“Pyramiding instructions appear on dollar bills. “I intend to risk below 5 percent on a trade, allowing for poor executions.” Losing a position is aggravating, whereas losing your nerve is devastating.” This usually doesn’t get me out any better than waiting for my stops to close in, but it does cut down on the volatility of the portfolio, which helps calm my nerves. Sometimes, I take profits when a market gets wild. I normally move these stops in to lock in a profit as the trend continues. “I set protective stops at the same time I enter a trade. “Risk no more that you can afford to lose, and also risk enough so that a win is meaningful.” “If you can’t take a small loss, sooner or later you will take the mother of all losses.” “Before I enter a trade, I set stops at a point at which the chart sours.” Being bullish and not being long is illogical.” I turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit. “If I am bullish, I neither buy on a reaction, nor wait for strength I am already in. “In order of importance to me are: 1) the long-term trend, 2) the current chart pattern, and 3) picking a good spot to buy or sell.” He has parameters for proper position sizing, volatility filters, and optimizes his strategy for large wins and small losses. Ed Seykota is a trend following trader that uses reactive technical analyses through quantified trading signals to capture large profits during trending price action.
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