Since I wrote my last observations about having large Stop Losses, I have experience the following:
1. If I trade very small units, I can set very large stop losses.
2. However, the profit that I will make is also very small (a few cents).
3. I might have to wait for days while the gap climbs to 10 pips, 20, 30, 40.... 100 pips and then,
ranges for eternity at 100 pips away, whilst I wait miserably with nothing to do.
4. It might be better to carefully select the currency pair that is ranging, and put tight stops.
If I'm wrong, I don't want to wait forever... I prefer to be stopped out early so that I can
use my capital to enter another position.
5. Alternatively, If I can't find a nicely ranging Currency Pair, I can trade Trend (instead of
Range). To trade trend, I would switch to MACD. When the trigger crosses the MACD
in the upward direction, I would buy (long position). When the trigger crosses the MACD
in the downward direction, I would sell (short position). I would put very tight stops. I also
want to be out early if I am wrong.
Thursday, January 17, 2008
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