DislikedUSDCHF:
Possibilities here. PA close to EP area. Has WAVE. S&R= been bouncing along half number. Dragon and Trend starting to turn upwards.....and no news to muck it up for at least seven hours.Ignored
As the pics show, the TP was finally reached. But this only happened after an extreme whipsaw. One purpose of whipsaws (a tool used by the PPMs) is to run stops before they reverse PA and execute the planned drive. Folks that were long, but had close-in SLs, lost their positons just before the trade went the way they were thinking it would!
This is an example of why SLs are problematic. Not only can unscrupulous brokers "team up" at the time PPMs go to work, to run stops of their own clients, but if they don't the PPMs will get 'em anyway. Some suggest wide stops, some suggest narrow stops, and some suggest no stops.
The real question is whether or not you believe in the trade. The second question is have you traded light enough to withstand extreme whips or long duration drives against the trade. If you believe in the trade, have traded light, and find yourself attacked by a whipsaw or a long duration reverse move, then you have the power to decide at what point the trade is no longer "worth it". But with a SL, you have abdicated power to the market. And even though you believe in the trade, the market can use whips or longer duration reverse runs to remove you from your trade. ...........But, is that such a bad thing if you have a plan?
I read somewhere that it may be best to not use SLs at all. If at some point you decide to "cut your losses", make note of the price. Later, when price has finished moving opposite your trade and has run back to that price, simply get on board there again. And shouldn't this work really well with tight SLs?
Lots to think about. But one thing is sure. In the last two weeks or so, the market has demonstrated how even the most scientifically thought out positioning of SLs means nothing. When it wants to, the market just steam rolls right over them.