Scan All is a simple tool to help you hedge short-term trades. Check out how it works by watching our quick video or reading the summary below the video:
If you are a short term trader, you know that markets move fast. When you see an opportunity to get into a trade, you need to get in quickly. Once you are in a trade, you need to manage the risks of the trade quickly as well. Let’s say your position quickly moves in your favor, but it is still not quite at your target exit level. Some traders will look for opportunities to move up their stop-loss. The problem there, of course, is that you may get stopped out too soon. Another solution is to find a way to reduce the risk using a hedge. A good hedge for a long position would be a short position in a stock that tends to trade similarly to your stock. How do you find such a stock? That is where our Analyzer comes in. Simply go to biggercapital.com/Spread-analyzer, log in, and click on “Scan All” at the top on the right. Type in your trading position and click on the different tabs to look at different databases. My Queries will show you pairs you have viewed in the past containing your stock. Ranked Spreads is a crowdsourced database of other users’ queries containing your stock, along with a rating for each spread. And Cloudscan is our statistical arbitrage database showing pairs containing your stock. Each of these tabs can show you potential pairs that will trade similarly to your stock. For example, let's say you had just bought GMCR for a short-term swing trade. If you click on Ranked Spreads, it looks like the most highly rated and most often viewed pairing is DMND. Click the “View Query” link to see more information about this pair. If the two stocks trade together pretty well from a mathematical standpoint, short position in DMND could serve as a good hedge for a long position in GMCR. Entering this short position means you have reduced some of the risks in your long position, and that can allow you more flexibility in managing your profit targets and stop-losses. Next time you are working with a short-term trading position, check out our “Scan All” feature to see how easy it is to reduce risk using this quick and easy trading tool.
Written by Michael Bigger. Follow me on Twitter and StockTwits.