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When it comes to momentum trading, there are sort of two approaches that you can take. One is to buy as the stock is squeezing up right here. The problem is when you're getting in as something is pushing higher your stop. It's way down here before the move began, so unfortunately this can position you with a lot more downside risk because you don't know if you're getting in at the very top or if it's going to continue higher.

The other way to get in is to wait for a pullback like this. This is is where you're buying a dip and you're getting in down here or right here. When you buy on pullbacks like this, you set your stop at the low of this most recent wave. This becomes our support level.

All right. So we're buying at support. When we come back up through the highs, we expect resistance, but rather than buying into resistance, we're already in at a good cost basis and we can take profit and sell as it extends higher.

By Stock Chat

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6 thoughts on “Buying the dip at support”
  1. Avataaar/Circle Created with python_avatars @JASHALL10 says:

    Except when you buy on a pullback, it can be reversing or going even lower. There are pros and cons to each.

  2. Avataaar/Circle Created with python_avatars @ChrisConti-dw2pu says:

    Awesome! This is what I need more of, thank you!

  3. Avataaar/Circle Created with python_avatars @mrdirexion says:

    I prefer getting in on pullbacks. I almost always buy at the top otherwise.

  4. Avataaar/Circle Created with python_avatars @infinitelyllc says:

    Thank you! 🥰

  5. Avataaar/Circle Created with python_avatars @slydon75 says:

    Good tip

  6. Avataaar/Circle Created with python_avatars @EGR370 says:

    How would one know if the stock will go higher once I buy?

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