Well…..im sure if any of you took this trade with me you either sold by now or are sick of watching the trade.
I am still in and wont exit until the rsi(2) closes over 50 for the day…Even though its at 3.82 now it got as hight as 35 this morning. So if the market makets new highs for the day there is still a reasonable chance we will exit today. But I doubt it.
I received an email this morning as to why no money management stop. Thats a very reasonable question. My response is that the methods I am using have been tested over thousands of trades with different parameters used for testing. In all cases when a stop is used the expected value of the trade goes down substantially. Invariably you get out at the bottom of the move!
Mean reversion trades are not for the faint of heart. Money management should occur when you put on the trade. I use 50,000 since I am comfortable with that number. Some of you might be comfortable with a bigger trade or a smaller trade. Its just like poker…play where 300 big bets to the downside wont cause you any concern…or sports…30 bets to the downside not being a big deal.
If anyone has any other questions regarding the trade please ask.