Chopped by the changes

Well, the headline trades - short gold from 977 and long Dow from 11180 are still firmly in the money, but under the surface of this apparently smart profit Flash has been burning cash, chopping and changing way too much.

The last 24 hours have been an object lesson in bad risk management and over-trading. If Flash hadn't been greedily moving stops and merrily adding long equity positions, nicked from his margin, thinking how smart he was and how right he was, he would have about 10% more of his meagre fund still in play rather than giving it up to the gods of market arrogance. A few lessons to remember:

- run smaller positions over longer time frames - i.e. had he not taken profit on a good chunk of the gold position when it hit 926 earlier in the week, and opened up new ones from the 920s, which he left open smugly thinking it would go down in a straight line, only to have them smashed to bits when the market went into cataclysm mode, then he would have a chunk more cash by now.

- don't try to second guess the market. watch, observe, set a predetermined entry point and then act if the conditions look right. Trying to put a covering short early evening on Weds on the Dow at 11480 (roughly today's pivot point) proved to be a total disaster because Flash hadn't put the margin in place. With a big margin it could have been a good little trade - partly because Flash had at the back of his mind that the Dow was getting a little overbought given how awful some of the data is - but instead it just lurched into profit, out of profit, and then got stopped out for a loss before the whole edifice came whizzing down in seconds at 1.30. And then to cap it all Flash decided, late on in the morning, that he'd not made enough cash (as if 20% up in 2 days wasn't enough) added another Dow long from 15600, and that got killed in seconds as well. Stupid. Poor judgement.

- stick to your guns if the trades are going well, even if the market suddenly moves. With the canyon in the dollar brought on by what Flash thought was a wild over-reaction to - by recent standards - some fairly modest figures - (omens of things to come tomorrow?) it was inevitable that the GBP/USD position and the EUR/USD positions were going to get taken out by stops, for the sake of preserving capital, but Flash went into full blown panic mode and shut down his very profitable AUS/USD and EUR/JPY shorts. He's back in them now but at the cost of the spread and with a much reduced margin for spikes, having been caned by the volatilty. EUR/JPY hardly moved at 1.30 but flash took out his fantastic short from 16900 - a complete over-reaction. It's back in now but from 16866 - not nearly such a good level..

None of this helped by the fact that the SB company servers were overloaded, the connection was ropey (Kids downloading Dr Who on the iPlayer next door) so everything looked and felt like a slow motion car crash for a while. Rank amateur, crap trading.

However, the shares are, for now, nearly all doing fairly well. D1 Oils sprang into life today on positive cash forecasts and better focus, BA has been a dream (however, results tomorrow may cause some wobbles), Barclays is behaving itself and even Crocs hardly moved downwards amidst the volatility. Flash can't help thinking that this afternoon's sell off was a ludicrous over-reaction - he understands profit taking but this was a herd of crazy bears. On what basis? The crack pipe of short equities, long commodities? As Macro Trader says - a classic case of lurching between disinflation and inflationary bust.

And all the while the dollar was strengthening and oil was coming back down. So what the hell was going on is completely beyond him.

Flash has cut the Ford long as it's just too much effort. Likewise UAL Corp. In their place he has discovered two ETFs that he's taken out a long position in - the PowerShares Global Water Portfolio and the PowerShares Water Resources Portfolio. Both showing a modest profit in 2 days.

He's planning to leave everything alone as much as possible tomorrow, go out, and let things work through - that's what stops are for, isn't it?