This is why the 2% Rule isn't enough and I also use a maximum position size, usually 15% or so as the a.m. gap is the hardest thing to protect yourself from in risk management, it comes down to position size...
Just like that, 6 days of longs were just put at a loss...
The SPY open, 6-days of longs at an automatic loss on the open, I've seen much worse than this, but as volatility picks up these kinds of gaps will get worse and volatility has picked up all of 2014.
However, I'm not having a knee jerk reaction to this quite yet, you saw the AUD/JPY which right now is the most sensitive of the 3 carry trades as AUD really reflects Asia in general and China specifically even though it's the Aussie.
1 min AUD is not selling me , but interesting, however at the 5 min charts...
AUD looks like it has a substantial positive divegrence which would send the pair higher and the Index futures/market with it,
could this morning's move be a nice head fake? I'd say there's a 70% chance that it is, we need to see accumulation in the averages over the next hour or two to confirm.
And the other half of the pair, the Yen or JPY, it has a substantial 1 min negative in to premarket and the open as well as a ...
substantial negative 5 min chart, confirming what we see on the AUD as well as the Carry Trade pairs and ES 5 min.
This might be a decent time to take some "QUCIK" short gains, I mean short term trades that were intentionally set up that way, not core short positions.
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