It sounds a lot like ordinary (but rare) occurrence can lead to intolerable losses. And you recognize what these risks are, and you've even priced the cost to mitigate these risks. The only answer here is to decrease position size. That or the ole O'hare spread--pro trader tip, buy the first class flight, that way the fare is refundable if the position goes your way.
Ways to hedge against a heavy loss in extreme situations for a scalper
- Thread starter CALLumbus
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Theoretically, there isn't any "qualitative" difference... only a "quantitative" one.
If you represent a big corp with big assets, you might "get by" with non-recourse (personal) obligations.... if the FCM agrees to allow that. But it would likely include some evaluation of the balance sheet. Most small-timers with LLC wouldn't have enough assets to back trading losses should they get out of hand.
It's not a matter of you "get to limit your losses to the assets of the LLC just because you have one". It's more a matter of "how much collateral does the LLC have to reimburse the FCM for any debits which might be incurred". If LLC assets are insufficient in the eyes of the FCM, then personal guarantees will likely be required.
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Beertrading, thank you for your comment. You are right, even if I need to trade at least some size to make some decent money, I have to constantly re-evaluate my actions and risks and take the right measures to not let it go too much into the extreme.
I did not understand your last sentence... O'hare spread, first class flight ? Lol, what do you mean, I have no idea
decrease the size of your position to the acceptable loss of say 50%
Beertrading, thank you for your comment. You are right, even if I need to trade at least some size to make some decent money, I have to constantly re-evaluate my actions and risks and take the right measures to not let it go too much into the extreme.
I did not understand your last sentence... O'hare spread, first class flight ? Lol, what do you mean, I have no idea
http://www.mademan.com/repost-the-ohare-spread/
Loool, this is good shit, I have to remember that just in case
Several? Several internet connections, phones and computers?
Heck, I'm still trying to get over the fact that you can follow and scalp four instruments in the very short term, since I can't even do proper justice to two; every time I try more than one, they both suffer:
Just curious, what do you consider very short term?
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remember is not enough, one has to adjust the size of the positionLoool, this is good shit, I have to remember that just in case
They you half your profit and have to trade twice as much, opening up more risk of something happening.
Set auto SL's if you don't trade with SL's as your worried, gets you kinda worse case SL's, limit the slap.
Other than that ignore, it's the cost of doing business, just move profits and build up a bank account so if a move does wipe out your trading account, you've not got to start from a small account again.
I’ve never used this service but you might want to take a look.
https://www.speedytradingservers.com/
The only way I know to hedge a large move is being prepared beforehand.
As a retail trader, if you don’t have foresight you’re going to be taken to the woodshed.
Even as a professional, you won’t get any liquidity to hedge your positions once the Big Bang happens. Nowadays, it’s electronic instead of phone calls, but even with extremely fast computers you won’t be able to get a quote from a bank in time.
Hedgies and mutual funds might be stupid enough to take the trade but you’re going to have to be quick when you try to get it through.