DislikedOne question Sir. Let's say you enter a nice down going swing. Not one big enough to take profit but sizable nonetheless. You will continuously add. All the longs die and a bunch of the shorts survive. At the bottom when the market start turning you are net short with perhaps a dozen of positions. You accumulated losses on the way. Now the new coming longs survive and the new shorts die. The old shorts on the way die at BE. The market is rising and despite you're adding to the long side you lose money (floating profit resorbs very quickly) because...Ignored
In my examples in showing how I remain 'hedged' in a certain manner I always spoke about how one side would be at a loss but the other side would take up the slack - making me net breakeven. But I did mention that I'd never actually let this happen. Once I notice that the majority of my shorts (as opposed to the majority of my longs) are starting to die, I now recognize that the trend is turning. It is time for me to close atleast 1, most likely 2 large shorts, which actually
a) restores balance
b) puts me in at a nice profit (also psychologically very helpful)
c) still allows me to ride the move upwards with my new longs
d) still allows me to ride the move downwards with my remaining safe shorts
If I'm wrong and the downwards move does continue, I'm not bothered that I closed some shorts early as all profit is good profit, and besides I still have 1 or 2 shorts in place to capture the further momentum.
Hope that helps, if only a little.
Fez