Flash Crash trades for 8/24/2015

Posted By JM on Aug 24, 2015 | 0 comments

Every few years, there comes a day in the stock markets where a trader can feel as rich as Bill Gates or Warren Buffett. Today was that day - August 24, 2015.

Volatile markets are a daytrader's best friend. Market volatility is caused by a major of factors some of them being fear, extreme one-sided trading (ie. funds are ONLY selling stock today and noone is buying), and environmental factors (ie. terrorist attacks or world financial instability). And when these factors are extremely exaggerated for a brief time, you will find your stock market to nosedive in a "flash crash" where ALL stocks just go down no matter what. That type of sharp downwards spiral movement is a perfect sign for a bottoming process or capitulation in the markets. Those are times when you have to buy everything you can in anticipation for a market reversal to the upside.

Today was 2015's flash crash day. China fears continued to spook the global markets and everyone was rushing to get out of the door at any cost. Fear was everywhere. The $VIX (volatility index) hit a high of 52 in the first half hour of trading that day compared to the average of low to mid teens for the past year. As we wrote in a previous post here, "man up" during times of extreme volatility -- Trade bigger sized positions and trade as many stocks as you can.

We felt today was going to be the washout day we typically see during market bottoms and starting buying stock during the pre-market session. In the first 15 minutes of trading, the Dow Jones Industrials fell by -1,000 points, the largest one day drop since the financial crisis of October 2008. Everything was being dumped regardless of price. When stocks fall this fast and down so much (the average stock probably fell at least -10% in the first 15 minutes), it's very hard to keep track of what's going on because it is just pure chaos. Our stock screeners / filters were going crazy alerting us to 20 trading ideas per second - just too much to comprehend. We ended up getting into 8 different positions in a matter of minutes from the opening bell and successfully rode all of them to huge gains. (On a normal day, we would average at most 2 or 3 stock positions at any given time.) By the time it was 10:15am EST, we had made almost $90,000! By the close, we were up 6-figures!

Here is a P&L realized screenshot of what was traded by 10:15am EST that day. The 6th column shows the net profit from the trade:


We regret not putting more money into each trade that day but the stock market tanked too fast and it was just impossible to react as professionally and calm as we would have in a normal market. Nevertheless, August 24th marks a day in our trading career where we made over six-figures, something that doesn't happen too often to us but puts a big smile on our faces for days.

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