Sunday, 18 October 2009

Very dangerous way

This is - a very dangerous way to enter the market. Trade looks great when the market moves in your direction, but what will you do if the market spread and go the other way? Surprisingly, most traders do not have a good answer to this important issue. Thus, they stiffen like the Rabbit in the boa, looking at the schedule, when faced with the cruel reality.

Persecution of the momentum may well work if the trader chooses to deal wisely and pay close attention to two important rules. First, always set your acceptable risks before trading. Choose a fixed percentage of the loss or use the graphical model in a shorter time scale for the output signal, if the market goes against you. Secondly, make sure that the broader market picture implies adequate support for your strategy.

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