Hurst Cycles Trading Software - Accurately Forecast Nifty and Stock Cycles

Wednesday, January 14, 2009

Trade Methodology

Got some questions on the trades so thought I will outline some stuff here...

First of all the PE option mentioned above was actually CE being a hedge. I have fixed that - It was my mistake. I have also updated all the figures with latest values. I will do this every end of day or if I do take a new position.

Now about the positions - I am not the kind of trader who trades daily. Only positional. Now I might 'manage' the position and the hedges some days but mostly will let them be. Coming to above positions, it was a double short position before but I covered half of it at 2740 which is what you can see above the open trades - did this since I was expecting a nice bounce which we did get. The other half is still running - I will decide when to close this based on market moves. Whenever I do this, I will update the sheet and also post a blog entry mentioning the exit. Once this is done, overall profit figure will be updated and the trade will move to closed trades.

Then regarding the hedge, why do I have double the futures position? Well most of the time, I try to make it delta neutral especially if I am not fully confident and then I will manage the hedge positions depending on my assessment of the risk in the trade. See the simple idea is that futures will move much faster than options...So if I profit, I am cutting down on profit with the hedge but it will be a profit...On the other hand, if position moves against me, I have protection against account blowup. I have written a good deal on this a few posts below this one - And why exactly I follow this method of risk management vs. hard stops.

Now coming to following these trades. Since these are already open, I would not recommend trading them. If I do new ones, you can try but remember its totally your decision and your risk..In fact, I would feel much more comfortable if people inclined to trade this first paper trade and then follow if at all you need to...Best always is to trade using your own analysis and use mine for confirmation!

I will post market thoughts and updates a little later today.


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