Tuesday, December 23, 2008

Keep Your Losses Small

I wanted to follow up on my last post.

Small losses are a part of the business. Not all setup that trigger become profitable. I always assume that I will have more losing trades than winners (I am not sure if that is the case), so my losses per trade have to be smaller than my gains per trade.

Crude Oil
I got stopped into Oil (USO) and then got stopped out at $31.80 yesterday. USO has been as low at 29.13 this morning. I still expect a real strong bounce on Oil at some point. To give you example of the power of the potential bounce, Natural Gas (UNG) has rallied 9.5% intraday. So I will be looking for other setups in the future.

Financials
A few days ago, I added to my short positions on Financials via SKF at $109 or so. I took half of my SKF out this morning. That gives me about a 3% exposure to SKF.

NASDAQ
I had stops in to buy QQQQ (Bullish NASDAQ) and PSQ (Bearish NASDAQ). PSQ triggered and I now hold it. PSQ did its annual distribution of dividends and capital gains today. The distributions were a total of $4.2547 per share. So I am up a few percent on PSQ. The distribution will hit my account on 12/30.

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