Buy Signals Sell Signals: Strategic Stock Market Entries and Exits pdfdrive com

Will you take the entry?
Entry signals are useless unless you are willing or able to take them. If you are
afraid, then your fear may be trying to protect you from losing money. Try
trading smaller than you initially planned to see if that eases your mind. Trading
is a business; you should feel serious and focused on entries but not stressed out
or losing sleep. Those are warning signs that something is wrong.
If decreasing your trade size doesn’t resolve your uneasiness, you may need to
build more faith in your system by doing more back testing, chart studies, and
coming to terms with the risks involved. Taking your buy signal requires faith in
yourself and your system, and that takes patience and time. Start small and you
can always increase your size as your comfort level and confidence grows.
Will you take your stop loss?
It is much easier to exit a profit taking sell signal than a stop loss sell signal. The
stop loss level must be embraced when the buy signal is taken. Always consider
position sizing and how much money will be lost if the stop loss is hit. Be

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prepared to accept that if the price can get to your stop loss level, then you are
wrong.
Ego is a roadblock of stop losses. You must be able trade your plan with
discipline to override your ego. Trading too large makes it difficult to take your
initial stop loss because it’s easier to hope that it will come back than it is to take
the big loss now and accept defeat. It is easier to take a small loss than a big loss.
Staying on the wrong side of a losing trade is dangerous because eventually you
will be on the wrong side of a trend with a large position size, and you could lose
it all.
Every profitable trader must develop the skill of accepting a loss when they have
been proven wrong. Every time that you take your stop loss and your trade
bounces back, you may think that you don’t need stop losses and you should
wait for a reversal. The reason we have stop losses is the same reason we have
brakes on our cars or insurance on our homes. We may not always need them,
but it is a bad idea to expose ourselves to the risk of ruin by not having that
coverage the one time that we need it.