I went short on Thursday and had said in my Friday note that I will cut my short positions and go long if Nifty futures crosses 5163. I am pleasantly surprised to see that despite going to 5157 my BUY has not been triggered. I said pleasantly surprised because what normally happens is that the Nifty triggers my BUYs and then retreats. As it were, the Nifty behaved for a change and has hovered near my BUY levels but not yet triggered it.

Anybody who has read my notes and bothered to track my trades will realise that I have been whipsawed a few times in the recent past. This makes it extremely difficult to take the BUY trade when it happens. Despite this difficulty I will certainly take the trade if the BUY levels are triggered for three reasons. One because I can only trade using a system-I know of no other way to trade the market. The second reason is that following my system could lead to further losses but changing my style of trading will inevitably lead to more losses. The final reason is actually the most important. My bosses are nice people and they have not yet questioned me!

The only problem I have with taking the BUY trade---specially today (if it triggers) is that we are going into a two day holiday. In these kind of volatile times and with the European summit heading towards a 26th October climax and with Tom and Jerry you never really know, going long or short without recourse for two days can be a killer. It could make or break this years trading. A potential 100 point loss could turn into a 300 or more point loss if the market gaps on Friday when it opens after the two day break. I have therefore decided to follow my system but put also take an offseting option trade for the next two days. This means that if I remain short then I will buy some calls and if I am forced to go long today then I will take buy some puts to offset the two day risk.