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How to gauge risk for a complete newbie: #Stocks

If you've hesitating, second guessing or wondering where it is a good price to enter a stock while keeping risk low ect.. .

Here is a simple method you can use to gauge risk.

I will keep it very simple, so lets go!

Thread 👇
First thing is first, make the 20sma and the 200sma (simple moving average) your friend.

What a moving average does, it simply smooths out the direction of price over the last 200 candles or 20 candles on a chart:

It is as simple as that
To keep this simple, we'll be using the 20sma (pink)

keep this in mind: Price will always return to its moving average, whether through price or time.

Using $SDC as an example, anytime price has moved away from it's 20, it eventually magnets back to the 20 sma
So in its most basic form, the faster and further price moves UP & AWAY from the 20sma, the more your risk is increased. (read that again)

The faster and further price moves DOWN & AWAY from the 20sma, the more your risk is increased if you are looking to short.

Let's take a look at $FVRR do you see how far price has moved away from its 200 & 20sma?

If you're experiencing fear of missing out and asking yourself should I get in??

You should reconsider, why? because the odds of price coming back to the 20 are increased.
When you have price accelerating away from it's key moving averages, specially when there is equal spacing between the 200, the 20 and price,

Most of the "meat on the bone" is gone per say.

This is where you wait for consolidation, or and a restest of the 20 to consider entry
One final example on $OSTK you can see that when price moved far away equal or greater distance from the 200 and 20, the odds of a snap back rally increased.

Stock recently tested the 20 again, which would have been a lower risk entry.

So to summarize 👇
If you are just starting out, your odds are increased sticking to stocks trading above it's 20sma on the daily chart.

There is no one size fits all strategy, this is just a very simple technique you can use to take the "guess work" out of gauging, whether the price you enter👇
has more or less risk, it can help you reconsider and improve your entries dramatically.

The higher the risk, the smaller your share size should be.

Watch this price action, and over time, you will start improving your trading dramatically. ✌️

Thanks for reading!
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