Once you understand the concept of a trend, the next major concept is that of support and resistance. You’ll often hear technical analysts talk about the ongoing battle between the bulls and the bears, or the struggle between buyers (demand) and sellers (supply#. This is revealed by the prices a security seldom moves above #resistance) or below (support#.
Figure 1 As you can see in Figure 1, support is the price level through which a stock or market seldom falls #illustrated by the blue arrows#. Resistance, on the other hand, is the price level that a stock or market seldom surpasses #illustrated by the red arrows#. Why Does it Happen? These support and resistance levels are seen as important in terms of market psychology and supply and demand. Support and resistance levels are the levels at which a lot of traders are willing to buy the stock #in the case of a support) or sell it (in the case of resistance). When these trendlines are broken, the supply and demand and the psychology behind the stock’s movements is thought to have shifted, in which case new levels of support and resistance will likely be established. Round Numbers and Support and Resistance One type of universal support and resistance that tends to be seen across a large number of securities is round numbers. Round numbers like 10, 20, 35, 50, 100 and 1,000 tend be im
via Technical Analysis: Support And Resistance | Investopedia.
We’ve already mentioned that there are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective. Bonds Grouped under the general category called fixed-income securities, the term bond is commonly used to refer to any securities that are founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out. The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed, or risk-free. The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities. (The Bond Basics tutorial will give you more insight into these securities.) Stocks When you purchase stocks, or equities, as your advisor might put it, you become a part owner of the business. This entitles you to vote at the shareholders’ meeting and allows you to receive any profits that the company allocates to its owners. These profits are referred to as dividends. While bonds provide a steady stream of income, stocks ar
via Investing 101: Types Of Investments | Investopedia.
Albert Einstein called compound interest “the greatest mathematical discovery of all time”. We think this is true partly because, unlike the trigonometry or calculus you studied back in high school, compounding can be applied to everyday life. The wonder of compounding (sometimes called “compound interest”) transforms your working money into a state-of-the-art, highly powerful income-generating tool. Compounding is the process of generating earnings on an asset’s reinvested earnings. To work, it requires two things: the re-investment of earnings and time. The more time you give your investments, the more you are able to accelerate the income potential of your original investment, which takes the pressure off of you. To demonstrate, let’s look at an example: If you invest $10,000 today at 6%, you will have $10,600 in one year ($10,000 x 1.06). Now let’s say that rather than withdraw the $600 gained from interest, you keep it in there for another year. If you continue to earn the same rate of 6%, your investment will grow to $11,236.00 ($10,600 x 1.06) by the end of the second year. Because you reinvested that $600, it works together with the original investment, earning you $636, which is $36 more than the previous year. This little bit extra may seem like peanuts now, but let’s not forget that you didn’t have to lift a finger to earn
via Investing 101: The Concept Of Compounding | Investopedia.
The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit. It’s actually pretty simple: investing means putting your money to work for you. Essentially, it’s a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And that’s exactly what most of us do. There’s one big problem with this: if you want more money, you have to work more hours. However, there is a limit to how many hours a day we can work, not to mention the fact that having a bunch of money is no fun if we don’t have the leisure time to enjoy it You can’t create a duplicate of yourself to increase your working time, so instead, you need to send an extension of yourself – your money – to work. That way, while you are putting in hours for your employer, or even mowing your lawn, sleeping, reading the paper or socializing with friends, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job. There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or star
via Investing 101: What Is Investing? | Investopedia.
When flipping through stock charts, an investor should look with a wide-angle lens.
Sure, a cup-with-handle base needs only seven weeks to be valid. But your focus shouldn’t be primarily on that almost-two-month range. Many cup bases consolidate for much longer — some up to a year or more. You don’t want to miss those longer bases.
The long cup can hold an advantage over shorter bases. Common sense suggests that the longer a stock consolidates, the fewer weak holders are present.
Uncommitted holders can be driven out two different ways. The anxious desire to break even can lead to selling. But weak holders also can be worn out by time.
In a short consolidation, the weak holders are probably holding shares through most of the base.
But if a stock consolidates over months or longer than a year, many weak holders will be driven out by their own impatience before the stock reaches break-even levels.
Other circumstances also can lighten the overhead supply.
via How To Invest: Long Bases Shouldn’t Be Ignored When Looking For Great Stocks To Buy – Investors.com.
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