I am expecting a drop into the Gap. Should this happen I may add onto this position if conditions stay the same.
To use a term from the Rearden Metal phrase book my position has so far been "pounded like a rented gerbil". http://www.urbandictionary.com/define.php?term=Pounded+like+a+rented+gerbil Still in the trade and we look to be forming a base on both SPY and VXX this may support my trade or be used to trick more buyers followed by taking there stops.
Unfortunately I never found the right place to add more size on to this trade... I may reduce size and take some profit on this one (When I get some) and then hold overnight so long as all conditions stay the same. This maybe the start of quite a strong up move but then again with the exogenous events in play anything can happen.
Now fully out of that position remaining was exited at 205.24. To summarize I lost $1.31 on 50% of position and $1.65 on the remainder average exit price for full `position was -$1.48 So the question is was the trade worthy? I was going against quite big momentum and a gap but I took the trade to try and make a front run on the higher time frame bullish divergence I was noting yesterday. It failed probably because of the two reasons above and so in future I will think twice about taking a setup liker that again.
Well we have gapped up at the open and so far the buying seems strong. I would normally be long right now but the Gap is concerning me. The last 2 setups like this the market has closed the gap so I will not be looking at going long until at least most of the gap has been traded.
So this mornings open highlights the last loss I took could have been an excellent trade if I had took the draw down. Hence why RM wisdom shines through. Quote; The market does not know or care where you got in! 'Being up' or 'being down' on a position shouldn't ever change the way you trade it. The market has no idea where you got in. I am scouting for longs But the market is not ready for them yet and all things staying the same I expect the market to fill the gap at least partially.
Looks like we are making a short term top here. Short term being for a day or 2. I am still long biased but will wait for lower prices before entering. Because of taking a loss on the last trade I will not be trading this counter trend and will wait to enter long on a pullback. That may mean having to wait until Thursday or Friday but I am seeking out a higher probability trade.