Contrary to popular opinion, trade exits are more important than trade entries, especially as it relates to when to take a loss. I certainly do not claim to have THE answer, I just know what works for me and what works for me is a visual line indicating when I should exit a trade.
The dictionary defines deception as a trick or the art of deceiving someone. And how do you deceive someone? By hiding the truth behind the facts. There is an art to this. Indeed, trading is an art, an art of deception, like it or not. Does not matter whether you believe it not, it just is.
What looked in early June to be a possible missile launch fizzled out over 10 days as we moved all the way back down to the lower support. My upper resistance line and my lower support line were both tapped within a five day period (please note I drew these lines BEFORE this happened).
Notice that in just the last 6 trading days ICE lost all of the gain from the last 49 trading days (note: the sell-off in this stock started BEFORE the negative news yesterday!). For trend traders following the 21 TANKS as a good trend line support money was made for several months.
CONCLUSION:
Waiting for one pattern to repeat itself over and over again allows THE CROSSHAIRS TRADER to remain focused. Just as a SNIPER must remain focused on the enemy in order to survive, the trader must remain focused on the trading battlefield or there will be no more fighting.
Will the resistance on the WEEKLY chart keep the indices in check as we enter the traditionally weak to neutral summer months? Or will the S&P and the DOW find the strength to join the NASDAQ and push further past resistance? There is always the possibility of a summer rally!
The question you must ask yourself is: 1) did you miss the trade because it did not meet your trading rule parameters or 2) did you miss the trade due to lack of confidence?
The answer can make a huge difference in your long-term success.
The S&P 500 broke out above its 200 SMA (TANKS) today to join the NASDAQ. The DOW tapped its 2oo TANKS intraday and then pulled back. The move by the S&P was its first move above the 200 TANKS in 359 trading days! This on a day when GM declares bankruptcy.
In many of my more technical posts I discuss moving averages and refer to them as TANKS. I feel a more detailed discussion is in order than the one provided in THE CROSSHAIRS TRADER DICTIONARY.
Make sure you are ready to enter the battlefield because the next move could be a big one!
