They usually take out people who put their stop-loss too close to the key pivot or the key support resistance level. Okay? So that’s the reason why sometimes you gotta move further away. Because once you move further away, the algorithm or the computer or the machine will not be so persistent to keep on going, making the price go lower just to activate your stop-loss. So that is the part where you need a bit of skill to do it. The reason why a lot of people get stop out prematurely is because they set their stop-loss too close. Okay?

So the thing is even if machine wants to do things like that, what happens is that they need a lot of money to do that. You can’t push the price down significantly, especially if you are talking about a very heavily traded instrument for example. If you are talking about things like Tata Motors, a machine is not gonna be able to move the price so much to hit your stop-loss before it goes back up again. So the thing is do not try to trade those very thinly traded stocks because they get manipulated easily, whether by machine or even by humans. So focus on those that are well traded, and machines will not be able to affect the price movement.

Ultimately, the price will still be caused by how everybody in the whole market thinks about that particular instrument or that particular stock. And a machine cannot force the wheel or people. And at this point in time, I also don’t think that machine is able to know what everyone is thinking and making decisions upon. Alright? So that’s the reason why I would say that machines, don’t worry so much. At this point in time, the ability of human to see patterns on the chart or to analyze the market is still stronger than machine.

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Philip Teo

Founder & CEO at Traderwave Pte Ltd
Philip Teo is an entrepreneur, speaker and trading coach who specialises in the field of Technical Analysis of the financial markets. He is currently the Founder and CEO of Traderwave Pte Ltd, a financial technology company that offers a web charting application to global traders. He has conducted many trading seminars and appeared on national television before. He is also currently an official speaker and trainer with SGX Academy. Learn more about him at his Google+ Profile, LinkedIn Profile and Facebook Profile

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