Confession: it's hard to be an insider trader

Discussion in 'Professional Trading' started by BPtrader, Dec 16, 2009.

  1. In the past few years, I was often at the giving end of insider information, oil inventory number is my specialty, I also dabbled in job #, retail sales # and consumer sentiment #. I thought my information was worth a lot more money than what I was paid by those who traded my information (I won't name names). So I decided to trade my own information and make bigger money.

    So I opened an account under the name of a distant cousin in Serbia and got ready to trade.

    The first # was the oil inventory last week, I knew in advance that the inventory was down big time, so I bought 200 contracts CL (maximum leverage I could get) minutes before the release time: 10:30am ET. I had planned to sell them after the price jumped up a dollar or two after the public release.

    To my horror, the price dropped like a rock the minute the # was made public. I started to panic and looked for the sell button, I never thought I needed the sell button so quickly. By the time I typed in the sell order and punched the sell button, another minute passed. Guess what? I sold at the low of the second minute, lost close to $200,000. If I had waited for 15-20 minutes, I could have made a profit.

    That was my first insider trade.

    This week I decided to try again. I have easy access to the oil inventory #, it's hard not to trade on such valuable information. I knew in advance that the # was similar to last week's, so I thought the market would sell off after the release, just like last week. So I shorted 50 contracts (the account was slashed by 2/3 due to last week's disaster).

    To my horror, the price jumped up after the public release. I said to myself: the price would probably reverse, like last week. So I held my short position for a little longer. That was a mistake.

    By the time I couldn't take the pain any more (about half an hour) and punched the buy button to cover, I had lost $50,000.

    To summarize, my two adventures in insider trading cost me a quarter million dollars. I have come to the conclusion: insider trading is hard, very hard.
  2. lol i guess they were right.
  3. You cannot look at the crude number in isolation - products inventories are important. PARTIAL energy inventory data is quite dangerous in that it can prompt unwarranted confidence.

    Not as easy as it looks.