Home > Lessons from the trading floor > day trading and government intervention

day trading and government intervention

Day trading through the sub prime crises early in 2008 and now the financial meltdown of the last few months has made for incredible trading. The day trading environment has been incredible if you know what you are doing. If you are not on top o fyour risk management you can blow out your account in a few mismanaged trades.

The Keystone Trading Group mentors have actually had to slow down and reduce share size for a couple of our more experienced traders. The reason is simple, they were starting to revenge trade because the market action was so volatile and order flow WAS changing on a dime it was hard to be comfortable with a size position. This is the point of mentoring, no matter your experience every once in a while you can need someone to make sure you stay on track.

Now on to my opinion about the government intervention last week. The government buys 79% of AIG and they let Lehman go out of business. I have a problem with this as a small business owner, not as a trader. I am getting sick of the government bailing out big business, on top of that they can still cash big checks on the way out the door. It is ridiculous.

They ONCE AGAIN believe short sellers are responsible for these poorly managed (out of control risk management, can anyone say long term capital?) Let me ask you this, if there was nothing wrong fundamentally with those companies don’t you think someone would have come in bought them? The short sellers had a reason to short them, the balance sheets were a joke. Off balance sheet assets are a joke to the accounting system.

Here is my point, if there were real buyers they would stop the stocks from going down no matter how many short sellers there are. This was proven about 8 weeks ago when they had the list of 19 stocks that were on the list of “non shortable.” They had a huge rally and then went straight back down after the ban expired.

These stocks are being sold, just as much as they are being shorted. If the government stuck to regulating everyone, not just small firms instead of creating DIFFERENT rules for bigger companies this would never have happened. Looking back off balance sheet assets with no market for those assets is a joke.


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