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> This posting by Joe DiNapoli is being sent free to our entire
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http://www.fibtrader.com/proprietary.html
>
> Events of Sept 11
>
> Contributors to these pages may have died yesterday. My Family
> lives in Boston and my niece was scheduled to board the flight
> that struck the south tower. She didn't make the flight but her
> coworker did. As a frequent world traveler on an American
> passport I'm keenly aware of the risks. I was under death threats
> when I spoke on financial matters in a predominately Muslim
> country several years ago to a studious, attentive, and friendly
> group who were also predominately Muslim. Since the weapon of
> choice is typically knives in that country, I lined my chest and
> stomach area with the morning paper, bunching it securely under
> my belt. It was a uncomfortable presentation.
>
> Our hearts go out to all those directly or indirectly effected. I
> guess that's all of us. My hope is that we learn more from this
> horrific event than the knee jerk reaction of retribution. In my
> view, it's a bit more complicated than a group of fanatics
> attacking freedom.
>
> Trading after a disaster
> How can we handle extreme emotion in financial markets? Please
> re-read the disclaimer liberally pasted throughout our web-site
> and literature. I'll give you my best shot at this but there are
> no guarantees in situations like these.
>
> I was around in the days of $50 silver, 60 in the Bonds, and some
> of you know I predicted the 500 point down day in the DOW in 87.
> While this brings experience to the table it does not mean what I
> will say below is going to be right. It's just my best shot.
>
> The fact that the markets are closed for a few days is a very
> good thing. It allows the planners (Fed, market makers,
> specialists, and exchange officials) to plan and emotions to cool.
>
> Firstly, If you don't have to trade, or you have insufficient
> experience, don't trade.
>
> Your biggest problem in situations like these is the getting the
> fill. Regardless of the accuracy of our approach, in times like
> these, you have to get the fill to make or preserve capital.
>
> You'll likely be ruled to death by the exchanges on any of these
> markets. If you don't know what I'm talking about see one
> example of this in an article I wrote entitled: Where is my fill
> !!(X'd trades) (originally published in Stocks and Commodities
> Magazine) which is available free on the website.
> Usually it's in our Proprietary client area but we've temporarily
> made it available free on the following link.
> http://www.fibnodes.com/xd_trade.html
>
> Difficulty in getting your fill will be proportional with the
> panic in the market or lack thereof.
>
> Futures pit issues:
> Along with X'd or canceled trades mentioned above there's the
> "up-tic rule". Now I'm simplifying this for brevity but the
> bottom line is that if prices keep falling without an up-tic
> you're not "due a fill" as a seller…
> Even with a market order. Those standing in the pit will be the
> ones that are able to sell when bids come in. They will be sure
> there won't be an up tic until sufficient support is apparent,
> usually at a very major fib number like the ones we've been
> talking about for the past year and a half!
> Your sell orders will then be filled at the bottom when they want
> to buy (from you).
>
> Then there's fast market rules which basically say they can do
> about anything they want down there with your order. You can make
> money one way for sure, bet with someone crazy enough to take the
> bet that whatever the specialist, floor trader, etc. do with
> your order, it will not be in your financial best interest.
> You'll win the bet but you'll lose on the fill.
>
> Electronic trading:
> Depending on the panic or lack thereof, this is a big test for
> the electronic trading computers and I don't know how it will
> come out. I do know that those Electronic trading agreements
> we've all signed are not designed to protect us. Re-read them. I
> would not count on being treated much better in that medium than
> any other.
>
> NYSE:
> Anyone selling on the 500point down day in 87 was filled at
> 500points down even if they sold when the market was only 100 points down.
> "Orderly market" mandates do not mandate specialists to loose
> billions in a day getting you your fill-- If you sell in a vacuum
> you are at their mercy.
> Most of you are aware of the up-tic rules when going net short on stocks.
>
>
> NASDAQ:
> Again, those trading in 87 know how market makers treated the
> public. Yes there have been rule changes but if it comes to Major
> market makers loosing billions or you getting your fill, guess
> who'll be the looser.
>
> ECNs will be available to NASDAQ market makers to lay off orders,
> so the ECNs may not be a haven either. You need a bid to get a fill!
>
> Perhaps the Fed or something else has given guarantees or some
> such thing to large entities or institutions to keep things
> orderly. I don't know but I would guess they have.
>
> Lets take 3 orders-- in a market we'll call "WAFTT index" (Where
> Angels Fear To Tread). The situation may vary depending on the
> market you trade but the outcome will likely be the same.
>
> 1)You're a short seller initiating a position at market. The
> market last is 20,000. Your filled 10000 lower, at the low, since
> there's no up-tic.
> The market closes 5000 up from the low. You were right, the
> market is off 5000, but… you Lose!
>
> 2)You're a buyer initiating a position in WAFTT, at the market
> you're immediately filled at 19999. The market trades 9999
> lower --you're sold out of your position by your broker for
> insufficient margin, at the low, a market maker, or local, or
> specialist takes your sell, he's up 5000 and you're in deficit.
>
>
> 3) You're closing an existing short position at a pre determined
> DiNapoli profit Objective-- It's a perfect play, WAFTT cover the
> short at 10,003. The market goes through your buy point by a few
> points. But you didn't get the fill --fast market, X'd trade, or
> the order matching computer broke or was overloaded. You can't
> get reporting on your trade as the exchange is too busy and you
> don't know until that evening when the market closed that you
> did not get filled. Or perhaps you've
> re-sold, Thinking you were flat, on a bounce and now you're
> short 2 times the position and the market is 5000 off the lows.
> Called higher tomorrow. There are many miserable scenarios and
> yes I'm simplifying possible events but these are real possibilities.
>
> So what do you do?…
> If you don't have to trade, or you have insufficient experience,
> don't trade.
> Don't sell or buy into a vacuum. Wait for retracements and place
> your orders so price action is apt to move significantly through
> your pre-calculated price points to better ensure your chance of
> getting that fill.
> Record any conversations with brokers. Time stamp all orders!
> If you trade electronically have back up phone numbers. Have back
> up local numbers as well as 800 numbers. Have an automatic dialer!!
>
> Major fib levels should hold--Look for Confluence and Agreement
> to trade against and trade small in case a position goes against
> you, so you can hold on to it until you get a retracement back in
> your direction.
>
> If your retirement accounts are low on equities as we have
> repeatedly advised since November of 99, now may be the time to
> get some great stocks, but only at major fib numbers- In the past
> weeks I have posted some of those key numbers on our proprietary
> client web pages for the indexes. It's easy for you to calculate
> them on your favorite stocks. Forget value investing-- P/E
> ratios and such. Put your orders in ahead of time-- Bonsai in as
> described in the book Trading With DiNapoli Levels" and hold on
> to your lunch. It could be wild ride!!
>
> If you feel this would be of value to anyone feel free to pass it along.
>
> -Joe DiNapoli.
> http://www.fibtrader.com
>
>
> PS. This message is ONLY being sent to traders who have
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