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Profiting from Technical Analysis and Candlestick Indicators: Powerful Methods for Accurately Timing Trades by Michael C. Thomsett

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14. Risk Reduction Methods—Using Charting Techniques to Manage Risk

Risk is unavoidable. It cannot be eliminated entirely, but it can be managed and reduced. For many traders not using timing techniques based on chart patterns, trade timing is a high-risk venture that is very difficult, if not impossible to control. The methods examined in this book solve this problem.

Assumptions That Add to Risk

A series of assumptions are likely to increase trading risks and prevent application of sensible and effective techniques. This is true for charting and the use of signals or patterns to time trades.

Among these are the following:

1. The “assumption of zero.” Traders may easily fall into the trap of opening trades with the mistaken belief that their ...

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