Market swings today were breath-taking.

Today's market action was simply awe-inspiring!

 

To see the market do 500pt loop-to-loops not once, but three times was simply something amazing. The market began with a pull-back off yesterday's close that continued down to set new lows around 11:00AM. From there the market rallied over 50pts to set new highs [918] and began a 45 minute dump of over 50pts to set lower lows right before the market closed for the weekend.

 

These moves in the SP 500 translated to over 500 pts swings in the DOW and did it several times. I am sure there were more than a few brokers and hedge funds that were caught on the wrong side of the market and lost a ton.

 

The volatility today was something that does not occur often, but when it does, and you happen to be working the charts correctly, you can make some big bling. However, if you caught on the wrong side, you could have coughed up a bundle. Remember, most markets today require a mark-to-market accounting that means when the day is over you losses are removed from your account, and your winning are added.

 

Futures, options and Single-stock-futures are all Zero-sum games. This means that money is never lost in these markets simply moved around. New money in the form of new accounts or added capital to existing accounts is the only way that money is created or added to these markets. Zero-sum markets means the $1 USD I made on a trade to taken from someone else that was on the other side of the transaction, and vice versa.

 

So when you hear that people lost money today in the markets, that's simply a misunderstanding of the market operation. It would be more accurate to say, I loaned the market $X USD today, and tomorrow the market may loan it back to me. You only lose if you quit or loan all your money to the market.

 

Have a great weekend.