The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

Question 68—The Volatility-Drop Method

Answer 1 Selection “A Volatility-Drop ensures getting greater profit from every trade” is incorrect.

Kerry Lovvorn, the author of this method, says “I do not think of using a trailing stop until my target is hit. At that time the trade has fulfilled its duty, but the market may be moving in a way that seems to have potential for an additional reward.” The Volatility-Drop method puts some of the existing profit at risk to squeeze more money out of the trade, but it does not guarantee that every trade will become more profitable as a result.