Yesterday we have illustrated how AbleTrend deals with sideways market trading the SSS. Today we’ll elaborate on the scenario if that market goes against you right after you go long. One may ask how far is too far? Here is an example of the initial entry for a Sweet Spot buy position:
Market took out the regional highs and broke the red x (the weekly resistance levels) showing a strong uptrend. Although there is no blue x (weekly support level) showing, it’s a valid sweet spot buy signal. You may place your protective stop at the small blue dot one level or 2 lower according to your risk tolerance, or simple exit at the red dot.
Here is the chart showing how the market developed later.
From hindsight it was a false breakout. Since your initial price for a buy position was very close to the stop, your risk was small and AbleTrend sell signal double insured your exit. You really know how far is too far for a losing position to be cut when using AbleTrend.