Page 37 - ART Study Manual
P. 37
® “Home-Study Course” Study Manual Page 37
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fearful mindset. Try and “let go” of your fear and place stops at
reasonable places in the market.
Position your stops in relation to market price activity and don’t pick an
arbitrary place to set your stop. Many traders incorrectly buy and sell
the same number of shares each time they trade. Then they choose a
stop so their loss is the same dollar amount each time they are stopped
out. By doing this, they are disregarding the meaningful market
support and resistance areas where stops should be set.
Not Setting Stops
If you do not use stops you are setting yourself up for failure.
When trading stocks for example, if you do not use stops and hang on to
losing trades to a point where you emotionally feel you cannot exit the
trade because the loss is so large, you are doomed.
If this happens you are “married” to that stock and it may not be a
stock you really want to own as an investment. Some stocks we trade
are good for short term trades ONLY because we are taking advantage
of the momentum in the stock. It may be a stock we would never invest
in and hold for a long time.
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