MY ALIBABA LONG POSITION WAS GETTING KILLED TODAY. SO I HAD TO FIND A HEDGE SOMEWHERE.

If you've been following my BABA trade then you would know it's not doing too good today. We are still above support so I'm holding the few contracts I have left.

Just check out the value of my options contracts in the picture below. Yesterday they were 30% in the profit and today they are 30% in the negative. This is as an example of how out of the money options can be very risky from day to day. This is why I do not recommend options to anybody especially new investors.

I wanted to cover my losses for the day since I've been having such a good week I did not want the week too end on a soft note. So I was looking for a quick day trade to recover my losses. Luckily it paid off as you can see. I'm only down a few percent after closing my hedge against Alibaba.

Here is my thought process while I was trying to find a quick day trade.
My number one go-to day trading ticker is the S&P 500. So naturally that is the first ticker I went to to find a quick day trade. The first thing I did was zoom out to the 4-Hour time frame to find a short-term trend. I want a short-term trend since I'm trying to find a quick day trade. and you can see in the picture below there is a strong 4-Hour support line that's been holding SPY's price up. You can see that support line in the chart directly below highlighted by the blue line. As a short term technical trader I was expecting to go long on a bounce off support. Or I would enter a short position if we drop below support and keep falling. So I was waiting for price to reach support and then pick a direction so I could make a play. It was taking a while and I was getting impatient. That is the greed talking.

My greed instigated me to find a play faster than waiting for spy to reach support. So I went on a closer time frame with smaller candlesticks. When I went to the 5 minute candles I noticed that there is a possible wedge formation happening. I noticed this wedge long before I took the screenshot of the chart. So in anticipation I would mentally prepare myself to enter into a long position off of support of the potential wedge. But I did not know if it was going to be a wedge so I waited for a confirmation bounce off of the wedges support.

In the chart below I have highlighted moments where the price was near support by yellow circles. I could have entered into a long position here at any of these points near support and I would have made more profit. But I was not sure if the price would bounce off support so I did not enter into a long position until I receive some sort of confirmation. Once SPY had a strong bounce off support I entered into a long position with the intention of only holding for a very short-term day trade. You can see where I entered the long position within the green circle. I held my position until we reach resistance of the wedge and I sold my position at that point as you can see in the chart below. In my mind I was thinking that we could very well keep going up. But we could also reject this resistance and head to the downside back to support again. I like to make my trades quick and not very risky. when I have profit I like to take profit off the table from time to time even while the profit is increasing.