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Thursday, May 6, 2010

May 6, 2010 in the U.S. Equities Markets

If you can handle what just happened in today's markets, and a whole lot more ... with real money on the line; then you just may be ready to trade and invest.

There is going to be a lot of emotion in the next few days. Quite frankly ... I don't really care what people think happened or didn't happen. This is my chosen profession, and I'm not going to bellyache over what happened in the past. If I get screwed, then I may try to fight it (I've had to go to bat against desks before, and I don't wish that scenario on an enemy); so I 'm not going to let myself just get screwed over, smile and take it. If you let them, the street will do that in a heartbeat. But I understand that the past, is the past and you have to live with mistakes in this business. Whoever makes them. So you had best have some sort of risk management defense mechanisms in place beforehand.

Literally, about 20 seconds before the dam burst, I put in order to buy some SPY puts. The entire system froze as I tried to put in the order. Yeah, I thought I missed the entire market drop, and to me, the markets were nothing more than a curiosity.

I came back about 15 minutes later, and found at that the orders were filled, and I was now holding those puts. The price wasn't really that attractive either.

Then everything flipped, turned upside down, and then and everyone started crying about the reasons why it happened.

Call "May 6th, 2010 in the U.S. Equities Markets" what you will. Call it a "fat finger" mistake. Blame it on high frequency trading, quants and algorithms; I don't care. In fact, I'm not buying the "fat finger" argument. There was fear there. You felt it, and I felt it. But the point is, that moment is in the past, it happened, and none of us are "Superman". We can't fly around the planet, turn back time, and do things differently. It happened. You have to live with the decisions you made.

Myself? This is why I preach about money management principles. I'm holding onto those puts, because the risk is assymetrical, and it's a very small position.

I'll hold the puts, and see what Friday brings us. I knew what I was signing up for, when I sat down at the table to play a hand.

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Note: This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have over 13 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research, and tolerance for risk.


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