Some nights always stand out in a winning trader's mind .
17/4/2000 was one such night for me . I recall it as clear as a bell.
the background to that night was that the markets as you all know , had been a raging bull since the early 90's . but it began to show terminal signs of fatigue at the turn of the new millenium . on the first day of trading in the new year , the Dow began to tank , which was really the start of the next 3 year's bear market .
tech stocks, ( NASDAQ) had been the darlings of '99 and had been the leaders in the " new economy " boom , hadn't been affected yet . they had been holding up quite nicely even after the mini crash over the new year.
But how fast that was to change , on the night in question , the NASDAQ finally caved in .
I don't not recall how much it dropped that day but it was a major move to the downside , my eyes were peeled on the DOW .
as I watched the last 3 hours of action it was down something like 300 points already , and the signs were getting worse .
I thought " hell , I've got to short this , but be careful because there's bound to be a major pullback , so you might as well wait . "
so I waited and watched, another 1.5 hours had past and the thing was down 500 points .
" 500 points I thought and no pullback , am I shorting now ? no , there MUST be a pullback now "
so I still waited , and finally a huge pullback , around 200 points . at market close , the Dow was down a record 400 points .
" Damn I thought I had wasted my chance , then I thought , ah what about Europe tommorow ? how far will that fall , what prices will the SB s be quoting , will they over compensate the Dow's pullback ? "
I decided then that the Dax / Cac might give up intraday maybe 250-300 points , and that the opening drop would be around the 150 point magnitude .
So I confirmed that I would sell any opening quote up to - 120 points .
I called FS immediately : " price on tommorow's CAC please " , the quote was something like - 80 , I was right they can over priced the correction . I jumped on it " sell me 20 pound " I said . I rang again and the quote was now like - 100 , I sold another 20 .
I could hear the trepidation is fat dave's voice as I gave the sell orders , they knew I got them.
sure enough over the next half hour , the quotes accelarted to the downside and soon they were quoting someting like - 140 for the open.
I felt vindicated , great feeling .
the next day , Europe opened , the action was fast and furious ,the Cac opened and dropped as I expected , within moments it was -120 and droping FAST .
another half hour and it was down 200 , I was in the money to the tune of 100 points , the fall accelerated , dropping another 50 , I was in now for 150 .
when was I going to take profits , everything was happening as I expected so far .
" wait I thought , like this it's bound to bottom out at about - 300 points "
the market was down -250 now , I watched more as I waited to take my 180 point target . another - 30 points and I was there .
Suddenly , in less than a second , the market rebounds in a spike .
" no problem I thought , as it corrects down again I'll take my money . "
the market does not go down again, the spike increases in length , my profit now cut to 100 points , it keeps rising , now only 70 pionts , and still it rises .
" damn I thought I have to take profit now o/w there'll be nothing left"
I finally close out the trade for a 50 point profit , it should have been 150 points !
the market finally closed up that day , so it was still a great trade , I made 2000 pound in less than a day and it turned my account from a loser to a winner and set me up for the next 2 years winning run.
Still there are a number of issues which we have touched on , which this experience confirms :
1) never be too greedy , always protect your profits at every stage , never let them melt away.
2 ) expect the unexpected . have plans for such whether cutting loses or taking profits.
3) always think about alternatives . in this case I was able to short the CAC BECAUSE I WAS SB'ING , I COULD NOT DO THAT IN THE REGULAR MARKETS AS THEY HAD NOT OPENED .
SBs ALLOW TRADES OUTSIDE MARKET HOURS AND THAT CAN BE A REAL ADVANTAGE ( an underestimated one , despite all the other bad aspects of SBs )
4 ) The power of an SB credit , always get a credit account . I made 2000 pound over night W/O PUTTING 1 PENNY DOWN . bloody fantastic .
17/4/2000 was one such night for me . I recall it as clear as a bell.
the background to that night was that the markets as you all know , had been a raging bull since the early 90's . but it began to show terminal signs of fatigue at the turn of the new millenium . on the first day of trading in the new year , the Dow began to tank , which was really the start of the next 3 year's bear market .
tech stocks, ( NASDAQ) had been the darlings of '99 and had been the leaders in the " new economy " boom , hadn't been affected yet . they had been holding up quite nicely even after the mini crash over the new year.
But how fast that was to change , on the night in question , the NASDAQ finally caved in .
I don't not recall how much it dropped that day but it was a major move to the downside , my eyes were peeled on the DOW .
as I watched the last 3 hours of action it was down something like 300 points already , and the signs were getting worse .
I thought " hell , I've got to short this , but be careful because there's bound to be a major pullback , so you might as well wait . "
so I waited and watched, another 1.5 hours had past and the thing was down 500 points .
" 500 points I thought and no pullback , am I shorting now ? no , there MUST be a pullback now "
so I still waited , and finally a huge pullback , around 200 points . at market close , the Dow was down a record 400 points .
" Damn I thought I had wasted my chance , then I thought , ah what about Europe tommorow ? how far will that fall , what prices will the SB s be quoting , will they over compensate the Dow's pullback ? "
I decided then that the Dax / Cac might give up intraday maybe 250-300 points , and that the opening drop would be around the 150 point magnitude .
So I confirmed that I would sell any opening quote up to - 120 points .
I called FS immediately : " price on tommorow's CAC please " , the quote was something like - 80 , I was right they can over priced the correction . I jumped on it " sell me 20 pound " I said . I rang again and the quote was now like - 100 , I sold another 20 .
I could hear the trepidation is fat dave's voice as I gave the sell orders , they knew I got them.
sure enough over the next half hour , the quotes accelarted to the downside and soon they were quoting someting like - 140 for the open.
I felt vindicated , great feeling .
the next day , Europe opened , the action was fast and furious ,the Cac opened and dropped as I expected , within moments it was -120 and droping FAST .
another half hour and it was down 200 , I was in the money to the tune of 100 points , the fall accelerated , dropping another 50 , I was in now for 150 .
when was I going to take profits , everything was happening as I expected so far .
" wait I thought , like this it's bound to bottom out at about - 300 points "
the market was down -250 now , I watched more as I waited to take my 180 point target . another - 30 points and I was there .
Suddenly , in less than a second , the market rebounds in a spike .
" no problem I thought , as it corrects down again I'll take my money . "
the market does not go down again, the spike increases in length , my profit now cut to 100 points , it keeps rising , now only 70 pionts , and still it rises .
" damn I thought I have to take profit now o/w there'll be nothing left"
I finally close out the trade for a 50 point profit , it should have been 150 points !
the market finally closed up that day , so it was still a great trade , I made 2000 pound in less than a day and it turned my account from a loser to a winner and set me up for the next 2 years winning run.
Still there are a number of issues which we have touched on , which this experience confirms :
1) never be too greedy , always protect your profits at every stage , never let them melt away.
2 ) expect the unexpected . have plans for such whether cutting loses or taking profits.
3) always think about alternatives . in this case I was able to short the CAC BECAUSE I WAS SB'ING , I COULD NOT DO THAT IN THE REGULAR MARKETS AS THEY HAD NOT OPENED .
SBs ALLOW TRADES OUTSIDE MARKET HOURS AND THAT CAN BE A REAL ADVANTAGE ( an underestimated one , despite all the other bad aspects of SBs )
4 ) The power of an SB credit , always get a credit account . I made 2000 pound over night W/O PUTTING 1 PENNY DOWN . bloody fantastic .
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