As mentioned in my previous post: My 30% gain from Netflix
Today's post will be my result from my Amazon trade.
I took a Contract for Difference (CFD) position to short Amazon.
This was because it is the most economical way to short Amazon.
Outright shorting of Amazon stock does not make me feel comfortable - I rarely short stocks, especially in huge positions.
The put options for Amazon are too expensive, which creates lower returns.
Thus shorting Amazon via CFD became the instrument of choice.
However, I am dissapointed to say that this is not a trade that worked out for me.
And as a result, I loss $100. It is not a huge loss, because I cut loss immediately.
Nonetheless, it is a lesson worth learning and sharing!
Why I enter into the trade:
1) 5 year (2010 - 2014) historical price movement downwards on the end of January.
2) Historical Price peaked at around December period.
Why did it not work:
1) Trend not obvious, with rebounds happening within a week
2) Surprise fantastic performance by Amazon this earning season
This sort of proves that the strategy of price trend is not a 100% accurate, thus should be used with care!