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Ric,
Your story highlights that some folks had a penchant for taking
something simple and making it complicated. Spreading between two markets
or indices greatly complicates one's market posture and leaves one
vulnerable to losing on both legs of the spread. One should only do such a
spread if by virute of 20 years or more of market data shows that the spread
has reached a major support or resistance area, which is probably a rare
event. To enter a spread and due to loses start trying to fix it by
throwing in a another market is more of the same pattern of complicating
life. Bottomline, buy against support, sell against resistance, preferrably
in one market at a time. If wrong, get out. During my stint at the CBOE -
CBOT, I had the good fortune to do business with Eddie & Billy O'Connor.
They started out as poor kids from the southside of Chicago and by the 80s
they were probably each worth about 100 million dollars. They were masters
at spreading. Eddie always said, "if you put it on as a spread, you take it
off as a spread". This means no legging and no jimmyrigging your losing
position with other junk
KEEP IT STRAIGHT FORWARD & KEEP IT SIMPLE.
Ric, drop me a line if you or your clients would like some more coaching.
Simply,
Norman
----- Original Message -----
From: "ric ingram" <ringram@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, March 07, 2002 11:08 AM
Subject: [RT] Eyes Open Wider
> Hi,
>
> Recently I have had my eyes opened by a client.
>
> He had contacted me as part of his once a quarter review of how he could
> further improve his reward to risk ratios and to discuss his successes and
> failures and how best to learn from them.
>
> This is the best kind of client - most only contact a coach when they feel
> they have a problem or have 'hit a wall'.
>
> It turned out we were both nursing losing long S & P 500 - short DOW
spreads.
>
> He, like me had market-made the spread, repeated buying the spread as the
> DOW out-performed the S & P and so we both had multiple losing spread
> positions.
>
> I had additionally faded the continuing out-performance of the DOW using
> market making techniques and had made more realised profit doing this than
> I had running losses on the spreads.
>
> He had missed this opportunity, but had made much more money than I
> had. He had repeatedly switched his long S & P into long DAX and back
> again, making more switching profits than running losses on the spreads.
>
> We had both missed opportunities to provide service.
>
> I have not spoken to him since, so I do not know if he has learnt from my
> ploys, but I have certainly leant from his ploys. I have switched my
> short DOW to short DAX when it made a huge run-up recently and back to DOW
> when it caught up - again making more in switching profits than losing on
> the spreads.
>
> I also incrementally switched the long side from the S & P to the Nasdaq,
> and back again, picking up a few S & P points on the way. It all helps.
>
> Hopefully we now both have more weapons in our armory - recognising more
> opportunities to provide service where it is most demanded. Profits
> follow providing service rendered like night follows day, but sometimes it
> takes a little longer than 12 hours.
>
> Hopefully you have learned a trick or two and you will want to share your
> idea(s).
>
> But maybe you want a shorter email or to waste time discussing individual
> trades or have some other way of avoiding the process of sharing and
> learning useful ideas and techniques.
>
> Unconditional regards, Ric.
> www.traderscalm.com
>
>
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>
>
>
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>
>
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