Novice Traders' Notebook  |  MAR 1995

The X'd Trade by Joe DiNapoli

The X'd Trade by Joe DiNapoli What you see is not necessarily what you get. What you see for prices on your computer screen may not be what's really going on in the commodity pits. Some prices that appear on your screen may even be canceled. How's that? Here's how. Friday profits are always sweeter, a trader muses happily as he cruises down the highway after a day of trading. He smiles that self-satisfied ""great trade"" smile. Life is good, and well he should think so, because he actually caught the market one tick above the low of the move. His smile grows wider as he thinks about it. But there's a problem that he doesn't know about. The trade, the one he's so proud of, never took place. He finds out only later that he's actually short six Standard & Poor's futures contracts and he didn't know about it. In fact, he won't know about it for 24 hours afterward. He can't close the position for three more days, and by the way, the market closed sharply higher. That happy smile of his on Friday afternoon is going to be a fond memory by the time he realizes he's in deep water. He may be doomed. Can this happen to you? You bet. Will this happen to you? Remember: ""If you're in the market long enough, everything will happen to you."" That includes this unfortunate scenario.

by Joe DiNapoli