Was it the stupidity of the mistake or was it the money that you had given back that caused such emotional pain? No, it wasn't the money at all. I think it was the realization that there really was "fire" there. Until then, I had
ridden $3,000 to $45,000 without a moment of pain.
On the way up, did you think, "This is easy"? It
was easy.
Did you give any thought to the possibility that the market streak could eventually go the other way? No, but clearly, my decision to lift the short side of my spread position in the middle of a panic showed a
complete disregard for risk. I think what bothered me so much was the realization that I had lost a process of
rationality that I thought I had. At that moment, I realized that the markets were truly capable of taking money away
every bit as fast as they gave it to you. That made a very strong impression on me. Actually, I was very lucky to get
out with $22,000.
I assume that your quick action that day probably averted a complete disaster. Absolutely. After that day, the market went straight down as fast as it had gone up. Perhaps, if I hadn't made
my stupid mistake, I might have made the mistake of riding the market down.
What eventually happened to the spread? The spread collapsed. Eventually, it went below the level that I had first begun buying it at.
Since you liquidated your position on the day the market and the spread topped, you would have given back a portion of the profits even if it wasn't for the disastrous decision that forced you out of the market. That may be true, but for me, that was my "going bust" trade. It was the closest I ever came to going bust
and, psychologically, it felt as if I had.
Was that your most painful trade? Yes. Far and away.
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