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

Tuesday, August 08, 2006

Blew A Tire On The Final Lap

Gross: +213.98
Net: +$86.71
Loss From Top: $331.86
Trades: 79
Shares Traded: 120402

Stocks Traded Today (net profit/loss):
Corning (GLW): +$419.24
Hewlett Packard (HPQ): +$335.98
AT&T (T): +$120.81
Bank of America (BAC): +$41.24
Motorola (MOT): +$17.89
Advanced Micro Devices (AMD): -$4.99
Seagate Technologies (STX): -$34.24
Home Depot (HD): -$37.68
Exxon Mobile (XOM): -$40.07
Time Warner (TWX): -$118.03
Walmart (WMT): -$613.24

Whoa! Did anybody get whiplash from that wicked move after the Fed announcement? I'm just glad I didn't get tricked into getting long during the initial move up. Amazing! We had a 4 handle rip up, immediately followed by a 13 handle tank down on the Futures (e-mini S&P500).

I hate it when you have a day when everything is going alright and you are following your trading rules (and you've avoided trading when you shouldn't be trading) and then near the end of the day, you goof up, put on a bad trade, and lose everything you made on the day.

That's what happened to me today. I thought I was well disciplined all day long and I was felt I was fairly successful in holding my winners longer than usual. I didn't put on many trades in the morning because the Futures were rather flat and most of the stocks I was watching were not moving either. I traded only when my trading criteria were met and I was extremely patient in waiting out the market lull.

I was also very cautious when the Fed announced a rate pause and managed to put on a few small winning trades.

But then, at around 3:20PM, I had a mental lapse, put on a trade that I shouldn't have, and ended up losing $550 (before fees) on it.

Needless to say, I blew a tire on the final lap of a race in which I was leading.

It feels as though today was a complete waste. The worst part about this is that I was supposed to leave early today at 3PM to go get my passport renewed. But I decided to stay and try to trade the volatile markets after the Fed announcement.

Oh well, I guess it's the perfect punishment for my incompetence.

Now that the Fed has made it's announcement, lets see if the market actually goes somewhere from here...

Good Trades
3:31PM - Corning (GLW) was downtrending as were the Futures. GLW reached the $18.00 level which had about 700 size on the bid. The Futures began tanking some more and the level at $18.00 was about to break so I went short 3000 shares. Held this position until it looked like it was going to reverse. I got out as follows: 11-cent winner (2000 shares), 12-cent winner (1000 shares) ($340 profit before fees)

Bad Trades
3:22PM - Walmart (WMT) was going bananas while the Futures were making new intraday lows. There was support at the $44.40 level (had about 900 size on the bid) and when the Futures popped down, I went short 6000 shares. The level at $44.40 did break and the position went in my favor by about 2 cents, but suddenly, a huge buy order appeared on the level two and pushed prices up by 10 cents! I got out what I could and ended up taking a severe loser as follows: 3-cent loser (1000 shares), 4-cent loser (1000 shares), 12-cent loser (4000 shares) ($550 loser before fees)
  • What the hell!?!? It seemed like a good short at the time, but I remember looking at a chart of Walmart and having second thoughts about it (it didn't really follow the Futures very closely for most of the day)
  • 6000 shares is way too much especially since I knew Walmart didn't have good price action all day
  • I was also acutely aware that everytime the Futures tanked, some big buyer was buying WMT up anytime WMT fell...why didn't I consider this at the time of the trade? I think it was because I felt I missed out on so many great moves after the Fed announcement that I was determined not to miss another...some good that thought did...

2 Comments:

  • JC Great blog, you are one of the few who put it out there. With my platform I can buy or sell 1000 shares with with 100 showing, reserve or something like that. I am guessing you watch Level II pricing closely which is why I am asking... can't you and everyone else do the same? Who makes the market go up and down like that anyway? Crazy!!

    By Blogger Glenn, at August 08, 2006 6:54 PM  

  • Hi Glenn,

    Thanks for your comments.

    At our prop shop, we can setup reserve orders (where the Level 2 will only show a size of 1 that keeps replenishing until the entire order is filled), but I haven't really used it myself. I'll probably have to start playing around with it soon, especially since I'm starting to use big sizes and I don't want to scare the market.

    I'm not sure if everyone can do it (I guess it depends on their platform), but I think it may cost a little extra to do so.

    But I know for sure that I always shake my head when I know I've hit someone's reserve order and I usually start to panic because I don't know how much size there is left, which usually results in me exiting my position.

    As for the up and down markets today...you summed it up quite nicely - crazy! It's probably some big players or big institutions jockeying for position or getting out of their positions. That Walmart trade that killed me today had someone place a buy order for 50,000 shares 10-cents above the best offer...I know the specialist would have given him the best price he could, so I tried to put my orders ahead of the 50,000 share order so that the specialist could fill me first (I put one order 20-cents above the best offer and another at 30-cent above the best offer)....the specialist eventually filled both of those orders for a 12-cent loser for me...I should have know it was going to happen...all day on Walmart, someone kept putting buy orders for 25,000 or 50,000 shares above the best offer. I've learned my lesson (and now I've got to lick my wounds!)

    By Blogger J.C., at August 08, 2006 9:19 PM  

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