Stop, If You Don't Read This It Will Cost You Thousands Of Dollars When Trading Penny Stocks: Trendlines
When trading stocks there is a saying that goes like this “A Picture is worth 1,000 words.” in this article we will identify positive and negative trends when trading penny stocks. Using technical analysis helps you get an idea what traders and investors are thinking about in any particular stock. All you have to do is pull up a monthly weekly or daily chart and you can get a quick idea if you have a positive or negative trend.
TheStockWizards.net uses some very basic technical analysis 101 to help you understand how simple it is to identify a trend. So if you’re new to trading to technical analysis this will give you a great education and a good start.t
When trading penny stocks, or any kind of market in general, the goal is to have your money work for you as fast as possible without being considered dead money. Using some of the basic principles in this exercise can help you build up your trading and investing accounts very rapidly if you time your trades and investments wisely with precise timing.
Most chart technicians (traders) that use technical analysis identify trends with trend lines. Trend lines are a very basic form of technical analysis but a very powerful technical tool.
How to Draw Trend Lines
A valid trend line is comprised of two or more points on a price chart connected by a straight line. The origination point of the trend line is not necessarily the high or low point of the price move. A proper trend line starts from when the actual move begins. The two points on the trend line should be between two pivots. These swing points should have enough price movement to construct a trend line capable of containing the trend. The last component of a trend line is the third point, which is contained by the trend line constructed by the first two points. Trend lines are like every other indicator in that it may not work as intended for every security. So, if you find that the price continually breaks the trend line, do not force it on the chart. Use some other indicator to gauge the direction and trend of the security.
You can see on the chart that the Dow industrial average made a top in the beginning of October 2007. Then it attempted to rally back in early 2008 only to make a lower top in May of 2008. This is where the trend was established. You can see were we drew our trend lines. To establish a current trend all you have to do is connect the tops, Lower highs and lower lows just like it states on the chart.
To view more charts concerning this article please click here:
Published By blogerzoom
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About the Author:
Dana Salvo has personally traded Penny Stocks for over 15yrs. I have developed trading techniques that consistently make me money. My techniques & strategies are simple but very powerful. Traders and investors tell me all the time that “you cannot apply technical analysis to Penny Stocks.” My trading techniques have been proving people wrong for over 15 years.
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