Thursday, June 19, 2014

TOM exit and IPM Trade Matrix Entry

As mentioned previously, Trade Options Matrix is an experimental product. We got some good returns in the beginning but the market trend was very strong to the upside. Cannot stay with a losing trade on an experimental product. Will exit today. Always enter an experimental trade with a very small position, all in the portfolio was only 4% short.

One reason we stopped taking short trades in an uptrend was because it clouded the vision for the real trade. Real profitable trade right now is the long trade. Even if the market declines, the confusion that this short trade will create will be much more stressful than the long trade.

We will go long on TNA. Will start with a small position 30% and then will keep on adding on any weakness due to Vix sell signal, as current turn window should mark a bottom.

Yesterday's post Fed announcement decline in markets might have been the low. It surely did trigger the buy signal. We remained reluctant because of the short trade. Short trade added murkiness to our long trading vision.

In short, this experiment showed us that once we have a clear bias, we should stay with the IPM trade matrix and not go in to make pennies. Although we might be able to make some pennies, we will lose our vision and clear directional bias. This will make things confusing in the long run.

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