Monday, April 22, 2013

Adhering to your stops

I was in a long position on this Italian stock, from the signal given in mid-March, until I got stopped out on Friday when it breached my stop level on an intra-day basis. I'm glad I did, seeing what has transpired this morning.

I always place stops when I open a new position, and NEVER move them further way from the current price. I update my stop levels as per the system rules, even when confronted with a stock that may be in the process of 'pulling back'. One man's pull back or retracement is another man's potential trend reversal. I simply let price action take me out of the trade - there is no manual overriding of the system rules. If I did, then what's the point in having a system?

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