Cutting losses quickly is super important if you are trading very large position sizes, however when your trading a small trade size via a portfolio method, there can be times when you can add to your trade intelligently, this will not work all the time, but i have found it to be a reliable way of covering losing trades under the right conditions, obviously if your over-leveraged, you need to cut your losers quickly regardless.
Short term trading setups look for:
1. Support and resistance
2. Daily Pivot Levels
3. Reward to risk of 2:1 Minimum.
One of the best trades of the year, this setup came around Xmas then price pushed through a trend line and retested support support, posed the trade on profit.ly and less than 24 hours later, Bam! Profit target locked in. This set up offered a playbook setup, minimal downside for maximum upside.Check out xmas and new year proft.ly sale
Entry comments: open on retest of support
Exit comments:#FOREX +108.1 - Closed at profit target, WOW! low volume got there a whole lot quicker than I expected, thank goodness i dont like to hold over the weekend! Awesome way to finish off the year!
Posted by Fatbeetrader / http://profit.ly/1Mo9es
I often get asked how I trade, or what I'm looking for. As I screenshot ever single trade I've ever taken for my own development (i have thousands of images), I'm going to start posting my favorite "playbook trades" and give a short description of how to play the setup, It may be a great way to get in my head and see how I trade using price action.
This setup is something I look for all the time, price retracing to a major support level then re-testing it before moving higher. The best entry is of course right on the support line, If you feeling a little gun shy or are just looking for an even higher probability trade (the downside is a lower upside reward), taking the first on the 0.236 retracement is always a nice play. Targeting the 0.50 or 0.618. moving stop to BE at the 0.382.
In my experience trades like this will be profitable 65-75% of the time (provided you dont get greedy).