Wednesday, January 21, 2009

Lucky Day - 20% gain

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.

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