The New York Stock Exchange still has a spread that I’m not comfortable with. People will point to the fact that we were up 400 points yesterday but my reply would be that it’s a reflection of the aforementioned spread and its corollary effects on trading overall. The market, up or down, is a landslide right now. I know my limitations and the limitations of the business and I am hitting that wall squarely right now. It feels like I am being suffocated. However, I have to steady myself because panicking will only make things worse.
Once again, I didn’t find any other assets that fit my trade/risk criteria for today so I decided to concentrate on the cash open, however, I had to play differently than I did before. I realize that with the spread and the volatility, I cannot expose my capital in the usual way that I do. I had to really really dial back what I felt was proper exposure and in return, instead of holding for longer periods – a recipe for utter disaster – I would just trade more round turns. Additionally, after much reflection, I decided that I would step out of my bread & butter zone to trade the 10YR. What I was expecting was that it would open up with a little bit of movement at the opening bell, sort of like how the cash open would do. However, it wasn’t meant to be. There wasn’t all that much action there and even with a fair amount of trading in the Dow and the Nasdaq, I just wasn’t able to achieve any “lift” in the PnL, so to speak.
I am not sure what I will do moving forward. All I know is that no matter what, I have to find something to trade in the way that I trade the opening bell. Even if I have to trade the cash open under a revised set of rules I’ll do that, knowing that there will more than likely be days of losing that I’ll need to make up for with other commodity trades. The preeminent principle in this business is to make as much money as you can in a way that loses you the least amount of money. To do this, I’ll have to scrutinize my thinking processes in order to come up with a different plan given this surprising & unprecedented challenge.
But the cool thing is, if my broker says it’s not possible then I get to say: “no….it’s necessary”.