April 12, 2013
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Trading Update: 040813 – 041213
Neutral week for me- in terms of gain/loss, but a good one in hedge management, adjusting long and short positions. The move to pre-program the hedge trades along with directional trades has worked well in solving the problem of trader bias in skipping hedge trades.
Working both sides of the market simultaneously takes some getting use to, but like everything, gets easier with use. The transition has been a bit of a challenge, but it’s definitely the right way to go to take my trading to the next level. When optimized, market movement in any direction each week will generate profits.
A good thing about hedging is that it forces you to always consider both market directions, which makes it less likely to get in trouble with trader bias in getting hooked on one direction. Permabears try to short the market no matter how strong the move up is, and Permabulls are constantly bullish. Both wind up losing big when going against an extended trend.
Comments (3)
It’s like reading something in a foreign language, I don’t understand most of the words.
Oh wait, English, indeed, is a foreign language for me even though I had to learn it since I was a child. Still…
What is hedging? Permabears? Permabulls?
I just would like to know for the knowledge-wise.
@simplysuzu - Lol, most people consider trading/investing and the buzzwords associated with them a foreign concept. =)
Hedging is when you reduce your risk by placing a trade that is the opposite of your main trade/investment. For example, lets say you own 500 shares of a stock, but are worried the market is going lower. To hedge in favor of the market falling, you would sell or short a portion of your position, which would reduce your overall market risk.
Someone is Bearish when they think the market will fall, and Bullish when they think it will rise. ‘Permabear’ is short for “permanent Bear” – a person who always thinks the market will fall regardless of any new information or actual market movement. Likewise a Permabull is always optimistic of the market rising no matter what. Both those type of people get into trouble because they are acting on what they believe instead of what the market is actually doing.
Hope that helps. =)
@SoullFire - Ah. Very interesting. I guess I understood. Well, a little.