weekend charting november 21, page-64

  1. 2,829 Posts.
    Richard,

    I think you are on the right path.

    There is no absolute right or wrong in this game, and chasing the "all winners" holy grail is pointless, for no other reason than who cares about the little fish.

    The point of all of this charting stuff is to get you to make better trades, no matter which ones they are, and the way to make better trades is to cut the distractions and focus on the ones which provide the most bang for your buck. Simple logic therefore tells you that the big "secret" is money management. TA and chart drawing is just the filtering process.

    The point I have been trying to get across with the forks is that the chart is there to tell you a story about where the price of an equity is, and how it got there. From that you might be able to deduce where it is probably going, perhaps to identify an entry point for a trade.

    IF you happen to be using the forks, then the lowest risk entry will be on the side of a line where price has been coming from, and the stop should be on the other side of the line. That gives you the biggest potential gain in the event of a reversal, and gets the stop as close to the minimum distance from entry as is possible. That is money management, and the same theory applies wherever you draw a line.

    If you go through my charts you will see places where I mark "test/retest". For me, the absolute safest place to enter is at the retest, short from a resistance tyne on a downwards facing fork, long from a support tyne on an upwards facing fork. After that, you need to monitor and move your stop loss following price (maybe at 2.5 ATR from the median or so, maybe closer if approaching a target). You will eventually get stopped out, but not before you have given it every reasonable chance, and that again is simple money management.

    IMHO just the fact that you are ceasing trading to review how you are going demonstrates a level of maturity which you can be proud of.

    If I was to offer advice it would be to remember rule number 1, "Never let a winner turn into a loser". Exit and re-enter at a later time if and when the odds are sufficiently stacked in your favour.

    If you focus on making your trades better, including better exits on your losers, the profits will come of their own accord. Many small wins are better than big risky plays, and a high proportion of smaller wins are a sign of a successful trader.

    T91
 
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