We put a trailing stop on our hedge that has risen nicely in this newest leg down in the market.
Conditions are wonderfully oversold here, and I expect a countertrend rally soon. The advantage of a trailing stop is that it will rise with the hedge to catch any final spikes the market throws off, as it often does at turning points. They’re called blow-off tops at highs, so I suppose a blow-off bottom is what we’re looking for here.
It would take our hedge up sharply higher, lock in the trailing stop, then get us out as the market rallies and the hedge falls. We’re just trying to make money the only way that’s worked for the past year: trading.
