Tips - Buying at support level and selling at resistance level

While doing stock trading the one of the tips or strategy could be to buy stocks at support level and sell stock at resistance level. Normally any stock tends to trade in a narrow range with very limited liquidity and volume. At such situation maximum of the stock investors avoid entering in these stocks but stock trader thinks this as good stock trading opportunity as long as these stock are trading in their specific price zone range. Stock traders always keep monitoring these stocks and enter in such stock pick at their support level and normally exit at their resistance level.

Say for example XZY Company stock is roughly trading in a very narrow range of $52 to $55. Stock trader immediately enters in such stock at $52 and exist their position near to $55.

Now you might be thinking of how stock trader makes out to enter in this stock at $52? Looking to the previous chart history of this stock the stock traders immediately make out $52 as strong support zone. In many previous sessions this XYZ stock had came near to $52 and had bounce back and not made a downward breakout of $52. Whenever this XYZ stock had touch $52 or is very near to it a significant buying had emerged and stock has bounce back from $52 and this gives a clear indication that at $52 the XYZ stock has strong support which could be a buy signal at anytime if this stock touches or is near to $52.

Precautions to take
Stock trading has always been risky as no person in world would give you 100% prediction. Now in above example XYZ stock shows strong support at $20 but unfortunately if the stock breaks $52 and moved further down with significant increase in average volume clearly gives a signal that this stock had break its support level of $52 and at such point making a stop loss near to $50 to $51 could be a very good sensible strategy for avoiding any significant money loss.