Is it Safer to be in LONG position now ?

#1
Hi,

Due to my Careless Mistake today morning , I went into LONG :( instead of SHORT position of Nifty FUT APR at 5328 , in with 4 lots...

Now it's already around 60 points down ...

Just want a opinion of whether to hold it or book losses ...

How the Nifty will be tmrw .... as I have planned the trade for a max. of 1 week....

Due to my carelessness , i've got into such a situation...

Please ...could some one guide me about the Nifty trend , and when should i exit the Trade ??..

Thx in Advance.
 

SwingKing

Well-Known Member
#2
Hi,

Due to my Careless Mistake today morning , I went into LONG :( instead of SHORT position of Nifty FUT APR at 5328 , in with 4 lots...

Now it's already around 60 points down ...

Just want a opinion of whether to hold it or book losses ...

How the Nifty will be tmrw .... as I have planned the trade for a max. of 1 week....

Due to my carelessness , i've got into such a situation...

Please ...could some one guide me about the Nifty trend , and when should i exit the Trade ??..

Thx in Advance.
Let me ask you this ... Were you supposed to be short and accidentally you went long ?? Well if this is the case, then you should have reversed immediately. You were initially bearish and just because of your mistake now you have become bullish ??

Market won't turn bearish or bullish based on your positions. Hence, going forward, you should take things more carefully. Now coming back to your scenario. Market's have fallen from the previous highs of 5310 (after breaking this high 2 days back), hence this fall is more meaningful for me. Plus there are so many negative factors around this fall (low VIX, all time OI levels, staright run up without any correction, plus a heavy resistance zone 5310) that I am very cautious as of now.

There are two scenarios that can play out. Firstly, the market consolidates more between 5220 and 5280 and then finally moves upward. If this scenario plays out then you might see Nifty going to levels of 5220-5250 in next couple of sessions and you might have to hold on to your losses for giving market's the sufficient amount of time to turn around. Secondly, if indeed the market's have fallen due to the mentioned points above, then Nifty could head down for more meaningful correction. In that case you could be severely hit.

The problem I see with your position is that you have given your trade horizon as 1 week. I do expect volatility to increase in coming sessions and if this happens and Nifty does correct, then your "1 Week" trade time will severely work against you.

Tc.
 

findvikas

Well-Known Member
#3
Adding to what Raunak said...

The hardest part in trading is accepting your own mistakes and taking corrective/protective measures to save you from disasters. You are long @ 5324 which is not a problem at all... the problem is you did not safe guard against your expectations.

Lets look at the 5300CE for April ... still trading at 88... good premium.. eat it.

Sell 4 lots of 5300CE @ 88 ... so you are safe till 5388
Your Nifty Longs are at 5324... and eaten a premium of 88 Rs... downside you are covered till 5212

so you got a safe range of 5212 - 5388 to stay long in the Nifty Futures...

The day market close above 5350... book your 5300CE Shorts and hold only Future Longs... the day market close below 5215 book your Nifty Longs and hold only Shorts of 5300CE

I am not very good in hedged strategy and leave AW bro to comment on this and if there are any caveats in this strategy.
 
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#4
Let me ask you this ... Were you supposed to be short and accidentally you went long ?? Well if this is the case, then you should have reversed immediately. You were initially bearish and just because of your mistake now you have become bullish ??

Market won't turn bearish or bullish based on your positions. Hence, going forward, you should take things more carefully. Now coming back to your scenario. Market's have fallen from the previous highs of 5310 (after breaking this high 2 days back), hence this fall is more meaningful for me. Plus there are so many negative factors around this fall (low VIX, all time OI levels, staright run up without any correction, plus a heavy resistance zone 5310) that I am very cautious as of now.

There are two scenarios that can play out. Firstly, the market consolidates more between 5220 and 5280 and then finally moves upward. If this scenario plays out then you might see Nifty going to levels of 5220-5250 in next couple of sessions and you might have to hold on to your losses for giving market's the sufficient amount of time to turn around. Secondly, if indeed the market's have fallen due to the mentioned points above, then Nifty could head down for more meaningful correction. In that case you could be severely hit.

The problem I see with your position is that you have given your trade horizon as 1 week. I do expect volatility to increase in coming sessions and if this happens and Nifty does correct, then your "1 Week" trade time will severely work against you.

Tc.
No I was not at the Trading window... as I had a work outside....So i had mailed my Agent to book the same.....but Because of a careless Typing mistake from my side, i made a mention of BUY instead of a SELL ...... which i forgot to notice
By the time i came back and realised this ...NIFTY was well below 50 pts...so decided to hold it for today.....

A small error from me made my day miserable today...

I learnt a good lesson from this... to cross verify everything before actually doing it ...
Anyways Thanks Ranauk Sir and Vikas for your Inputs....

Keeping my hands crossed now...
 

AW10

Well-Known Member
#5
Vikas, you are almost 80%+ correct (as per my understanding of hedging).
Just an observation on # of contracts for shorting 5300 CE.
Assuming 5300 at ATM option, this will carry the delta of 0.5 (i.e 50 paise move for each 1 rs move in nifty). For futures, Delta is approx 1. (i.e. 1 rs more for 1 rs move in nifty).

So to hedge it proprely, you will need 2 ATM option cotract for 1 NF position. If you carry 4 short contracts, then the losses on short option will be much faster then the gain on Long NF.

Generally it is good idea to hedge the position before close to take care of any shock from gap. In my view, active trader need not use hedging during mkt hours cause by doing that, you are just holding a guranteed loosing leg in your hand and hence limiting the profit on winning leg of the position.

As per my reading, most likely, we are going to see lower low tomorrow.

To Satish - When you bought the NF, where was your stoploss point. Trading in futures without stops is dangerous for your wealth dear. This approach has pushed many traders from Futures trader to stock trader after loosing most of their capital.

If one single point that can make difference to your trading, then it is "Respect for stoploss".

So even if you have not planned for it today, atleast now you can decide on the point where you would like to cut your loss. Just remain in the game and flow with market direction. And it will throw enough opporunity to make good money.

Happy Trading
 

AW10

Well-Known Member
#6
Satish, we all learn from our mistake. If you are making such human error, it shows that you are human. I still make typo errors while placing orders ..and generally it is too late to realise this mistake cause in our mind we are holding exact opposite trade.

Solution that I am using is - to repeat the order that I want to place / review the order before hitting OK button / check order status or position to ensure that everything is same as what I want. And if it is not, then no second guessing / hoping etc..but ruthlesssly cut the mistake i.e trade and pay price for it.

All the best and happy trading
 

findvikas

Well-Known Member
#7
We can only give you advice now while only you have to go through the pain... I always instruct my broker to keep a watch on my positions when I open them through phone or if I have to move away from my desk... he keep me posted if the trade goes against my expectations and I can take decisions.

ok I am keeping it quiet now.
 

nac

Well-Known Member
#8
repeat the order that I want to place / review the order before hitting OK button / check order status or position to ensure that everything is same as what I want. And if it is not, then no second guessing / hoping etc..but ruthlesssly cut the mistake i.e trade and pay price for it.
+1

You should have cut it at once.
 
#9
if needed to cut your losing postion, cut it immediately to preserve your capital. But it is easier to say than do.

You will be the one who only can say if you will go long or short or cut your position depends on your risk factor.

one thing I can say same as I always telling myself, to be a disciplined trader, you must have to know how and why to enter the market, when to exit the market, and where to place your money management stops. You need to manage your risk and maximize your cash flow. In short, you must have a trading strategy.
just my 2 cents... :)
 

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