‘It’s night already and I’m still sat at the trading desk, staring at the screen where the price history of the past twenty or so trading periods zigzags so teasingly. Now the trading frenzy is at its most intense, I have just scored five consecutive successful trades, a feat I never achieved previously during the whole day. I feel euphoric and invincible now, for the first time after countless hours’ numb sitting I can stretch my aching neck and back, savouring the prospect of getting the upper hand of the seemingly indomitable market. In hindsight I might blame my previous bluntness on my own miscalculations: wasn’t that moving average line stretching far out of the previous range, and I failed to react, for wanting to play contrarian? That double-shoulder on the trading chart was full of warning bells of imminent perils, but I stuck obstinately to my position. I saw that mini-crash coming and should have gotten out of my position way before . . . had I not been too greedy! Yet invincible I feel now, even though I’m still under for the day, having suffered huge losses during the afternoon session, and on a few times I was on the brink of being wiped out entirely of my authorized loss limit. My rival traders are invisible, for me they are just emotionless professionals ready to prey on any mistakes on my part, and on their fellow traders. But as my last straight winning track shows, I finally see through their schemes. The price history indicates that we have just come out from one of the characteristic volatility clusters—currently the slow, steady upward trend confirms my gut feeling that finally I can outsmart those cunning, bastard traders on the other side. So, invincible now, I feel the need to double my trading size, as I grow impatient at the small price increments, downside risks should be one part in a trillion, such a sure bet I shouldn’t let it go. Yes, now I’m willing to bet my last shirt on this trade, as my last chance to recover my day’s loss and perhaps end up with a small profit. I strike the “up” button, the price moves slightly in my direction. Even with my double leverage, the gain is insignificant, now I activate the maximum leverage, four times my normal trading size, and smash the “up” button . . . Out of the blue, the sky falls, the price inexplicably went down, way down in a previously unseen crash pattern . . .A red spot flashes, “Margin call, trade terminated”. I know I just lost my last shirt.’ -From Minority Games by DAMIEN CHALLET, MATTEO MARSILI, YI-CHENG ZHANG
Posted on: Fri, 25 Oct 2013 12:28:19 +0000
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