aka the Macdulio doctrine
Equity hedging should happen in 3 steps.
40%, then 50% of the remainder, then all.
Don’t forget to adjust the hedging direction for less surprises.
A liqidity event is when people get margin calls en masse.
A push means having to hedge in full size at the last weekly terminal for a beat or a liquidity enent.
Being in a push means that there are only forced enents and no support levels.
A push that did not make it outside the window envelope can be faded the next week 30-40 pips out.
A push that did make it outside the window envelope may be followed by another push – this would be a liquidity event.
During a push all secondary buy signals must be ignored; only primary buys are good enough for defiance.
Ask yourself the question: is this a primary buy? If not, it is a sell.
, here’s why I think there will be a lower low – the spike into the overdrive line plus the inertia of having reached 6x stretch from the mean