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Dealing with Trades Getting Pre-Maturely Stopped Out



May 14, 2010 – Comments (0) | RELATED TICKERS: TIE.DL

A lot of people get discouraged when they are stopped out of a stock early on, only for it to go on a 'rip-roaring' tear for the remainder of the day. In fact when this happens, it often causes traders to be weary of using stop-losses at all and rely on their own instincts to cut the losses when they occur. This is probably the worst thing that one can do and can take you out of the game faster than you can imagine.

I'm hear to tell you that getting stopped out of trades is a part of life. Furthermore, getting stopped out of a trade pre-maturely only for it to go on a major run soon thereafter is also going to happen to you as long as you trade with stops.  The sooner you come to grips with this reality, the better off you will be.

Stop-losses IS NOT a perfect science. Every time you get stopped out doesn't necessarily mean that the stock you are trading in is going into the crapper. Instead you should be placing your stops at a strategic point on the chart that should the price of the stock hit your stop, you know that there is a strong or likely possibility that the behavior of the stock itself is diverging from the thesis that propelled you to buy the stock in the first place. When that happens you WANT to get out.

Click Here to Read the Rest of My Article On Stop-Losses.

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