Sunday, January 10, 2016

The Texas Hedge

The Texas Hedge

By (my) definition a Texas hedge is the exact opposite of a hedge. It is when you use two or more instruments that you expect to move in sympathy with each other to increase risk and maximize return as opposed to using two or more instruments to hedge risk (and thus minimize return). 

The first thing I noticed early Friday was 6E likely wanted to go up and test 1.0995 - 1.0978 TS # Zone. 

If you have been paying attention 6E and U.S. equity have been moving conversely of late, in general if 6E is moving up ES is moving down (and vice versa). 

That set up our Texas Hedge. 

With a clear initial YM target at Thursday's 16410 KEY TS #

6E TS TradePlan Euro Chart Review - Friday January 8, 2015

We could tell from early in the day that 16410 TS # was going to be key for the YM. (1933.25 in the ES).

At 10:40 AM PST (just under 2.5 hours before U.S. cash close) I posted on StockTwits/Twitter the question: "Friday stick save or sell into close?" (must read below from bottom up). We thought 6E target up / 16410 YM/ 1933.25 ES break lower and likely sell into close.

We know how the week ended ..

YM TS TradePlan E-mini Dow Chart Review - Friday January 8, 2015

ES TS TradePlan E-mini S&P-500 Chart Review - Friday January 8, 2015

We blew out 6E long and YM short and went home flat!

Charts shown with the TS TradePlan Indicator for NinjaTrader

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