Wednesday, September 05, 2012

One that got away

This particular Italian stock I had come across a couple of weeks back, and put on a watchlist, but missed the actual long signal being given. More fool me, as can be seen by the subsequent explosive uptrend. This particular signal is showing a profit of approximately +20R in just over a week. Nice if you can catch one of these!

My guess is that even if you caught the long signal, the majority of traders would have closed the position relatively early on in the uptrend, either by exiting at a pre-determined price target, or by referring to some oscillator that you have signalled an overbought condition. It is these types of trades, where you let the trend play itself out, and go for the absolute returns, that give trend followers their overall positive expectancy - they pay for all the small losses, and leave plenty left over as clear profit.

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