Author: Tom Gentile

The Two Lines I Draw on Every Stock Chart

Prior to moving into trading full time I spent a number of years with a leading global home improvement company. One thing I learned in that culture is that a tool that serves multiple purposes is worth its weight in gold. Multipurpose tools are economical, time efficient, and allow you to accomplish much more than you planned due to its versatility.

In trading terms, one of the best multipurpose tools is the moving average – the average price data of a stock or ETF over a specific time period.

As I showed you recently, you can use a stock’s Simple Moving Average (SMA) to determine its direction. If the moving average line is on an incline going up from left to right, it tells you the stock is in an uptrend.  If it slopes down from left to right, it tells you the stock is in a downtrend.

But this versatile technical trading indicator is like a Swiss Army knife for traders… and it is one of the go-to technical indicators in my trader’s tool chest.

Let me show you what else it can do…

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The Secret to Using Stop Orders to Take Profits

This week we talked about different order types and how traders can use them to maintain a level of control over their trades even when they can’t watch the markets. They can assess their downside risk tolerance ahead of time and set their stops orders accordingly. But we didn’t really cover one of the most important – and perhaps most frequently issued – types of orders.

Stop orders.

A stop order is an order to sell a security at a given price. Some traders use dollar-based stops, others use percentage-based stops (not to mention the all-important trailing stop, which adjusts to lock in profits as your trade moves up or down).

But here’s the secret not a lot of traders know…

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