Once targets and stops are set and the trading signals are given, the technician can execute the trade with no fear. Losses are limited and projected profits should make the risk of these losses worthwhile. In general terms, if the profit potential is at least three times the loss potential, the trade is worthwhile. Keep in mind that like baseball players, traders who can win 40% of the time are leaders in their profession. The value of the six losers is far outweighed by the value of the four winners.
Traders who can win 40% of the time are leaders in their profession.
The Nikkei index in Figure 21.1 was in a significant bear market going into the start of 1997. After falling nearly 2,000 points in one week, it began a rising triangle-shaped ...