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artichoke wrote:
>> Linda Raschke and Steve Moore once did some research that showed that
>> a market that finishes in the top 10-15% of its range for the day had
>> an 80% chance of going higher at some point the next day. You might
>> want to consider this if you're intraday trade is near the end of the
>> day and you're considering closing it out or not. The other thing is
>> to actually consider the larger trend. If the larger trend is up and
>> you're closing up, would you like to carry it overnight. On the
>> other hand, carrying any longs overnight the past several weeks would
>> have been very injurious to your account for sure. All of this may be
>> based on how tight your stops are and whether any move against you
>> overnight might be enough to take that out (means considering
>> volatility). And, of course there's always that 3% chance that the
>> bottom falls out overnight, one of the caveats in that 80% reasoning.
>> Working with options is another way to risk longer term trades
>> assuming you get it right during the day, but I'll leave the nuances
>> of the option game to those on this list who know much more.
thanks for pointing this out. i *have* been thinking about LBR's
stuff, which i read a long time ago & probably need to re-read.
i do agree with you about knowing what the larger trend is -- i was
being somewhat facetious when i said i "ignore" it. warren buffett
(whom i admire) always talks about "margin of safety" in fundamentals.
my view is, vis-a-vis *trading*, that you increase your margin of
safety knowing what the larger trend is. for me as intraday trader
this can be as short as a 3 hour "trend" or as long as weekly/monthly
trend. it does give a bit of margin for error if, for instance, your
entry point isn't so hot (my entries usually suck pretty bad, to tell
the truth).
i usually don't talk about my book, but it so happens that i AM
carrying some spx 850 calls overnight tonight -- for the exact
reasoning that you explain above. carrying overnight, though, usually
makes me feel a bit queasy. ;-) i unloaded all my 800 and 825 calls
today -- leaving a LOT of money on the table (don't we all?!?!?) but
not regretting it one bit.
my belief is (as an intraday trader) that "they" can't take it back if
you cash in. as long as i have an open position, "they" will try
their damned hardest to make me give it back to them.
& i refuse to. i gave to them all last year. it's time for them to
pay ME.
- *lk
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