Wednesday, June 6, 2007

Smoked



The worst part is, I saw it coming.

My first short order went into JCI this morning at 110.70, or about 5 points from the top. No, I didn't see the news that it was upgraded until later... rookie mistake... also a consequence of not trading in an office.

Why do I trade like that? Because I knew at *some point* the stock would turn tail as it did after 10:30 and drop. The problem, naturally, is figuring out when that point comes without having to lose thousands of dollars first.

I'm getting better at trading the hybrid market. But I realized something else today that is different. In the past, back when people respected me and the market "traded normal", if I was trying to "pick a top" like this, I'd put my buy stop a little above the last high of the day. If I was early, the stock would trade my stop and then fill me (30 or 40 seconds later) 20 to 40 cents higher. Clearly I'm generalizing here, but that's what it used to feel like. Even when you were getting squeezed, it happened slower and it was less violent.

With instantaneous fills (really, the speed still amazes me... I know you Nasdaq traders are used to it) the speed at which you can get squeezed (or clipped) is stunning.

It causes my eyes to literally glaze over because I can't even follow the quote action... the screen just kind of blurs, I see large green bars moving ever higher against my short position and my mind goes kind of quiet... and then something weird happens.

I imagine, for a brief second, being poor. I'm mowing a lawn on some estate... there is a repugnant man there... he is throwing an empty fluorescent green can at me and calling me a "Mexican" even though I'm Italian. I reach down and pick up the can... "Monster Energy Drink"... what the?

Anyway, The big spike today in JCI happened so quickly, that I just had that deer-in-headlights thing happen. And I felt it. It's a helpless feeling, but I can identify it now. The thing I need to train myself to do in the future, when I feel it happen, is just to cover and wait for the stock to settle down.

The opportunity will come, it always does. I just need to be more patient.

Despite today's smackdown, my spirits are still in good shape. I feel I turned some corner in May and that things are looking up. Thankfully, it's still early in the month.

This is a good reminder that I can't let big losses pile. I'm going to try a new rule... and I'm going to call it something gay like the 3-trade rule. If I trade a stock 3 times in a row and lose on each trade then I won't trade that stock again for an hour. Something like that would have prevented my JCI disaster today.

Without my blowup in JCI I would have made money today... so it goes.

Anyway, here's the stats:

P&L, -$1726
Best, TNH,
$768
Worst, JCI, -$2188

shares traded, 35,800
stocks traded, 13, 5 positive, 8 negative
total trades, 199

7 comments:

Broker A said...

I'll hire you to fix my herb garden.

The fucking Basil is out of control. Since you're Italian, maybe you can help.

wincity said...

I shorted JCI too today. I knew it was upgraded and I started shorting it at $113.13, thinking that would be the top in such a weak market. I was amazed how much higher the toad ran. I added at $114 and $115. Even though I felt that kind of madness just couldn't last, I got a bit concerned because it ran a lot more than I expected. I was afraid of a buy-out. I got out fast when it came down to almost $114.

gary said...

just my 2 cents and these rules are actually written on the wall in front of me cause like you I used to make the same mistakes


--never add to a losing position(there's 8000 other stocks waiting for you)
--never trade your opinion(how can it go? why should it go higher on a weak day etc etc)
--set your stops--it always helps
--if you are wrong and for some reason you dont get out or your stop doesnt trigger like it should've or it gets halted etc etc just get out of the damn trade--you are wrong so you should be out.

Remember it's how you handle your losses that's going to determine what kind of a trader you are going to become. Cant have big losers small winners.

MIsstrade said...

Why not wait on these fliers to give you one red bar on a 5 minute chart before even thinking a top is in? If you would have waited for the "ineveitable top" near 115's and seen that first red bar, it would have been low risk entry with stops above the old highs by .5 or so. Just a thought, let the market come to you. Be patient. No one can pick tops and bottoms let the chart show you DT!!

Dinosaur Trader said...

Broker,

Yes, I remember my grandmother stinking like sauce and telling me how to trim the basil plants in the backyard that were, of course, planted over the shallow graves of the gangsters my Uncle Cheeto wacked.

I know Basil.

-DT

Dinosaur Trader said...

Win,

Yeah, it was quite a rip... there was the upgrade and then also the new 52 week high. Still, with the market as weak as it was it was surprising as hell. Which brings me to Gary's comment.

Gary,

Your rules are great. The first one was the topic of an old post of mine which is here:

http://dinosaurtrader.blogspot.com/2007/04/only-add-to-winning-positions.html

The others are dead on as well. The thing about stops nowadays though is that with stocks ticking up on 100 share prints, I find it's much harder to place them in spots they won't get hit...

Anyway, you're right about them all. Thank you very much for the reminder.

-DT

Dinosaur Trader said...

MT,

Patience little grasshopper, right?

Good advice, thanks. It's all about me jumping when I make these bad trades.

-DT