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

Tuesday, June 20, 2006

Ha Ha! That Was A Good Trick You Pulled BAC!

Gross: +$213.40
Net: +$103.64
Loss From Top: $348.45
Trades: 59
Shares Traded: 91200

Stocks Traded Today (net profit/loss):
JP Morgan (JPM): +$221.82
Citigroup (C): +$144.92
Home Depot (HD): +$63.24
Motorola (MOT): +$33.22
Walmart (WMT): +$1.42
General Electric (GE): -$12.58
Bank of America (BAC): -$348.47

Today I had to leave at around 2PM (and miss the best part of the trading day) because I had to go renew my health card and I had to get to the government office before they closed at 3:30PM.

Anyways, today felt like it was a complete waste of time. There were very few opportunities in the morning and then I lost everything on one of the last trades I did before I had to leave.

The trade in which I lost a bundle (about $246 before fees!) was on Bank of America (BAC). I fell for a trick that someone was playing on Bank of America and ended up taking a big loser on 8000 long shares.

What happened was that around 1:51PM, BAC was downtrending while the Futures were flat. BAC looked like it reached some support and moved up slightly to the $47.30 level. The size on the offer at $47.30 level was about 300.

Then all of a sudden, huge size showed up on the bid at $47.29 (about 1300 size appeared!). Then huge size also appeared on the bid at $47.28 and at $47.27 (both had sizes over 1300!). Overall, there were 3 huge levels, all back-to-back-to-back!

I quickly went long 4000 shares and hit the size at the $47.30 level. I was quite surprised that the level didn't break right away, so I hit it for another 4000 shares (altogether, I was long 8000 shares).

Then I started sweating a bit when I kept seeing big orders being filled at $47.30, but the size on the offer refused to break. Usually if the above situation occurs, the stock would rocket up, but I should have known better and exited when BAC refused to go up.

Then all of a sudden, the three huge levels of 1300+ sizes on the bid all disappeared!

I had to exit my position, but I found myself laughing a bit while I was exiting for a big loss. Nice trick BAC - someone got their money and I lost mine. Ha ha - you basically cost me my day. I guess sometimes if something looks too good to be true, it's probably some guy playing games on the Level 2.

As I said, I found it hard to find opportunities and unfortunately I had to leave early, so I had no good trades to tell you about and only the one bad trade to report.

Good Trades
Unfortunately, none

Bad Trades
1:51PM - Bank of America (BAC) was downtrending, but looked like it caught some support. The Futures were basically flat at the time. Three huge sizes all of a sudden appeared on the bid (each level had size over 1300!). I went long 8000 shares, but it was a trick...probably some guy who wanted to get short, so he scared up prices so that he could get filled. The huge sizes disappeared so I had to get out as follows: 1-cent loser (2800 shares), 3-cent loser (2000 shares), 4-cent loser (200 shares), 5-cent loser (3000 shares) ($246 loser before fees)
  • What can I say? I'm a fool who got tricked. This is the type of thing I'd expect to see on Pfizer (PFE) and frequently on Motorola (MOT), but Bank of America (BAC)? That's why I was so quick to go long, even though most of my criteria for a trade were met
  • When I saw that the size at $47.30 wasn't going to break, I should have realized it was a trick and exited everything right then and there
  • Isn't this kind of thing illegal? Oh well, I'm not the first trader to complain about this kind of activity


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