Do you need to hedge your trades?

Nivas asks: “You have always advocated to go with the trend does this mean one can take unhedged positions. I always tend to buy some puts to hedge my longs even on a uptrend. Willing to change my strategy. Your thoughts.”

My Notes:

A layman reading the above comments will feel that an ‘unhedged’ position is a terrible place to be in. In reality, all positions should be straight forward, in the direction of the signal, without any hedge. When the trader gets a signal, he should just take it.

We should manage our risk by position sizing. If we want to take less risk, decrease your quantity. If the signal is to buy, what is the purpose of taking a short position through puts, for example?

The Quitter Always Wins

Failure means that you have to quit doing what you’ve been doing and do something different. Doing something different is an amazing thing. It allows you to really think deep at what you’re currently doing and how the next step is going to be better than before.