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>out for a loss frequently, often, 50/50, sometimes, seldom, or never.
Less and less as the years have gone by. Im pretty aggressive and
oftentimes I run close stops. In fact, I had a lot of trouble learning how
to keep my stops intact and often felt pretty helpless over the early part
of my trading life.
I do try and recognized when a trade isn't working out and exit before my
stop is hit. Probably 1 (if Im trading well) out of five get hit.
>I've watched as traders have used stops in about every way you can
describe. >Time after time they get burned.
Again, I think it comes down to learning to recognize setups and patterns
that have a high degree of correlation with change. I seldom trade a
breakout in terms of going with it. However, once a market has broken out
I will wait for a corrective pattern to set up and then buy/sell the thrust
from the pattern. This puts you away from the best entry point and further
from your initial stop, but by making the market prove it to you by
thrusting you vastly increase in the odds of the move continuing.
I also seldom make the assumption that support or resistance is going to
hold. I use to get stopped out a ton just by buying oversold at support
and selling overbought at resistance. Now I make the market prove it by
running the stops (spiking above resistance and failing for instance) or by
thrusting and taking out a level either beyond either support or resistance.
Look at today's setup in the Dollar index. A prior strong level of
resistance.... the market broke the uptrend on the original rally and now
goes and upthrusts the resistance. If you took a short position in
anticipation of the market failing... you got burned and stopped out in the
upthrust. If you are a breakout trader... you got long and then stopped
out... Note that after upthrusting and running stops and inducing new weak
longs.... the market promptly turned and took out yesterdays low.
This is a good example of a market where the stops have been run and it is
a fairly safe bet to enter (not a recommendation).
As far as getting burned, it happens. It is a cost of survivorship.
Sure if you can keep track of all the
>potential events that could make the market explode you might be ok.
I only keep track of one or two things. Frankly, I know when employment
and PPI are coming off and I pay little attention to anything else.
From
>what I could tell with all the possibilities for disruption you just don't
trade and that way you don't get in at the wrong time.
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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