As the market broached that 1956 level in the stock market yesterday, I bought long positions like a deranged madman. As you will note in the stocktwits stream, I had a monster winner by going long on risk, unhedged on AUD/JPY. After that first 75 pip pop, I shread out of 25% of the position profitably, and let the rest ride. I then closed out that trade late last night.
Why did I close out the trade? Well, as I mentioned … I had enjoyed a monster win. Looking at the last 15 trades or so … that one trade took my risk reward ratio up to something stupid like 1 risk to 2.243 reward. Basic money management. It was just time to close out the trade, as my risk reward ratio looked incredible.
We then pressed a short on USD/CAD.
That one fell apart, almost immediately, and you can note that I closed that trade out early this morning, as alerts began to sound off. I ended up jumping out quickly. Because that’s what I do when a trade moves against me. I’ll jump out of a trade that moves against me from the outset faster than a fart in a windstorm. So I ended up with a small loss. Only half, of the full sized loss that I am normally willing to accept.
Once again … basic money management.
So what’s the plan moving forward?
I’m still a believer in the long side on stocks. I’ve caught a nice pop here in stocks, and the old addage can provide a guide. ‘Resistence now becomes support’, so I see support down near the 1950 region on the September e-mini S&P 500 Futures contract. That’s my new level to watch. I could hedge out immediately. But I’m not afraid of undergoing a little pain. Especially consdering the time-frame I am considering.
And it is Friday. So we thus head into the weekend, and we can watch to see how the powers that be attempt to beat on my portfolio …