Wednesday, November 7, 2007

A True Trading Disaster

For the record, this is the first time I've ever been 40 points out of the money.



I'm not trying to be flip about this trade or anything... I guess I got short at $164 or so.

It's almost humorous. Meanwhile, we got a "cheap pizza" tonight... no "Mardi Gras."

It's a bad trade, it blew up my swing account, and I'm moving on. There are two lessons I take away from this:

1. Things can always get worse.
2. Should they "get worse" life still goes on. Gotta keep moving.

I will keep making money in my daytrading account, re-fund my "swing account" and hopefully not make this type of fucked-up mistake again.

25 comments:

Prospectus said...

Damn, Dino! I'm sorry. This is just what happened to me in BIDU, but I was only in for 30 shares, not 100, and it was 20 points, no 40. Sorry to hear this. :( Are you still in the position?

This has been a truly messed up earnings season. This thing will probably open tomorrow at 140, seeing how these things go! The AH action has been completely asstarded.

Keep a level head and don;t trade angry or depressed. It CAN always get worse! Take it from someone who knows. :)

Dinosaur Trader said...

Pro,

Yeah, you know, I left to go out for dinner and it was trading $190. I came back and it was $204. I should have covered at $190, and taken my entire group of friends out for dinner on me!

Anyway, sorry about the BIDU thing... but you know, I guess you have to keep a sense of humor about this stuff and definitely perspective.

-DT

Prospectus said...

I don't know how you could even eat with that thing open to the red that far!

Yeah, if we're not going to quit, then the only thing to do is laugh at ourselves, learn something, and hit the next trade. Anything else is a complete waste of energy and counter productive! Part of the trading game. We should be able to meet a big hit and a big win with the same grace. One day, Dino, we shall both take "man sized" losses and downright criminal profits in stride, like our hero the Fly, peace be upon him. Unless he quits blogging for real, and if so then screw him. ;)

Dinosaur Trader said...

Pro,

For the record, I hope this is the last "man-sized" loss I take.

As for the gains, they will come when I get my balls back.

-DT

Prospectus said...

If you find your balls, let me know. They are probably hanging out somewhere near mine. And no, not in that way. Perv.

Dinosaur Trader said...

Hopefully, my balls will arrive at my trading desk by 9:30.

We will see.

-DT

artha said...

DT - Sorry to hear about the big loss. I can empathize since I've had quite a few of those lately. It seems I broke every trading rule in the book this past week: I traded without stops, averaged down on losers, and revenge traded.

Today, I contemplated closing out my daytrading account and calling it quits. Going to my Tae Kwon Do class and relieving some frustration, and reading the introspective exchange between you and Pro helped, so we'll see...

Pro - great advice and nicely put.

Woodshedder said...

DT-

SLB 10+ points
BLUD 5+
BWLD 10+
TRAK 5+
FLR 10+

All those fuckers gapped down on me by the amount indicated, within the last few weeks. Of course I was long them. It makes me not want to buy more than 50 shares of something for fear of getting whacked.

I understand your pain.

wincity said...

DT, sorry to hear about your loss. But why do u short such a freaky stock before earnings?

Dinosaur Trader said...

Win,

Because despite the fact that solars have been ripping, I thought with the market getting fucked again (-360) that no matter what FSLR said they'd have a little selling. I mean, they've had quite a run recently. Never did I imagine them gapping up 40 points! I thought at most my risk was 20 points, $2000.

-DT

Dinosaur Trader said...

artha,

I think it's a tough market. You know (since you're a loyal reader) that I'm not immune to those same mistakes you mentioned. Sorry you've been having a rough streak.

It's a tough game. If you can keep your perspective and handle being wrong a lot, you can do well. However, even the most level-headed person can lose it sometimes, making life unbearable when things are going poorly.

-DT

Dinosaur Trader said...

Wood,

Yeah, sorry about that. No more earnings for me in this type of market, that's for sure.

I remember not too long ago when it was much easier to divine how stocks would react to earnings... not so easy right now.

-DT

wincity said...

I'm sure if you didn't short, it would tank $20 on good earnings. Or if you had shorted CSCO, it'd go up 10% instead. Whatever you fear, happens.

