Jul

10

 We all have an interest in not suffering through another day like May 6. And without violating our rule of never disseminating anything that is a meal for a day, i.e. a recurring regularity, perhaps you will forgive me if I attempt to open a discussion of how a day like May 6 where the market was at a minimum to start, open down and then went up and then dropped 110 points or more, a nice 10% to wipe out point– how such could have been predicted.

Ralph Vince comments:

What cost? If someone has stop orders in (fear of loss or missing a move to the downside), there is cost. If someone was, say, buying on a limit, it was a boon. If someone got shaken out of a position (fear) because they couldn't ride it to 0, I posit they were in too heavily. They were clearly people who were trading with money they could not afford to lose. (In my book, that makes them losers before they even put on the trade!)

Jonathan Bower writes:

I saw many parallels to "that" day on Wednesday. I'm curious if you all enjoyed Wednesday too…

Larry Williams replies:

I have enjoyed my luck which is soon to fade I suspect.


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  1. Anatoly Veltman on July 10, 2010 9:18 pm

    The slant of Chair’s question “as above” is surprising (I think our original discussion off-website was slightly different). I mean to say that there was not so much astonishing, or unprecedented for that matter, about the downside portion of the session. The rebound, on the other hand, was both astonishing and unprecedented. Thus spicier query: how could the intraday rebound have been predicted! And even that query may yield limited application to future analogues.

    Important experience (and easily applicable to one’s trading tactics next time around) of May6th IMHO is along the lines of my query within “May 10th Briefly Speaking”:

    “My general trading approach, since experiencing an “extraordinary day’s range” in the markets from 1987 on, has been that a contract (be that S&P future, gold, oil or currency-pair) will tend to meander largely within that day’s range for a great number of days to come, sometimes weeks or even months! You may call it gap-filling, or tie it to price-anchoring - but that’s what I’ve intuitively observed (I’m not aware of solid quantitative testing of this concept)”

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