Way back in the day I was a newbie trader. I know, it’s hard to believe, but it’s true. 
One of the first trades I ever made that was actually based on my own market analysis (as opposed to getting trading ideas from other people) was taking a short position on the NIKKEI 225. This was back somewhere in 1990 when the NIKKEI was trading north of 30,000. I was very bearish, quite sure the Japanese market was in for a major tumble.
This chart shows roughly where I got short. I can’t honestly remember the exact level, but it was somewhere in there.
Now back then futures wasn’t part of the equation for trading the NIKKEI, at least not for me. I was a stock market player only in those days. That meant working through an instrument available on an exchange. In this case, it was a put warrant. The basic idea of the put warrant is similar to an ultra-short ETF these days. It rose in value if the associated market, the NIKKEI in this case, fell. The difference, however, is that the warrants had a defined life – generally three years from issuance.
I bought that NIKKEI put warrant somewhere in the $5 range. The market pretty much went in my direction straight away. Some point later on – I can’t recall how many months – I saw the price in the $9s and decided to take my profits. It was my first meaningful gain on a trade, so I was quite please with myself,….
…at least until I looked back at the price chart later. 
After I closed out the put warrant trade I pretty much forgot about it. I was in college and not really doing a great deal of market watching. Eventually, though, just out of curiousity, I checked the prices. I knew the NIKKEI had kept tumpling in the interim, so naturally I expected to see those warrants have gone higher. When I saw $25, though, I’m pretty sure I moaned aloud.
I’ve made more trades over the years than I can even estimate. I don’t remember too many of them any more, but that’s one which will stick with me until I die. It’s the first “got the analysis right, but didn’t trade it right” experience I had. I hate those!
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
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