This important WITCHING strategy carried out in order to avoid errors on trading positions that led to a very fatal. When we estimate the price will go up, but in fact the price continues to fall and getting down. If so, why do we continue to persist in the belief is wrong?
Switching is a strategy to do the turn direction rapidly by way of closing the position we (cut loss) who are losers because it turns out that prices move opposite to the predictions that we do. At that time we open new positions by following these moves against price and hope will benefit in the second position is greater than the position previously losers because we cut loss.
Yes, the problem is the extent to which we believe our position is wrong. It's also not underestimated. Necessary knowledge and a set of analysis to be able to come to the conclusion that we are indeed wrong, and should be changed.
Of course the term "don't fight the market price" should take precedence over being selfish and said prices will come back again. Switching is purely personal. All based on personal analysis in which only we can believe. The trend is your friend. Believes the trend means eliminating selfishness.
The loss on the position that first need to be immediately closed and we soon took another step to take advantage. And then, what if our second analysis turned out to be wrong? And the price is indeed really fit the first prediction? Do we have to do a reset switching?
All decisions are indeed up to you. However, when you pay attention to this: when a row we do the analysis wrong, close your chart and refreshing conduct refresher, evaluate why kok error always occurs.
For that, it's good you also pay attention to the expression of a trader William O'neil as follows:
Most investors who don't have the skill, stubbornly resist the disadvantage when the damages are still small. They reasoned would get out with minimal benefits. They keep waiting and waiting and hoping until the losses into profits. But regrettably, the cost is also quite large.
Then the stop loss would be very useful to limit ourselves and improve discipline in the ability of us trading.