I think the economic theory of "perfect competition" explains why a lot of traders got blown out. Too many traders using the same TA techniques leaves less money or no profits for all but the most skilled or capitalized.
Well, traders got blown out all the time... many did even during what we see now as the best market of all times. Magnitude of that move coupled with access to trading technology (online brokerages, ECNs, SOES, Level II etc) warranted unusually high number of traders coming in the markets and their subsequent blowout... TA or no TA, it couldn't be any different, could it?
Also, after the volume died down, if felt like there was nothing left but a bunch of proprietary traders with OPM competing against me. That's what took me out of it.
Hmmm... or, it presented perfect opportunity for low risk entry? :) Let me quote one conversation in my room that took place on 3/10/2002, a day after US tested what forces called MOAB - Mother of All Bombs,hence the reference in the text (NQ traded around 950-960 those days):
<member> An interesting point to ponder is that with the Nasdaq down 75% on a price basis and volume at about ½ of what it was three years ago, the total dollar value of stocks traded today will be roughly 12.5% of what it was three year ago. In other words, on a dollar basis, volume is 87.5% lower than three years ago
<Threei> sounds like mother of all bottoms, doesn't it?
<Threei> when NDX is 1300, remember... you heard it here first (trying hard to imitate guru style)
<member> just try not to say "Who's Your Daddy?"
<Threei> yeah, but I think I am allowed to say things like: buyer at 1300 is out there, he just doesn't know it yet
I underestimated the strenght of the trend appeared after subsequent low established on 3/12, NQ went much higher... nonetheless, remarkable volume dry-up together with huge price drop was a great indications that crowds lost interest in the market to such degree that it had nowhere to go but up... just like overheated interest in the market couple years earlier oversaturated it with participants and left it nowhere to go but down. Notice that what by your own words took you (and many others) out, can also be percieved as one of the best opportunities - if you look at it from point of view of a tape reader.
Finally, I really believe trading your own account sucks as a job...ha ha! When I go to work today, I don't have to worry about losing the money I made yesterday.
Ah come on... By this logic dayjob beats the hell out of any business... :)
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