I went long 3285 S&P futures here. I am looking for a relief bounce. Stop shown above at 3261. Plan on adjusting stop to breakeven if/when price gets above 3310
Trade closed: stop reached
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Stopped at breakeven at 3285 ("Plan on adjusting stop to breakeven if/when price gets above 3310")
Comment
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A decent learning lesson to be taken from this set-up.
1) Tight stops usually result in unnecessary losses. This means you're better off holding smaller positions and widening your stops on trades. After doing this as long as I have, I've consistently come up with this conclusion, as have many professional traders I speak to and learned from.
2) While I didn't lose money on this trade (due to my stop adjustment to breakeven at 3285), it's better to let trades breath more. Let price trade. We don't know how erratic markets will be - a break below our level usually does not signal that your trade is invalid. It simply means our level was tighter than it should have been/our size is too big. My point is this, yes I would have gotten stopped out either way (since my stop was at 3260 and the low of the day was 3259), but in general, I strongly believe you should assume trades will fake-out against you before going in your expected direction.
3) I went long SPY call options at the close yesterday in addition to my futures position. I did this because I had a feeling I could be right in my analysis but still get stopped out due to heightened market volatility. It's easier for me to hold options than it is to hold futures positions. This is mainly because having stops on options is challenging unless they're just "money stops" (for example, buy a $1000 options at $10 per contract and you set a stop at $8 because you don't want to lose more than $200 per contract). So while I'm still profitable on this trade, it could have been executed better.
Bottom line: Figure out a way to hold positions more to allow insignificant market volatility to run its course. Had I traded this better, I would have simply established wider stops and initiated a smaller futures position, and I would not have adjusted stops until market meets target or gets 70% to target with a trailing stop.
We all understand that politics can affect the stock and financial markets, but you really need to keep your personal opinions out of the TV forum. There are many other forums you can post comments like those you posted and frankly the TV should ban people who make these sort of comments regardless of affiliation. Your work is reasonable so its sad you denigrate that by making the comments you did
Lanmar
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@OzMoneyman, i have no idea what you're talking about. I don't make comments outside of trade execution and analysis on TV and have no clue what forum you're mentioning.
OzMoneyman
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@Lanmar, I do not see the comments now so maybe they have been edited out or maybe some one hacked you but they certainly were there when i looked at your post this morning. (including not so clean language) (very disparaging remarks about a certain candidate etc) Mate I would not have commented if they weren't there but having said that i will take your word that you don't do that stuff. All the best
Lanmar
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@OzMoneyman, thanks a lot for letting me know and please tell me if you see anything like that again (feel free to dm). If you followed my work long enough I only concern myself with trading analysis. I've never represented a political opinion in public nor do I intend to. Simply not the place to do it. Thanks
PontusTrader
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Very risky play imo, I wouldn't trust this pennant to hold for long - a quick scalp is the play but no more.
Lanmar
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@PontusTrader, yeah it's basically a scalp and is risky I agree. Price is now above 3310 so my stop is now adjusted to breakeven. Generally though, these reversals aren't worth picking at. Better off waiting longer usually.
PontusTrader
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@Lanmar, Great trade management, I need that discipline!
Lanmar
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@PontusTrader, thanks buddy. I still have plenty to learn on that side of the equation too!