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Dumped by the surf

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Billabong International - BBG

The trade

Entry: Short $7.05 on 3pm, 11 Mar 09

Initial stop loss: $7.35

Hedge: Long ASX index CFD at 3243, ~2.6x BBG trade position size

Exit: Covered $7.41 on 10:10am, 13 Mar 09. Closed hedge at 3292 at the same time.

P/L: A loss of 36c per share on BBG (~5% move), partially offset by the hedge which made 49 points (0.5% move). As the hedge position was 2.6x the size of the BBG trade, I am -2% on this trade after commission.

The entry

See description here http://www.aussiestockforums.com/forums/blog.php?b=540

The Exit

A strong night on the DOW coupled with better than expected retail data saw BBG spiked up in early trade. I moved my stop loss just gently to beyond the daily pivot point resistance level, but the stock had no problem pushing through that, and I was stopped out at $7.41. I closed my hedge at the same time.

The trade would be in a small profit had I closed both legs just 15 mins later (BBG @$7.39, CFD at 3316). Oh well, if only I had polished my crystal ball clearer.

Key lessons:
  • The hedge worked well and to expectation. It was wise to put in the hedge in light of a potential rally from the US.
  • I didn't know US retail data was due out last night. It is important to know when major economic data is coming out. Having said that, even if I did know I would have expected some really ugly data and still play the trade the same way.
  • I had no problem moving the stop loss just a tag, as the daily resistance level can often provide resistance to a better exit point. I need to be sure however, that I have enough discipline not to move it again and again...

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  1. beerwm's Avatar
    thanks for sharing skc,
    nice work in evaluating your trades, something ill definitely use from now on
    best of luck


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