RDS Trader – Overtime

BY MICHAEL RADKAY

Is it against the law to cross the street against the light when there are no cars coming? Technically speaking yes. Steph knows a woman that crossed the street, when there was no cars coming but against the light. A traffic cop just so happened to come around the corner and see her do it. He gave her a $200 ticket. The woman scoffed at the idea of the ticket she felt was unnecessary and a joke. She blew it off! A notice in the mail came a couple months later telling her that since she ignored the fine it is now $400. She went to court and the judge reduced the amount to $300. Valuable lesson? Well for her, it was, because she got caught and she is now preaching up and down the street to everybody she knows to not j-walk.

Why is it that we have to learn the lesson the hard way? “Don’t touch the stove”; Mom and Dad shout, yet we still touch the stove. Don’t overspend and yet even our supposed role models in government ignore the signals.

I’m as guilty as the next person when it comes to no cars and crossing against a signal, especially when I am on a run. It breaks up the rhythm when you have to stop at the light and jog in place. But these moments that make you pause are actually life’s little gifts to get you to stop and slow down. Whats wrong with jogging in place for a couple of minutes to catch your breath. You still are going to run the distance you set out to run but come in a couple minutes slower. What is that two minutes going to do for you?

There is some lesson to learn when that moment hits. Stop and slow down. Stuck in a traffic jam maybe its time to turn on that self-help CD you bought last year and put in the player yet never listened to yet. Or maybe its a perfect chance to just sit in the car in silence and clear your head.

The problem with tweaking the rules or the law especially if you get away with it, you undoubtedly will do it again. People get a rush being a rebel and getting out ahead of everybody, even if it means doing it by bending the law. Is it ridiculous to wait in those moments at the street light with no cars. Some say yes and some say no. The punishment at one point may be that you get hit by a car as we wonder off and get caught up in our thoughts when crossing the street. I once woke a guy up who was just walking across the street and a driver on the phone didn’t see him. I yelled and the walker flinched and stopped as he noticed the car scream by leaving the pedestrian unharmed, startled and thankful. Careful what you think might be ridiculous!

Wait; am I talking about trading again. Of course! Why do we do things in the market that we didn’t want to do. Did the guy who just got missed being run over learn a lesson. Probably not. Do you as a trader who has gotten away with bending the rules learn a lesson. Probably not. Dont get run over and harm yourself physically and financially! Wake Up!

Whatever you decide to try; you can’t expect to win, if you don’t have a plan in place
Trade Strong!! Trade Smart!! and Always Have Enough to Trade Tomorrow!!

BY MICHAEL RADKAY

I’m a little troubled with the MF Global Bankruptcy and the freezing of assets of individual traders (that had nothing to do with the bad bets of an FCM) that I see flashing on the news wires these days. It brings back memories of 2004 – 2005 when I was introduced to Spot Forex and Refco. Maybe many of you can remember back when Refco filed for bankruptcy. At the time Refco was the Big Dog firm of the day. During the bankruptcy fall-out we found that our Spot Forex accounts didn’t fall under CBOT, CME, NFA, CFTC and SEC segregated account protection policies so those accounts were raided and never returned to their rightful owners. We all felt that those accounts were protected should the firm get into trouble just as our futures accounts were. Were we wrong!! We lost all our funds in those accounts without ever making a trade that day. Through the court process years later maybe 25% at most was returned when all was said and done. Thankfully at the time my futures account was safe and secure as promised by the CBOT, CME, NFA, CFTC and SEC protection policies. At the time I kept the bulk of my money in my futures account and was quite pleased and relieved that things were handled as promised back then.

The scare however on the Spot Forex side in 2005 taught me to only carry what I needed to have to trade each day and I soon did that for both accounts (Spot and Futures). Sweeping regulations over the years and assurance from our regulators is the reason why I am still in this business today but I wasn’t going to hold my life savings in my accounts anymore. I learned my lesson and I relay this information to the very clients I help on a daily basis as well. The ironic thing for me is that the next day after the 2005 Refco bankruptcy (practically overnight) the header on my futures account statement read MF Global instead of Refco. Many of the Big Dogs over at Refco just kept their jobs and continued BUSINESS AS USUAL I GUESS up to 2011 but now under the MF Global umbrella. I guess in hindsight the good news for me was that not much longer after the 2005 Refco bankruptcy I walked away from MF Global as well and moved to other firms.

The news today about MF Global doesn’t leave me wiping my brow and saying thanks that I moved away from them as the real ALARMING ISSUE in my opinion is that the exchange and regulators watching over the ENTIRE INDUSTRY are not doing what they promised to do 100% of the time for the traders caught in the middle of the MF Global crisis. This promise is to guarantee that all trades made are backed and that the traders accounts are segregated and protected in case a FCM collapses to ensure safety for all. This crisis doesn’t effect me in the short term today but it leaves me thinking about the integrity of the entire industry in the long run. The thousands of other traders attached to MF Global are now looking for their mysteriously missing funds in what they thought were protected accounts (the $600M neighborhood and maybe in the Billions). As traders the CME and industry regulators make us as traders hold exorbitant amounts for margin (good faith money) in our accounts, rightfully so in a highly leveraged business. They charge fees every time we trade on top of the held margin as does the NFA to keep themselves profitable and funded in case of need.

Now it is time for the CME, NFA and other industry regulators to do their part, which is to protect the very business they say has a sound foundation; enough with the hypocrisy already! In my opinion the money in the futures accounts of traders needs to be returned if the integrity of the business is going to hold any merit. There is enough pressure to worry about with trading but to not have a foundation under our feet destroys the business.