TRADE LESSON: WATCH THE PAST TO UNDERSTAND THE FUTURE
Often when stocks or indexes fall there will be good support levels for bounces. Therefore, you want to look at multiple time frames and have a chart that goes back several months to find intraday trades and possible 1-2 day swings. In this example on MGM the stock was in virtual free fall and found support in the $8.80- $9.00 gap window area. This was identified by InTheMoneyStocks.com traders by looking back to the September 3rd date and seeing a gap window. It is also important to recognize that MGM has been down quite a bit and well off it's high. Therefore, after an extended move lower it is due for a bounce. Remember nothing declines in a straight line. Always remember to use stops and once the trade is in the money take half the trade off for a profit and move the stop into the money or break even. Then you can look to sell the rest of the position at the next strong resistance level.
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