Zoran, position sizing is definitely one part but my take on that chart is to not let your losses get to big (cut them short - quick!). For instance, the chart below, the capture was taken just a minute or so ago shows where I hopped on the bear bus, if it goes past the pink line from that pennant formation I'm out, I'm on the wrong bus at that time so I'm not wasting any more on fares, I can always get back on. We'll see how it pans out, but it's only an example.
The problem that exists with PS'ing is that people tend to set their stop to it and then wait for it to be hit thinking they have to let it play out as they thought it would, yes, you need room to move but you need to preserve capital more.
cheers,
Mick.
The problem that exists with PS'ing is that people tend to set their stop to it and then wait for it to be hit thinking they have to let it play out as they thought it would, yes, you need room to move but you need to preserve capital more.
cheers,
Mick.