Market junkies who have a knack for these kinds of fast - paced systems usually look at the hourly time frame or lower to aim for smaller profits and
place tight stop losses.
Sell when a security breaks below the lowest point of a longer - term range that it has been confined in and if you are short - selling,
place a tight stop loss in case the breakdown fails.
Buy when a security breaks above the highest point of a longer - term range that it has been confined in and
place a tight stop loss in case the breakout fails.
Not exact matches
Many traders misplace their
stop losses by
placing them at the wrong levels, and they are often too wide or too
tight.
Charts that have violent up and down swings are not considered to have solid chart structure as I like to
place my
stops at 10 - day highs or 10 - day lows and if the charts have a
tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your
stop will be further away allowing the possibility of larger monetary
loss.
A low multiple means a
tight stop -
loss that
places risk control above profit potential.
Maybe okay to buy some shares if you have an exit plan with a fairly
tight stop loss order in
place, but covered calls are not the right strategy for that situation.
Traders would
place very
tight stop orders initially, just below their purchase price, so as to
stop out for the smallest possible
loss.
This gets you a better entry because it significantly improves the risk reward profile of a trade by allowing you to
place a
tighter (smaller distance)
stop loss, making it more likely that you'll make 2R or more on a trade.