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TomB and/or Roz wrote:
> Ah yes Tim:
> The good old days..I'm lucky I survived it. Cost me a lot/saved me a
> fortune over the long term - i've never spread off a loser again - just
> take the loss. Frees up the Psychic/emotional energy too. No sense
> fretting over a position you won't get paid on.
>
> While I'm sure there are many on this list who are wiser and more
> experienced then I , since we were talking about money mgmt we should also
> talk about things you can't control and sometimes you can't control risk.
> BTW this is not to demonstrate my great knowledge or experience - I am
> continuously aware that I am and always will be a student of the market.
>
> I still traded currency spreads quite heavily but always felt I had no
> real risk control. Gaps are Gaps. I wasn't into the Interbank mkt - didn't
> even get it. Today ould rather stick to bonds, Stk indices, copper, a
> grain , maybe cattle - crude, still like currencies but not like before.
>
> > TomB and/or Roz wrote:
> > > One of my trader buddies said spread it off- so I sold a dec
> > > against my sept. About an hour later the market
> > > rallied but I had locked in my loss right near the
> > > bottom.
> >
> > Tom:
> >
> > I assume you were answering the question someone posed about hedging.
> > My personal feeling is always to just grin and tak the loss [or
> > grimace and take the loss]. In your first example, of course, you had
> > had enough and the only opportunity for you to limit your loss from
> > that point forward was to use a spread.
> >
> > I think so many traders find their way to bad habits by trying to do
> > the right thing and then find that they have cut their loss at the
> > low. But I think in your example of the T-Bills, you did the right
> > thing. You reacted to a behaviour the Fed had never exhibited before.
> > You got tagged for a much larger loss than you bargained for and even
> > though in hindsight you hedged near the bottom, you managed your loss
> > as soon as you could. It would be unfortunate if this example had led
> > you to 'learn' to hold losses longer.
> >
>
> (I think some might be interested in this, if it bores you I apologize in
> advance)I learned to respect the mkt and be prepared for the unexpected.
> When i first started i watched the Hunts get squeezed by the Fed with
> "Liquidation only" silver went from $50 down limit, limit, limit and then
> all the traders trapped long got hit for margin calls so they had to sell
> positions in other mkts - it sucked the liquidity out of the other markets
> and they all started falling - i don't remember if t-bills rallied i
> assume they did(don't remember) - flight to quality - just like '87 when
> the stk mkt 'crashed'. I respect the market - I use stops - I traded thru
> the Gulf war had my pit broker have a nervous breakdown in the crude oil
> pit and throw his deck up in the air and walk out. They couldn't find my
> orders. Everything was fast market on a not held basis. (Which means grab
> your ankles and kiss your butt goodbye)I had a large position on. After
> the dust settled i ended up in arbitration with a clearing firm who isn't
> around anymore and can you believe I lost ! Moral of the story. Use stops,
> risk only 1-2% per trade and know that statistically that besides some
> great opportunities there are BOUND to be some BUMPS in the night where
> your anticipated risk will be exceeded..
>
> > There was a saying I used to use quite often in the market place [I
> > trade in my home office now and so I try to avoid talking to myself
> > too much]: If you didn't like that price, wait until you see the next
> > one. I always find that when a position gets out of where I expected
> > it to go and I haven't got a resting stop in the market, as soon as I
> > feel like the prices can't get worse, they do. So when possible, have
> > stops there. Period. That wouldn't have helped you in your original
> > example. But in most cases, it would.
> >
> > As for sprading off a position because it is at a loss, I feel losing
> > positions are a drag on your thought processes. When a position has
> > gone far enough that I want to limit my losses, I will always take a
> > loss, id possible, indstead of spreading off the risk. Then my mind is
> > clear of that losing trade and I can get a clear, fresh look at the
> > markets. And with spreads, somehow getting into a calendar position or
> > futures/options position I haven't planned on being in doesn't sit
> > right. Even a spread is an exposure.
> >
> > Tim Morge
Regards,
Tom B.
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