ONE operator’s story
It was October 2008 - the market was setting records in volatility. 'Harry' was sitting in class, looking around, trying to get a quote on GS (Goldman Sachs.) Nobody felt comfortable talking to him after what had just happened. One classmate reluctantly pulled up the ticker on his phone and showed it to Harry ... not much movement, no real change in his puts. Harry had $30,000 in his account, $28,000 in puts with around half in GS. No reason to panic, he didn't need his laptop, which he had just been banned from using in that particular class.
It all began just 6 months after his 18th birthday. Harry took $2,000 in savings and opened his first trading account with Scottrade. He had read William J. O'Neil's book, "How to make money in stocks." He was ready to take on the world, with a little common sense and some CAN-SLIM, there were thousands to be made before he graduated. After buying two quick names, 3S Bio and another name that is less memorable, Harry was quickly in the hole.
It was the fall of 2007, the Dow Jones was making all time highs above 14,000...and here he was, the fool buying the top. His account never broke above that $2,000 mark, slowly trickling down ... 1800 ... 1500 ... 1200 ... 900 ... alas Harry lost interest before the end of the year.
Then came Bear Stearns. Harry was out of the stock market, not paying much attention, but the story caught everyone's eyes in the business minded school.
Friends were asking, "Were you short Bear? What do you think is going to happen next? Isn't that crazy that JP bought them for $2!"
Harry had barely heard the story when he got back on the horse quick. This time he said, he wouldn't be buying a top, the market was clearly in a bear cycle and he was ready to short. He signed Scottrade's approval form for a margin account, and was ready to sell short shares he didn't own. But again, his timing was poor, as the market had just made a low on the Bear Stearns saga, and started what would be multi-week relief rally.
Harry added funds to his account. He had saved $4,000 from umpiring baseball games - all of it now in his Scottrade account. He was short CMG (Chipotle) & DECK (Deckers Footwear). He was taking losses.
Then the market began to decline in May. Right around this time, he was told by a friend that he could make more money trading options. Another approval form, some articles on investopedia, and Puts were the name of the game. On about June 12, as Bush - Paulson - Bernnake were giving speeches on Fannie & Freddie, Harry's account was at $9,000; he had banked coin. But it wasn't enough, $9,000 was seen as a small amount of money...so he kept buying puts, kept shorting, only to lose it all in a span of a week...and reach an eventual low of $700 mid September.
The account wasn't dead yet though! Harry was short, he had puts across the board, a few spreads but mostly naked, and he had just gotten another $10,000 account to trade with from an account his father had set up for him years ago. The money's intended use was law school, but Harry saw opportunity...he saw a crash coming. He wanted to take that $10,000 and turn it into 6...7..8 figures. The crash of 08 would do for him what Black Monday did for Paul Tudor Jones.
And in some ways it did. He succeeded in taking the $700 to $14,000 & the $10,000 account to $48,000. As a 19 year old kid, a sophomore in college, he had $62,000 as of November 21, the day Citigroup was bailed out and also the bottom of 2008. Over the next month, Harry lost half of the account. Along with a friend, he decided college was no longer for them and that they would drop out & make millions trading futures. On his first day with 3 monitors, Harry placed over 100 round trips using Thinkorswim's platform, all on the Mini S&P 500 Futures contract (ES.) The loss was about $500 for the day but he held strong.
Long story short - over the next 3 - 4 months, Harry slowly bled out money. He found that youthful confidence was not enough to succeed in the financial markets.
Later, you will read more personal stories about Harry's journey that many of you may relate to - such as loading up on calls in February 2009 (right before the market's bottom, or in Elliott Wave speak before the end of Wave 5,) just to dump them 3 days into the rally & missing out on MILLIONS in profits. You will also read about day trading options, and how Harry made $10,000 in just one day in October 08, and how later he couldn't make a dime day trading futures.
Finally you will read about more recent events in Harry's trading life - working with Ivan, coding spreadsheets, back applying the various L.I.V.E.T.M. concepts & more.
When Harry is not starring at his 2-headed (twin LCD's) girlfriend, he can be found on the baseball field umpiring youth baseball games or at a NYC office selling networking solutions. So anyone in the five-boroughs, shoot over an email and maybe you can get together with Harry for a latte or a beer somewhere in Manhattan!
PS. Harry is not his real name.