MS,
I sent MS a private message regarding the basic premise behind my hedges IF I take a directional swing trade based soley on TIME ANALYSIS.
Here is a part of that PM that he thought would be good for this thread:
So, when I am taking a swing position purely based on TIME, I have a window. IF the position is not going my way by day 3 - I start the hedge process - especially IF the market internals do not favor my direction. Many many times taking trades purely based on TIME - is a contrarian trade - which OFTEN does take time to play out.
My trade rules implement a hedge in 1) options, and/or 2) an ETF. With the ETF I am playing the sector leaders (liquidity is key to find in these ETFs), and with the option I am in the money. (The hedge ratio's and specifics are up to each individual trader to determine based on personal risk and trading skills.)
What is important - and how I see it - capital preservation. I can careless about being right - AND with your public journal on ET that makes it difficult to seperate BUT not impossible.
MY RATIONALE
The hedge takes me out of a purly ANALYSIS trade, and allows me then to execut MY SKILLS and ABILITY as a full time trader. I see the market more clear. I re-assess my hedge at the end of every 2 day period thereafter.
What you find, is that you protect your TRADE and often will be able to make more money trading out of it than you originally risked. Obviously it is not more than you would have orginially made IF the trade went the direction into the TIME period - as desired.
I simply HATE sitting around and waiting on the market, for the trades that I take from TIME analysis.
All the best,
Patrick Q
Wish me luck!
