Sugar’s sharp reversal is a reminder to have a strategy, because no matter how strong or long the trend hangs around, sooner or later it’s bound to end. We use the 200-day moving average to determine when we’re in and when we’re out. When a position is above its 200-day, it’s a buy signal. When it drops below or 8% off the recent high, it’s a sell signal.
Employing a stop loss will eliminate the need to ask yourself, “Is it time to sell?” Have that time set beforehand, and your emotions won’t do the talking when you press that button. [New Year, New ETF Strategy.]
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Max Chen contributed to this article.