Writing about Failure: Bad Chinese Index (A50) Trade
Summary:
- Bad drop in CN50
- No Fundemental Reason, at least offical one.
- 7 Standard Deviation Day, only once was an ATR of this range recorded in the last 532 trading days (2 years).
Commentary From this morning:
This morning on waking up, the market jumped. As the $AUS200 $JPN225 , was the first to open, i assumed the resumption of normal trade. The Malaysian, Singapore and even Jarkarta Index were all up as well upon opening.
I entered the trade quickly went south, dropping by about 2%, erasing all its gains. I remained calm as I thought it was just retesting the gap.
CN50 continued to drop, so i turned on Bloomberg TV. No news. Just a note to say it is dropping.
So i left it, 3 hours later, we were 3% down on no news.
I closed out my position having lost about 2% of my acount. I already made 1% from last month, so net this position is down 1%.
Thesis:
My initial thesis for this, is the status quo.
Europe, the US indices all continued as per normal. Sure we had a major sell of. The VIX, XIV and VXX exploded, and potential fallout from this could be a global recession (if we have a pension crisis).
However, I was of the opinion that everything seems to be back. All green across the board today.
However, we got caught in quite litterally a black swan event caused by absolutely nothing.
My experience of the Chinese Markets is generally quite manipulated and much insider trading. But the CN50 is diversified enough to prevent single entity whips like what we saw.
Days like these do happen and it is just unfortunte. The only thing we can hope to do is not lose too much when it happens.
I could write alot more, but i will leave it as that.
I opened another trade expecting this market to rebound tomorrow. Stops are close, only risking another 0.5% of the accounts. You don't get 3 SD events without a rebound, let alone a 7 SD.
On the daily charts, it is a retest of the previous highs.
IF something major is happening and this continues to drop. There is going to be something absolutely major announced out of China soon.
Lesson:
Things like these do happen. It is just unfortunate.
This is also unfortuntely life, all you can do is wake up, work hard and hope for the best.
You can put in the work.. try your very best.. even out husttle your competition..
Things can still work out wrongly for no reason other than bad side of probabilities.
But i get up everyday, hoping that the God who loves us, who wants the very best for us, has our interest in mind.
If you are doubting yourself, your purpose, your life. Running into wall after wall.
I pray that you may see that God cares. And may that give you hope.
