Jim Woods

   

Remember back in the late 1990s when day trading was all the rage?

There were throngs of individual investors who quit their day jobs in the hopes of striking it rich by moving their money in and out of booming Internet stocks. Well, most of those day traders are now back at their old jobs, but a few managed to stick it out and become successful.

Why did a few day traders survive when most got knocked out of the game? One reason could be the willingness to step aside when the circumstances dictated as much.

I can remember one of the more accomplished day traders I knew back then who described to me one of his key principles of success. He told me that he never, ever, held a position overnight. Before the final bell sounded, he was completely out of every equity position.

Trading Like It's 1999?

Now, I don't think we've gotten to the point yet in our options positions where the secret to success is clearing the decks before the closing bell rings.

I do, however, think that given the wild volatility we've seen in the market of late, the smart money certainly appears to be willing to "exit stage left" much sooner than they have in the past.

Monday's historic 777-point Dow (DJI) drubbing heightened the sense of fear and volatility that traders face right now, and for good reason. Think about it, would you like to be the holding on to positions in front of a market subject to the whims of Congressional infighting?

I think not, and I'm not the only one. Right now we are witnessing a rising level of fear that's forced many traders to clear the decks a lot faster than they otherwise would if circumstances were different. But other than our own sense of internal queasiness about this market, how do we know that the fear out there is so high?

Michael Shulman

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