Time Stops, 1

A Time Stop is a technique that contributes to enabling you to cut your losses so that your winning trades can carry your account to profit. Yet it is rarely mentioned in literature about trading.

Accoring to Thomas Bulkowski in Trading Classic Chart Patterns, “A time stop is when you make a trade, and know that if the stock does not move in, say a week, you will sell. The thinking behind this stop type is to maximize your use of capital” (page 73).

Trading Classic Chart Patterns

While Thomas says he does not like to use this type of stop, he admits that “Some analysts argue that the longer you are in a trade, the less likely it is that the trade will work; the best trades are those that work immediately.” (page 73).

...cont'd tomorrow...

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