Watch The Whipsaw
In trading, all we do is pick the setup, place the trade and take our
chances. Some (hopefully more) work out to be profitable and others do not. Here
is a recent setup that appeared to be a success, yet provides a good example of why
we preach consistently about using stops.
14:58:37
Everest Real Estate (RE)
is making its move out of a pullback from the recent high. RE is currently
up 3.07 to 76.05 and has a 3-month
relative strength ranking of 88 from TradingMarkets.com.
The stock rises more than 2 points from the entry trigger, so a
successful trader would take profits on half the position and move the stop up
to break even from the low of Friday’s bar at 72.00.
When RE gets whipsawed today, the smart trader has a small
profit, rather than letting his trade that had a 2 profit on paper, turn into a
loss. Setups do not exist in a vacuum, they must be utilized in conjunction with
proper money management if one wishes to remain in the game.
Until tomorrow,