So you keep shorting in anticipation of a rare black swan? You will likely die from a thousand cuts before that happens.
if you look at the last 5 years .spu's have had a 20-50 pt pullback every month,just reversion, not a black swan,before you ask, was flat may 2010 for the mini flash
re: Downside Fear Aside from weekends, you got fairly reliable stops though. Sure there is slippage during major earning surprises, FOMC, economic data, etc. but the way you manage your risk makes you less prone to such slippage. Bottomline, I see your logic during weekends, but that's it.
Bottomline is 20 pt loss on a max size of 60 contracts, chances of that happening to the upside by the time i have averaged into a full position,which usually starts at a fair distance from last low and at or near a new resistance area, sometimes 3 res areas by the time its a full position are pretty rare and if we do get the 20 pts overnite to the upside,its rarely more so amount willing to risk per month is not exceeded. Stay in business is the first rule of business, marginal profit is number 2, then it's just finding ways to increase profit,...90 pts on a 60 lot is 225k minimal, amount you're able to sell once it reopens and how many at each price until you are flat could increase that loss...so for the way this strategy is played, the only way to play it to the upside is with a lot of put protection or cross hedging, trading out of several instruments ,longs and shorts with a market that is in berserk mode,just a skill i don't have, this is a kiss method for a simple stupid trader , from the outside it looks stupid because you are underwater for 2 weeks at a time , but it pays 85% of the time ...as long as the fed keeps pumping and the fear of the music stopping is loud and clear, that upside risk will be contained and it's a good strategy, once the music stops and we've corrected greater than 10%, then the upside whips will be back in play and will have to come up with a new plan...when that music does stop and hopefully i didn't flatten at the wrong time, there will be a nice parachute package for retiring this strategy
I think a good number of people do. I pretty much only trade the options. Buy or sell the cash only when I absolutely need the hedge. However I'm not a TA or PA type "day" trader. oops..responding to Visaria
My hat is off to your position and money management. Thank you for taking the time to detail some of the brilliance.