Presidential Election Risk Management

Whether you are a died in the wool Republican or Democrat really doesn't matter to the markets. On September 5th the McCain contract broke above a CUP AND HANDLE formation (point 1 on the chart below) and I suggested that the trend was "innocent til proven guilty." Eleven days later I posted that it was time to take PARTIAL PROFITS (point 2 on the chart below) and to raise the stop on the balance of any remaining long position. I didn't trade this market, but it is no different than any market.

Whether you trade stocks, futures, currencies, or political contracts, the markets do not care what you think. The number on job of a trader of any contract is RISK MANGEMENT! To the markets, where people risk their money, the next President of the United States is clear and it will take something dramatic and unexpected to turn the market in a different direction.

As a trend trader, regardless of which market I trade, I put my feelings aside and try to figure how I can exploit the current market psychology to put some money in my pocket.

McCain Contract up 25%

since THIS POST about breaking past the cup and handle. I would lock in partial profits if long and raise the stop on the balance to protect profits. Regardless of what market you trade, it is all about RISK MANAGEMENT! Emotions have no place in the business of speculation.



while the support near 56 was clearly broken on the Obama contract, I hope you locked your gains in with a stop at the suggested level.

McCain Breaks Cup & Handle

The McCain Presidency contract broke above the 20 & 50 day MA's in early August and has held the gains nicely. Since the beginning of August there has been a nice pattern of higher highs and higher lows. With a rising 50 DMA, this market remains "innocent til proven guilty". Notice the shakeout below 38 prior to his speech, from failed moves come fast moves? The contract is tracing out a bullish cup and handle which shows strong Republican momentum.



At the same time, the Obama contract is looking like stage three distribution. With this contract below the declining 50 DMA, I would be thinking of exit strategies if it breaks what appears to be key support near 56.



DISCLOSURE: NO POSITION

Thanks for pointing this out, Eric.