Wednesday, December 23, 2009

Heads Up on Possible Trade

I'm just making a heads up post here because I may post a trade at any time today. I was wanting to see a gap up and then sell off for a possible new trade entry, and we got a modest gap today and are selling off modestly now. Volume will probably be lackluster due to Holiday trade, but there may be enough to make a decent reversal.

The only thing I haven't decided is whether I will post a recommended stop on this one. If I don't, then expect to take an approximate 25-33% short weighting relative to account value. So for example you could put 25% of the account into SH or short SPY. But if the trade is on SPXU which is 3 times as volatile, then you would need to bump that down to 8-10% of account value.

For those who do their own trading, but just use the blog for analysis purposes, then I would use a basic 60 minute chart with a MACD and go short/inverse if there is a bearish cross. Then the stop would go above the day's high. You may want to give a cushion of about 1% above the days high as well.

A few chart will follow.

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