Hubert Senters here.
Let’s take a look at how to prevent premature profit taking. Sounds like I’m doing a drug commercial for Viagra or Cialis but that’s not what I’m doing. A lot of people will suffer from taken — just premature profit taking or I call them being a serial killer of profits where they will just choke the life out of a trade that was working because they trailed their stop entirely too close to the actual price action so.
I’m going to show you a tool that you can use to fix a lot of this. It does take a little work. I mean it’s a free tool but you got to do a little work. You know, everything worth doing that takes a little bit of work. So you’re going to use a parabolic SAR that these little purple and these little cyan dot so I’m double left click on them so you can see how it’s spelled.
Parabolic, SAR, support and resistance. It’s a long short always in the market. You don’t have to use it that way. Modify it to use it for your travel and stop. So let’s just say you’re in Amazon and you got an Amazon right here at this point at the close of this bar which is around $1421.
According to this 10 minute parabolic SAR your stop would be all the way down here at $1365. I don’t know about you but that’s a large stop. So what you’re going to do is your first going to curve fit that. Usually, sounds like a nasty word curve fitting like you’re trying to over optimize.
No. You’re just trying to fit the parabolic SAR to the price action without it whipping you around too much. So 10 minute is too loose for me. So then I would go down to a 5 minute and go ‘’well, it’s not too bad there, that looks like it works pretty good.’’
I mean when it’s flat nothing works. Let’s do another example here. So if I was to get along Amazon right here at $1424, could I afford the risk of my stop loss of $1403? So that’s only $20 point. I might be able to live with that for that example.
And then we would stay long, long, long. And then you’d exit right here on this candlestick. So you say long as long as the dots are underneath and then you would exit the long. Same thing if you were short a period you would short, short, short and then cover. Parabolic SAR fit it to something that you’re cool with on the risk side of things, rinse lather and repeat.
Good luck. Hope it helps. And I’ll see you on the next video.
Hubert.
