THE HAnDbook of TECHniCAl AnAlysissignificance and relevance. At extremely high levels of leverage, the concept of
aggressiveness and conservativeness with respect to the price on entry or exit di-
minishes rapidly, and may even be rendered somewhat redundant.
Consequently, with progressively higher leverage, the degree of aggressive-
ness and conservativeness associated with the time of entry becomes substantially
more relevant and significant. This explains why market timing is seen as an es-
sential feature in margin trading.
behavioral profile–based entry Orders
In a situation where a trader is concerned with being more risk averse or conser-
vative with respect to the price on entry rather than time of entry, participation
in the market via the use of buy or sell limit orders may be more appropriate and
better suited to the behavioral profile of the trader. Conversely, for traders con-
cerned with being more conservative in the time of entry rather than in the price
on entry, participation in the market via the use of buy and sell stop entry orders
may be more appropriate. See Figures 26.7 and 26.8.
Figure 26.7 Risk Profile of a Counter‐Trend Trader.
Figure 26.8 Risk Profile of a Breakout/Momentum Trader.