Hammy Trade: SDS

6/16: Bought SDS at 55.37 to hedge against my longs. Last night i remember wishing I had bought some during the day, and was pissed I hadn't when SPX futures were so low.

The SPX is indecisive, and I don't feel like getting "dropped down an empty elevator shaft" as Fly would put it.

Hammy Trade: SDS

bought at 58.09 on 5/7/09

This is dangerous, I know. However, it's a small position and I'm using it as a slight hedge for the time being. I'm just really not sure what's happening in the market right now, but believe we'll see a little bit of a correction:

This is a leveraged Moving Average buy. The index moved down through the 20 and 50 (10 minute) moving averages. I'm holding this as a hedge in case the market makes a major move down, and my other two positions break down. I haven't made money on this type of trade in the past, and I don't think I'm doing much differently, so it's probably a stupid trade. I'll get back to this later.

Update: sold at 59.37 on 5/7/09

Why I sold: It hit the day high. SPY hit a low. I didn't want to hold SDS for more than intraday, and I had no conviction that we'd see move either way. Since I held a profit, I decided to get out. Minor success (1.85%) on a small move, but not bad for an intraday play.

Hammy Trade: Sell SDS, Buy SSO, Buy SDS

sold 31 SDS @ 77.98. bought 131 SSO @ 20.71. I just bought 37 SDS @ 74.84 to hedge my long position, since I don't think i have the settled funds to sell SSO for the $55 profit. I'm essentially even now. This was a big rally up to a resistance position (825) with smaller than normal volume. Not interested in being long, nor short. 

My resistance trade failed. The S&P pushed through 805, triggering me from bearish to bullish. 

I learned something significant: If you're trading counter-trend, you need to keep it small or non-existent. Right now we're in the middle of a huge rally. Yes, it's on smaller volume than average, yes, it's not for any good reason, but the market IS and HAS BEEN moving higher. Thus, shorting is counter-trend trading. If you're going to bet against the market, you better a)have a great piece of information and assurance that you're right, or B) make your position very small.

I got long after 805 and made back some of the money. So today wasn't a total wash. I also came out of today with a very valuable lesson. 

LESSON LEARNED: IF YOU'RE COUNTER-TREND TRADING, KEEP YOUR POSITION SMALL! Better option is: in rallies, wait until it crashes up through ceiling resistance, then get long. This is instead of speculating that it will bounce down from the ceiling. Use the momentum of the market and stay on the safe side. There is a much smaller chance of being wrong if you wait for it to confirm it's own trend and then ride it up, or down (if in a bear market). 

or:

Don't try to short during rallies. Don't try to get long during bears. Trade with the trend. 

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UPDATE 3/25: 

Traded out of my "even" position with SDS and SSO. I bought the SSO close to the end of the "epic" rally around 810, and bought SDS yesterday to "cover" that SSO position.

Since these are leveraged ETFs, an "even" position between the two still loses money. So i got out of both of them today.

Hammy Trade - SDS, SSO

Traded out of my "even" position with SDS and SSO. I bought the SSO close to the end of the "epic" rally around 810, and bought SDS yesterday to "cover" that SSO position.

Since these are leveraged ETFs, an "even" position between the two still loses money. So i got out of both of them today.