When it comes to the markets, "Anything can happen, and it usually does".
And here's another quote, from my original post on this trade on Sep. 2nd:
"This Friday will probably bring a difficult choice because this weekend coming up is a 3 day weekend in the USA"
Anticipating this didn't help much when it came to fruition. Look what happened today. We started down, breaking through the Trend Line. Great, this was in our favor and very welcome. But we bottomed out around 10:00am ET and trended up the rest of the day. We broke through the Head and Shoulders Neckline and the 8ema, and closed near the top. The bobble I discussed yesterday has resolved to the upside. Not what I was expecting nor wanted.
Notice today's bullish candle body engulfs the previous day's Doji body. That makes these 2 candles a Bullish Left/Right Combo candlestick pattern. Of course this is a bullish indicator. Also, we are resuming the up trend outlined by the channel we've been in. And Stochastics are mid-range, so we're not seeing pressure from being overbought.
Apparently the appropriate action is to exit this trade, especially facing a 3 day weekend, right? Well maybe, but let me give the bearish side of this trade. First, we have a ton of bearish indications as of yesterday. Maybe we shouldn't just abandon all that so quickly. The other thing is that I've seen many trades that do a quick 50% reversal, then resume the original direction. You can see we made a high today within the yellow range between 50% and 61.8%. I drew the yellow range to cover the previous down leg on the Daily chart. If this is one of those trades that does an annoying partial reversal before resuming the original direction, then it would look just like this chart. What matters now is how the next trading day goes. If it continues up, then we're scr.., uh... out of luck. If we see that, we'll have to exit the trade. The Bullish Left/Right Combo is a real thing to be respected.
So, since everything hinges on how price goes next, and I think we're looking at a 50/50 proposition, do we really want to just completely exit the trade? Its possible we gap down and continue down on the next trading day. So saying we should exit now because we can always get back in, isn't quite true. A significant gap is more likely after a 3 day weekend than a 2 day weekend. We could get back in but we could lose a lot of ground (meaning profits).
Conveniently, but maybe not fortunately, we have a double sized position on this trade. So what I did is to wait until the last minute today to see if we'd close under the 8ema, then when we didn't, I covered half the position (the second position). The original position is still on. So we reduced the risk and retained our opportunity to profit from this trade.
If NG continues up the next trading day and hits the 2.685 Stop vs getting out today at 2.580 we'd lose about another $250. If NG has a bearish day then we can add that position back on, maybe at a less advantageous level but still a potentially profitable one.
So, bottom line is we lost some money today to prevent a bigger loss.
Sold at 2.580 at 16:57:57 ET:
2.580 - 2.485 = -0.095 * $2500/pt = -$237.50
No comments:
Post a Comment