How To Use HIT & RUN Trading Strategies in a Bear Market: $SOXS Trade Review!
I just wanted to give everyone a quick update on a recent Art of Trading short term trade where we traded $SOXS for +11.60% overnight!
Last week I shared a post titled "Short with Confidence". In that blog post I shared ways that you can go about shorting in a bearish market. Many of those same principles were applied to our recent $SOXS trade that we opened in the afternoon of Oct 6th 2022 and closed the morning of Oct 7th 2022 for a very quick +11.60%~ gain!
So, what was I looking at and how did we trade it?
I mentioned in my previous and recent blog posts that shorting in a bearish market is usually best executed when the market sees a bounce or a bit of strength, the reason being is because you naturally reduce your risk shorting at a higher price and with that comes a stronger entry with greater potential downside.
This week I had my eyes on the $SMH chart. Basically $SMH found a recent low and reversed into the 20D EMA. The 20D EMA has been a spot of thick resistance for $SMH this year so I figured if I wanted the best risk vs reward on a semiconductor short sided trade this was the spot to get short. $SOXS is my semiconductor inverse ETF of choice for "shorting" semiconductor stocks!
This is important point to note: $SOXS is an inverse leveraged ETF. If the market goes down this ETF goes up! You go LONG this ETF for bearish reversals!
Here was the $SMH chart I tweeted to AoT members:
Shortly after this tweet we went LONG $SOXS for a bearish $SMH short trade!
By the end of the day the stock closed out strong nearly 1.5% higher than our entry at $53.62.
$AMD warned Afterhours sending $SOXS up an additional 5% after hours. I tweeted AoT members this:
The very next morning $SOXS was up nearly 10%. I emailed AoT members explaining my intentions with the trade before the market opened for regular trading.
Here was that email:
Then, shortly after the market opened I booked the gain. Here was the official alert:
Using the methods explained in my previous blog posts AoT members enjoyed a quick "Hit and Run" style trade in a bearish market that booked us +11.60% in a short time frame!
How has AoT performed in 2022 so far? +37%~ YTD!
Here is our updated trade tracking spreadsheet!
I hope you found this review helpful!
Cheers and Happy Trading!
Art of Trading
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