Gyanee Trading Lesson#3

 

Always Sell Shares If Retest Fails At Breakout Level

        

People are fond of Breakout Trading, reason is very simple , it gives the Higher Return in Less Duration. Professional Traders loves this kind off trading and they succeed 90% times ; but when they fail they cut the losses . Where as beginner HOPES.

            As you can see in Image , There is Expectation and there is Reality , Beginner Hopes for the expectation even when reality is totally different. Their hope increases the losses and they stuck with the big junk with loss. 

            Where as Professional Trader , keep 3% window for Rebound from Breakout level , Pro Trader will cut out its 30% stock at Breakout Level , 50% stock at 3% Window for Rebound and rest on it primary Stoploss. 

            This helps him in managing losses in average . if Stock rebound after 3% window , which is very very rare , than he can buy back and average price would be lower. And if Rebound doesn't take place than , you have cut your losses by squaring off your trade by 50% below 3% window. 

So in Nutshell

1. Take Decision on Reality not on Hope
2. Always try to Modify trade in your favor
3. Rebounds are very rare, Don't Hesitate to Square off your position
4. Be Very Disciplined to cut losses quickly and keep them small. 

         

 

PLAN on Expectation but Act as per REALITY.