Friday, July 20, 2012

Plan the trade and trade the plan

A did a post on US stock Dean Foods here last month highlighting the profitable uptrend that was in play at the time.
The current chart which is below shows how the trailing stop made sure that you kept the vast majority of your hard earned profits before the trend reversed. This rapid drop is also a good example of why I never enter a position on a pullback - at what stage does a pullback or retracement change tack and become a full-blown reversal of the trend?

I ALWAYS buy on strength, and go short on weakness, as determined by my system rules.

And as I've mentioned on other recent posts, resolving to follow your exit rules in an unemotional fashion gives you the best chance of success and eliminates the possibility of seeing big profits evaporate - this chart being a great example.

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