Going to take a slight detour from my normal blogging routine to talk about a trade I made today. It was a pretty good trade for me, but most of it was pretty lucky.
I've been, for a while, wanting to get long the market and get less short. But work has been pretty busy lately (we had a layoff, more on that another day) and so I have had very little time to even think about what I want to do in the market. I went to bed early last night, mostly because I was so tired from the long week, and was able to get up early. I had some time to kill before work, so I started to see how I could finally get some trading done.
Now, the market was down about 10% from where I wanted to start to get a more long. My strategy was to continue to get longer while the market moved down. I want to trade the range. That is, I believe the market will trade between a range that is about 20% wide. When we get close to the bottom of that range, I get rid of my shorts and get more long. As we get close to the top, I get out of my longs and increase my shorts. It is extremely hard to do and takes a lot of discipline because it can seem like the market will never stop moving in a given direction.
Well, despite the fact that I think the financials are going to be hurting for awhile, I decided to get long, ultra long in fact. Not a huge bet, but at least wanted to start another position. So I bought 800 shares of UYG which cost me a little bit under $2500. So not a huge positon by any means. But like I said, I was going to buy a little more if it went down even further. The ETF proceeded to end the day up 23% from the previous close. I got about 18% of that gain.
Now I'm tempted to just get out. In this market, best to just take your gains and run. Granted, it is only about a $400 gain. But in this environment, that really is not anything to sneeze at. I might hang on for a little bit longer but will probably get out soon. While I do think the market is probably up for the next few sessions, I believe it is best to just take profits when you get them and look elsewhere for opportunities.