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: Sell SSO

This was a "cover" buy to cover my SDS position. Instead of getting long more SDS, I decided to just get rid of the hedge. 

Why I think the market will go lower: We are up to strong resistance at s&p 805. I got "re-long" SDS at around 797.. so there may be some pain going back up, but we'll see how it goes. VOLUME IS LIGHT for a 4% up day! 

At what point my assessment on the market will be shown wrong: If the S&P breaks resistance at 805, I will be shown wrong that it is going to break down at that resistance. At that point, I will consider getting long SPY. 

trading wisdom

where to put a stop/where to plan to sell:

"self, at what PRICE* am I just wrong about my assessment of this trend" and that's where my stop goes. ~danny

Hammy Trade - HES

Sold 40 HES @ 64.79



Why I sold: I sold because of market direction. The energy index is loosely linked with the overall market, and I saw the S&P break a trend line. I have a nice gain on this stock for the day and decided to take it, and call it a day.







1 week update on price:



Success! on 3/30 HES is around 55. Here's a chart of some recent action:

The stock started giving warning signs anyway, but I'm glad to have decided to take my small profit. Even the little wins are encouraging.