What Can We Learn From a Fiasco


So did you get caught in the EMLX tornado. I did not, but i got the chance to watch a one of my fellow traders deal with it. He had actiually gone into it short the day before thinking it looked toppy.When the news came out the next day he thought he had hit a stroke of luck. He watched as his profits grew til they halted it at around 50.He was up big but hadn't covered his short yet. When they reopened the stock after having released the fact that it was a hoax, it opened at 130x108, leaving him way under water.It was obvious that the stock would settle down, but how much? My friend managed to ride it out and pick up six points on his cover. He achieved this by using his excellent knowledge of charts and a iron guts. Congrats RK.

How do you avoid this kind of disaster. Many people got crushed on the day. People who were long the stock, sold on the way down. They lost big on a hoax when the stock was actually fine.The people who shorted at the bottom got whacked on the reopen.As an investor this was not that hard to survive. As a trader, it was almost impossible to ride out. The only people safe were those who were watching.As long as people can hack the net this will happen and it's hard to stay clear. Could my frien have covered earlier and hit it big? Sure. Was it greed that made him hold out and not get it? Nope. He was watching the tick and the chart as he should have. The sucker was losing a point a minute. That is not a sign to cover. That is a sign to ride. The halt got him. It's part of the game and you can't avoid the rules in any game.Will this happen again? You bet and people will get killed and get rich.

Now let' find some sites to help us make money this week.You know that I always say you can't learn enough. How about playing a game to learn?http://www.fantasystockmarket.com/ is a game that can help you.It isn't as fast paced as daytrading but you can learn alot there about the market and it's movements. You can also learn alot about peoples market psychology by reading the message board posts. I have found that some ofthe people who post on the various market game boards get more excited and ferocious than those with real money at stake. Give it a try.

The copyright of the article What Can We Learn From a Fiasco in Day Traders is owned by Bob Tompkins. Permission to republish What Can We Learn From a Fiasco in print or online must be granted by the author in writing.

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