Best Loser Wins by Tom Hougaard

Author:Tom Hougaard
Language: eng
Format: epub
Tags: Why Normal Thinking Never Wins the Trading Game
Publisher: Harriman House Ltd
Published: 2022-09-15T00:00:00+00:00

Source: eSignal (esignal.com)

As shown in Figure 15, instead of continuing lower, the DAX Index consolidates and moves higher, and it eventually takes out my stop-loss. I am now at −35 points.

Figure 15

Source: eSignal (esignal.com)

The previous pattern does suggest higher prices to come. Yes, it looks like a double top sell; but on a gap up day, the odds are higher of continuation than of a reversal. Remember the saying, “In bull markets, resistance is often broken, and in bear markets support rarely holds.” Well, you can replace bull markets with bull trends, and bear markets with bear trends.

In Figure 16, I execute a long position on the close of the bar, as it closes above my stop-loss. It is in reality a stop and reverse situation. I am stopped out of my short position, and as a result of it, I am going long.

Figure 16

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