Re: How Will The Market Behave Near And After Fed Meet In Mid December ??- Traders' V
You are missing a point that we are discussing how a market will react to a very important event like Fed interest rate hike....we are no way saying that the prediction is that the market will bottom out at so and so level and we go long there irrespective of the trend and keep adding to longs if the market tanks further,and we will see higher levels in 15 days....that is predicting ...we are just discussing various possible scenarios.The trade will be on the trends, signals with proper stops.
Most traders here do directional trading and non directional trading sounds great but let us take a definite example ...can you suggest a non directional trade in Nifty or any other stock which will make money irrespective of the market goes up or down ? Let us monitor this trade for December...we will learn something useful.
Smart_trade
Ok, I see.
Now about the non directional trading. In a nutshell: You enter any trade with at least two legs. Two legs means one for each direction (Up and Down). So regardless if market now goes up or down, one of your leg is with it. There are different option and hedge strategies around to use doing this. Some are two leg strategies, more advanced stuff is with three and more legs.
So let's take just one example like the simple "
Synthetic Short Call = Short future + Short Put ". When ever we want to enter any trade we place this two legs in the market. Depending on the main picture according to our minds and what we see, we can modify the option leg by choosing a lower or higher Delta level. Stop loss is individual, depending on each traders preferences and how he trades.
Now we are placed in the market more or less "Non directionally", depending on how exact we want to level our Delta in the whole position.
Now the trading management starts:
If market not moves, our short put will make money. If market moves up, we throw away the future and work and manage the put leg. If market moves down, we throw away the put and work and manage our future leg. (This just to mention one way to handle the situation) Now each of this left over single leg can be converted again into other combinations when ever needed. Around this, individual follow up trading plans with filters can and are created, all depending if pure day trader or managing a position over days and weeks.
So the start of the trade is non directional and we do not depend on any targets or what so ever at this moment. After market wants to leave any of our zones which are define with our break even levels, we are free to stay directional with those specific leg and we are free to convert when ever we want this one leg into some thing new, depending what market is doing and how our rules are worked out for those situations.
What ever non directional we choose, each leg must be separately managed during the time in the market. So "Non Directional" needs as management as any other kind of trading. But we do far less depend on any predicting and hoping as we know how and when to put in or out any needed leg for which reason. Hope this makes it a bit more clear what I meant with "Non Directional' trading.
Have a nice day / Dan
