I believe it. If you are a halfway decent trader averaging down works until the odds are proven once again. They don't call the Martingale Technique the "Gambler's Ruin" for no reason.
The guy that gave me the info I posted here about Rob's blowup invited me over to his house to watch this morning's "How We are Going to Fix The Room" webinar. A few comments -
1) Hoffman admitted he messed up. He said there were three times that he could have taken a small profit but that wasn't enough profit for him. BUT, he never mentioned that there were (according to my buddy) an even larger number of opportunites for him to take a small loss all the way down.
2) Hoffman explained that he had switched to a more aggressive mode of trading and that the blowout trade was an agressive trade. What he failed to mention, is that he had identified a more conservative entry point, suitable for small traders, and that many people entered there and lost money. My friend says the TTM board has people who have published their losses and one guy said he was leaving the room as he had blown up his account and was unable to trade.
3) I also heard the "institutional trader" remark. Hoffman did imply he hadn't suffered very much. My friend thinks Hoffman got hit quite badly despite his implied - it was nothing - remarks. According to my friend the Infinity DOM shows how many contracts you can enter "per click." As best he remembers, before the "minor loss", Hoffman's DOM showed button steps between 1 and 1,000. In today's session the buttons went from 1 to 100. My friend believes that is what the DOM showed the next time Hoffman opened the room after the margin shutdown. Infinity offers $500 margin on the Russell (TF) so that implies a $500K account and would account for the margin closeout when Hoffman was down as far as he was.
4) Hoffman tried to make the loss appear smaller than it was - he reported it as $307K plus commissions. Why not just say $312K? Ego? He also never mention the actual 852 contracts, just "about 800". My friend believes that Hoffman made about $200K last year and about $100K this year, so the $312K basically lost him a year and a half's trading earnings. Hoffman also mentioned all the large profits he made in the past. Good thing, or he'd really be hurting.
5) He also stated that the people in his room were more concerned with his no-loss record than he was. My friend says that Hoffman would often say "I haven't had a loss in the live trading room in XX months." You can imply, probably accurately, that he has had losses outside his trading room. To me, he has yet to realize that his ego (and listening to him talk I'll guarantee it is massive) was the primary cause of not cutting his loss short. He went through a list of reasons he screwed up, but, to my recollection, ego was not mentioned. Nor was the sales impact of being able to say "no losses in 17 months."
6) He also mentioned that there would be 29 exciting changes made to the room and he'd be revealing them tomorrow, so be sure to tune in then.
After an hour and a half, John Carter took over and talked about trading psycholgy. I'm sure he was not happy to be there as he kept looking at his trading screens and moaning about not be able to trade because he had to make the presentation. Don't blame him, I was frustrated watching my friend trade while I could only watch.
A curious thing. Hoffman's slide were copyrighted by PowerCharting and TTM. Maybe there wasn't a merger, just a joint venture and Hubert and John can dump Rob if they can't help him recover from the disaster.
It's Rob and Hubert tomorrow. I'm invited over again, but I'll probably stay home and trade, rather than listen to a bunch of stuff from Hoffman, he does tend to repeat himself, a lot.
