Doomsday Hedging

摘要

When markets experience volatility spikes, many trading assumptions regarding correlations fly out the window. Doomsday scenarios require doomsday hedging and doomsday management. Here is a simple method that will keep you relatively dry in the in the worst of market storms. For the past six months, the currency market has not been kind to its traders. In the euro market, we were accustomed to having about 80 pips of noise on the four-hour chart before a trend developed, but now we have seen, in this jerked-around-flight-to-quality environment, intraday price swings of up to 3￠, 300 ticks or pips. The week before Thanksgiving 2008 saw prices rise and fall a total of approximately 7￠ or $7,000 on a $100,000 position.