Support and resistance is the core of price-action trading, and can provide you with amazing trading signals and even confirm your existing signals from indicators or fundamental analysis. In this article we will describe what support and resistance levels are and how to trade with them.

Support and resistance levels are psychological levels which price has trouble breaking. When price stops on a level from above and cannot continue downwards, the level is a support level. When price moves up and is unable to break higher than a certain level, it is called a resistance level. The more times price has tried and failed to break a level, it is said that it is more ‘respected’ by price and therefore it is stronger. We will only trade levels that have been respected by price at least twice, for ensuring that it is indeed a strong level and not just a temporary retracement.

We can trade these levels by waiting for price to hit a support\resistance level, and enter a reversal trade when price hits th level and begins to reverse. This is a strong signal that can provide you with good profits on many stocks and commodities. Another signal that is worth trading is the breakout: it occurs when price breaks through a level it was previously unable to break. Usually after this breakout the momentum is very strong and traders who have entered the trade early can ride a long trend with big profits.

Another interesting signal is the pullback. The pullback occurs after a level is broken, and price re-tests the level from the opposite side. What usually happens, is that the support level becomes resistance (and vice versa), and price continues with a strong trend in the direction of the breakout. This is a very accurate place to join the trade for low risk-high reward trades.

The importance of these levels is due to the fact that they exist in any tradable security, and their effect is present in any stock, Forex pair or commodity. By reading the charts correctly you will be able to predict movements of price, knowing when price will reverse and you could prepare with a countertrade, or filter your trades according to those levels. For example, if an indicator gives you a buy signal but you see that price is heading towards a resistance level, you will not enter and will prevent this imminent loss.

In conclusion, support and resistance levels can be a very useful tool in a trader’s arsenal, so learn and master their use for your long-term trading success.

Steve Sollheiser is a writer and a stock trader. Visit his site, www.StockChartPatterns.org for more
articles about chart patterns.

Most people tend to manage their own finances. At a certain level of investment, that’s usually a mistake, and it can be an expensive mistake. Even the most competent and independent people generally don’t have the knowledge base to cover all the issues in personal investment and wealth creation. Managed investments can cover a range of issues from capital gains tax on share trading through to the finer points of asset management, financial planning and superannuation options.

Self assessment- Do you need a financial manager?

There are some very simple ways of defining management issues with your investments:

• Are your investments impacting your tax returns? If so, you may find that this situation evolves into a real nuisance. These situations tend to evolve over time, and can become quite counterproductive if you don’t get assistance with tax management options.

• Do your investments consume a lot of time and space, doing things yourself? This very common problem actually costs money. Your time is being diverted from making money to administering it and doing “office work”.

• Are you constantly tinkering with investments? If you’re forever moving capital around and trying to get better performance out of your investments, you’re in danger of going nowhere. Best practice financial management is planned, not reactive.

• Are you unsure of your rights as an investor? If so, you’re definitely not alone, but this situation means that you may have issues with investment quality and performance. 

• Are your investments “treading water” or going backwards? Some investments can be truly spectacular under-performers. Not all financial products are good value, and some are much better avoided.

• Are you missing your financial targets? One of the greatest problems in financial investment is meeting your own expectations. The blunt fact is that investment has to be managed to hit targets and track performance. 

If you answered Yes to one of these issues, you’ll need to speak to a financial manager, preferably soon, to prevent escalation of the issue. If you answered Yes to more than one of the questions, you do need help, because your investments are already creating both current and future problems. These problems are already visible, and will need to be dealt with soon enough.

What’s now a nuisance can become a loss-making, expensive issue over time, sometimes quite rapidly, even with good investments. Under performing investments, by definition, mean you should be investing elsewhere. Non-performing investments mean you’re losing money, with an ongoing risk factor as well.

Getting professional help with your investments

The huge advantage of engaging professional financial managers is that you can quite literally have all the financial services you need on tap, getting expert level information and advice when you need it. Financial managers can also provide you with good investment options like managed funds, professionally managed funds which can keep your capital growing without all the issues of DIY investment administration and accounting.

Successful investment really doesn’t have to be hard work. Talk to a professional, and see what you can achieve.

