When trend following, many times the issue of support and resistance are discussed. Too many traders feel these are lines in the sand that have to hold. Actually in the market, anything can and will happen. Supports can be tested, broken and turned around….and in other cases supports can fail and become resistance.
The key here is when trend following, have a plan. Look for low risk trades and have stops placed ( Low risk does not mean you have low risk…rather inflection points where you know if a trade works or not)
In regard to GDX, this share broke support and turned around. Listening to the market, one could make a bet to go long as the sellers would now have remorse….
In another example of Wheat….The price of wheat simply went through the support. Believe anything can happen when trading….You will have countless trades that do not work….Have trading stops ahead of time. Do not be hesitant to take a loss as losses can grow much larger. Trading is not for everyone. It is totally a psychological endeavor.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (“FOREX”) IS SUBSTANTIAL.
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