This impromptu post will be talking about the events of Feb 5, 2018 in the volatility markets.

Allow me to indulge in a little bit of millennial nostalgia. For those that played Chrono Trigger, odds are, one of their most memorable experiences is first experiencing the Kingdom of Zeal–it was a floating kingdom above the clouds of a never-ending ice age, complete with warm scenery, and calming music.

Long story short, it was powered by harvesting magic from…essentially the monster that was the game’s final enemy. What was my favorite setting in the game eventually had this happen to it.

Essentially, the lesson taken from that scenario is: exercise caution first and foremost, and don’t mess around with things one does not understand. After the 2017 that XIV had, when it was seemingly impossible to do any wrong, many system traders looked foolish. Well, it seems that all good things must come to an end, though it isn’t often that they do so this violently.

For the record, my aggressive subscription strategy was flat starting on January 31st, while my conservative strategy was flat for far longer. In short, discretion is sometimes the better part of valor, though those that are interested in what actually constitutes as valor and want to hear it from a quant, you can head over to Alpha Architect. Wes Gray and Jack Vogel will tell you far more about being a badass than I ever could.

However, to put some firm numbers on my trading philosophy:

1*(1+1) = 2.
1*(1-1) = 0.

Make 100% on a trade? You’re a hero for some finite amount of time.
Lose 100%? You’re not just an idiot. You’re done. Kaput. Finished. Career over.

The way I see it is this: in trading, there’s no free lunch, and there are a lot of smart people in the industry.

The way I see it is this:

Risk in the financial markets (especially the volatility trading markets) isn’t like this:

But like this:

The tails are very long. And in the financial markets, they aren’t so fluffy.

For the record, my subscription strategy, beyond taking a look at my VXX signal, is unaffected by XIV’s termination, as SVXY will slot right in to replace it.

Thanks for reading.

NOTE: I am currently seeking full time employment, consulting opportunities, and networking opportunities in relation to the skills I’ve demonstrated. Contact me on LinkedIn here.