Managing risk of unpredictable, abrupt tweets that cause volcanic reversal action

Discussion in 'Risk Management' started by learner88, Aug 26, 2019.

  1. Peter8519

    Peter8519

    :sneaky::D
     
    #11     Aug 26, 2019
  2. Use TA to buy support and/or sell resistance with a hard stop.

    Then when the tweet/news/spew comes into the market.... if it's against your position, you get stopped out... maybe 4-5 ES points? If the event is in favor of your position, you make maybe 20+ points. (Last night's jawboning was worth 80 points.)

    You almost have to do it this way as the moves are too swift to "see, then catch"... algos, you know.
     
    #12     Aug 26, 2019
    yc47ib likes this.
  3. notagain

    notagain

    NQ looks like it'll open above VWAP trend line, NQ should spike down to ring the bell
     
    #13     Aug 26, 2019
  4. smallfil

    smallfil

    The stockmarket knows better than the fools who fall for every bit of news they come across with! Fools deserve to lose their monies!
     
    #14     Aug 26, 2019
  5. I think it works for forex because forex makes smaller moves in terms of percentage. It will be a problem if higher leverage is taken.
     
    #15     Aug 26, 2019
  6. I think one has to use a market stop order. The movement can be so fast that it will miss the stop order if it's a stop limit order.
     
    #16     Aug 26, 2019
  7. Robert Morse

    Robert Morse Sponsor

    Unfortunately, in my experience, if your time frame is days or more, I find stop orders execute at or near the point you might have added to your position rather than where you would want to liquidate. That is why I like using ITM options.
     
    Last edited: Aug 26, 2019
    #17     Aug 26, 2019
    yc47ib likes this.
  8. Agree. You don't want to be "penny wise and pound foolish" when you're playing defense.

    Even your stop order may be overshot a bit. Suggest not exposing yourself to a possible "weekend gap" where feasible also.
     
    Last edited: Aug 26, 2019
    #18     Aug 26, 2019
  9. tomorton

    tomorton


    Agreed on leverage. My highest is 1:20.
     
    #19     Aug 26, 2019
  10. A note FWIW...

    In my entire trading life, I've rarely had my capital levered even 2:1.
     
    #20     Aug 26, 2019
    MattZ likes this.