Sometimes It’s Best To Walk Away
- Posted by DynamicHedge
- on April 26th, 2011
A couple weeks back, I wrote about one of my all-time favorite spreads that had “blown up.” Some people looked at the chart and said, “buying opportunity.” I said, “knock yourself out.”
I’ve seen a few of these blow-ups. Once they move this far, they’ve trapped way too many people to let anyone up for air. This spread needs time before I will trade it again, otherwise the trade will just look better, and better, and better until I have no more money in my account.
This is opportunity to someone, and I’m not totally discounting the fact that it may come back. It’s a matter of time-frame and opportunity cost. I will continue to stand aside until my algos tell me otherwise.
Here’s the chart from the original post:
Here’s the chart from today… notice that after a brief retracement it is now trading $5+ lower. UGLY.
Disclaimer: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please click here for a full disclaimer.
DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
- Confirmation bias: A dependable filter of objective information
- Conservatism Bias: How to know what new information to focus on
- Sentiment Flip
- Pardon the interruption
- Wait for the market to flex
- How SPY typically trades after a gap up/down on NFP report
- Ebay Monster Gaps
- Ghosts of Death Cross Past
- Yahoo Strategy Ahead of Alibaba IPO
- 3 Important Things To Watch For At 52-week Highs