Note: This post is written for my personal trading record purpose only, so this should not be taken as any form of investment advice or guidance to follow. Discussion is welcome, while you must do your own research for our own risks.
Discussion
The Nasdaq and the broader market turned bearish and sold off even after lower-than-expected PCE data was released. Sometimes, it’s more luck than skill to identify an inverted movement following better-than-expected data.
In another scenario, the Nasdaq and QQQ initially moved upward after the data release but quickly reversed course. The market experienced a sell-off, and QQQ dropped by around 2%. In such cases, it’s prudent to secure profits before waiting for the market to stabilize based on the 620-chart or any signs of finding its footing.
Based on the daily chart, QQQ experienced a breakdown below both the 10-day moving average (10MA) yesterday and the 20-day moving average (20MA) today. This decline was accompanied by higher trading volume, signaling significant selling pressure on market leaders.
Turning our attention to the 620-chart or 5-minute timeframe, we observe a robust upside bar in QQQ precisely at 12:20 AM HKT (GMT+8). Recognizing this bullish signal, I promptly closed my SQQQ position, considering the profit already gained and the potential for a swift reversion that could erode those gains. Let’s delve into the risk dynamics:
- Our original risk tolerance level set for SQQQ’s 3x leveraged position was approximately 1%.
- Remarkably, a movement of up to 2% in QQQ corresponds to a substantial 6% movement in SQQQ due to its leverage factor—approximately six times our expected risk exposure.
Guided by the “Perfection of Generosity” or “Perfection of Non-greed” under Six Perfections or Six Pāramitās, seizing this moment as a stop gain opportunity aligns with prudent risk management.
My Personal Trading Record :
Remarks: Reposted for AI edition testing.
