This is the final installment explaining the ABC Stop Management method, which I’m sure you’re all thrilled to hear. IWO traded above the previous down bar high at 79.80, so your stop would have triggered and the short would have been covered. Later price reversed and tanked once again, hitting the original target of 77.45, but we wouldn’t have been there to enjoy it unfortunately.

Stop management is difficult and I had to come up with something decent for record keeping purposes, thus the “Arbitrary But Consistent” method. I expect everyone will manage the trades differently and there is no one correct way, but the ABC method is one thing worth considering — it caught over five times (5x) the initial risk in this IWO trade, which is nothing to sneeze at.

Click to enlarge

Arbitrary But Consistent (ABC) Stop Management (Part V)
Arbitrary But Consistent (ABC) Stop Management (Part IV)
Arbitrary But Consistent (ABC) Stop Management (Part III)
Arbitrary But Consistent (ABC) Stop Management (Part II)
Arbitrary But Consistent (ABC) Stop Management