Tuesday, October 07, 2008

The bad trade

October 6, 2008. Chart of YM. Dow opens gap down, going down over 800pts intraday.
I'll tell you what happened. I was long 4 NQ contracts and short 1 YM contract. I was short 2 contracts on YM but I covered the additional contract on YM in the morning. My internet connection went out a little after I covered 1 contract on YM short. I waited to see what was going to happen because the market looked quiet and we bounced off the morning lows. The market kept dropping so I tried calling my broker but I was on hold for 10min and then I got disconnected for some reason. One hour before the market close my internet comes back on and I was stressed out. I decided to add to the YM short right near the lows when the Dow was down 800pts(even though I had a buy signal- market internals were like 300/1 to the downside, so I said screw it). I thought the market was going to fall -1000pts for the circuit breaker to kick in. Well, we reversed and I took a big loss on my YM short that I just added to and I sold my NQ long a little too soon for a loss as we rallied before the close. Lesson learned - trade 1 instrument, 1 direction, unless you plan on doing a longer term pair trade. My original plan was to hold the NQ/YM trade for a bounce, with the ability to add to the YM short if the market kept dropping (my internet went out so I couldn't add to the YM short unless I called my broker, I should have called sooner). My original thinking was that NQ would bounce more than YM because there would be more short covering in Tech names as opposed to financial names because of the short sell ban.

I hate Comcast.

Overall, I let emotions get to me on this trade and I miss-managed this trade very badly and took a big loss. I was up 7k in the last 2 weeks, but I lost all that plus another 3k. It may not seem like a big loss to some of you or compared to my January blow up, but it was a mistake that really set me back because I keep losing weeks worth of profits from making the same disastrous mistakes on crazy trading days like Monday.


Anonymous said...

Add in a couple sleepless nights and a few other blows up, maybe you simply don't have the capital to really do this. Your learning curve should be over, but you pay the market 1,500 a week to let it know what it already knows -- it is bigger than your account. But those candles are addictive, huh? Like a casino, except the win rate is higher with trading. Same end result, however. Unfortunately, you are an addict and a gambler that needs the rush. I would try a GA meeting.

HPT on 10:13 PM said...

I posted this 1min ago and you already left a comment. WOW. Talk about addiction. See you tomorrow.

Jules on 11:41 PM said...

You knew exactly what happened. That's a great start.
Daytrading esp. scalping takes 100% attention - it makes sense to trade just 1 instrument at a time. As for direction, I have to agree with you wholeheartedly on trading in 1 direction (speaking from personal experience). Some people can trade ranges and are comfortable trading both directions. I'm not, so I don't force myself. And I don't believe in missed opportunities. It's really about repeating what you're best at doing.
You can trade. And if it's what you love doing, don't let people who hardly know you talk you into doubting yourself and into giving up.
Start small and focus on getting back your confidence first (which means you might have to call it a day once you've achieved a realistic target).

Anonymous said...

HPT - Good to see your still posting. We've all been there, it does suck. You have a very intelligent approach to the market, don't give up! - elwood

Anonymous said...

I think you should have 2 ISPs. That would have saved you. An extra $30 or so a month with DSL? Not too bad I'd say. (Or cable if I already have DSL)

I believe many pro traders have at least 2 connections. It's a very small price to pay considering you're good enough to making back that money per month easily.

Anonymous said...

Wow, I had my connection go out before as well as my IB station is Java intensive but damn you got screwed. I know you probably don't have a leg to stand on being you have called the broker but if from a landline instead of a cell I'd look into litigation. You took a 10K loss and in this American society you can sue for anything. Hell, I bought Enron at $10 and now many years later I'm expecting a settlement check for $6.79 a share:) How much is 7K gain relative to portfolio cause I hope your not swinging for the fences again? GL

Anonymous said...

I was up 7k in the last 2 weeks,

You can trade, you just need to know when to say when. Staying up all night to trade then stay up all day to trade some more is not going to help you in clear head thinking. Slow down and getting plenty of sleeps should get you back on track.

cal_trader on 12:43 PM said...

It's always interesting to hear traders preach about plans and then in every example they show you of their trading, it's obvious there isn't one.

HPT on 8:03 PM said...

This is a great example of how I screwed up on the plan. I am continually reminded how I'm a terrible trader and I should never trade. Real traders much prefer to see their mentors winning day in and day out with no screwups along the way. You are likely inspired by other traders that post there daily P/L and you probably frequent blogs looking for other successful traders so that you can learn something from them because you wish you were more successful.
You wish you had more money, and you wish to make money from the stock market.You take the time out of your day to leave a comment on a post that is 7 months old in which your goal is to make me feel bad because I recently made a post that says you should stick to the plan in trading.

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