Friday, November 11, 2011
A tiny losing day because of a second spread trade gone bad
When I am not sure of the market's likely direction on any given day, I should refrain from trading. In fact, this is what I normally do. But lately in a futile effort to outsmart the markets, I have started using spread trades in these situations. If well executed, a spread trade does not represent the same degree of risk than a straight forward regular unidirectional trade. Sometimes you can even be wrong on the main direction of your spread and still make money (obviously a less frequent occurrence, but still). Well today for me it was more in line with statistics and my short euro/long crude spread trade never really took off. I had been patient enough (I think) to wait for the right setup before initiating it but the euro at one point went through the roof and, frankly, I wasn't expecting it to go that way that fast today. Too bad to end the week on a reddish note but that's the way it is in the wonderful world of trading. Net result for today: -$48 trading 1 contract (commissions included). Details below.