Glenn said...

Too bad DT, least you can make that much back in a day or two.

Bluedog said...

DT,

All I can say is wow, that was a ballsy move shorting FSLR into earnings like that. Q3 earnings for many companies has been akin to jumping into a wood chipper. It's bloody out there!! At least you have a good story to tell now. ;)

-BD

High Probability Trader said...

Sorry to hear about the loss. That hella sucks.

shoulda woulda coulda used a protective option call...

Welcome to the "BLOW UP" team.

Expect record traffic from this post.

Where's NewEquity? I'd expect him to be here laughing. He probably blewup his account weeks ago.

Seriously, who would've thought it would gap up 40pts, that is bullshit. I wonder how much money it took to fuck over that many people by gapping the shit out of that stock in AH. Total bullshit market manipulation. Of course if it went down 40pts you wouldn't be complaining either. There's always another day.

mdawsz said...

Tough break man. All you can do is move on. You've been consistent lately so you'll make it back.

JJ2000426 said...

Dinosaur:

I hope you do not panic cover the FSLR short. The earnings indeed crashes the estimate by a huge margin, and took every one by a big surprise. So panic resulted and during panic people over-react, and then regret. Even if you have to cover for a loss, wait a few days let it cool down a bit, you can cover for less.

Why it is an over-reaction? This too-good-to-be-true quarterly earning is a one time thing, and will NOT be repeated in the next quarter. They admitted it in the conference call.

The whole reason they had a smash out quarter, is they were able to sell 64.2 MW solar panels at $2.48/per watt, the previous quarter saw only $1.90 per watt, and the long term contracts have an average proce of $1.90/watt.

So $1.90/watt is "price is right". $2.48 per watt is price is wrong. Had Q3 been sold at $1.90 per watt, they will only break even, instead of having a smash out quarter. Next quarter they should return to normal pricing of $1.90 per watt, and there will be a huge disappointment.

The $2.48/per watt wasn't said by me. It was said in the conference call.

So why panic? I never expected them to beat the street, because I assumed sales will be $1.90 per watt. I never expected $2.48 per watt. The number could well be cooked!

Or it could be a mere accounting error. The sales revenue must have been originally recorded in EUROm and then converted to US dollars, using the $1.30 for one euro ratio, the ratio that FSLR stick their calculation to.

Very likely, some one already converted the sales number to US dollars, and then some one didn't know, and convert it again. So it's coverted twice by multiplying $1.30 twice. The actual sales price is $1.90, when you multiply $1.90 by $1.30/euro, the result is $2.47, which is where the $2.48 came from!!!

Dinosaur Trader said...

I wake up and it's 13 points higher...

Rule one is a doozy!

-DT

Dinosaur Trader said...

I covered at $219. That will go down as the worst trade in my entire trading career.

Frontwards.

-DT

ainkurn said...

DT,

sorry to hear about that man. hope this blowup doesn't affect your daytrading. just keep doing what your doing and stay away from earnings.

tapeworm said...

sorry to hear about that DT...however, that's not near as disturbing as the comment PRO made about your balls

newequity said...

ouch, never play with earnings dt.

JJ2000426 said...

Dinosaur:

Yes indeed that was your worst trade. Why do you take the loss and cover and walk away, when you should just hold and wait for the craziness to dissipate. I do not believe you shorted too big a stake so it should not jeopardize your margin.

I shorted NEWP a few years ago from $80 all the way to $200, and covered everything at $60. People don't believe that. Now you have a chance to watch me do another nutty thing and evetually walk away a big winner. Bet on it. I will cover at very low double digits.

Dinosaur Trader said...

JJ,

I have a feeling that I am sane and that perhaps, you are not.

There was no way I would have been able to trade with a "clear head" today had I not covered FSLR pre-open.

I hope you cover in low double digits although I seriously, seriously, doubt you will. When the market is getting completely killed and a stock has the strength to gap and stay up 50 POINTS, it's not the stock you want to be short.

In fact, if that bugger pulls back below $200, I'll be buying some and socking it away for the long-term...

-DT