unanswered

One trade follows another.<br /><br />
The head and shoulders breakout signals a trade. An even more basic signal is created by a bottom. Some percentage of the time, prices will approach an earlier low price, then reverse and head up just before the earlier low is reached, or, quite often, at the earlier low price ... and, also, fairly often, just below it.<br /><br />
So, if we observe a bottom, we can try to pick a price near that bottom, place an order at that price, and wait for our order to be filled. When the order is filled, we would immediately place a stop loss order just below the bottom. That stop will be triggered some percent of the time. It is not a question of whether it will sometimes be triggered ... it will definitely be sometimes triggered. The question is, how often? Half the time looks to be about a minimum. But, let's look at examples.<br /><br />


If you were to indiscriminately "trade", this way, each bottom in this chart, you would have accumulate 9 losses, with still no gains. That doesn't sound good. Perhaps by being selective we could eliminate some of those losses, but we would need to figure out how to do that ... how to be selective. We'll keep an eye on the question, but, for now, it's unanswered.