So why reduce at this time, are you reducing your exposure (risk)? Also do you add the same number of cars each time or do you add more as price moves against you so you get closer to the current price? So say add 1+2+3+6 etc etc..
if "take care" you mean.. leave them so far behind in the rear view mirror that they are irrelevant to the charts.. then maybe
you want to take some adds off on the pullbacks(reduce size so you can add if you want) mon was maybe 2 points and tuesday none ,if you have a max number of contracts you will hold,if you are at max ,and cant add, then you bite the bullet on a few to keep you in the game,assuming you are going to accept your loss $ limit ,short at 67,if we go to 81-3, you cant add if you are at max,had you reduced, you can,take a small loss,hopefully after an add we get a better pullback,you are able to stay in the game if you can keep raising your avg while staying with in max loss max contract rules, and yes sometimes you do add more and reduce more ,not always the same number of contracts, depends on the market strength/weakness... i was over take home max contracts and cut back for overnite
Interesting, I've never thought about reducing the average as a means to stay in the game. So it's not a case of if the market doesn't do as you expected then exit at that point? Or at this stage, is it a case of when not if the market pulls back for a much larger retrace? How long will you keep adding and subtracting contracts? Isn't there a danger of lots of small paper cuts? Or do you just keep going until your max loss $ is reached? Thank You.
you are basically scalping, hopefully the daily 3 or 4 point pullbacks, sell 77 , reduce 73 for instance,just keeping a position on for any larger correction, if the spx went from 1800-1900 in a straight line , thats 100 points, there is a lot more if you count the to and fros, maybe 300-500 points,who knows,the jpm and gs's holding your money ,and your stock shares make the money on those moves while you make the appl 90-100 move, so as to whether its an if it pulls back or when it pulls back,you're betting on the when it pulls back not a houdini and do get caught ocassionally,stopped out, but a minority of the time ,roughly 15%
Aren't you making a loss though (on every reduction) until the big move? Edit: I see so you buy back under the last addition, on the pullback ??
yes and no, the position is underwater until we pullback, but some of the scalps are profitable, so your underwater may go from 8 as it is at the moment to 5 , if the underwater mark is under 20, the corrections are often that and much larger, you need the corrections for the method to work, spx is a mean reversion index