this refers to stops and price objectives. for example...you buy XYZ at 130. 128 stop, 138 target. you are proven "RIGHT" or "profitable" when your price objective is hit or "wrong" when your stop is hit. in between is a bit of a grey area that doent count as profit or loss until one of the two numbers is hit. If you reach your price objective...move your stop loss up to maintain a profit, and maintain the position. For me. I have started to sell 1/2 the position half way to the price objective, to where if my stop is hit, I have still made some money. this has obviosly led to having to take larger positions with tighter initial stop losses.
I say "Make your own rules". Conventional wisdom is so often wrong. The few that understand that, and who carefully watch position size and risk/reward, will be the more successful traders over the "long haul" IMHO. I routinely violate a lot of those rules, yet I consistently make money in up or down markets and have for years. How is this possible? I know the limits and characteristics of my systems. Good trading to all.
I get part of what you are saying. What it comes down to is fading short term trends in favor of longer tem trends. To get RSI in over sold while something is trending up, doesn't it have to trend down a bit, granted maybe in a different time, from than the time frame of the overall/longer trend? How does one distinguish from the "rules" written, wether it is weakness or the start of another trend.