Well that can vary based on the individuals trading plan. I have seen plans that use channels, plans that use Bolenger Bands, plans that use Support/Resistance lines, etc. In the case of channels the distance between the entry point and the opposite channel line should be 3x greater than the distance from entry point to where the stop loss needs to be placed. The same goes for the other two methodologies. In all three cases you are looking at how far the equity has the potential to move in your favor vs the level where you are going to admit you are wrong and exit the trade with a loss. Once again we are just looking at probabilities, not absolute certainties. One more thing I want to clarify is when I mention that you should risk the same % of your account every trade, I am talking about strict risk amount and not investment amount. For example let's say you have a $50k account and you are willing to risk 1% every trade. If your stop loss would be $1.00 below your entry point then you would want 500 shares so the risk is $500 and maximum profit potential is $1500 or greater. If your stop loss is $0.50 below entry you would want 1000 shares so the risk is still $500 and the max reward is still $1500 or greater. Not doing this breaks the way the lose 2 win 1 to break even works and this is why so many people fail at the money management portion of handling their account. By not doing this if the two you lose end up being bigger than the one you win you can be way upside down in your account.
That doesn't mean technical analysis is crap. On markets that tend to trend well (i.e. Forex) comparing price to past price will tell you if the price has been rising or if it has been falling. If it has been rising then the trend is up and there is more chance of it continuing to move in that direction than there is of a reversal. That doesn't mean the trend can't reverse in the next five minutes, just that a long trade has a better probability of being successful than not. Markets like commodities and stock market indexes however are driven by speculation and therefore support and resistance comes into play. Here's an article I wrote that explains how technical analysis provides and edge technical trading edges
================== Mr Altenburg; That suprises me .the number of traders that confuse prediction, with probability-obviously, you have not done that.You also may be wrong of the ''useless '' part of it Thanks for free info Trends or countertrends may also help you.Not a prediction
DeadBroke can forecast the markets using Elliott Waves because his charts are timestamped and his wave counts never change and the Fibo retracements and extensions always hold. Elliott Wave charts are the best looking technical charts of all. Did you know that you can define the timeframes you want to show in a chart to show a great before/after screenshot ? Just make absolutely sure that you post your before and after charts after the fact and at the same time. Claim victory.
I just spotted a buyer in a low volume name , up 25% in just a few days. straight up. I would have posted it here, but so many are making millions with their own great plays, I didnt think you cared.
same here, found a great play a couple days ago. didn't post it because i'd rather trade it and make money. posting calls is silly business.