What the Crash of 1987 Taught Me

There’s been a lot of talk the last few days about the Crash of ’87, which is natural given the 25th anniversary passed on Friday. Plenty of other sites, news broadcasts, and the like have discussed what happened to cause the event, so I won’t bother going into that. I just want to share my own personal takeaway from that event.

Unlike a great many people at the time, the Crash actually was a major motivating factor in my getting fully into trading. I was only 17 at the time, so not old enough to have my own account yet, but I was already quite interested in the markets by then. The Crash scared a lot of people out of the stock market for years to come (they came back in in the latter 90s, just in time for the next major turn down). I, on the other hand, found the whole thing fascinating and it made me eager to start trading myself as soon as I was of-age a couple months later.

I look at the Crash as having provided one major lesson a lot of folks hadn’t learned to that point (and some folks don’t seem to have learned since) – that the market can do just about anything at any time. Nothing the market does surprises me. This is a major lesson every trader needs to learn because it speaks directly to risk management (though certainly there are plenty of other ways for someone to blow up their account).

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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.
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