View Single Post
  #8 (permalink)  
Old 03-12-2006, 10:40 PM
Maji Maji is offline
Senior Member
 
Join Date: Mar 2006
Posts: 793
Maji is on a distinguished road
Head fake is a fact of life that traders will have to leave with. There will be trades which will be losers because of the head fake. However, the other side should ride the trend and the profits should be greater than the losers in the long term.

Let me give an example. Say the two straddle orders are Long at 1.5500 and short at 1.5400. The stop loss will the opposite order. Now, if the long order is triggered but then that is a head fake, then the stop will be hit and we will be net short. We hope that the down trend starts with that short breakout and we can ride it for handsome profits.

Hope this helps.
Maji
Reply With Quote