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You can use stops based on technical analysis. If price moves in your favor and breaks a resistance level, move your stop below it, etc... Identify S&R levels, fib retracements, trendlines, channels, etc... and move your stop accordingly. I personally use target points and do not trail. Or I will move stops as price breaches a pivot. |
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Well, for me personally using different kinds of indicators is not a problem since my primary profession is software design and I'm able to automate almost every thought I have about trading strategies.
But I have friends, who buy stocks guided by some fundamental analysis (news, quarterly reports, gossip, hype) and then sit infront of their portfolio every day watching market ups and downs and having no clear exit strategy to follow.
They have no programming skills and even don't bother if technical analysis exists. So, a couple of weeks ago the guys lost lots of money while the markets sell-off. DELL, MSFT (one of the favorite stocks traded by computer geeks) drew down sugnificantly and caused losses.
So, my question was about a comprehensive solution for such kind of "traders" to preserve their capital from devastation. They open positions almost intuitively, but when it comes to selling, emotions come into play and they sit and wait for their stocks to go up again, but the stocks do not go in the right direction ... common picture.