Gotta love ZERO RISK in the SP500 = $$$
- Thread starter makloda
- Start date
Real question is will one drawdown negate all the winnings bulls have accumulated in the past half decade?
When you consider that, your assumption looks weak.
It's like saying you won a round, when the opponent won 500.
Not really, ive been a bull in this market too, when it made sense, but if your a trader and your going long right now in leveraged accounts looking for these small gap ups when the market just hit new highs and only managed to go up 5 more points, you are basically picking up pennies right in front of a steam roller, its just idiotic trading, if your long on leverage right now your going to get blown out when the down move eventually comes, thats just reality.
Of course anything is possible and therefore can't be excluded. Yet look at this weekly trend, the 'resilience' is just unbelievable, all thanks to QE/low interest rates/technological progress. They know what would happen if there was no incentive - deflation leading to depression, we had it in the past, did we not? So they decide to go the route of inflation. Considering where the market closed (see chart), this is a buying opportunity.
The problem here is that the Fed is creating a deep hole in the process of doing this. They're basically pot committed and have nowhere to go at this point. It's giant fucking hack that obviously isn't working and the fact that it's been allowed to go on for almost 7 years straight is almost criminal.
So delay the inevitable and put everything into pure hope that the economy will magically fix itself?
Rates are like 5% of the actual problem and the current policy has not demonstrated any effective usefulness other than making a bunch of equity holders richer.
We are ranged in an uptrend anything else is pure speculation.
All trading is speculation, your lying to yourself if you say anything isnt, even bonds have become speculative because of the fed.
You are probably right, we are in a bull market so id put the odds that we hit new highs this summer somewhere around 3-2, the difference is this, if we hit new highs i stop out harmlessly on my short via the SPXS, i will lose 2 percent on this trade if im wrong,(Actually i will lose nothing since i sold a quarter of my SPXS position at 18.24 today, so the trade pays for itself now) with the possibility of earning 65-70% very quickly if im right, If you are wrong you could be underwater 2-3% over night, and 30-40% if your buying ES contracts on high leverage. This market is very similar to the one in late 2007, or early 2008 where the market was reduced to these tiny ranges and people became fearless because the downside appeared to be limited. I can be wrong 10-20 times at these levels and it still pays out for me when i get it right, it only takes 1 hadouken for the leveraged ES bulls to blow out, Which side do you want to be on? We are currently at the back end of an overextended bull market.
Im just pointing out the fact that you arent getting good risk reward buying this market at these levels when the return you might get is 25-50 points on the ES, if we set new highs, vs 150 points downside in a couple days if the fed actually sticks to their guns and raises rates any time soon.
IMO since trading is a probability game, good trading is all about finding those situations where the risk reward is skewed the most in your favour, and it definitely isnt in favour of taking a highly leveraged long position on the ES hoping for a gap up in this environment. Im trying to help people here, i honestly couldnt care less if im wrong, its like being mad over a losing hand in blackjack where you know how to count cards. I just try to put myself in positions where the numbers line up and i let the chips fall where they may.
Like I said EARLIER, that kind of trade mimicks people who are selling the VIX when its at all time lows, it only works until it doesnt, your going to be right 90% of the time but your going to blow out the day the market finally does crack.
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