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Why I am still short the ES

I'll be honest and say that I haven't seen an ES quote in about ten calendar days. I have happened to catch some general market numbers when I'm passing by TV screens at lunch the last few days, I know my short is looking ugly. But here is why I'm still short:

  1. Roughly 13% of the current total value of the S&P  has been gained in the last 90 days, that seems a little extreme. Those types of moves rarely come with no pullbacks. So if I wasn't already short I would be shorting here, this really is the main reason for continuing to be short.
  2. Markets can only do three things, go up, down, or sideways. The odds of these three options are supposed to be random over the long haul; and in 2/3 or 67% of those outcomes, I can make money. Though the market has done nothing but go the wrong direction since my initial short back in the last week of December, I've still managed to cost average up my position by 40 points. I know from experience what I can do in sideways or down markets.
  3. From a trader's perspective, you can't lose 90 days in a row and then walk away, at least I can't. That's equivalent to selling your longs when the market crashes simply because you can't stand the pain anymore. But I'll be honest and say this has been a painful short and the reason why I'm only passively paying attention right now. I'll know when volatility is back. You can't wait for the market to turn ugly to put on a short, but again that's just this biased trader's perspective. I will also admit that at this point the goal has been modified to reclaiming a large part of my losses and no longer trying to break even, that will have to come in the long run and not this particular trade.
I rolled my two short contracts a few weeks ago and have yet to update my spreadsheet. I don't even know my current cost average. I know the rough number is I'm down about $9,000, so with two contracts a break even is 90 points away. That's actually not far fetched if there is a correction, but I'm not waiting for 90 points to pull the plug. If we got a down move or return of volatility I anticipate bringing in one contract well before then and attempting to trade around. If I get unlucky and pull in a short and the market continues to fall, then I've still got one short on.





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