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Trading The Stock Market

Stock market commentary, analysis, insight and opinion of the RightLine Editors is available every Tuesday/Thursday evening & Saturday afternoon. The following is excerpted from the:

January 22, 2019 - The RightLine Report

Notes From The Editor

Thomas Sutton, EditorOne of the best parts about being a trader is that it gives you a front-row seat to the market's daily happenings, and puts you in touch with its ever-changing pulse. But the knowledge and insight you gain from observing stocks isn't limited to short-term trades; it can also help you with longer-term trading, or even with investing.

In the course of pursuing daytrading, swing trading, or other short- term set-ups, you'll inevitably run across stocks that also look great from a longer-term perspective. This is powerful stuff! When you find one of those stocks, make it a point to keep an eye on it - not just over the coming days, but for several weeks or months.

For example, let's say a stock has been trading in a large ascending channel for a few months. You first notice the stock when it's in the middle of that channel. Although that's not the best place to jump onboard, you know that a pullback and rebound from the bottom of the channel could afford a great longer-term entry point - especially if the market is in Bull mode. Similarly, a rollover from the top of the channel might offer a bearish entry point.

Using this simple observational technique, you can gradually build an evolving list of potential set-ups. This will add a powerful element to your trading strategy: time. Using longer-term set-ups, you can take advantage of gradually-evolving trends and underlying market tendencies that unfold over weeks and months, rather than days.

And what about stop placement? As a general rule of thumb, it's a good idea to give these trades much more room to breathe; you don't want to get stopped out by intraday "noise." One idea is to take a look at the stock's typical trading range over the course of a week, and then double it. This would be your initial stop. Also be aware of any upcoming earnings reports or other scheduled news announcements that might influence price action.

The market is as flexible as you want it to be. Customize your trading strategy to your own personal goals and preferences. Work with the flow of the market, rather than against it. Your account will thank you!

Here's to profits,

Kent Barton
Senior Analyst

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