What Will Today Bring? A Trader's Meditation

At the beginning of every day, there is the reflection or meditation---What will today bring? The difference between a monkey and a human is forseeability....and visualizing is what the seasoned investment pro does...it takes imagination...after the imagination, one gets to compare the reality...but the imagination is what the trader and investment pro brings to the equation. On Saturday or Sunday, looking at the events of the coming week is key. These are detailed in Barrons Magazine in the calendar section, one looks at the events and plots what one thinks the week will look like. Is Bernanke going to speak? What job reports or retail sales are scheduled? You need to know. At the end of the week, you can compare what you thought the week would look like and what the reality was. This is important and surprising. Last week for example, ending August 3, 2012, it was speculated by the pundits to be a "Pump and Dump week", or it was a week where during the Mon to Thursday, the EU and the ECB would be making the promises, and then at the end of the week, the jobs report would probably disappoint, and oh yes...the ECB would probably result in nada..nothing...but smoke and mirrors, with the Italians just saying they wanted moral support. In the end, the last part was so, but the rest was a suprise. The market wanted to go higher, and disregarded everything to do so. The jaded news junkies had to just wonder and observe. So....what will next week bring. Visualize it.

Twenty Minutes is an eternity on Wall Street; The story of one Knight

It has long been known among regulars on Wall Street that live real time trading is very different than "delayed" information. In fact, thirty years ago it cost a small fortune to get real live data...but I date myself. One of the most exciting times to trade with live data is the first half hour of trading, when orders from around the world have bunched up over the hours when the exchange is closed, and all begin trading. In fact, it is during this early fifteen minutes that there is the "exception" to the normal circuit breakers that prevent wild swings on the exchanges. Leave it to the program traders to design an algorithm to exploit this weakness---and you have what occured last week with Knight Investments debacle, when an error in their program issued a weeks worth of buy orders all at once. In the end, the firm was 200 + million short and looking for a rescue from someone. Ya think we might have gone too far when the model announcers on the Wall Street channels are talking of "straddle" trades or currency plays that they dimly understand the ramifications of, and indeed should be prevented from even suggesting to innocent investors. Options always were for seasoned investors and serious traders, and were never meant, in my view, for anyone who needed something stronger than a light beer.