Basic Stock Market Trading Strategies:
Breakouts, Pullbacks and Bollinger Bands
The stock market has been known to be the greatest creator of wealth on the planet; however, it is often quoted that 8 out of 10 investors are losing money on a daily basis. How can both these statements be true?
The problem that most investor fall victim to is that they are not prepared to invest in the stock market. They get a tip from a television show or website and throw all their cash in hopes of that wealth untold; however, the usual results is pain like nothing they have felt before. Investing in the stock market takes much more than knowing what to buy. You also have to know when to buy and how to buy. You need to be aware of how much to buy and when to cut your losses. Today, we would like to focus on the How to Buy portion that every trade must learn.
So, we put together a list of basic trading setups that any beginning investor must learn and master before throwing real cash into the market.
- Breakouts - A breakout is a stock price that moves outside a defined support or resistance level with increased volume.
- Pullbacks - Buying weakness and selling strength is the art of buying pullbacks. Pullbacks offer low risk opportunities to establish a trading position
- Bollinger Bands - Many traders use Bollinger bands to determine overbought and oversold levels, selling when price touches the upper Bollinger band and buying when it hits the lower Bollinger band.