In the world of trading, **supports and resistances** are essential tools for market analysis and determining entry and exit points. Let's take a quick look at this concept and its importance.
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What are supports and resistances?
- **Supports (Support):** A price level where a decline is expected to stop and the price starts to rise due to increased demand.
- **Resistances (Resistance):** A price level where an increase is expected to stop and the price starts to decline due to increased supply.
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Importance of supports and resistances:
1. **Determining entry and exit points:** Buy at support and sell at resistance.
2. **Risk management:** Set stop-loss and take-profit at these levels.
3. **Predicting price movement:** Helps to understand market direction.
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How to determine supports and resistances:
- **Manual analysis:** Observe the levels where the price stops repeatedly.
- **Technical indicators:** Such as moving averages and Fibonacci lines.
- **Practice:** Use demo accounts to apply these tools.
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**Tips for beginners:**
- Do not rely solely on supports and resistances; use other analysis tools.
- Be cautious of false breakouts.
- Practice well before actual trading.
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**Conclusion**
Supports and resistances help you make better trading decisions and reduce risks. Learn to use them step by step to improve your performance as a beginner.
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