Am I the only one who thinks this is a great short setup on SPY/ES here? Close to the 2000 resistance, overbought (by many measures) and today there is a catalyst (fed minutes). what the minutes will say I don't think it matters (barring any big surprise), people are likely to look for reasons to sell. one can risk 20 ES points and potentially make 50+. A lot more if there is a Oct panic
Global Macro Trading Journal
- Thread starter Daal
- Start date
Pretty terrible day for me. At this point I gave back the vast majority of my IVV gains from the September sell-off. After the minutes I played it pretty poorly. All my hedges failed. I tried gold and it reversed, I also tried NFLX because I liked the news and thought funds would chase it up. Stock did nothing for like 20 mins after the minutes. Of course, as soon as I sold it rallied 6 dollars. I should have gone long SPY as a daytrade like I did on FOMC day last month. It was a pretty smooth ride. But I was getting hit with losses everywhere (including FNMA long) that I let my short bias get the best of me. Normally, I do these sorts of day trade hedges and they offset the losses from the swing position but this time I couldn't do it
My initial risk level was 2010-2020 on SPX but now I'm going to have to widen this. This market is so overbought and sentiment is so onesided that covering here is a bit like capitulating at the top. The market was stuck in that 2050 level all year long and did nothing. No we are supposed to believe buying a few % bellow that is the key to wealth? I don't think so, this is more of a short squeeze (from shorts and underweight longs) than anything.
The statistical analysis also suggest a pullback
http://quantifiableedges.com/what-the-stretced-vxo-is-suggesting/
This has only gotten more extreme today
I don't like to fight indicies but im going to have to this time as covering here is emotionally comforting but a bad decision. Now if the market pulls to 1975 or so and then rallies back up to 2010, id cover everything in a second. In a straight up move, on average the better decision here I believe is to give more room
The statistical analysis also suggest a pullback
http://quantifiableedges.com/what-the-stretced-vxo-is-suggesting/
This has only gotten more extreme today
I don't like to fight indicies but im going to have to this time as covering here is emotionally comforting but a bad decision. Now if the market pulls to 1975 or so and then rallies back up to 2010, id cover everything in a second. In a straight up move, on average the better decision here I believe is to give more room
Its amazing, a few weeks back in the FOMC statement market sold off because the FED was delaying the liftoff due to global economic weakness, now the minutes brought the same thing and markets rallied... Lots of schizophrenic traders out there...
Have order to sell ES Mini @ 2013...Hopefully it will get there
Have order to sell ES Mini @ 2013...Hopefully it will get there
The more hilarious reaction was the ES pop after the Yellen speech where she hinted a Dec hike. Markets pushed like 20 ES points
Today bonds actually fell and my fed futures hedge barely moved. Equities are trading on emotions right now, not logic
This situation here presents a pretty interesting dilemma. On the one hand you have general trading advice that tells you to cut losses and not add to losers, on the other hand you have a situation where a market has gotten very one sided and the risk reward of betting against it has improved further (which in theory calls for a bigger position, not smaller)
I know some guys who swear by each of these styles and I will say this, the first style is more robust. It protects you against fat tails more. You give up a % of your profits for the insurance of never having a huge loss. Whereas the 2nd style is more profitable because you sometimes you will be pretty big when the risk-reward is extremely skewed. The danger of course is that you keep adding and then you have a huge loss.
This is not a risk for me because I wasn't that big to begin with. Right now I'm at 100% of the size that I had on the Sep FOMC meeting (which I commented that didn't want to go big because I would faked out by rallies). But honestly, if this market rallies further I will go bigger but only on a intraday basis (im done adding to the swing). Like, if tomorrow this market gaps higher and runs after open, my day trading experience tells there is a 80%+ the market will roll over and go red (and flush 20-30 cents) on the day so I do plan to play that pretty heavily
I know some guys who swear by each of these styles and I will say this, the first style is more robust. It protects you against fat tails more. You give up a % of your profits for the insurance of never having a huge loss. Whereas the 2nd style is more profitable because you sometimes you will be pretty big when the risk-reward is extremely skewed. The danger of course is that you keep adding and then you have a huge loss.
This is not a risk for me because I wasn't that big to begin with. Right now I'm at 100% of the size that I had on the Sep FOMC meeting (which I commented that didn't want to go big because I would faked out by rallies). But honestly, if this market rallies further I will go bigger but only on a intraday basis (im done adding to the swing). Like, if tomorrow this market gaps higher and runs after open, my day trading experience tells there is a 80%+ the market will roll over and go red (and flush 20-30 cents) on the day so I do plan to play that pretty heavily
When I got hit with my loss on Gold I should have shorted a lot of it. It couldn't rally on the 'dovish' fed minutes, same thing happened with bonds but I wasn't trading that (still holding my 10y bonds though).
I still have a lot of learn in these futures/ETFs but there are some good setups in those. Over the last 2-3 years I traded micro/small caps almost exclusively. I wish I had traded more in the bigger markets. The patterns/setups are there. You just got to be patient as hell. If you play great setups with big size, its better than trying to play everything with small size and then try to nail the better setups with bigger size. What happens is that the small losses take your confidence away and then the good setup shows up, you don't play it (or you play it smaller). At least, that's what I have been learning about ETF/futures short-term trading
I still have a lot of learn in these futures/ETFs but there are some good setups in those. Over the last 2-3 years I traded micro/small caps almost exclusively. I wish I had traded more in the bigger markets. The patterns/setups are there. You just got to be patient as hell. If you play great setups with big size, its better than trying to play everything with small size and then try to nail the better setups with bigger size. What happens is that the small losses take your confidence away and then the good setup shows up, you don't play it (or you play it smaller). At least, that's what I have been learning about ETF/futures short-term trading