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Strategies & Market Trends : Technical Analysis - Beginners

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To: Trader X who wrote (11201)	2/1/2001 10:19:44 AM
From: Michael Watkins	of 12039

I trade tests of tops/bottoms and retracements, and as a result of the setups used, my stop loss is very narrowly defined - a single bar is almost always the extent of my risk. Eg, if I am going short on a retracement, I will follow the up bars in the setup with sell stop limits underneath. If the setup pans out, I'll be taken into the trade as price moves down below an up bar with my sell stop limit underneath. I immediately place a buy stop (not limit) just above the bar that I had the sell stop limit that took me into the trade. If it is a real retracement, price will not move back up there, and I'll get to move stops to break even fairly quickly and then follow down with a fast MA or other approach for managing the profit from the trade. If its not a real retracement, only a pause in a new (upswing in this example) trend or perhaps an ugly consolidation I shouldn't be in - well then if price moves up I am stopped out with minimum risk. Works in stocks, futures, whatever. I'm not sure how it would work with indicator based trading.

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