It was November 2008 and I’d been trading full time for only a couple of months.
The credit crunch was in full force and every day presented new challenges and headaches.
Until Lehman Brothers collapsed I had been doing well. Trading on a simulator, I was happily bringing in a reasonable £300 a day.
Then, everything changed. As soon as we went live, the markets went into chaos. The FTSE 100 would drop massively in the space of a couple of minutes. Then, it would reverse almost as fast, for no other reason than traders being too scared to hold on to their shorts.
Some days were good. The increase in volatility meant you could make large amounts trading with just 1 lot. Some days were not so easy and soon I was overtrading, trying to pick every crash and rally like a mad professor.
Making money in your sleep
I came into the office one morning at the usual time, 6:50AM. But before I could get to my desk the office manager called out to me. He had a concerned look on his face:
“Joe, did you put a position on overnight?”
What was he talking about? We were day traders. We only very rarely held positions over night and I certainly didn’t put any trades on before leaving.
Quickly, I switched on my screens and sure enough I had a live long position on the FTSE 100 future.
At first I couldn’t work it out but then I realised. The night before I was short the FTSE and in my haste I’d left a stop loss order in the market. I’d closed the short trade at the market but completely forgotten about the stop order.
Sometime during the night the stop order had been filled leaving me with an open long trade.
I felt sick, I couldn’t believe I’d been so reckless.
Then I checked the pre-market futures. They were all up. The spread bettors were calling for the market to open up by 1% percent.
A few moments later the market opened and sure enough I was up over £1000 from a trade I didn’t even mean to put on.
I’d made 100 ticks in my sleep. For once, my nasty habit of overtrading had actually resulted in a profit.
I looked at the chart and sold straight away on the open. In fact, I sold two lots.
The open turned out to be the high of the day and I made another £600 on the way down.
Selling rallies was a good strategy back then. In fact, it was probably the ONLY strategy back then.
Still, it wasn’t a good feeling. I’d been very reckless and had got very lucky.
Needless to say, my managers didn’t see the funny side of it either.
The money had a distinct bittersweet feeling and I vowed never again to leave the office without checking all my open orders.