Quote:
Originally Posted by dpaterso
J.: I KNOW that this weeks moves on stocks has possibly taken a year or two off of your life but 'hang in there' i.e. this business has a habit of giving you those years back in spades when you least expect it!!!
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You are not only correct, but you are also right! Every day this week has wiped a nice slice out of my positions. My account has suffered as well, as I did not enron those positions that were doomed, but closed them completely. Yesterday it was the first time I felt a bit depressed, I admit. I think I could stand one more of such weeks, but not a third one without loosing my faith in this. Well, actually if there is another such week in a row, all of the rest of my positions will be SARed and the third week would have no impact - unless I manage to open yet another set of bad positions. I just hope that you are correct with the turn in the market.
There is one thing that occurred to me about closing a position in loss beyond VS SAR. I had those two positions well below the SAR, but decided to close them only after the candle has closed. They were already that far behind the SAR that I could not see much chance for them to recover that day, so it should have been quite a safe bet to close them before the candle close. In this case waiting to the next day cost me money. I may in the future consider selecting the earlier timing for closing, but it might be a bit difficult to formulate a rigid rule when this would be wise and when not.
This subprime crisis has reminded me long about the bank crisis we had in Finland in the early 90s. The causes were much alike, very loose crediting. The banks were beaten very badly and a few of them disappeared. The state subsidised the banks heavily and it became a huge bill for the taxpayers. The finance stocks were utmost beaten and it would have been an excellent deal to buy the biggest of them at their lowest. But not all. Now I am looking at FNM and FRE, and although I already traded them with tiny success, I'm now viewing them like the worst ones during the Finnish bank crisis and won't touch them any more even with a long stick. Here is one quote I just run across summing this nicely: "I'd be worried for the near term for anything that's not senior debt, especially common shares and preferred shares," says XXX. "For the long term I'd just be worried, period."
On the other hand: would it be a good time now to sell such shares, i.e. FNM and FRE, that probably loose all of their value, as the latest news suggest? I'm not sure what would happen to those CFDs, but I would guess that you would cash such an investment in full, i.e. the difference of the selling price and zero.
But if history goes like it did here, a few of the banks will come out of the crisis alive and their stocks will multiply their values sooner or later. It's now the question to find the correct ones and the time to buy them. Maybe it is this historical background that has made me quite careful with financial stocks.
There is at least one positive thing I should mention. I saw a number of promising energy and industry CFDs, but opened only some of them because of the money management rules. I ended in margining about 20% and that was enough. If I had decided to boldly go with the rest of those picks, I would be in much deeper sheet now.
To justify this post in terms of forex, here are some thoughts about GBP pairs. Based on some commentaries I've just read, the British economy looks like going in the wrong direction at least for a while. This makes me suspicious about trading in favour of GBP at the moment. EUR/GPB has given a short VSC1 signal (did you mean that signal, Dale, a couple of posts ago?), but I don't dare to follow that. On the other hand, if the second currency in a GBP pair is also being hit, like NOK by oil, such a pair might be a better one to trade. Actually, when checking it while writing this, there
is a VSC1 signal from GBP/NOK yesterday (and also SIS), so that puts more weight on following at least this pair.
I ended up opening long positions for GPB/ZAR and EUR/ZAR. I think I took the signals about correctly, and despite the current drawdown of these pairs I hope that they work for me as well as they have done a couple of times before. And hopefully ZAR will perform worse than GBP so that these would not add to the "challenging" trades I am holding at the moment.
J.