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Hello all again,
Thank you for your participation, here are the results:
Number of votes: 19
Option3: (Take profits, play again) 7 votes
Option4: (Let profits run, forego next play) 12 vote
In this question I included a lot of irrelevant info, and indeed it
seems this has confused participants: There is a split view as to
whether to consider taking profits now as an opportunity to make a new
trade with again an average expected return, or not. Depending on this
view expectancy favors 3 or 4 . Most adhere though to the view that a
trade has to be pressed to the very end, and exiting early does not give
the opportunity to benefit from a new extra average winner (which is the
opposite reasoning from the opportunity cost of not being able to trade
again because one is stuck with an old loss)
Best trading to all
Gwenn Ael Gautier
QUESTION B WAS:
You regularly trade futures, by entering on breakouts in what you
define as being the direction of the trend. When trades prove profitable
you pyramid systematically, effectively doubling initial size.
You trade 50 times a year on average, and your average trade is about
$4.200 in profits. You are currently in a short trade in yen, sitting on
6 pyramided contracts with over $14.000 in unrealized profits at
yesterday's close.
However it appears the BOJ and the Fed could lead a joint action to
reverse course
and this is currently the main topic among currency traders. .
You are facing the following alternative, which one do you chose?
Option3: Take immediate profit of $14.000, and wait for next setup to
happen.
Option4: Hang on to the position, knowing you have 25% chances the
intervention does take place and the market shoots up to reduce your
profits down to $6.000 only. If they don't, you will collect $6.000
more in profits.
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