In 2022, the Nasdaq has fallen by 25%, and at its peak it fell by more than 30%. Many stocks fell by more than 30%, and many people suffered heavy losses.
I've been looking for better ways to avoid the risks that come with falling markets, and I've tried a lot, but to no avail. Later, after doing a lot of testing in a demo account, I finally found a way to set up a hedge order. And, I have used this method of setting hedging orders in my real trading. The effect is very good.
I set up a hedge order every day. The so-called hedging order is to set long and short positions on the same stock at the same time, and set a stop loss, but not set a take profit. Then after the market opens the next day, the opposite order will be stopped, and the one remaining order will be profitable. At this point you just need to close the order manually.
Below I will tell you in detail my actual trading results.
Trading results for the first week:
On May 23, I placed an amzn hedge order at 2137. When the market opened the next day, I closed the position at the price of 2083, and finally made 5k;
On May 26th, I placed an amzn hedge order at 2228. When the market opened the next day, I closed the position at 2262 and finally made 4k;
I lost 4k on the remaining two trades this week and ended up with a 5k profit.
Trading results for the second week:
On May 31st, I placed an amzn hedge order at 2428. When the market opened the next day, I closed the position at the price of 2441, and finally made a profit of 8k;
On June 2, I set up an amzn hedge order at 2500. When the market opened the next day, I closed my position at 2482 and made a final profit of 5k;
The remaining two trades for the week lost 6k and ended up with a profit of 7k.
In fact, the number of my real trading orders has been more than 4 weeks, and the number of orders is much more than that. I randomly extracted and published some data. Transaction objects include tsla, amzn, googl, etc.
At the same time, according to my observation, the market is volatile about 70% of the time. That is to say, the chance of making money on this hedging order is over 70%. The remaining 30% of the time is relatively stable fluctuations, but it does not mean that you will lose money, just not making money.
I don't know if anyone else does hedging like me. I believe that someone has done better than me, and I hope you can share any better experiences and methods. Hope to find a better investment plan.
How do you hedge your investment risk in a falling market environment?
Warning: This is not considered financial advice.
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