Automatic stock market selling is a science, and it’s based on hair trigger systems geared to stock prices. It’s used widely by managed funds and day traders. These systems have been evolving since the 90s as a standard professional practice, and for those just starting to explore market behavior, they’re also a volume control, in which sellers lock in a price. A big volume of sales at a certain price isn’t some sort of mental aberration, it’s a considered process of profit making and loss prevention.

Automatic selling basics

Automatic selling is pretty simple. The buyer of stocks selects a price for sale, above and/or below the purchase price. The reason for these selections is to obtain a given profit margin, and to ensure loss minimization.

Making a profit

For example: A million units of stock is bought for $1.00. The seller sets a sale price of $1.23 as the trigger. The sale is conducted automatically, through the stock software. The seller doesn’t even need to look at stock prices. They’ll be notified when the sale is made.

The price is calculated on volume and on charges incurred for purchase and sale. The $1.23 includes 20% profit on the principle, and 3% to cover charges. That’s a simple $200,000 profit, clear.

Avoiding risk- Stop Loss orders

Traders don’t want to take any losses if they can help it. They prefer to maintain their working capital in one piece, and fast stock movements can happen at any time. There are various ways of hedging on investment risks, but automatic selling is by far the simplest and quickest way to avoid excessive losses, particularly in volatile markets.

This is one reason for sudden large volumes of sales on global markets.

For example:

The million units of stock above is bought by a managed fund for $1.00 is based on existing profit for a fund. The fund manager is developing their capital, and this $1 million dollars isn’t something they want to lose. The transaction is now based on risk management principles as much as a desire for further profits. The fund manager sets a Stop Loss sale price of 95 cents with the broker, (either directly or using supplied software), as a below the line sale price, to reduce risk from the outset, as well as an above the line sale price of $1.23 to get the margins described.

It’s a very good idea to consider the Stop Loss option in particular from the moment of purchase. Everyone takes some sort of loss on the stock market at some point, and minimizing the damage is definitely the best option for preventing damage to your capital base.

This methodology was developed by traders who were always at risk of a run on stocks even in the course of normal share trading . A trader holding any portfolio, including all blue chips, is always vulnerable to a major hit on a particular stock which can undermine an otherwise profitable trading portfolio quite easily.

Automatic selling is simple, quick and safe way of protecting your profits and your investments from loss.

Exchange Traded Funds have been so successful that the big financial groups are now getting interested. Deutsche Bank has opened up a range of ETFs on the DAX, and even the big mutuals are starting to try operating ETFs to provide more market exposure for themselves. This is partly because ETFs have become so popular that they’re pulling investment capital away from the traditional investment platforms. For SMSF investors, they’re gold.

ETFs deserve to be called “derivatives” in a sense few other financial products can claim. They’re based on hard equity values, to start with. They are literally derived from holdings, not variable earnings. That puts them several classes above other so-called investment vehicles, which are more like skateboards than any sort of “vehicle”. The lucky investors in the derivative junkyard skate along on nominal values until they have to come off.

ETFs have prospered because the equity and financial markets have outgrown the old investment products. They’re far more flexible than their 19^th century- based competitors, and they can target investment areas far more effectively. The average mutual or unit trust tends to be a generic product, with “growth” and other characteristics used as definitions of the nature of the investment. With ETFs you can invest across whole indices and classes of equity, quickly and efficiently, and trade them much more effectively.

There’s also a “class” factor in the ETFs. These are professionally managed funds, and the value of that was shown in the big 2008 crash. Some of the high unit value ETFs took a pounding, naturally, and weren’t helped much by the fact that the sudden loss of capital in the market reduced the high capital flow they needed. The lower unit value ETFs, however, were less affected as a group, and became day trader fodder, which was an interesting phenomenon in itself, because these traders are naturally very margin conscious.

Investors haven’t needed to hear much more than that to jump ship from the markets and head to more remunerative territory. That process has both identified a market for the major leaguers and left them with a problem: How to attract ETF investors?

Deutsche Bank is probably the best example of how the heavyweights are approaching the issue. The bank has had the good sense to use its name as a selling point, and being one of the world’s top banks isn’t exactly a turnoff for investors. The only real market resistance is coming from the fact that other ETFs are good investments. This is a highly competitive market, and getting investments away from the original ETF managers like Vanguard isn’t that easy.

