What is the disadvantage of placing stop loss at current price?
= Action points
Technical analysis assumes that prices move in trends.
Look for the weight of the evidence;
- (several indicators, to indicate a reversal.)
In technical analysis we are dealing in probabilities, never certainties.
- disadvantage is that locals and market makers can “go” for your stop.
- order is executed immediately the price is touched – no opportunity to second guess.
- A correctly placed stop is usually executed at a better price.
- For liquidation of long positions, the best point to place a sell stop is below
- support and for covering a short one above resistance.