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| A big, big point in favor of buying dips (sometimes called pull backs or retracements) is you can place your stop loss closer to the present market price.
If you buy an extended market price (one that's gone up considerably) you need a stop loss far away from present market price--which, if stopped-out-- will have you losing lots of money!
Buying dips is not for the faint hearted but in line with what the pros do. Buying extended market price is typical for most people since it takes less courage or self-discipline. (Why? Because it has you going with the market--with the crowd psychology rather than doing the opposite of most people.)
About successful traders: Are they successful consistently over a long period of time or with just a few trades? Takes consistent profits over long period of time to equal a TRULY successful trader. Don't think they are as common as some people think.
It's generally considered best to place your stop loss in the market rather than have a "mental stop loss. " This helps to ensure the self-discipline that is absolutely required to be a winner. Very easy with the "mental stop loss" to fudge and let the market keep going against you!!!!!!!!!!! Hanging on and hoping is a real killer in the speculative markets !!!!!!!!!
Trailing Stops: You have to keep them below the last pull back/retracement price and that can have you losing a lot of your paper profits. When possible I'd rather sell a spike up, at the market, in an extended market or an exhaustion gap. Selling a double top is also good.
Nothing is perfect and one will often leave a bunch of money on the table. Trade the "percentages" with self-discipline.
Don McCullough
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Trailing Stops??
