Supplement 2 to Trading Methods

Jan 29, 202515

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The author discusses their short-term trading strategy, emphasizing the risks of significant capital drawdowns due to market fluctuations. To mitigate these risks, they employ a hedging approach by taking a short position when the market is bullish, using one-third of their capital for this purpose. This strategy provides them with some flexibility and helps prevent large losses during periods of inexperience and uncertainty in market trends.

Because I am doing short-term trading, when there is a fluctuation in the macro cycle, such as on the daily chart, my funds are prone to experiencing significant drawdowns. Therefore, I am currently using a hedging method; for example, if the market is bullish, I will take a one-third short position as a hedge. Of course, the short position is also done to an extreme. In this stage, due to my lack of experience, I find it difficult to grasp the rhythm of the market, so this approach can provide some room for reaction without easily leading to significant capital drawdowns.

Published

October 22, 2024
Category

Trading Insights
From

Bai E

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