Do we need to bail out the speculators after oil and metals took such a huge nosedive this week?
It’s been about 8 years since I traded future contracts, so the margin requirements may have changed a bit since then. However the nature of the beast is it gives you high leverage on the contracts. When things go wrong, you can see your account go to 0 in a week like this. This was a brutal week for any momentum players long on futures.
My take is the big boys (Wall Street Investment Banks) sold a boat load of their contracts this week after coaxing the average Joes and Janes to jump into the markets on a momentum play over the last couple of months. The big boys got out on top and average Joes and Janes got wiped out. Now they will re-load and start the game all over again!