When I am a beginner at trading, I wished to learn a lot about trading strategies and subject. Now in the article, we are going to cover the basics of trading. These strategies will serve you years to make good trades.
- Rubberband Method
- Support and Resistance Method
1. What is a Rubberband Method
Rubberband method is quite simple and easy to understand. It is used to find out when a stock breaks its support or resistance point. Let’s have a look at the image below.
Let’s assume a human being tied to poll with a rubber band. He runs to 10 meters distance then he will be tired to move further, due to pressure with Rubberband and poll. He moves back to 8 meters distance. He Somehow gets energy and starts moving further, Now he reaches 14 meters. Now he is tired at 14 meters so he comes back to 12 meters distance.
In this situation, The support point of the person is 12 meters and the second support point of the person is 10 meters. So the place where the stock gets support from the buyers is called support point. The last traded least position can be considered as a support point in the rubberband method. Rubberband method helps a lot for intraday traders to calculate support and resistance points.
2. What is the Support and Resistance Method
In the Rubberband method, we are able to find what is support and resistance point. In this method, we can calculate the moment of stocks to make some good trades.
A stock moves in between support and resistance points. Before breaking these important points, The stock moves in between for a lot of times. With the perfect calculation and by knowing what is support and resistance points. A trader can make good trades.
Let’s take an example: The certain stock is trading at 95 points,
Support of the stock: 90 Points
The resistance of the stock: 110 points.
Buy call at 92 points
Stop loss 85 points.
As per the above-mentioned example, The trader can make the profit for the number of times, stock trades at support and resistance points. There are chances for the stock to break support or resistance points. The probabilities of profit making will be high in this method.
The article is completely about knowledge purpose. We do not suggest any advice any trades.