Joe Ross
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Is it true that selling a market when it is limit up is usually a great strategy ?
This brilliant strategy stems from the idea that selling a market at
limit up, may result in the trader gaining two limit moves in his favor
while theoretically not losing any money the day of entry.
I think is that this is an absurd idea. I don t advise this high risk
approach as a trading tactic.
Keep in mind that most markets that remain limit up on the close, will
open sharply higher the next day over 90% of the time. The limit-up
sell is recommended only as a partial profit taking measure, not to
initiate short positions which may be considered on the next higher
open.
If ever trapped into a limit up move situation try to buy deferred
futures contracts or call options immediately and ask how many
contracts there are to buy on the most active futures contract. If
there are over 1000 contracts to buy, do not assume the most active
futures contract will come off limit to trade the remainder of that
day.
This brilliant strategy stems from the idea that selling a market at
limit up, may result in the trader gaining two limit moves in his favor
while theoretically not losing any money the day of entry.
I think is that this is an absurd idea. I don t advise this high risk
approach as a trading tactic.
Keep in mind that most markets that remain limit up on the close, will
open sharply higher the next day over 90% of the time. The limit-up
sell is recommended only as a partial profit taking measure, not to
initiate short positions which may be considered on the next higher
open.
If ever trapped into a limit up move situation try to buy deferred
futures contracts or call options immediately and ask how many
contracts there are to buy on the most active futures contract. If
there are over 1000 contracts to buy, do not assume the most active
futures contract will come off limit to trade the remainder of that
day.
