Optimizing Profit and Stop Loss Targets

How to Optimize Your Profit (and Stop Loss) Targets by Erich Senft, CTA Don’t you hate it when you take profit on a trade and the market continues on a lot further without you? That’s almost as good as getting tagged on your stop loss only to watch the market reverse and head to your intended profit target (and maybe continue past it!) What’s going on? Why is it so difficult to make set efficient profit and stop loss targets? The problem originates with the assumption that the markets never change, and of course that is a bad assumption. The markets are constantly changing, expanding and contracting to reflect what is currently going on in the marketplace. Just understanding that the markets are in constant flux will better equip you to take advantage of what the market is giving (or not giving) and allow you to set effect profit and stop loss targets. How do you do that? The first thing you need to consider is the market’s Average Daily Range, or ADR. Notice that the Average

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