7/7/2015: Ten years on from the London bombings: Reflections on breaking rules and impulsive trades.

tavistock bomb

Fellow trader, this post is part markets, part anecdote, part rant so please indulge me.

Its ten years today since that fateful day in London. I am sure all of you readers will have your own memories of the event (please feel free to share your own experiences). I wasn’t going to write anything about it until I watched the deeply moving BBC drama ‘A song for Jenny’ on Sunday evening which was about Julie Nicholsons experience of losing her 24 year old daughter at Edgware Road Tube Station. (If you missed it then you should try and catch it here on iplayer) 

The drama made me recount my own experiences of that day. Please allow me the indulgence. The day before was a Wednesday and (though many will have now forgotten) was the day London was announced as the location for the 2012 Olympics. My parents were visiting London that week and I had met my father for lunch in a pub right next to the Cutty Sark when it was announced, and we were right under the flightpath when the Red Arrows thundered over for their impromptu flyover of the celebrations in Trafalgar Square. (Impromptu to you ladies and gentlemen, not to the Red Arrows. It was a highly planned operation.  I was later told by an ex-Red that they were circling out on the Thames Estuary waiting to hear if we’d won the bid or not. If we hadn’t their orders were to turn around and go back home.)

red arrows over trafalgar

It made for quite a sight. All was well in the world and it made you proud to be British and all that.

Next day the 7th was a Thursday and was a normal day for me. Up early trading the London session from home as I had my mother staying with me. I don’t remember it being a remarkable session (if Im honest I dont remember the session pre-bombing at all).

I wasnt a big trader of FTSE but it was on my watch list and I was sat watching the markets when suddenly they went hay-wire. I wondered what happened. (I had long ago given up watching Bloomberg and i those days there weren’t retail squawkbox offering like we have today.)  The FTSE was dropping…and fast.

My trading buddy Christo pinged me on IM and told me to switch on the TV. At the same time my mobile started hollering away with multiple calls. What was going on?

Once the TV was on it became pretty clear to me what was happening (despite the confusion). It was clear this was the terrorist attack  we’d all been waiting for since 9/11 and the invasion of Iraq.

As per my rules I made sure all my positions were flat and also took my orders of my platforms in case there was a volatile melt-down. All good so far.

I went and answered the phone, let everyone know that my mum and I were ok, checked in with my family and sat with my mum and watched what was happening unfold.  My mother had recently retired from helping run an Accident & Emergency unit at the local hospital. Our first conversation was about whether we should head into town to one of the local hospitals to offer to help out in their hour of need. I was all for doing it – and it tells you all you need to know about my wonderful mother that her first thought was not for her safety but for the safety and well-being  of others in their hour of need. However I had to put the brakes on such an impulse. I know that sometime the first attack is nothing more than a ‘come-on’ – they want support people to run to the rescue, and then they make their real attack. I was happy to put myself at danger, but not my poor old mum – despite her protestations!

It was after watching the events happening and seeing the devastation being caused that I acted in a most unprofessional and wholly emotional way. Those of us who had remembered 9/11 and the effect on the markets had known that Bin-Laden and AQ had shorted the US markets and in particular airline stocks. The profit from that had funded their operations. (Well that’s what the rumours were.)

So I broke my rules – badly. In a moment of frustration and indignation I went in to my trading room – brought up a FTSE rolling contract and bought into the FTSE. I went long the FTSE and it was a purely impulsive trade and coming solely from a point of indignation. A case of  “F**k you, I’m not letting you win!”. I felt a real sense of indignation at the attempts of AQ and their people trying to bring their form of terrorism to the streets of London – my home town.

It was around 5080 that I got long and had a mental stop the other side of 5000 (which I hoped would hold). Price continued to move down and actually hit a low of the day at approx 5020 before moving back up in the afternoon. I have no idea whether there was more people like me just buying in through pure frustration, indignation and hope. Or whether there was a concerted effort by institutions to bring some calm to the market (please feel freed to add your own story and experiences).

To make matters worse I actually left my screen for a while and took my mum out for a walk into the local village and park. We just wanted to get out of the house and see if there was anywhere that we could help. Everywhere was empty, the whole area was strangely quiet.

What that walk did do was help bring me to my senses and a gnawing realisation that a) we were under attack and b) I’d just blindly bought a falling market under some feeling of false bravado / national pride. Let me tell you that does not make for a good trading strategy ladies & gentlemen! So I high-tailed back to my trading computer to check in on my position.

Anyway the position was roughly break-even and i decided to stick with it. In the end the FTSE rallied all afternoon and whilst closing down on the day was up from where I’d bought it. It appeared that the ship had steadied itself. In fact i was amazed at how swiftly the market had shrugged off the indictment.  You can take a look at the price action from the day below.

ftse intra day july 7 2005

Interestingly the next day was a positive day as well (from what I can remember) and actually closed higher on the week than it had on the Wednesday evening before the event.

ftse daily data 772005

In fact you can see below that the markets shrugged off the event, July ended on a positive note and the FTSE actually kept climbing for the rest of the year.

ftse monthly chart 772005

Was that a sign of the resilience of markets post 9/11? Was it just an example of British Blitz Spirit buying a market as a sign of defiance?  Was it also just an early sign of an over-heating market that was to crash so spectacularly a few years later?  Maybe its none of those things, maybe it was all of those things?

Ten years on gives us a chance to reflect. 52 people were killed on that day in the most cowardly manner. Is the West a safer place ten years on? Its hard to say. Especially with the recent events in Tunisia and France earlier this year. Anyway that’s a long conversation for a different time and a different blog post.

My heart goes out to those who lost their lives ten years ago and all the friends and families, like Julie Nicholsons, who suffered that day. I’m sure in many cases that even ten years on the wounds are still raw.

As for me, my FTSE position was a profitable position. I was lucky, very lucky. I donated the profits from the trade to the charitable campaign that sprung up from the event. I cant deny that it made me feel good to be able to do that. I felt proud and positive to be able to contribute in that manner.

Once again I implore the reader to learn from my mistakes. My behaviour was rash, impulsive and foolish. Buying a market on some sense of national pride or fervour is not the way a professional should be operating. It was naive and foolish of me to trade like that. I was lucky that the market ended up going my way – but that’s beside the point. Its about repeating good solid consistent behaviour. I pride myself on always managing my risk and always being in control of my position wherever possible. That was one day when I threw those rules away.  Its why some of you have me constantly bending your ear about always managing risk and always staying on top of what you can control: Plan your trade, trade your plan and manage your risk. I didn’t really do any of those three elements that day. As I said – please learn from my mistakes. It will be much cheaper for you in the long-run!

Trade well,

Paul

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About FXTraderPaul

A professional Trader and Coach, FXTraderPaul blogs about his adventures from the front-lines of FX Trading. A Trader and educator who can walk the walk as opposed to merely talk the talk!

View all posts by FXTraderPaul

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2 Comments on “7/7/2015: Ten years on from the London bombings: Reflections on breaking rules and impulsive trades.”

  1. george_fx_trader Says:

    Thanks your a real long detailed post – very nice reading. Is it ok to ask – would it have been “better/more professional” to close the trade once you had decided that it had been an impulsive entry, rather than hanging on and seeing how it would turn out?

    Liked by 1 person

    Reply

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