Fascinating

Some random observations from today:

-What happened today is what I thought was the likely scenario in mid January when I wrote this Fear & Greed Day Trader: How to trade in a wild, pile driving market.

Obviously I paid attention and saw the incessant march upwards instead so I traded it the way of least resistance. But I felt it was going to turn out bad for the longs when the music stopped. Today it did.

- Human brain beats algorithm. I touched on the subject here Fear & Greed Day Trader: Probabilities vs. expectations I had to chuckle to myself when I picked the bottom to cover my shorts. It was so obvious. The really interesting part happened moments later on the upswing. The spreads indicated the machines did not know what to do. Sell or buy, buy or sell? They were totally lost like a lost young kid at a crowded circus. I almost felt pity for them. Almost. I laughed instead. Consecutive multi dollar spreads on the buy and sell sides on a typically .01 - .05 spread stocks like TNA or AAPL shouted out to me the super brain PHDs that designed the algorithms can’t think out past what happens if this and this and this and this and this and this and this and this and this happens. A clear thinking human being can because we have the ability to adapt. I'll keep that one tucked away in my memory bank. Score one for flesh and blood.

- In mid January I also updated my computer to the latest, fastest processor and loads of RAM and any other trick to make me fast and reliable as possible on my end. As I witnessed in the fall of ‘08 there is a lot of information to process in a short amount of time. I was loaded up, sitting pretty and observing during the crash today so I didn’t need to do or have a problem selling. I was looking for the cue to cover instead. Buy orders were filled EZ. Every morning I also synchronize my computer clock to the official government clock so as to have no delays.

-I wonder if some trades will be broken by the exchanges.

- Wouldn’t a 2000 point down or up day be something to trade tomorrow? Nothing is impossible.

On being prepared.

Today, if you made 10x what you normally do , now is a great time to go take a walk in the park and reflect on the incredible trading conditions. You just witnessed that anything can and does happen. Congratulate yourself on being prepared to take advantage of them and following the plan and reading the mob mentality. Now forget about the money. Don't boost or brag. Tomorrow is another day and there is always room for improvement.

Here are some worthwhile charities that you can share a bit of your "luck" with. It will make you feel good.

http://www.warchild.org/helpus/helpus.html

http://www.freethechildren.com/

http://www.worldwish.org/

Cover VXX. Now just work it...

Sold TNA, now thats what I call a bounce

And selling VXX

There comes a time when it'd be foolish not to take profits. I'm covering TNA and others here and now.

TNA

Points to remember.

Here's a few points to remember on days like today when the markets are crashing hard:

1. New lows make newer lows - fear has a grip on a lot of the market participants. The dummies who averaged down from last week are getting their accounts brutalized. And their emotional state is in one of questioning why they didn't take profits instead. You can capitalize on that force driving the market when you trade from a detached emotional view. It's much easier to make money by going short instead or trade the inverse ETFs .

2. It's time to trade larger size- push the volumes you normally trade because the momentum is telling you it's definitely on the short side.

3. Focus on only a couple of plays at the same time, don't spread yourself and your focus amongst too many stocks. You want to be able to react and take profits and not be befuddled by having to make too many decisions.

4. Nothing lasts forever. Take profits when they are offered up to you after a good run or candle. There will be bounces and pullbacks and you want to take advantages of those as well. Trade well. Follow your plan.

Days like these are what we are here for. It's why we practice and do the visualizations, fine tune the trading plans and concentration exercises. Grab the opportunity with both hands.