When do you trust your charts over price movement?
If you have traded at all then you’ve had the experience of purchasing a security and having the price immediately move against your position. Why not bail on the position and buy the other side immediately? If you did you’d be whipsawed into poverty. No one wants that to happen to themselves.
When your charts are telling you one thing and the price movement is telling you another how do you know when to trust your charts and not price movement? I consider this a trading widget. Beginners should learn this one rule first. It’s what I call the “Sleep-At-Night” rule.
If the price moves so far away of your purchase price that you wouldn’t be able to sleep at night because you are worrying about the loss, then it’s time to get out of it.
The flip-side is that if you’re going to stay up late saying “I could’a, would’s, should’a…” then you shouldn’t be in that position. I’ve stayed up late worrying about the losses but I’ve also stayed up worrying about the profits I “should’a, could’a, or would’a taken if I was thinking right. Since I’ve been using my rule I sleep much better at night my trading is also much more profitable.
So how are you sleeping at night?
Patrick
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