The market has been falling so far this year. amzn fell 33% cumulatively, and fell by as much as 44%.
In a down market environment, I also try to do some short-term trades. Then, testing stock hedging in a demo account led me to a good idea. After two weeks of demo practice, I started using my live account to hedge trades in amzn. So far, the deals look good.
I am setting up hedging orders for amzn every day. A hedging order is a simultaneous long or short position on the same stock, with a stop loss but no take profit. Then, but if the stock goes up or down the next day, the opposite order will be stopped and the other one will take profit.
Below, I'll post some of my trading details.
On May 23, I placed an amzn hedge order at 2137. The next day the stock market opened, I closed my position at 2086 and ended up making 6k.
On May 26, I placed an amzn hedge order at 2224. The next day the stock market opened, I closed my position at 2262, and finally made 3k.
On May 27th, I placed an amzn hedge order at 2261. The next day the stock market opened, I closed my position at 2346 and finally made a profit of 3.5k.
On May 31st, I placed an amzn hedge order at 2431. The next day the stock market opened, I closed my position at 2471 and ended up making 5k.
On June 2, I placed an amzn hedge order at 2499. The next day the stock market opened, I closed my position at 2482, and finally made 4k.
Starting on May 23, there were five profitable trading days, with a total profit of 21.5k. At the same time, within the three trading days of May 24th, 25th and June 1st, amzn traded hedging orders suffered three losses, with a cumulative loss of 8k in three days. So, in the end my profit was 13.5k.
Losses are limited due to stop loss settings. In addition, the number of positions I held during this period was different, and the stock price fluctuations were also different, so the profits varied greatly. In the future hedging transactions, I will be more mature, I want to be able to better control the number of trades and stop loss.
After the stock split from amzn, I stopped setting amzn hedge orders. This week, I mainly set up a hedge order for googl, as well as a hedge order for tsla. I can post the hedging order transactions for googl and tsla later.
Do you have any hedging strategy? Or how do you hedge your risk in a falling stock market environment?
Of course, I think there may be better ways to hedge. The truth is, you can't make money with stocks in a down market environment. So essentially, you're already losing money.
I hope you can share your views, or if you know a better way.
Warning: This is not financial advice. For discussion only.
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