I have made only 1 trade this year so far – shorting the Dow Jones Industrial Index (DJIA). Indices are actually not my favorite asset class to trade, however it was the most logical choice for me at that time.
I am sharing the details of the trade, in case anyone is interested in them.
Summary
- I opened DJIA (US 30) short positions from 36,820 to 36,943 (see blue box in the image above)
- I closed the short positions at 36,296 (see green box in the image above)
- Position size was around $1.1M (in SGD)
- 1 point = 22USD
- Position accumulated via 11 trades of 2 units each
- Profit was about $16.7k (roughly 1.6%)
- Position was entered on 6 Jan and closed on 7 Jan
Why I Entered The Position
- There was a high probability of a short-term trend reversal
- The latest FOMC minutes were released, and were more bearish than usual
- DJIA was at all time high
- I had not traded for several days and felt a bit bored
Why I Exited The Position The Next Day
- The probability of continued downward movement decreased
- DJIA went down a reasonable amount from entry price (>1.5%)
- There was no fresh news flow putting additional downward pressure
- Maintaining the position was a bit tiring
- Indices are active almost throughout the entire day, unlike stocks which are traded for about 6-8 hours per day. Thus more time is used to concentrate on monitoring the prices
- Indices prices fluctuate every second, resulting in more ups and downs within the same period as compared to stocks. Thus more emotional stress is inflicted
Conclusion
Trading is always about probability, not certainty, so I was glad this trade worked out for me. This is the trading off-season for me, I have not been spending much time trading and researching. It is probably time to get going again!
