sh50 said:
Thanks for sharing this because this is against what a lot of books advocate- either percentage filter or 2-3 days closing.
In books, it is also given that a majority of breakouts are false. Can you please give some tips on detecting false breakouts. Low volume seems to be obvious but that apart, what else can one keep in mind- previous resistance levels and volumes at those levels or whether weekly chart is not suggesting a sell?
It is very difficult to detect false breakouts! If you are convinced with the trade go with it using proper risk management.
You cannot avoid losses by careful planning or brilliant strategy. Numerous losses are part of the trading process. "Trading is a business of making and losing money. Any trade, no matter how well thought out, has a chance of becoming a loser. Many people think the best traders don't lose any money and have only winning trades. This is absolutely not true. The best traders lose a lot of money, but they eventually make even more over time."
There is no point trading if you cannot handle the psychological discomfort of making losing trades. While people tend to take losses personally as a sign of failure, good traders shrug them off. The best trading plans result in many losses. Because of the amount of randomness in market price action, such losses are inevitable.