Chapter 5

Managing the Trade

In This Chapter

arrow Creating trading rules: The five-step plan

arrow Blending trading rules with indicators yields trading style

arrow Knowing when to take the money and run

arrow Keeping losses under control

arrow Finding out how to adjust positions

In technical trading, you use indicators that help you identify what the price is doing, but indicators don't always have an embedded buy/sell trading rule. Even indicators that do contain an inherent buy/sell instruction (like a breakout) can be unreliable. You need to invent a reliability quotient of your own. Indicators are a foundation, but it's up to you to build trading rules around them. Indicators are about price changes. Trading rules are about you and your money.

In this chapter, I talk about developing trading rules that reflect your risk appetite. The emphasis is on stop-loss rules — don't leave home without one.

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