Several years later, in the late '80s, I remember even as a mistake. I was using a new commodity cycle program I designed. In fact, it is the same one I used today to clients titled "Timeline". I feel comfortable with it. That's half the battle. In any case, I bought four of coffee futures contracts to about 58 cents. I was looking for an explosive cycle time move up. Sure enough, the coffee market began to creep over a week or so. After a few weeks he started to run and hit the coffee about 70 cents. This is a great result for me, something like $ 18,000. But this is not the end of the story.
Here is how an error occurred: in the morning I left, I had a resting GTC trailing stop at 68 sold four coffee futures closed out. I just had gotten one of those nifty hand-held citation devices with FM band. Remember that? It was a big mistake. Watching that thing just ruined my long-term perspective. But this time it's different. Somehow, I recognized the top and called the trading desk to sell everything on the market. I almost grabbed the top right. It was just luck. So I took the car thinking I was out of the market $ 18K points. Time for a celebration! I was so smart! Not so fast, Tom.
When I got home I heard a message on the answering machine from the trading desk. I called them and the officer said I forgot to cancel a GTC sell stop at 68 to sell four futures contracts. I sheepishly asked him what machine closed in. He said, "limit down" I was still $ 4,000!
But again, not so fast, Tom.Trgovanja Manager (with a hoarse, gruff voice, of course) got on the phone and said to be called before the market closed to see if I wanted to keep the shop. He said because he could not reach me, it covers four contracts without me. Then he barked, "This will be at the expense of an error!" He said it with such authority, I thought that was it. So it worked, I told myself. I was so pumped up to just create a $ 18,000 how could I be greedy and demand an additional $ 4,000 as well?
but ... What would happen if the coffee futures market went limit-up instead? Do you think that trading manager would require the loss goes to "error account" then? Not a chance. I would have eaten that as sure as day. In hindsight, I could have told him that my intention is to stop and reverse, and actually still be in the coffee market of the future and short. What is on the right are no signed contract management approval to assassinate me?
If it happened today it would be a different story. I'd probably offer to share it, as such a nice guy. [smile] But it was a long time ago and I did not know any better. Probably laughed and shook his head afterwards. As Robert Redford said at the end of the Sting ... "I would just like to blow anyway." Knowledge is learned is more valuable than money. Gann said something like: "Once you have knowledge, it is easy to make money in commodities." I guess I can rationalize it all.
So there you have it ... two stories to make mistakes. One we lost $ 1500, and the other me $ 4000 - well, I made $ 4,000 brokerage firms, I would say. It taught me the importance of having a novice commodity futures trader paired with an experienced, mentoring broker. It is so important to have someone at the other end who knows your situation and can flag errors before they get out of control. In these two cases, there is the potential to wipe out many years discount commissions savings.
If you are new to the commodity futures and options trading game, consider going slow for a while and work with someone you trust. Once you get the basics down, you can ramp with confidence. I know some experienced commodity futures traders will only work with a full-service commodity broker. There are a lot of traders like this out there. They know the risk of errors and what you can do to make your ego and your bottom line.
good trading!
There is a substantial risk of loss trading futures and options and May not be suitable for all investors. Only risk capital should be used.
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