the problem of swing trading
- Thread starter heilbronner
- Start date
I didn't know that today was earnings announcement. So it was my fault, didn't do my homeworks.
I deserved to loose money, my fault, it was me, nobody else.
Think in that case the problem is me.
What makes it even harder is that it's a deja vue, 3 years ago I remember being caught in the same situation in NOK!!!
Shame on me.
I deserved to loose money, my fault, it was me, nobody else.
Think in that case the problem is me.
What makes it even harder is that it's a deja vue, 3 years ago I remember being caught in the same situation in NOK!!!
Shame on me.
For once I agree with db. Avoiding overnight risk, particularly during earnings season, is one of the primary reasons to be flat EOD. There certainly can be air pockets during the day, but they're rarer and affect all styles equally. To me, the main risk of daytrading is the limited profit potential, which puts a lot of pressure on your technique.
You can hedge the overnight risk with options, but at a fairly steep cost, either out of pocket or opportunity. This is probably an area that swing traders need to focus more on though. I talked to a guy who claimed to have become very successful as a swing trader by simply selling options against his positions when they got close to his profit target. He would let the short options take him out of the trade and pocket a little extra premium. He said it dramatically improved his results, because before sometimes he would exit early or hold too long.
You can hedge the overnight risk with options, but at a fairly steep cost, either out of pocket or opportunity. This is probably an area that swing traders need to focus more on though. I talked to a guy who claimed to have become very successful as a swing trader by simply selling options against his positions when they got close to his profit target. He would let the short options take him out of the trade and pocket a little extra premium. He said it dramatically improved his results, because before sometimes he would exit early or hold too long.
Hi Margo,
I went long @ about 14 Euros, was well in the green. Intention was to let profits run, but... this turned out to be wrong for today.
I try to risk .5% to 1% of my total equity on a trade. I also cap my position in any particular stock to no more then 20% of equity.
That means that if I am at maximum money in, if I lose 20% overnight, I only really lost 20% of 20%, which is just 4% of total equity.
Losing 4% is huge when you tend to make only 0.25-1% per trade (total equity return, not just money in that trade), but its not an unrecoverable disastor.
That means that if I am at maximum money in, if I lose 20% overnight, I only really lost 20% of 20%, which is just 4% of total equity.
Losing 4% is huge when you tend to make only 0.25-1% per trade (total equity return, not just money in that trade), but its not an unrecoverable disastor.