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Calculating your profits

 

We are amazed at the number of traders that buy into a stock not knowing what their break even price is.

As with any trade it is important to know where resistance is and how like it is for the stock to reach your target and also if it is going to cover the brokerage.

This demonstration is more applicable to those just begining to trade as they usually have limited capital to trade with.

Let's assume that your initial trading capital is $5,000

The share price is $0.80

Divide the price ($0.80) into the amount available to trade ($5,000) = 6,250

6,250 is the number of shares purchased

Cost of share        $5,000

Online brokerage  $70

Other fees             $50

Total cost              $5,120  divide by no. of share 6,250

= $0.8192 the share price must rise above this price in order for you to break even. This is an increase of almost $0.02c that the share price must rise, so it is important to know where the most immediate resistance is and this way you can work out if it is worth taking the trade or not.

Always make there is a nice trading range for you to profit from.

Here is an example of a nice trading range..

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It is important to notice that in October a positive convergence pattern was also formed. Thus increasing the odds that this was a good trade to take. A perfect ascending triangle was also formed. This two clues together should have been suffice to justify a good positive trade.

    

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