> You don't need to time it, do you? If you have resting buy orders the market is going to come down and hit you at a favorable (to you) price. You can close the position when the market rebounds.
You are, of course, right if you know how far down the bottom is and that the market will rebound.
Maybe I'm just a coward, but all I see is risk:)
Here are the big questions to ask yourself before trying this.
What if the market doesn't rebound, ie if you set your buy at a 1% drop and it drops 3% and then closes down 2.5%. That's enough to shut down alot of prop shops:)
What if it doesn't drop low enough to hit your bid, ie the market just ignores your buy and shoots way up. Then your short position crushes you.
Or if you use a short butterfly, what if the market just yawns, you've lost your one chance at moving the market but atleast you live to trade another day:)
You are, of course, right if you know how far down the bottom is and that the market will rebound.
Maybe I'm just a coward, but all I see is risk:) Here are the big questions to ask yourself before trying this.
What if the market doesn't rebound, ie if you set your buy at a 1% drop and it drops 3% and then closes down 2.5%. That's enough to shut down alot of prop shops:)
What if it doesn't drop low enough to hit your bid, ie the market just ignores your buy and shoots way up. Then your short position crushes you.
Or if you use a short butterfly, what if the market just yawns, you've lost your one chance at moving the market but atleast you live to trade another day:)