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TomB-and all the list,
I apologize for all this bandwidth,-I originally wrote via private
e-mail,to "Tom/Roz",
kindly refer to the very bottom of this lengthy note.
Thanks all,for understanding.
Regards,
Ruth
TomB and/or Roz wrote:
>
>
> Ruth Ruby wrote:
>
>> Hi Tom/Roz,
>> Did you 'add' anything to these posted
>> exchanges-the reason
>> I'm asking is that my ns communicator did not show anything 'new'.If
>> I'm missing
>> something,could you kindly enlighten me,as I
>> am not that computer literate.
>> Regards,
>> Ruth
>>
>> TomB and/or Roz wrote:
>>
>> > TomB and/or Roz wrote:
>> >
>> > > Yes Tim: (My T-Bill Spread)
>> > > 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. Like you said, it 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, and still liked to sleep at night, though with some
>> anxiety. Today would rather stick to bonds, Stk indices, copper, a
>> grain , maybe cattle - crude, still like currencies but not like
>> before.> >
>> > > >
>
>
>
>> Tim Morge wrote:
>> > > > 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 to locked limit 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..
>> > >
>
> Tim Morge said:
>
>> > > > 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
>>
>
> Ruth & others, I'm sorry for the confusion on this post between Tim's
> and my discussion re: hedging and/or spreading & risk mgmt, however,
> for those not familiar i thought I'd share some situations that can
> occur and how they can impact the best laid plans..
>
> Since this may not be of interest to the list, please feel free to
> email me directly.
>
> regards,
> TomB.
>
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