Hey Guys,
The market surged upward overnight. At this point, the S&P 500 is back to where it was before the CPI report came out earlier this week.
That exemplifies what I mean about how the market reactions aren't always intuitive. The CPI report suggested inflation was even higher than expected over the last month, and yet here we are a couple days later and the market is pushing its way up. We are of course still in a volatile market situation, so there's no guarantee it won't go back down from here. But moments like this make me happy that I'm not trying to guess how the market is going to respond to news or reports. I just stick to the back-tested trading strategy regardless of the news.
I picked up a position for SGEN stock in the main account this morning. That's the only new position I bought this morning.
Yesterday with the options positions I closed at the end of the day, I walked away with a net profit. The TCOM options had a tidy little profit and the CL options had a small loss.
My position for TXG from the low-priced account hit its stoploss this morning. Yesterday after hours, TXG reporting preliminary revenues for the second quarter, and it walloped the stock price. It gapped down below my stoploss price, which means the loss I took was bigger than normal.
Sometimes that happens. It's one of the risks we take as swing traders. By holding a position overnight, we are subject to the risk that the price can move overnight. It can go in our favor or go against us. I had a trade in ATVI earlier this year where the price gapped up in an explosive way overnight. I try to roll with the punches since I know it will go both ways over time.
Also, I want to mention that I use a stop market order for my stoploss (also referred to as simply a "stop" sometimes). This means that if the price of the stock is at or below the stoploss price I indicated, then a market order will be used to close the position. It's kind of like a way of guarantee the plug will get pulled on the position.
Some people like to use stop limit orders. Those work differently. For those, if the price goes below the stoploss price indicated, then a limit order gets placed at the stoploss price, and the position only closes if it can sell for that price or better. So in the case of a gap down below the stoploss price, that can be risky because it means the price would have to climb all the way back up to the stoploss price in order for the position to be exited. I don't want that risk, so I use a market stop instead.
If you have any questions or feedback, I'd love to hear from you.