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Wednesday, March 28, 2012

Scaling Out Another Third

I executed my plan and scaled out another 1/3 of my inverse ETF's on today's gap fill.  It's unfortunate that this exit was at higher market than my first 1/3 exit, but that's how it goes.  On the other hand, I can be happy that I took action earlier and sold the first 1/3 at a better price.  Now the daily MACD histogram is once again negative, but $BPCOMPQ still flash a buy signal even after today's correction.  Bears have to pray that it (MACD negative divergence) follows through this time around.  How VXX and TVIX ended the day wasn't exactly encouraging.

Scaling out is a form of offering sacrifice (in the case of cutting loss) in order to bring about a closure sooner.  It's healthy for the mind.  Not doing so would be like a person having hurt (or joyous) feelings pent up inside him but refuse or unable to talk it out; it'd be very unhealthy.  Imagine if I hadn't cut 1/3 of loss 3 days ago, I'd have full position getting hit by the monstrous gap 2 days ago.  On the other hand, being a believer of jinx, my timing would normally go against me.  So being wrong on 1/3 could be beneficial for my other 2/3.  If not and I still want to be naughty, I can still add back the 1/3 at better price.  In this context, the 1/3 is like a bait waiting to catch a jinx.  I wish I had done this sooner.  I would have survived longer by keeping my position size manageable at all time.  For a bear, being able to survive longer in order to catch the drop is paramount.

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