Question about risk

[doji]

Quote from 50 cent:

Indices are very unlikely to drop to zero overnight. I mean even in 9-11 the gap wasn't that enormous. However if you are short..... and something really nice happens in the world.... you may have a problem. You are still at much less risk than if you are trading stocks. One day a manager catches a cold and the stock drops 70%.

50 cent,

I've actually been wracking my brains the last couple of days trying to think up a scenario where being short overnight has anywhere near the risk of being long overnight. It's pretty easy to come up with situations that could panic the market and cause it to drop say 20% while I'm blissfully sleeping. But aside from the capture of Osama, I can't think of any single event that would move the markets up in the same way. I'd love some examples of good news that overnight that caused say a ten percent up move...

-doji

 

[50 cent]

Quote from FrasierK:

My main focus is always on risk/money management.

That is the holy grail in trading. If you manage to keep this attitude consistently, you will be profitable. It's not always psychologically easy, but when you get beaten up a few times for not adopting this attitude, it becomes easier.... we only learn through pain, especially us speculators..

 

[50 cent]

Quote from doji:

50 cent,

it to drop say 20% while I'm blissfully sleeping. But aside from the capture of Osama, I can't think of any single event that

Osama... i doubt it would shake the markets. There have been too many rumors about it already, plus, capturing osama would be a good thing for Bush, and some people don't see that as a positive thing. I too can't think of a scenario that will hype the markets overnight but, as it says in a very famous book, 'add the unexpectable to the unexpected in your list of hazards'.

 

[doji]

50 cents,

yeah I was thinking the same thing regarding osama, but it was the only thing I could come up with that would qualify as a single event of good news that could take a short by surprise, I don't think the markets blinked when saddam was caught. You have a good point on expect the unexpected. Granted there is always the working spacecraft hidden in the lost city of atlantis hypothesis....

-doji