Traders typically place stop-loss orders at a predetermined dollar level. Then, if the market moves against the trader's position, the stop automatically liquidates the position and limits further losses. However, the type of stop you use could determine if you win or lose.
Arbitrary Stops versus Principle-Based Stops
There are stops; there are arbitrary stops, and, then, there are the intelligent principle-based stops. Principle-based stops are defined by the market's own support / resistance levels. Therefore, they are objective and reliable and can be back tested. They are also practical to use in real-world trading. And, that's what you get with eASCTrend stops -- the new generation of intelligent stops.
eASCTrend is a decision-making trading software that provides stops with small blue dots below the bars for buy positions and small red dots above the bars for sell positions. These intelligent stops are dynamic, and the software automatically adjusts them as prices change. A built-in feedback loop retrieves the data for market direction, price range and momentum.
2 Examples of Arbitrary Stops versus Principle-Based Stops
Sweet Spots for “Adding Some More”
The eASCTrend software signals “sweet spots” -- recommended optimum times to get in on a trade -- with the first blue bar to appear after a series of green bars, as in the chart shown subsequently.
If you missed the first entry, the sweet spot gives you a second chance to get on board the trade. Already have a position? The sweet spots indicate when you should add more to your position. That way, you can buy with confidence -- and seek to expand your total gain on the trade.
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