I have my mech systems. But basically I look for either an X%
move off a low (typically 4-8% for a 2x ETF) or a clear breach of
long term resistance.
I don't believe that any indicators or TA predict the future. At
all. Therefore there is no way to distinguish a breakout from
a fakeout ahead of time. Therefore you are inevitably going
to be faked out, probably more times than you catch a breakout.
Therefore the key is to (a) trade all the not-obviously-dumb
breakouts and (b) manage your risk very tightly with position sizes
and stops.
Why I'm against averaging losers is that it's a strategy that
depends on buying a stock in a downtrend. This means that you are
committing to losing money up front, and continuing to lose money
so long as the stock goes down. Either that, or at some point you
cry 'uncle' and eat the loss.
It's also very psychologically traumatic!
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I have my mech systems.
uyg
Posted by unsane on 19th of Feb 2009 at 04:55 pm
I have my mech systems. But basically I look for either an X% move off a low (typically 4-8% for a 2x ETF) or a clear breach of long term resistance.
I don't believe that any indicators or TA predict the future. At all. Therefore there is no way to distinguish a breakout from a fakeout ahead of time. Therefore you are inevitably going to be faked out, probably more times than you catch a breakout. Therefore the key is to (a) trade all the not-obviously-dumb breakouts and (b) manage your risk very tightly with position sizes and stops.
Why I'm against averaging losers is that it's a strategy that depends on buying a stock in a downtrend. This means that you are committing to losing money up front, and continuing to lose money so long as the stock goes down. Either that, or at some point you cry 'uncle' and eat the loss.
It's also very psychologically traumatic!