How LDR Can Help You Minimize LossesPosted: October 26, 2013
A quick review of the posts in Sept yielded the following:
-8 patterns were completed and profitable=$$
-3 patterns did not complete = no trade, no harm
-3 patterns were completed but failed=loss
If you traded all 11 patterns & used money management on the 3 that failed you would have been net profitable. Speaking of money management, here is one tip I use.
Setting your stop loss
I learned this simple money management technique from a well known & successful trader, its called LDR. LDR stands for Last Day Rule and is pretty straightforward. When taking a position on a breakout H&S Top or Double bottom (it doesn’t matter), the stop would be the lowest point of the day. Here is an H&S bottom example. As you can see below, the stock after breakout never challenged the low of the breakout day. (NB: This technique is not fail proof, its just a way to decide your stop loss)
Guess the name of the stock and type it in the reply below. The first correct answer gets a trading related ebook.
Have a great weekend!