Future Trade Alert Network

 

 

 

 

 

I’ll show you how to identify when a bounce is losing momentum by focusing on the **60–10 Stochastic** and **9–3 Stochastic** indicators. This method requires strong discipline because it challenges one of the toughest obstacles traders face—**greed**. Many traders hope and pray they’ve caught the bottom, but in a strong downtrend, that can be dangerous. Understanding how and when to exit will save you from unnecessary losses.
 

 

This is a must-watch lesson for anyone serious about navigating down markets. Whether or not you apply it is up to you—but mastering this technique could prevent significant losses in your trades.
 

 

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**Rules for the Downtrend Trading Strategy (Safety Net Strategy):**
 

 

1. **Recognize the Downtrend**:
 

  - Use moving averages and trendlines to clearly identify the market’s downward momentum.
 

  - Pay attention to the overall market sentiment and don’t assume every dip will reverse sharply.
 

 

2. **Watch Your Stochastics**:
 

  - Focus on the **60–10 Stochastic** for larger time frames to see where the trend is heading.
 

  - The **9–3 Stochastic** provides a more granular view of short-term moves and helps spot when a bounce is running out of steam.
 

 

3. **Exit on Loss of Momentum**:
 

  - When the **60–10 Stochastic** is still pointing down while the **9–3 Stochastic** hits overbought levels, it's a strong signal that the bounce is nearing exhaustion. **Exit before the reversal.**
 

 

4. **Discipline Over Greed**:
 

  - Stick to your exit strategy. It’s easy to get caught up in the hope that you’ve nailed the bottom, but downtrends can overpower even the best setups. Greed will lead to unnecessary losses if you don’t act on your indicators.
 

 
 

5. **Avoid Catching Falling Knives**:
 

  - Don’t try to anticipate a bottom in a strong downtrend. Let the indicators guide you and don’t force entries based on emotion or bias.
 

 
 

6. **Respect Risk Management**:
 

  - Stick to your predetermined stop losses and position sizes. Overtrading or increasing your risk in a downtrend can quickly lead disaster. 
 

 

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This description and set of rules should help traders focus on disciplined execution while navigating downtrending markets effectively.