Stop loss points are capital
savers.
As we
said before, reversals can happen at any time. Retracements can turn into
reversals without warning.
This makes using trailing stops in trending environments very
important. With trailing stop loss points, you can effectively prevent yourself
from exiting a position too early during a retracement and exit a reversal in a
pinch.
Conclusion
You don't
have to be shot down by the "Smooth Retracement". You don't have to
lose all those pips. And you most certainly don't need to wear pink arm
floaties (although if pink's your favorite color, it's okay - we don't judge).
Just know
how to distinguish retracements from reversals. This is part of growing up as a
trader. Having the ability to do so will effectively reduce your losses and
prevent winners from turning into losers.
With lots
of practice and experience, you'll find yourself being able to trade
accordingly to retracements and exit with a profit more times than not.
