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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: jjs_ynot who wrote (41103)	4/19/2000 9:28:00 AM
From: Patrick Slevin	Respond to of 44573

Yes, he will be back but it reminds me somewhat of the cat who hopped on a hot stovetop. The cat will never hop on a hot stovetop again but then it won't hop on a cold stovetop either. Seems my friend was incorrect, the professionals use margin extensively. Of course, they get better breaks on margin but it's key to handling very esoteric trades such as swaps and so forth. Also, they are professionals. They have a tighter grasp on what is going on. That fellow will open a margin account again if he wishes to write options against positions as many people do these days. Once he does that it may become like an alcoholic who has a social drink, who knows. What he needs to do is learn to recognize when the stovetop is hot. I don't think margin is a bad thing, I just think it has to be treated with a measure of respect. It's a two-edged sword, when you are overleveraged then the measure of Risk you have should be watched closely. It's a question of safe trading and management, no different than being careful with respect to averaging down or holding a losing position while selling off winners too early. In this fellows case he probably was not available to watch the market closely and perhaps he was not prudent in how he treated his margin. Plus, he appears to blame it on margin alone, but he ran a $97K account into zero. Without using margin it would have been run to $5K. It's easy to blame margin when in fact it looks like poor decisions in terms of trading. Won't be around much today, the debacle with the machines last night plus the difficulty logging on late chilled my jets for the time being.