The 8 EMA

Yes Pat, Quick question around using the 8 ema to confirm that I am grasping the concept correctly. If you are reliant on trading as an income source or want to steady grow your account you need to:

1. Limit initial losses
2. Protect Break even
3. Protect gains.

This will ensure a steady uptick in your equity curve over time without wild swings. Now what I have found is if a stock trends with the 8 ema or 21 ema once you have a gain you let it work. (Most recent example I can think of are SQ, BA, CAT) But once that trend (8/21 ema) is broken you will usually give back some gains and this is where wild swings in your equity curve will be noticed. As we all know the best trades work right from the start thus if a trade breakouts and falls back below the 8 ema we know the probabilities of that trade working is slim so we cut our losses and move on and you won\\\'t be sitting on dead money? Before using the 8 ema I found myself lots of time being up a couple % for the month but then giving it back and then sitting on dead money where now its like if its up and it works I let it work and if it does not work I sell without hesitation. I am grasping the concept? Its funny but if you study the winners the most gains comes from the trades that respect the 8/21 ema and they work from the start. Thus in a away if the trade does not respect the 8 ema and if it does not work within the first couple of days we sell it because we know its most likely not a winner or as Mark Minervini would say the bus in not on time? All the best, Johann