May 12, 2004
We know from experience that when you place a
stop-loss order, the market will not hesitate to take you out, if
there is a sufficient number of orders clustered around that
particular price.
In the example below, you can see that on
05/12/2004, the market just barely reached our QQQQ stop-loss, took us
out of the trade, and then immediately reversed course.
-
If I follow your trading signals,
do I need to place my own stop-loss order based on your
stop-loss price?
We generally do not recommend placing stop-losses
or limit orders based on our stop-loss price. The market has a
habit of hitting stop-loss orders simply because they are there.
