What we will cover in this chapter
The perception of risk tends to be greatest at the bottom because the memory of having accepted a loss will be fresh in people’s minds. They tend to be highly disciplined with stops and as a result they are much more likely to be taken out of the position.
The longer an uptrend persists, the greater the accumulated profits and the greater the expectation of future appreciation. This contributes to a lower perception of risk. Investors tend to tinker with their stops for fear they will inadvertently sell a market which they believe still has considerable upside potential.
A stop strategy needs to be tailored to the individual consistency characteristics ...