Because when the market bounces up (just a little), some stocks fly up.
ANd this results in stop losses getting hit, before the market comes back down.
That's why we need to determine the volatility movement within the indices and stocks and WIDEN stop losses and take profits - to not be victim of these short term bear market rallies.
It's probably one of the most difficult aspects to getting right...
We clearly see the JSE ALSI is in the bear market with the diagonal resistance along with price below the 200MA...
The best we can do is short markets BUT also go long and hedge a few markets just in case we have a relief rally to make up for the stop losses hit with the shorts...
Trade Well,
Timon Rossolimos
Founder, MATI Trader
(Pro trader since 2003)
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