I made another "poor entry" trade today into XIV at 67.33...should have been more around $62-65 when I had decided the instrument had stabilized But as a result, I came up with a strategy to leg into a large position...
Blueprint for Strategy--rule of 4 thirds:
-Third 1: early bird...immediately when things seem to have stopped going the bad way, put in an order below current price to put 1/3 of the capital in...this order can be open for a few days, sometimes gyrations occur for awhile.
-Third 2: once that is filled, and markets seem to be starting to go in the other direction, put in a second third of the capital in, at a limit price a little lower than current.
-Third 3: Once markets are obviously going in the right direction, put in the remaining third
-"Third" 4: Give it some time to clear any forthcoming hurdles (political events, etc.) and then put MARGIN into the trade. At this point, it should have gone significantly in the good direction.
Protective stops will be at 5% of portfolio loss for the first 2 thirds...they are just that, protective stops in case something happens. The major trading decisions will be executed by the manager.
Once the Margin is in, switch to a trailing stop for the margin at least. At the first sign of trouble, the margin needs to be taken off.
No comments:
Post a Comment