DislikedWhat I still don't get, however, is where the stoploss is placed if you are entering far from the SMA. From my understanding, the official guideline is that the stop should be placed an arbitrarily far distance away from price on the opposite side of the SMA. If price is already very far from the SMA, however, following the guideline would lead to a ridiculously large stop. So, I guess the stop should also be moved to the trade-side of the SMA, based on perhaps a key support/resistance level? If anyone knows the answer to this, please let me know....Ignored
Let's say there is a particularly strong trend underway and you make the decision to jump onboard while price is, say, 100 pips away from SMA200. As you correctly identify, a traditional stop placement (i.e. the emergency stop) is going to provide an absurd level of risk. In that case, I would suggest placing an emergency stop around the SMA but (and this is a key BUT) then actively managing the trade using trendlines and speedlines. Once your trendline is broken and the dominant trend is seen to be weakening, you can make a decision whether to take profit, take partial profit or stay in for the ride.
Hope this helps.
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