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Stocks Education Channeling Stocks
One of the basics of the education process taught by BetterTrades in Atlanta is a strategy known as channeling stocks. Students just getting started in the stock market often choose to start with channeling stocks, because the strategy is not complicated and doesn't require a ton of money to get started.
A channeling stock is one that moves with a predictable and repeatable pattern between two prices over a short period of time. At BetterTrades students are taught to purchase the stock when it reaches a low point, known as the support level, and sell as it approaches the high point, known as resistance.
Under the channeling stock process, a student might purchase a stock at $2 when it begins to move higher (called bouncing off support) and sell it at $4 when it approaches the level of resistance. This transaction would produce a $2 profit. Multiply that by 100 shares and it's a $200 profit. Multiply it by 1000 shares and it's a $2,000 profit. Since the stock is moving in the same repeatable pattern, it's theoretically possible to do it over and over again. Stocks may move in the same pattern multiple times before they break down or break out.
Channeling stocks may be readily spotted on the charts. The up and down motion can jump out at you if the stock is going sideways. Channels for stocks that are moving up or moving down may be more difficult to find, but anyone who attends a BetterTrades class in Atlanta can potentially learn how to spot them with a little practice.
Because a student who is using the channeling stock strategy is actually purchasing the stock, it is usually limited to stocks with affordable price tags. It's difficult to buy enough shares to make a profit when a stock is priced $25 or higher. In other words, you probably couldn't afford to buy enough shares of a $100 stock to take advantage of its channeling move.
