Watch our video on how to trade red to green move stocks.
Trading red green moves is very popular among traders. Red green trading has to do with price crossing above the previous days close line. In the video above we explain this strategy in depth, how to profit trading it, as well as how to set proper risk management strategies when you do. You can also read more below.
The previous days close line is a key area of support and resistance. As a result, trading red to green move stocks are a great place to set proper trading risk management, especially with penny stock trading.
If a stock crosses above the previous days close then that's a popular area to set a stop loss; because if price falls back below the previous days close then that's showing potential weakness.
On the other hand, if a stock crosses above the previous days close and holds then that might be a potential sign of strength and continuation. This post will be particularly highlighting red to green move stocks.
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It's always important to do your proper technical analysis of stocks and map out support and resistance lines before entering into any trades on red to green move stocks . Watch our video on how to draw support and resistance lines if you need more help.
The Ichimoku cloud is also a very helpful indicator when depending support and resistance levels and is also popular with options trading strategies.
The reverse is also true with red green moves. The process is the same but inverse. If you're looking to short a stock, which is a popular trading penny stocks strategy, then you would use the previous days close as overhead resistance and as your stop loss if price rises back above that level.
So, you'd watch to see if prices stays below the previous close and ride it down. If price reverses and starts to climb back over the previous close then that's a potential warning sign that the trend is reversing and might be a good place to cover your position.
We teach how to trade red green moves live in our stock trading rooms. Check out our trading services to learn more.
The orange dotted line in the picture above is the previous days close line that we added into ThinkorSwim. It's a special script that has to be added into the TOS platform.
It's easy to add so watch our video on how to set this up. Watch - Previous Day Close Indicator ThinkorSwim.
Remember that traders are creatures of habit and they pay very close attention to both red to green move stocks as well as green to red moves.
Just like traders watch stock charts, candlesticks, patterns, moving average lines, trend lines and so on...the red green trading strategy is another weapon in their arsenal.
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