If you’re doing DIY superannuation, you’ll be well aware of the spectacularly uninteresting options for investment available. Equity investments which produce demonstrated reliable ROI are thin on the ground, and those doing better than cash rates are comparatively rare.

Consider:

• ETFs are very easy to buy and sell.
• They don’t have the bells and whistles of mutuals, when you need to move money.
• They pay dividends, and do splits like stocks.

Check your options, because they may be exactly what you’re looking for.

Developing a plan of attack, executing a buy transaction for a particular currency pair, and then following market signals during the course of a trade are all simple enough tasks for the average forex trader to learn and perfect.  However, when it comes time to sell, even for the seasoned trader, there seems to be a nagging little voice in the shadows of the mind urging you to hold on for just a little longer.  Intuition can be a savior at times, but not if the programming has been dysfunctional.  The question remains, “Why is it so difficult to sell?”

The nascent field of investment psychology has actually gleaned a great deal of information from a variety of experiments conducted over the past decade.  Clearly, the difficulties a trader faces when it comes time to exit a position are comprised of both external influences and internal drives and motives.  We tend to be victims of social imprinting and our negative emotions.  In order to survive and thrive in a stressful forex trading environment, we must develop coping behaviors to avoid the potholes our minds have created for us.

From an external perspective, the act of buying is an affirmative and positive statement.  It is surrounded with hope and the possibility of good things to come.  Selling then becomes identified with the opposite end of the spectrum.  It represents stopping or saying no, and we will go to great lengths to avoid being branded a negative person.  While buying is imbued with hope, selling, usually done under stressful circumstances, is conducted with palpable fear that we are making a mistake.  The sad fact is that we remember our losses more than our gains.  When haunting memories of judgment errors persist of when we fell victim to selling out of fear or lack of resolve, we tend to succumb to natural inertia and resist any attempt to pull the sell trigger, no matter what the currency charts are signaling.

Selling is also associated with closure, which, more often than not in our lives, has been a painful experience.  There is a profound finality to closure, coupled with a feeling of sadness and regret that we could have done better.  Part of this is rooted in the desire for perfectionism, an increasingly pervasive cultural force in our electronic age.  Our workplace demands perfection.  Failure leads to dismissal.  Selling invites failure and inspires us to flee from the possibility of self-humiliation.  An aversion to admitting failure is not healthy for our mental psyches.  Denial is also a wonderfully handy, although ultimately dysfunctional, protector of the ego.  Denial leads to rationalization, which then results in procrastination, another deeply rooted psychological behavior.  Refraining from selling has now become a defiant act of a powerless and emasculated ego.

Is there a simple cure for the ingrained and self-destructive behaviors that inhibit our ability to be effective sellers?  Self-discipline is the key and must be developed through practice and repetition.  Professional golfers have learned this lesson well.  When under severe competitive pressure, particularly when putting in a golf tournament, a golfer reverts to a routine that he has practiced for endless hours to perfect.  He may take two practice strokes, reset his position, look at the hole one last time, and then putt.  His personalized routine is a way to remove his emotions or any external distractions from affecting his execution.  You, too, can develop a personalized “selling routine”.  Document the steps in your process, consciously follow the process in practice, and over time, it will become ingrained and easily executable.  Another “mental trick” worth trying is to ask yourself if you would invest more of your precious cash at the point where you should be exiting the position.  This evaluation is a harsh but valid discipline.

Developing appropriate coping behaviors take time and practice.  Perhaps your lack of resolve at selling could be handled best by changing your entire trading modality.  A very popular forex alternative these days is signal-based auto-trading.  These “hybrids” of managed accounts and auto-trading are offered by firms that audit the trades of traders all over the world, and then publish the results of their trading strategies for you to choose from.  You review and choose, and then convert the trading signals of your choice to real-time trades in your own account.  Your forex experience then “mirrors” the often successful and more experienced trading patterns of global experts, thereby eliminating any selling anxiety on your part altogether.

We should never lose sight that our ultimate goal is to increase our overall cash position.  Forex trade positions are only “temporary depositories” that must be converted to cash.  If the act of conversion, selling in our case, is becoming too difficult to handle, then self-examination is in order.  If self-discipline training does not do the trick, then other forex alternatives may be your best plan of attack.

