An NYSE Scalper's Tale - A Trader's Diary

Wednesday, April 26, 2006

The "Ball Buster"

Gross: +$279.56
Net: +$116.96
Loss From Top: $372.87
Trades: 79
Shares Traded: 184800

Stocks Traded Today (net profit/loss):
General Electric (GE): +$118.81
Coca-Cola (KO): +$115.10
Micron Tech (MU): +$64.83
AT&T (T): +$42.16
Citigroup (C): -$74.46
Sprint-Nextel (S): -$149.49

What a disappointing day today. Everything was going just fine until about 10:15AM. At that time, I was up almost $500, but then it happened - the "Ball Buster".

A "Ball Buster" is one very bad trade that basically trips you up and ruins a perfectly good day. And for me, it happened on AT&T (T). On that one particular trade, I lost $520! Once that happened, it basically set the tone for the rest of the day and I was barely able to keep myself in positive territory.

I struggled the rest of the day and traded way too much considering that the overall market did not move in any significant direction. It felt as though the "Ball Buster" left me dazed and confused and half the time I didn't even know what or why I was in a particular position.

I've been reviewing what I've been doing today and yesterday and I think I may know what's been going wrong. Here are a few things I've noticed that may have contributed to my poor performance the last two days:
  • I started using 8000 shares; just like in the month of March, by moving up to a larger share size, I've been trying to get long or short 8000 shares whenever the bid or ask would let me - in other words, I was getting long/short 8000 shares because at that particular moment it was possible (and I disregarded most of my trading rules)
  • Some stocks are simply not fit for trading 8000 shares at a time - stocks like PFE, GE, MOT, and TWX are OK for trading 8000 shares at a time, but on other stocks it might be a little too risky. Yesterday I traded Citigroup (C) with 8000 shares, which can be quite risky
  • Knowing when to trade and when NOT to trade. I think this is probably one of the most important aspects of trading. Over the last two days, emotions got to the better of me and revenge trading got me into trades at times when I shouldn't have been trading at all
I'm going to be working on these items (again). It seems like everytime I step up with size, these problems always seem to recur. The key item will be knowing when NOT to trade. Over
the past two days, I traded way too many times when the market was flat.

I had several good trades during the day (over $100), but I'll just review those that made $200+. There was just the one very bad trade (the Ball Buster). For most of the afternoon I gained some, then lost some and basically hovered around the unchanged mark.

Good Trades
9:38AM - AT&T (T) had a strong uptrend going and the Futures were up. Size on the ask was breaking, so I tried to go long 8000 shares, but got partially filled for only 3800 shares. Got out as follows: 3-cent winner (2000 shares), 7-cent winner (500 shares), 10-cent winner (1300 shares) ($225 profit before fees).

10:30AM - AT&T (T) was uptrending, while the Futures were relatively flat. I went long 6000 shares when the Futures popped up. Got out as follows: 2-cent winner (2000 shares), 3-cent winner (2000 shares), 6-cent winner (2000 shares) ($220 profit before fees).

Bad Trades
10:14AM - AT&T (T) was uptrending, but was encountering resistance. The Futures were flat. I saw some size on the ask and for whatever reason, I decided to hit it with 8000 shares without any other consideration. Needless to say, it was a stupid move - got out as follows: 1-cent loser (2000 shares), 4-cent loser (400 shares), 8-cent loser (2000 shares), 9-cent loser (3600 shares) ($520 loser before fees).
  • Again, knowing when NOT to trade was a missing element in this trade. If I had wanted to go long, I should have waited for the Futures to move to the upside before going long, since it was at a resistance level
  • I was also over-confident when I put this trade on. I was up almost $500 and all my trades prior to this one were good trades. I just remember sitting there after I got out of the trade, staring with disbelief at what had just occurred - for the rest of the day, I felt like a zombie (like I didn't know what hit me), and traded with frustration


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