The Best Patterns for a Consolidating Stock...READ MORE
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| The Best Patterns for a Consolidating Stock | | Sometimes, you have a great investment idea. Everything goes right. You make as much money as you thought you could make on the trade, and cash out.
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| | But then that trade goes even further. And you left money on the table.
We've all done that—and while it's fine to feel bad, it's better to get educated. Chances are the position that gave you a great return went from being in a big rally into a more sideways and stalled mode.
That's something called a period of consolidation. It's the pause that refreshes an existing pattern and allows it to go higher in time, as the first wave of profit-taking ends and new hands enter the market.
Like any chart pattern, it can play out over a period of minutes or as long as months. But no matter how you trade, different strategies are required to deal with the narrow trading range that an investment goes into during this time.
Given how often an individual stock, currency, or even an entire market can trade in a sideways pattern, however, it's a useful pattern to be able to recognize and even profit from, which you can do in a variety of ways.
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