Why is No position is also a position

Yet another week gone by and we saw lot much Volatility during the week. But this Sunday I have something very special to talk about and it’s not one stock we traded but many of them. And we had a huge open position. And the market tanked. What happens to our position.

Which side our position was, Long Or Short?

Wrong.

This week our position was no position. Huge No position.

What is he saying? Is he all right?

Yes my dear friends, in such turbulent times, if you are not so sure which side the market or the stocks are heading. Or you are not comfortable with the way or with the direction or the uncertainty,. You can always take this position.

We call it NO position.

It also means keeping away from the market deliberately. If you are a long only trader(a completely non acceptable phenomena) because a trader is a trader, He is not at all bothered by the the up or down side, he must take the benefits of the volatility.

But if you are a long trader, a times comes where you feel it’s all looking cheap, You should buy but with kind of indications you get, it creates an awkward ambiguity and you are in the state of the mind, what to do should you or should you not.

The best way to answer it is ask a question what if it is my premature thaought?

What if it is just the beginning of a down fall?

Where will I stand if market falls?

I am so sure you will surely get the answers and the ambiguity is gone.

No position has its own inbuilt advantages.

1. There is No threat to your capital Since your stake is none.

2. For wiser decisions you can also sit back and take a helicopter view.

3. Your prejudices are no longer active and you don’t lose oven if you were wrong.

When to Sit back and Have No Position?

  • In a falling matket, you have been expecting recovery and it’s not even visible.

  • In a rising market you have been expecting correction and it’s not happening.

  • Because you trying to go against the trend.

  • If your ratio of failing trades is higher than winning trade in recent week or a month.

Obe reason to keep your self out side of market, “ PROTECTING YOUR CAPITAL IS THE BEST
FORM OF TRADING AND THE BEST JUSTICE A TRADER CAN DO TO HIS ACCOUNT ”

What are your reasons to keep away from the market?

Send your Comments

Stay tuned for the next post.

2018-04-03T13:13:09+00:00