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I mentioned yesterday that I understood the frustration of small-lot SPISpy-ers, where the Rules of Engagement require early exits from profitable positions; it seems to defy the old maxim 'cut your losses short and let your profits run'. You've got to be careful of maxims, though; many of them sound real snappy but are not applicable to all situations. Taking that 3 SPI points (or 1 S&P point, or 10 Dow points) per contract per day is establishing (mentally) the absolute requirement for disciplined adherence to whatever gameplan is decided upon. The less latitude a novice traders permits themselves, the better.
So the SPISPy short yesterday is currently showing a profit of 80 points per contract for the 'rider' units of anybody who is trading more than 4 contracts. If you're trading one contract, that doesn't mean you missed out on 75 of those points; it means you exited a profitable position yesterday and are looking forward to seeing if that feat can be replicated today. Your equity has increased a couple of percent, and you ought to be looking forward to getting to the stage where you trade your way up the contracts-traded ladder to get yourself to the 4-or-more brigade - at which point you can make a nice living off a few points a day. That's the way to look at it, rather than getting maudlin that you weren't 'on' the ride down.
And what a ride: this was sent out at 5:45 yesterday (with the SPI at 4620) -
If your broker gives you the ability to trade SYCOM (the overnight session), think very seriously about exiting any remaining units straight away.
The market is now pretty deeply oversold, and it would be a shame to waste too much of a 50+ point gain on the last units.
That said, this is very much a "fielder's choice"; personally I am moving exit stops to the point where it locks in 25 points on the final tranche, and trailing that stop point-for-point.
This is the difference between the early part of a trader's development and his later decisions; early on, it is maddening to watch a trade give up half of its gains - you tie yourelf in knots thinking "Bastard... if only I'd taken it off when I was up 50". But again, that misses the point - which is why novices should take a small gain and learn to move on. It's better than taking a small loss and moving on.
Anyhow - in the overnight market the SPI has fallen below 4600: it's at 4594, but has been as low as 4585 - which means that the stop mentioned in the blockquote above is now at 4617, thus now locking in 60 points of gain on the final tranche. The stop is probably going to be hit early today, thus kicking the remaining position out of the trade. Not a bad call.
