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You might want to consider the risk of buying at limit down in volatile
markets, anticipating a bounce. Even if it works nine times out of ten, the
tenth time can bury you.
By the end of the day in the Crash of 1987, many locals who stubbornly held
to their habit of buying breaks, had to sell not only their Porsches but
also their CME seats. Will it happen again? Without doubt. Will most
traders see it coming or even recognize the danger as it unfolds? The
markets have a nasty habit of regularly surprising the majority, including
some traders that are supposedly the most knowledgeable and sophisticated.
Consider the risk/reward. Preserve capital. Trade against a strong trend
only with great care. The markets will always be open tomorrow for those
with the means to participate.
Regards,
Jim Alvis
----- Original Message -----
From: "Randall Kurzon" <rkurzon@xxxxxxxxxxxxxx>
To: "Omega-list" <omega-list@xxxxxxxxxx>
Sent: Thursday, October 26, 2000 10:38 AM
Subject: Limit Down Bounce
> I have noticed that almost every time the SP or the ND are halted at limit
> down it is followed by a bounce. I've been watching that for the last 5
> years and as far as I can remember there have been very, very few times it
> does not bounce. Any comments as to the reliability of entering a position
> right after the market starts trading again from limit down?
>
> Randall
>
>
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