Saturday, July 13, 2013

The big money is in the big swing

When you get into a trade that produces a major trend such as those shown below, all you need to do is simply wait for an exit signal to be given, denoting that the trend has finished. You need to resist the temptation to close the position, either for fear of losing open profits, or simply because you want to hear the cash register ring.

I've seen people not make as much money as they could or should have done, or their system suggests. This is simply as a result of taking profits too early. They may use proper risk management, and take their small losses on losing positions, but by not letting big trends play themselves out they destroy the inherent positive expectancy that a trend following approach has. Make sure you don't fall into that trap. Remember what Jesse Livermore said: "the big money is in the big swing".

Incidentally, despite my own system being towards the shorter end of the timeframe scale, the stocks shown below have been trending for quite a while now, and are still going strong.





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