Part of my job as a partner at SMB is keeping an eye on what other traders on our desk are trading.  I have a third monitor that is used primarily for this purpose.  I find it kind of amusing when a new trader asks for a third monitor.  Why would they need a third monitor?  So they can spend more time watching videos on You Tube?  I guess in that sense I’m old fashioned; like the parent who doesn’t know why their kid needs (fill in the blank).  But I digress.

For those who are professional traders you understand how distracting it can be to focus on anything but your trading during the Open.  When I am trading my focus is pretty singular.  I filter out information that isn’t relevant to the task at hand.  But I still feel compelled at times to glance at my risk monitor to make sure no one on the desk is doing something way out of bounds.

This morning I glanced at my risk monitor when I heard one of our traders had moved on from WAG, a stock he made a lot of money right on the Open, to GS.  My hunch was he was about to ruin his Open.  If you are up a lot of money at 10:00AM it is pretty tough to ruin your Open.  You really have to do something fundamentally unsound.

When I checked the risk monitor the trader was short GS.  I told him to cover the position immediately.  I was slightly annoyed as this trader wasn’t a newbie and was making a newbie mistake.  Let me break it down for you:   1) Market gaps up 2) Market has some profit taking 3) Market then rallies above high 4) Financials leading the Market higher    5) LONG FINANCIALS.

I don’t really have much to add to the above.  It isn’t the job of the trader to find the top or the bottom.  It is to recognize the strength of the wave and hop on board.  Try to go against the wave and you will be going the way of the Andrea Gail…