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Hi, RTs,
I remember that in April, 1996, I went long wheat. I got in too late: i.e.
in the middle of the move. In order to protect myself, I placed a stop just
in case. It did fall--It gapped open on the next day. I stopped out at
518, the lowest point in the whole correction. My broker tried his best to
persuade me to get back in. I didn't. Wheat went on to move to above 700.
I was devastated.
Mervin
Barcia, Nick wrote:
> The stops won't always help you. You can easily trade right through the
> stops, and if you are lucky, you can get filled at not too painful
> levels if the markets move fast against you. We all know how currencies
> trade. With synthetics, you may need multiple stops for the legs and
> you could get filled on pieces, rather than the whole position.
>
> Also, if you are trading such that your reaction is to try to tighten
> the stops too much, you should probably get out.
>
> Nick
>
> > -----Original Message-----
> > From: TOM142@xxxxxxx [SMTP:TOM142@xxxxxxx]
> > Sent: Thursday, October 01, 1998 10:49 AM
> > To: RealTraders Discussion Group
> > Subject: Re: Long term capital
> >
> > Scot,
> >
> > You are basically right, the only problem is if you trade synthetic
> > derivatives, instruments they made up themselves, there is no stop and
> > quite
> > probably no exit as there is no liquidity and just nobody to take the
> > other
> > side. I think, this was their main problem, they created such
> > complicated
> > investments which such incredible leverage that nobody else understood
> > what
> > they were doing. And if you have no controls who can truly supervise
> > your
> > operations, this is a sure way for disaster too. As for Niederhofer,
> > that was
> > another story and exactly the way you described it.
> >
> > Thomas
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