Question 60—A Stop One Tick below the Latest Low
Putting a protective stop on a long position one tick below the latest low is problematic for all of the following reasons, except:
1. Even a small sell order thrown at the market near the lows can briefly push it below the latest low.
2. A bullish pattern occurs when a market takes out its previous low by a small margin and reverses.
3. Professionals like to fade (trade against) breakouts.
4. Once the low is taken out, prices are likely to decline much lower.
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