What a powerful week for the bulls! The two huge gap ups on Monday and Wednesday put traders who shorted on the wrong side of the market completely. I was one of those. The huge gap ups with no movements during intradays left me no room to “fix” my shorts. Averaging down and hedging were the two tools that I used to keep the damages to the minimum. Nevertheless my portfolio value has changed from $59,847.19 to $58,011.46 (-3.07%) while The S&P 500 has changed from 1,159.91 to 1,244.96 (+7.33%).
Lesson learned: Don’t short within the first 4 bounds (4 up days) from an oversold bottom. Don’t long within the first 4 pullbacks (4 down days) from an overbought top.