TradingMarkets Top 5 Of The Day
Welcome to TradingMarkets.com Top 5 of the Day!
In this nightly feature, the editors of
TradingMarkets select the 5 best and most insightful (and sometimes humorous)
excerpts from all of the articles and blogs that have been published throughout
the entire day.
Here are today’s selections:
Kevin Haggerty from:
Current market perspective
"…The
bottom line is that by my not being in front of a screen since 09/27 and having
the long synthetic straddle position put on between SPX 1230 – 1240, it has been
very profitable not being here; however, the key to that is the logic as to why
they were put on, which made the trade. Dynamics makes the trade, not the
pattern itself.…"
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Gary Kaltbaum from:
3 things I want to see in this market
"…Hey Barrons!
Do not, I say, do not ever put Paris Hilton on your cover ever again. I
don’t know her…and I don’t care. I am sure she is a sweetheart. I just don’t
want Paris Hilton on the cover of Barrons. For all of you who do not eat,
do not drive, do not use electricity, do not pay for home insurance, do not
pay for health insurance, do not travel, I have good news for you: THERE IS NO
INFLATION…"
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Adam Warner from:
Options traders can be wrong and still profit, here’s how
"…One
of the myths that abound in options trading is that most options expire
worthless. Well, maybe it’s not a myth, as somewhere between 75% and 99.9% of
options do in fact expire worthless, depending on whom you ask. But does that
mean you lose money over 3/4 of the time? I would argue that not only is the
answer no, but depending on the management of a trade, both the buyer and seller
of an option can profit within the same time frame…."
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Brett Steenbarger from:
How to handle risk and uncertainty
"…If
you find yourself overreacting to a situation, there’s a good chance it’s not
really an overreaction. You are reacting to the
situation–*and* to something previous in your life that is being stimulated by
the situation. The first step of progress you can make in this circumstance is
to remind yourself that you’re not really reacting to the situation at hand.
"This isn’t about trading," you tell yourself. "Something else is going on."
Such a reminder does not, by itself, eliminate the threat response, but it
starts the process of putting threat in perspective. That is important.
Remember: threat–and stress–are functions of perception. As you alter your
perception, you alter your responses…"
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Rob Hanna from:
This bounce is unusual, here’s why
"…Now
back to Friday’s unusual action. Here’s what occurred. The market bounced, which
was expected, but the bounce was weak. The S&P 500 didn’t even gain 1%.
Meanwhile, the VIX, which closed Thursday more than 12% above its 10-day moving
average, dropped so sharply that it closed Friday below its 10-day moving
average. In other words, it took just a very small move for people to lose their
fear of the market. My initial instinct was that this was not a good thing.
Markets do better when doubt and fear are prevalent. A good bounce is typically
one that people doubt. To confirm this I looked back in history.
I first did a study to
see how many times the market had managed to gain 1% or less while the VIX moved
from a position of 12% or more above its 10-day moving average to closing below
it. The answer: only twice — and it had been 13 years since this last occurred.
The only instances of this were on October 28, 1987 and June 19, 1992. Since my
sample set was far too small to tell me anything, I decided to expand the study…"
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