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> Kevin, I agree with the first part. I have a comment about your trade. It
> has been my experience that when extreme volatility happens, many of the
> probabilities go out the window. I usually decline to trade in these
> conditions now. Some of the guys like Ben seem to have a handle on trading
> in these conditions. I like markets that make sense.
I couldn't agree more; anything that raises reasonable doubt about typical
interpretations should give rise to real caution, and extreme volatility
is one such.
In the particular trade I described, I don't think I misread probabilities
though; I called the market direction correctly, and a huge move ensued.
My problem was timing and execution; I was late, and I didn't protect myself
from the risk of being late via a limit order. That's the lesson I learned.
OKAY A NEW REALTRADE:
I've been waiting for coffee to set up for me to go short with high
confidence. The coffee contract is BIG by my fiscal standards, and I
love it and hate it for that reason. It certainly causes me to be pretty
careful about timing my entries, and quick about locking up profits when I
have them.
The breakdown bar from yesterday looked a heck of alot like a broad
breakdown from the slightly uptrending range coffee's been in for the last
12-15 sesssions or so. I jumped on it, but this time I DID use a protective
limit. I put the limit sell at 108.25, to give a little room from last
nights close (I want in!), but to protect me against a horrendous "at the
bottom" fill.
My logic overall; either the start of a broad downmove (30% chance?) which
could score me big profits if I ride it, or a "shift down" in range, out of
which I should get a smallish profit (which in coffee = 400-800) or a
smaller loss at most (60% chance?), or it's just a short term (one, two day)
downspike, in which case I'm risking between 800 and 1600 (10% chance?).
When I checked after rising, I was in and the market was around 106.50.
My fill was 108.50. My finger twitched with the idea of taking small
profits. But I restrained myself. To much chance of a continued slide.
An hour and half later, I checked it again. 104+ zone, 1500 in profits.
Ka-ching. Cashed it in. Turns out I exited within .25 of the low for
the day. Ahhhhh, lady be good. Maybe I try it again soon if it shows
signs of a broader, longer breakdown. Meanwhile, my money's under the
pillow.
Comments, criticisms, other approaches to coffee right now?
-k
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