Quote:
Originally Posted by soul
I am new to all this and that's why I'm taking your classes, however I'm a bit confused and can't seem to find the answer. In grade 7 it says regarding symmetrical triangles:
"We can place entry orders above the slope of the lower highs and below the slope of the higher lows. Since we already know that the price is going to break out, we can just hitch a ride in whatever direction the market moves."
There is only explanation as to what happens if the market moves up but what happens when the market moves down? Even if you placed an order below the higher low and gets filled, wouldn't you lose since the market will go down further?
I have the same question about the ascending triangles.
Can you please clearly explain how one can benefit in the other situation as well i.e. when the market moves down?
thanks
|
You would place a
Buy Stop order above the lower highs and a
Sell Stop order below the higher lows.
The image below their explanation shows what would happen if the price goes up. The opposite would occur if the price goes down.
For example, if the market moves up, then your Buy Stop order would be executed. Once the price goes up to your Target Profit, you would sell.
If the market moves down, then your Sell Stop order would be executed. Once the prices goes down to your Target Profit, you would buy.
Once one of your Stop orders is executed, you cancel the other one (unless it's set to expire automatically).
Either way, you make money.