RE: Tight Range for Last 4 Weeks10 Jul 2025 13:58
" even if one waited to see what would happen, there's still no guarantee that things will continue on an upward trend and that you'd still end up in profit. Last time the SP had a bit of a rally, I bought a very small amount again, only to lose half of that at current levels. So, you see, none of us really know, do we?"
The way it works as it is a mechanical system, is that lets say you do decide to buy now at 32p. You WOULD sell if it fell to 29p, no ifs or buts.
Now you know your risk: 3p per share. Then you see where is the target for an upward break out. Because it has been a tight spread you might decide 43p is where it will go to before drawing much breath.so your reward would be 11p per share, nearly 4-1 risk reward, so you take the bet, and if it works out 33% profit in probably short order. If it hits your target you sell and bank the profit.
You must have these targets otherwise how can you judge the risk or the reward.
The reason so many fail using TA is that the SP might zig zag up to 42p (not quite there), in my example and fall back to 35p so you get nervous, and sell, even though it never broke your stop loss at 29p and take a small profit, and then the SP promptly goes back all the way 43p
Thats the emotional pull of fear and greed.
On stocks TA is only useful really imo to time entry and exit. News releases are unpredictable and if it is very bad news you won't get out where you want to anyway, so I just do it for a hobby but do watch the movements pretty intently.