Cape Cod Doug’s Brazilian Bailout!
Every trader worth his salt has at some time or other known the feeling of being trapped in a trade.
And once you’ve experienced that feeling, try to burn it in to your brain, and avoid getting trapped again! Making mistakes is unavoidable if you take a directional position in the markets. Learning from mistakes can be valuable indeed, while failure to “get the lesson” will eventually lead to a blown-out account.
Every once in a while, though, you can get lucky with a trap trade. It happened to me today, when my sell stop on BZQ (which is double-short Brazilian equities) was unexpectedly hit at the end of the session during the general market mayhem:
Bottom line — I got out where I got in ($20.21), and escaped unscathed. This was, however, overall a draining beat-down trade that took almost eleven months to play out (not bad for a swing trader, eh?), and caused enough angst that it probably prevented me from pursuing other more creative trading ideas.
But live and learn. One good thing that came out of it was it forced me to look closer at using options to define risk, and that is where the bulk of this year’s trading profits have come from.
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