Quote from NoDoji:
Thanks for referencing the post where I demonstrated the value of trading what you see, not what you think.
I thought price was indicating a down move ("I hesitated because price action seemed bearish"), and I placed an order that would let the movement of price prove to me whether it was bearish or not ("so I simply placed a sell stop @ .32.")
I didn't think price could start moving up, but when it did, I decided to trade what it was showing me, instead of what I thought ("Then when price found buyers at that level and broke back up through .50, I added the buy stop @ .65").
So there I was with a sell stop and a buy stop in place at once, prepared to trade what I saw, not what I thought, and took 2.30 out of the move in 10 minutes.
When you anticipate a level will hold and use a limit order to trade it, the way you then trade what you see instead of what you think is by placing a very tight protective stop in case the level doesn't hold, unlike traders who let their opinion keep them on the wrong side of price as a trade runs runs further and further against them, sometimes even adding to the loser.
