From the May 2014 issue of Futures Magazine • Subscribe!

Volatility and volume reveal value

Fear and greed

Do not average down, but do average up (add to winners not losers). It’s simple and makes sense, though many traders do not follow this rule. We should put our money into a winning investment not a losing one, but sometimes human nature trumps this. A trader who likes a stock at $25, really loves it at $20. Don’t let ego cloud your judgment. 

“Complete picture” (below) displays Bollinger Bands, a trendline indicator, NYSE volume ratios for panic selling and panic buying and entry and exit arrows based on overbought and oversold.

The goal in this uptrend is to buy the green arrows, and tighten stops while locking in partial profits along the way. It is critical to hold a core position with each new trade entry to build (pyramid) the long position over time for maximum gains.

Trading is a tough game to win. We all lose trades, and at times we go through losing streaks that can be difficult. So if a trade starts to go against you, getting stopped out of the trade could be the best thing for that trade. You need to add to winning positions and lock in partial profits along the way. If you do not lock in profits, the market will eventually take them back and then some.

Chris Vermeulen can be contacted through his website

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About the Author
Chris Vermeulen

Founder of AlgoTrades Systems., internationally recognized market technical analyst and trader. Chris is also the founder of, a financial education and investment newsletter service. He is responsible for market research and trade alerts for of its newsletter publication. He is the author of “Technical Trading Mastery – 7 Steps To Win With Logic” and has  been featured in Futures Magazine, Gold-Eagle, Safe Haven, The Street, Kitco and dozens of other financial websites. 

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