Well, I don't know which strategy I'm actually using... so I can only tell you what I actually DO most times. I usually attempt to recognize when price is not moving, and catch it as it begins to move out of an area... I.e., I try to catch the transition from NRB to WRB. As to the WHY... I KNOW price can only stay in NRB for a certain period of time, and what follows MUST be WRB, and that also will be short lived. The conditions upon which the trade works seems more defined that way, but that is just based on what I think I see. MP
My son started to get some interest in the oil market. He had some good results. He said to me at what price he bought. He made me think. His problems started with the : where to sell question when in profit or when in loss. GO
Maybe he bought at a round number... (e.g. $ 70,-) He would sell at a profit or loss around those numbers too; or at a % of the entry price?
There is an idea in behavioral economics called loss-aversion or prospect theory, that suggests that we value losses and wins differently. More specifically, humans are risk avoidant. Given a choice of bets about WINNING... Option A: 50% chance of WINNING $1000, and 50% chance of WINNING $0. Option B: 100% chance of WINNING $500. Given a choice of bets about LOSING... Option A: 50% chance of LOSING $1000 and a 50% chance of LOSING $0 Option B: 100% chance of LOSING $500. Many would chose Option B when it comes to WINNING, but option A when it comes to LOSING. Most people will choose the sure thing when it comes to WINNING(risk avoidant), but willing to gamble when it comes to LOSING(risk-seeking).