Code 16: Beware of "False M&A News"
One day, I got a call from my friend, who is a director of a large enterprise.
"Vic," he said, "XYZ just agreed to merge with ABC. You must buy XYZ. This is a sure-fire deal. "
"Fred," I said, "is it legal for you to tell me this news?"
"There is absolutely no problem! We have nothing to do with these two companies, they have already announced; It's just that the media hasn't reported it yet. "
? So, I checked the price of XYZ, which was 6 dollars per share, and I bought some. Two weeks later, the two companies merged ... ABC merged XYZ at $4.50 per share.
As a result, I lost money-the standard tabeunder.
I think this is the second time and the last time that I have traded on special news. Among the special news I have heard, this is the only time it has come true. There is a merger, but the price is wrong. From then on, I will never touch these potential "merged" stocks again.
Code 17: If the success of a transaction depends on the correct execution of trading instructions, you should not engage in this transaction.
? When Noam was in charge of the international options trading department at Merrill Lynch, he had recorded improper execution or poor timeliness. One day, he handed in a transaction slip. 10 minutes later, did not return. So he walked into the meeting and shouted:
"Li! What's the matter? 10 minutes has not been sold. " The floor agent said without hesitation, "Do you know? I sat on the left of the market maker and shouted, I think he must have heard me. Finally, I stood up, gave him a push and asked him, "Is there a deal?" He said, "Deal? Don't you know my left ear doesn't work? "
? Oh! Sure!
? The biggest loss in my life is due to human negligence. From 1982 to 1983, when S&; P futures and NYSE futures are very popular (NYSE contracts are equivalent to S& trading in new york; P contract). In arbitrage trading. I made an extra 350 pounds. P, and short 500 NYSE. I'm about to close my position. So I called Paul, my field agent in Chicago, and asked him for an offer.
"Buy and sell, 40-45," said Paul.
? I hung up and immediately covered 500 NYSE contracts, so I only had 350 unpaid S&; P long contract. Then, I intend to sell S&; P contract, according to Paul's quotation, the buying price is 40. I contacted S&; P trading pool broker, only to find that the price is not 40-45, but 20-25! As a result, Paul misread the gesture
? If the offer was really 40-45, I would have made a profit. If I had known that the offer was actually 20-25, I wouldn't have covered the NYSE contract-the fourth gear was already quite bad before the computer program transaction appeared.
? At that time, because my position hardly surfaced, I decided to temporarily hold the position of S.P. However, the bad news of the new tax law suddenly appeared in the market. Before I close my position, S & Group；; P fell by two or three points. This transaction cost me hundreds of thousands of dollars.
Although this is an extreme case, the point is that you sometimes suffer from improper execution, and you don't know when it will happen. You should get into the habit of double checking, and if possible, you should reconfirm the offer. If you think the information or situation is a little strange, you should clarify it. No matter how busy the people at the meeting are, their job is to provide accurate information, implement it properly and report it in time.
? I didn't mean to blame the floor broker. If there is an opportunity, you should go to the exchange when the transaction is busy. At some point, the situation will be heated up, and brokers are human beings and make mistakes. You must not mistake them for machines that will never go wrong. You must protect your own interests, find the most reliable broker and reconfirm as much as possible.
? Another example happened recently. I designed a set of S&; P-day write-off system of futures. Judging from the paper work, this system is quite good, so I gave it to my assistant for field test. Theoretically, its performance is ideal, but I didn't expect to waste three gears in and out. Who would have thought that the trading volume in the market is so scarce that a small amount of temptation is enough to drive the price of the third gear! However, this is the actual situation, and we must adjust the system to make up for the execution error.
Code 18: You must keep your own transaction records.
? In some cases, especially when trading in your own account, you want to pick up the phone and give trading instructions directly. There is no record left, because you think the broker will log in all the relevant information. However, brokers can also make mistakes.
Every time a trading order is issued, the date, time, trading tools, buying or selling, quotation at the time of placing an order and the actual transaction price should be recorded. Check your records and brokers' reports regularly. If you don't have your own records, you can't judge whether the broker's report is correct.
Code 19: Understand and abide by the rules.
Every trading rule of 1 can be violated in at least five ways, and traders will always come up with new methods. According to this reasoning, I have listed 18 trading rules, and you should have at least 90 ways to violate them. Every time you break the trading rules, you will find a new way to lose money.
Code 19:? 85% rule
? No one can always be in the perfect state of 100%. There are too many things that may distract you, and you may quarrel with your wife (husband) or loved one; Someone may call you in a pinch; Everything around you may distract you.
? For example, on May 4th, 1984, I was invited to give a speech in Chicago. I was also talking to Steve Walsh, general manager of Walsh Greenwood, and Gary Knight, market maker. When answering a question after the speech, an audience member said, "I hope to consult this market maker." The relevant regulations of the exchange favor market makers with seats. "He said without hesitation," yes. "
"I don't think it's fair," said the audience.
"Then you can buy a seat," Gary replied. "The current price is about $250,000."
? It is important to remember that the rules of the game are beneficial to floor traders; This is their livelihood.
Anyway, I'm talking on the stage. I was bearish at that time, and I made a slam in June 5438+ 10. The market changed from rising to narrow consolidation. I'm looking for an empty position. I have been waiting for three months. Murphy's law works again. The day I left the office, the market crashed. Frank Joe seized this short selling opportunity and won the trading contest ... when I was sitting on the plane.
The key point is: to survive in the market, we must keep 100% perfect physically, psychologically and emotionally as much as possible. According to my estimation, if you can actually keep an average of 85%, then your performance is quite good.
Therefore, when trading, you should be mentally prepared. You may lose money for reasons you never dreamed of. At a certain point, you completely control the development of the market, and you are ready to hit a home run, but you have an argument with your wife, your family dies, or something unexpected happens to you.
Prepare with 100%, but 85% is acceptable; That is the reality.