Re: Limit Down Bounce

[gm@xxxxxxxxxxxxx (Gerald Marisch)]

Kim:

Thanks for the response.  It was a good read.

I think though, that the operative phrase for us small traders is...
I could  have lost if the market had turned against me."

----- Original Message -----
From: <KIMBOLEGSA@xxxxxxx>
To: <gm@xxxxxxxxxxxxx>
Cc: "Omega-list" <omega-list@xxxxxxxxxx>
Sent: Thursday, October 26, 2000 7:55 PM
Subject: Re: Limit Down Bounce


> In a message dated 10/26/2000 11:02:44 AM Central Daylight Time,
> gm@xxxxxxxxxxxxx writes:
>
> << Now, having written that, I'm ready for anyone's war story that proves
me
>  wrong - how a trader made a million $ in a couple of minutes in a limit
>  market.
>   >>
>
> Gerald,
>
> There were no limits in 1987 but I believe Lewis Borsellino did achieve
the
> feat you describe in less than 1 minute. The words that follow are his -
not
> mine:
>
> "I've told this story dozens of time, but the memory has never ceased to
have
> an impact on me. I was out of the country on Black Monday of the Crash of
> 1987. In fact, I wasn't able to get back to the trading pit until Tuesday
> afternoon (even though I flew standby on the Concorde). I made six-figure
> profits on Tuesday afternoon and Wednesday. But that all paled in
comparison
> to what happened on Thursday.
>
> Before trading began, the pit was tense. The brokers, I noticed, were
> especially nervous. Having been a broker in my early days, I could read
their
> body language clearly. They were acting as if they had a large order to
fill.
> Just before the bell rings, brokers start to make their offers. A broker
> offered to sell S&Ps 4.00 points lower. (In the pit we'd think of that as
400
> points lower.) Then another broker, this time from Shearson, said he was
> 10.00 lower. (Remember this was 1987, and we didn't have any limits to act
as
> brakes on a sharply falling market.) This was unbelievable, I thought!
Within
> seconds we were already 10.00 points down. As a local, I wondered just how
> far down this market would go.
>
>                     "I'm 20.00 lower," I yelled out.
>
> A Shearson broker was lower still - 30.00 points lower. I said I was 40.00
> points lower. The Shearson broker shot back that he was 50.00 lower.
>
> S&Ps opened 56.00 points lower. In the midst of this freefall, I knew it
had
> to be the bottom. I turned buyer. I bought 150 contracts from a broker
behind
> me and sold them two seconds later for 20.00 points higher. I walked out
of
> the pit with a $1.3 million profit made in less than a minute. I went into
> the bathroom and threw up. As much as I had made on that one trade, I
could
> have lost if the market had turned against me."
>
> Rgds,
>
> Kim
>