Limit-up! (This article is for futures traders)
Joe! Is it true that selling a market when it is limit up is usually a great strategy?
This "brilliant" strategy stems from the idea that selling a market at limit-up, may result in the trader gaining two limit moves in his favor while theoretically not losing any money the day of entry.
I think is that this is an absurd idea. I don't advise this high-risk approach as a trading tactic.
Keep in mind that most markets that remain limit-up at the close, will open sharply higher the next day over 90% of the time. The limit-up sell is recommended only as a partial profit-taking measure, not to initiate short positions which may be considered on the next higher open.
If ever trapped into a limit up move situation try to buy deferred futures contracts or call options immediately and ask how many contracts there are to buy on the most active futures contract. If there are over 1000 contracts to buy, do not assume the most active futures contract will come off the limit price to trade the remainder of that day.
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