Markets grind higher, and I plan to short QQQ if we gap down a decent amount (>.5%). Started a half sized long position in Macys and took losses on BABA and QQQ.

Hi everyone. Last week I bought a half sized long position in Macy’s stock (M) for a longer term swing trade at 15.71. My original plan was to average down the other half of the position, but it looks like I’m much more likely to be averaging up now.

M daily chart below.

Since the trade is working out, I want to add more to this trade. My current risk to my account is about 0.6% if I get stopped out at 14.5. If I average up, I’ll be raising my stop loss up as well to keep the total risk to 1% of my total account value. If price breaks and closes above 17, I’ll average up if it retests 17. If price continues lower, I plan to buy after the first red candle, as long as it isn’t substantially large (close below original entry price at 15.71).

BABA closed very close to my stop loss on April 6th, and since there is overnight gap risk, I exited the position. I considered selling half of the position, but figured selling all of it and reevaluating would be the better and safer option. Since the QQQ short was used as a hedge against BABA, I exited that as well for essentially break even (slight loss).

BABA daily chart below. I wanted to hold this trade until the day before earnings, but it got too close to my stop loss so I sold for a loss (0.7% loss to my account value).

Lastly, I’m planning on shorting QQQ if we gap down more than 0.5% tomorrow. I might start with a half sized position and scale in if we drop further by the end of the day. I’ll be out if we close the day green. Something else I’m considering is just using a full sized position with a somewhat wider stop loss.

Current risk reward strongly favors the downside, so although I’m probably going to lose money on this trade most of the time, when I do win, it’ll be a large win (enough to offset 2-3 smaller losses).


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