Friday, March 9, 2012

Mistakes I will Never Repeat:

Here is a list of mistake that I aim to never repeat. If you have some that you think I should add here tell me about them.
* I will never enter naked short option positions EVER! Risk management is the most important part of trading for a living.
* I will always account for the fact that the rules of the game can change at any time (ex: they can double the margin requirements forcing you to trade just to satisfy their new rules even if it goes against your strategy and cost you big bucks)
* I will never forget that ANYTHING CAN HAPPEN AT ANY TIME. To illustrate this fact think of the most highly unlikely thing and assume it can happen and that would have world wide ripple effects that can crash a market. Here are a few that happened: Fukushima; ash clouds, major wars, president assassinations (think of how today's market would react to Kennedy's assassination if it had occurred now); missile crisis; major worldwide fuel shortages. All these have happened and though unlikely, they can happen again.
* I will never under estimate the stupidity of the markets! (this one is new due to recent development in reactions to AAPL upgrades and Bank Stress Tests). AAPL $SPX $NDX $RUT $C $GS