Trading Profitably In A Falling Market
Ryan Mallory | Sep 13, 2015 01:23AM ET
If there could possibly be a more uninspiring week of trading, please tell me, because this market was an utter bore this week.
When September 17th comes and goes and we finally know the Fed's rate decision, I for one will be an extremely happy camper. Any market that is this hung up on a rate change going from 0% to a quarter percent higher has some major issues. I've followed the market for over 20 years now and I've never seen such hysteria and utter paralysis by the market to determine its future direction ahead of a FOMC meeting.
With that said, I did manage 3 trades this week, with only one of them being of any significance and that was my trade that I made on Wednesday in SPXU that I netted 5% on. I bought it at $37.26 and sold it at $39.04.
Here was my trade:
And to me, the trade was fairly obvious. I started seeing the market fade quite early in the trading session. When that took place, I immediately added ProShares UltraPro Short S&P500 (NYSE:SPXU), which is a leveraged 3-to-1 inverse of the S&P 500. I held it overnight and when the market tried to go back up the next morning, I immediately took my gains as shown on the chart above.
I'm a full-time trader. This is what I do each and every day, and the key to successfully trading is patience and knowing how to manage risk. If you don't have either, you are destined to fail in this or any other market you trade in. While I'd like to be 100% long or 100% short all the time, the reality is, that you can't... not if you want to preserve the capital in your portfolio.
I would have liked to of have nine or ten trading opportunities to take advantage of this week, but there was only a few that caught my eye, and only one that really worked out well and ultimately made my week profitable.
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