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Looking at the Intel chart, is it an up or down trend?
In this situation, it’s in a down trend.
We want establish the support and resistance values to predict where the stock could take us.
This allows us to look at the trends of how the stock is performing so we can make the best predictions possible.
I could have purchased the put options earlier and “rode it all the way down” and taken profits where it bounces (or starts to go back up), which is where I would have gotten out.
To get started, I reviewed the 10-day moving average and I saw Intel “run up” and then start to sell off. I viewed this as a continuation sign that the stock would continue to sell off.
When the chart showed a red candlestick that told me it was time to close out the trade.
You might be asking yourself why I didn’t close out the following day and try to make additional profit. If I were to enter the trade earlier at a higher starting price, I could have potentially made more if the stock had fallen to it’s possible support value – but it didn’t happen that way.
I entered in at a lower price and I was trying to make profit off a smaller range at this time.
Once I made the majority of the profit, almost 50%, I didn’t want to push it… I could have potentially “blown up” my account by trying to get every last bit of profit from the stock, because sometimes it can turn around and reverse.
I think about how I can make the bulk of the profit… if there’s $5 to be made from the stock dropping, how can I make $3 of that $5?
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Image and article originally from thebrownreport.com. Read the original article here.