Stop Loss with Support & Resistance
The least used and most often improperly used analysis by Technical Traders and Retail Traders is Risk Analysis. All too often, traders are choosing high risk stock picks without realizing it. See candlestick chart example below.
This analysis is NOT using percentages, but rather using the technical patterns within the chart in order to do the following:
- Find the lowest Risk trade from a group of potential stock picks.
- Determine Risk vs. Run Gain Profit Potential BEFORE placing an order.
- Determine the correct Stop Loss placement for your stock picks to avoid setting it at a whipsaw point. In addition, avoid not using a Stop Loss at all, due to not knowing how to use and set them correctly.
- Selecting the strongest stock picks based on Risk Analysis, which reveals weaknesses that do not show up in Candlestick Patterns or MACD Patterns.
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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