Wednesday, February 10, 2010

02/09 NDX Fast Butterfly

I got whipped out of the Fast Butterfly, let me talk a bit more about that:

I had a contingent order to stop the trade if down 8%, this was done with a stop order on the butterfly, but I think this was mostly my mistake in doing so. As the price moves around, the P/L on the butterflies tend to oscilate quite widelly, so I've kept the lesson and will think of better ways to hedge/halt a position based on price levels and not so much on the stop limits. I'm keeping track of the trade despite the loss episode as I'm 90% sure it was a factor of the technical way the stop limit was triggered based on intra-day oscilation and not so much actual P/L risk management.

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