gains that can be achieved, it is certainly worth it.
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