*My take on the psychology behind the megaphone trading pattern is one that screams indecision in the valuation the companies shares. Whether it be how much revenue they expect in the future and or growth rates, skew and overall market sentiment all factor into various PPS “fair value” models. When a stock makes higher lows and higher highs it is considered up trending, but if it pivots at a clear upper trend line another example here , you have a megaphone shaped bell.
Back to the chart, as you can see the PPS has hesitated and pivoted at the mid line of the channel. Ok great? reason this is interesting is the stock is trading technically well, you know there are others out there playing a chart similar to this, thus you are not in the trade *alone.
Every successful trader must be able to make decisions on his or her own without the input of others. Why? #1 reason being time. If you are stuck in a trade and you have a lot of risk on, you must exit the trade mitigating risk fast, think fast trade fast. You must know break even points before you enter any trade, and know always have a exit strategy. ie. hedge and or puke up the shares and bang out, moving onto another trade. dont dwell, you will miss opportunity.