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Among the most powerful and popular financial institutions across the globe is the stock market. Since this is the place where billions of money is being exchanged, many people are interested to know about the stock market history. This is not only significant for students or the people of the United States but this is also helpful for those who want to be involved in this market. Actually, the U.S.’ stock market history began over two hundred years ago.

It all started when the government of the United States funded the wars using bonds. These bonds were put up for sale to those individuals who wanted to make an investment in the country and with that they will be able to get some returns. Because of this strategy, new banks were able to grasp the idea and they thought that they should try doing the same thing. Private investors were the ones who participated in the funding and the banks sold a part of their ownership.

In 1792, the stock market history began to get more interesting as 24 merchants held a gathering on Wall Street. These people all had varied securities and stocks and they are all eager to exchange them for investment purposes. At the end of the meeting, they all agreed that they will meet each day so that they can continue trading. That was the highlight of the US stock market history.

When the 1800s came, more and more people participated in the stock market. It grew quickly and then it became a very powerful showground. Many companies started to invest as well and the government saw this as a way to fund for the country’s development. Thus, they turned to selling stocks for their endeavors. In this part of the stock market history, the New York Stock Exchange department became very significant.

In 1929, however, the stock market history began to show its descent. This was considered as the darkest period for the market. More than 100 billion dollars were lost on the part of the investors. Still, the stock market found ways on how it can stand erect once again. As we can see now, it has definitely reached new heights. This is yet another remarkable chapter in the stock market history.

When you think that stock market crash is imminent, do not panic. There are many ways on how you will be able to fight the circumstances. Read on and find out what you should do so that you can avoid losing all the investment you are counting on.

The first step is to bear in mind that you will grow old and soon enough, you will need help from these stock markets. Of course, there are times when your money flow will decline because of stock market crash but you should not quit the business so that you can keep ahead of your taxes.

Next is to rebalance wherever you think is necessary. Observe and take note of the winners in your portfolio. For instance, let us say that your target is to sell about 20% of international stocks but because of the stock market crash, you are forced to sell 30% more. Now, what you have to do is to invest in another sector. Hopefully, this will bring you back to your target. Bear in mind that your loss is not yet final until you make a sale. You can actually take your losses to offset the win. This way, you do not have to pay tax for the transaction you made.

If you do not have any winners at all, you should definitely begin to diversify. Ensure that you have enough investment in all asset class so that you can survive the stock market crash. These include the small, mid, large and international capital. Aside from that, you must also have enough in each style so that you can make an investment plan. These involve the growth, blend, value and balance. Stock market crash is not something most people are comfortable with but in order to stay alive during these times, you should be prepared to risk. Believe it or not, there are actually mutual funds that managed to gain more than their losses.

The most important thing that you have to do is to make decisions now instead of waiting for the stock market crash. Yes, you cannot control the market but still, you have control over the stocks you buy and sell. This is the right time for you to act against stock market crash.

You can definitely make money when you participate in stock trading. What you will do here is to buy and sell stocks and hope that they are in your favor so that you gain profits. The strategy here is that when you buy stocks you should on to them until their worth is more than the price you paid for them. That is the time when you should sell the stocks. The higher the difference in the price, the more you gain. This technique actually made stock trading popular. However, a lot of people only want to earn extra money that is why they get involved in stock trading. They buy only a few stocks and then they will wait until the time comes when it is appropriate to sell them. Now, if you want to do this for a living, there are important things that you have to consider.

First of all, you need to keep in mind that you really can earn a lot with stock trading. There have been a lot of people who bought stocks and then they sell them immediately so that money will keep coming. You can also do this but you have to be aware of the basics of the stock market first. These resources will serve as your foundation for education so that you will be able to beat the stock market. Investing properly can only be done when you are well-informed about the market.

The next thing that you have to do is to make sure that you have money to invest. Otherwise, what will you use to buy the stocks? Initial capital on stock trading is important. Even if you know how to buy and sell stocks when you do not have enough capital, you will not go anywhere. Finally, you will need a good program that will assist you in your stock trading activities. Most people do not think that this is necessary but in actuality they are very useful especially when you want a guide that will help you invest easily and correctly. Indeed, stock trading is a great way to earn for a living.