A swift kick

In the balls. Deviated from my initial game plan, tried to get too cute and got a swift kick in the nougats this morning. VXX got taken to the woodshed overnight by China, which announced that it still supports EU debt (despite meetings earlier in the week). That turned markets around in Asia, and US futures went ballistic.

I sold at 29.27, a loss of 2.18 per share. It was a small position (11% of my portfolio), but the percentage of the drop (6.9%) is massive. Good that I kept it small. Bad that I started a position at (literally) the last possible minute yesterday with all volatility (late-market selloff) priced in. There was nothing left to boost VXX, but I was convinced the current climate alone was enough to ride it higher.

Would not surprise me to see VXX back over 30 and even 31 later today. But I cut losses sooner rather than later as a rule, and without a chance to get out overnight, the risk was unnecessary. It gapped down before us mortals could sell (starting at 8 am Eastern), which also meant that I couldn't get any shares of AAPL until it had gapped up (now 249.50, up more than 5). If I'd opened a position in AAPL (as a hedge of sorts) yesterday, then it would've had some efficiency.

By and far, the majority of my trades in VXX as a stand-alone rather than a hedge have ended as losses. This may seem like overkill, droning on about a loss that is less than 1% of my account, but I have to learn how and why I lose, as well as win. Always.

The external factors, like China publicly stating the politically correct thing — instead of simply saying that there were meetings, things were discussed, etc. — are par for the course. Sucks, but that's a risk factor I didn't consider.

A swift kick from China