Short WHR

[Pascal]

I took a short WHR position as soon as I noticed that the volume was above the average of the past day.


Pascal

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[77seas]

Pascal

Today being FOMC rate outlook day was expected to be very volatile. So the calculations for probability of both hitting the entry price at 77% and hitting the stop before reaching the target at 47% was not applicable under today's condition. We hit both the entry price and the stop in a span of couple of hours because of extremely high volatility today. So I guess that while the average calculations for normal calculations are fine, we should have avoided this trade at least today.

Thanks

[Pascal]

Pascal

Today being FOMC rate outlook day was expected to be very volatile. So the calculations for probability of both hitting the entry price at 77% and hitting the stop before reaching the target at 47% was not applicable under today's condition. We hit both the entry price and the stop in a span of couple of hours because of extremely high volatility today. So I guess that while the average calculations for normal calculations are fine, we should have avoided this trade at least today.

Thanks

Your analysis is 100% correct when you only look at this trade.

However, I am managing a five positions portfolio and wanted to stay long with my two positions going into FOMC.
Hence, the WHR short trade was a hedge against the two long positions. WHR is a big-ticket item company, which means that it would react to an interest rate change.

This means that it was a good hedge against the two long positions.
I saw it bouncing from the low before the FOMC announcement, but waited for the FOMC before closing the position. I think that this was a good trade in the framework of the Portfolio.

I also closed the two long trades in strength at the end of the day.




Pascal

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You can see that I closed the trade 4 minutes after FOMC (Time shown is Brussels time)

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[77seas]

Thanks for the background information.

It has been a good lesson learnt on how to play a FOMC day.