It’s fast, like a whipsaw.
It makes little sense how something can be worth 30% less today than it was yesterday when nothing has changed. It’s downright scary.
It’s a market correction. And do you know what the worst part is? It usually happens when your broker’s computers aren’t working or when the internet slows down.
Three weeks ago, I was licking my chops, getting ready to put on some awesome trades. It was the premarket, and the futures for the S&P 500 and Nasdaq were plunging. When the futures are plunging, it’s a pretty good bet that the market will open lower or at least head south later in the day.
I had my list of companies. I entered the tickers on the quote service I use and waited… and waited. At 9:30 a.m. my screen lit up, flickering all over the place. I turned to my brokerage account. I wanted to buy some stocks and sell some puts. I wanted to cover part of the S&P put position I bought a few weeks before in anticipation of such a day.
It was the type of market I live for. Volatility was back, and I was going to cash in some chips, baby!
I logged into my Fidelity account. A screen popped up and told me I couldn’t connect. Fidelity was having issues with its servers. I clicked to open my Ameritrade account. (At least it opened.) But the screens were loading slowly. I entered a trade and couldn’t even get confirmation that it was being processed. Meanwhile, each time I entered a limit price, the little box changed it to a market price. I wanted to throw my laptop out the window!
I hate the new $4.95 commission rate. The cheaper it gets to trade, the more I am going to hate it!
When you can trade for $4.95, everyone is a trader. That means all the bandwidth is being tied up. That $4.95 trade was costing me hundreds if not thousands of dollars.
And in those situations, what are the brokers going to do about it? Nothing. They don’t have to. They’re not liable. No sob story will get them to admit to anything but “the market was too fast.” It’s their out – and they know it.
Fidelity came online about three hours after the bell. Sure, I tried calling, but I was put on “permahold.” Ameritrade came back a little quicker, but by then I was already using its phone app, which was working just fine. Explain that one!
It reminded me of the worst days of 2008 and 2009. Not the worst in terms of the declines but in terms of the firms’ inability to get their act together when the markets were volatile.
Guess what? It’s going to happen again and again. But now I know how to beat the system.
I forgot about this when I was panicking. It had been so many thousands of trades ago that I had been lulled into the false sense of security that these clowns had their act together.
This is what you must do. It’s quick. It’s simple. And it works.
Get on your computer 30 minutes to an hour before the market opens. Place your limit orders to buy or sell at that time. That’s it.
Only a fraction of people are trading or putting in orders before the market opens. The systems aren’t tied up with millions of trades going off.
It’s kind of… peaceful.
Once the market opens, the stocks or options are either going to trade at your price or they’re not. If they do, you’ll get filled. That’s more than I can say will happen if you try to trade after the market opens…