This falls under the category
of pure stupidity.
Once upon a time, I opened my
first futures trading account. I put in $5000 which I had saved up. It was a
very exciting, and more than a little scary. From a knowledge perspective,
and from a price movement point of view, I totally understood what I was
getting in to.
Actually pulling the trigger,
though, is a completely different story.
I had traded stocks for
years. The futures account was my first foray in to leveraged trading. In
stocks, while there is certainly the risk of taking a substantial loss, it
generally isn’t going to happen nearly as quickly as can sometimes be the case
in futures. That thought was what had my knees shaking as I made my first
foray in to the market.
As it turns out, I was right
to be afraid.
My very first trade was in
Japanese Yen futures. I can’t recall the specifics about the analysis that
went in to the trade, or even if I was going long or short. I do remember
fighting the anxiety for a long time before I actually finally pulled the
Let me back step a little. I
am talking here about a time when online futures trading platforms were just
in their infancy. There wasn’t any real electronic trading. You weren’t
doing much more than using the internet to submit an order to your broker’s
desk just like you would do calling them. The process was slow and getting
your fills took forever by today’s standards.
My first trade wasn’t going
my way after some period of time, so I went in to close out the position. The
problem was, however, that I accidentally doubled up my position instead. By
the time I caught the mistake, it was too late.
When the dust settled, I was
down something like $4000, a hit of 80% on my account value in a matter of
hours. I was literally sick to my stomach. My coworkers must have thought
someone died. I’m sure I looked that bad. I’ll always remember that feeling.
Can I say that I’ve never
messed up an order entry since that time? Definitely not. It’s been
infrequent at best, though, and I’ve certainly never taken a hit like that one
since. Remembering those feelings is likely to keep me from ever bungling
things like that again!