I was trading Iron Condors in the EUR/USD in 2008.
I had just started a new position and I got the calls on and the short puts, but the long puts didn't fill. It was the end of the day so I figured I would get them filled in the morning.
If you weren't following that currency pair, you might not be aware that the EUR/USD moved down seven standard deviations in a single day.
Because my long puts were not in place yet, I had a terrible loss.
I considered this a great learning opportunity. Here are a few lessons:
- I vowed never to partially fill a defined-risk trade without the long puts in place again.
- If I trade at the end of the session, I make sure I have no unintended short options.
- I am more aware of the true risk I am taking. I don't over leverage SPAN margin.
- I learned the value of having a portfolio hedge in place
See aeromir.com for more.