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

Wednesday, December 20, 2006

Fat Head, Fat Fingers, Fat Scalping

Gross: +$109.05
Net: -$92.47
Loss From Top: $325.31
Trades: 87
Shares Traded: 211160

Stocks Traded Today (net profit/loss):
General Electric Company (GE): +$318.89
Pfizer Inc (PFE): +$187.83
EMC Corp (EMC): +$69.02
Nortel Networks Corp (NT): +$16.55
Micron Tech Inc. (MU): +$15.67
Citigroup Inc. (C): -$17.27
Christopher & Bank Corp (CBK): -$25.26
Circuit City Stores Inc (CC): -$40.51
Family Dollar Stores Inc. (FDO): -$77.82
UnitedHealth Group Inc. (UNH): -$124.05
CarMax Inc. (KMX): -$124.43
ConocoPhillips (COP): -$291.09

FAT HEAD
Today there were several trades on some of the thinner stocks that went well as soon as I put them on.

Once I was in the position, the stock would go my way....then my old scalper-self would start screaming for me to get out and take the profits while they were there....but then my new patient-trader-self started telling me to give the position more time and let my winners run!

I gave the benefit of the doubt to my new patient-trader-self and held onto these positions.

Well wouldn't you know it...had I listened to my old scalper-self, I would have been able to lock in a lot more profit.

Instead, I watched several of my trades go from a good winner into a loser. Three trades in particular (though there were other, smaller trades in which this happened):
  • A trade on UNH - went long 1000 shares and quickly the position was a $300 winner...my old scalper-self was screaming for me to get out and that I could always get back in, but I decided to listen to my new patient-trader-self....I watched this go from a $300 winner to a $40 loser (I tried desperately to get out when I saw it falling...but it was too thin and it collapsed fairly quickly)....cost to me: $340
  • Another trade on FDO - went long 1000 shares and it went up until I was looking at a $60 winner....my hands were ready to punch out after being screamed at by my old scalper-self, but decided to hold on at the behest of my new patient-trader-self....watched this become a $70 loser....cost to me: $130
  • Another 1000 share position on COP - it moved up and I was sitting on a $120 profit...I wanted to get out (scalper-self), but decided to hold (patient-trader-self), it went up a little further (I could have had a $160 winner), but ended up chasing my position out for an $80 loser....cost to me: $200
I was pretty upset with myself today for being such a fat head. I had all the setups and calls correct, but I didn't have a clear exit strategy because of my fat headedness. I'll have to work out some exit strategies.

FAT FINGERS
I had just finished a trade and I started watching COP. It started moving up and when it cleared some resistance, I decided to go long.

I placed the order to punch in to what I thought was 1000 shares....I remember watching the Level II and seeing rather big buy orders coming through and I thought to myself "Wow - people really want to buy this up! Maybe I should get another 1000 shares!".

But I look down and see that I'm long 3800 shares! What the.....?!?!!!??!?!!

I then realized I still had my default share size set to 5000 shares (from my previous trade) and that I had tried to punch in for all 5000 shares! I was partially filled for 3800 shares so I quickly cancelled the balance of the order.

I then patiently tried to wait and see if COP would continue going up. It moved up maybe 1-cent, but then it started falling fast!

Crap....I got out what I could and ended up losing close to $400 on that one.

I was surprised I wasn't too upset after my fat-fingered mistake. I guess my reasoning was that it could have happened to anyone.

I just cannot imagine what would have happened if I decided to get another 1000 shares and placed another order (which would mean I'd get long another 5000 shares for 10,000 shares total!).

I hate fat-fingered trades...

FAT SCALPING
At one point during the afternoon, I was in the hole by over $500 and I was quite upset that it was a near-repeat performance of yesterday.

I then decided to resort to fat scalping....

What is fat scalping?

It's when you trade a fat stock (a stock that has big size on the bid and ask...in other words, a thick stock) and you put on a fat position (a fairly large-sized position - 10,000 shares) and you try to scalp for 1, 2 or 3 cents ($100, $200, or $300).

Fairly quickly I was able to make close to $400 fat-scalping GE and another $550 fat-scalping PFE. I saw myself get into the green by a few hundred dollars! On those trades, I had carefully timed them and waited for the right opportunities.

BUT....I hate fat-scalping.....

Just as easily as I had made that money, I just as easily lost that money...after several other fat-scalps, I was in the hole again.

Fat-scalping can easily get emotional and can also lead to revenge trading and overtrading. And sometimes when a trade looks like a sure thing, someone comes it and slaps it with big orders and the stock reverses course.

That was what happened to me after making a couple of good trades on GE and PFE....I started overtrading and the emotion-filled fat-scalps were coming in a flurry....I would end up losing $400 on PFE and another $200 on GE on purely emotional fat-scalps ($600 altogether).

Anyways, I've got to run again and I don't have time to post up the good trades and bad ones (there were 4 good ones and 4 bad ones...mostly from fat-scalping).

So, that basically sums up my trading day: fat head, fat fingers, fat scalping.

So let's review:
Fat headedness cost me about $670
Fat fingers cost me about $380
Overemotional fat-scalping cost me about $600

In short, all the "fatness" of the day cost me an arm and a leg today. So far this week I haven't been able to get myself in gear...let's hope for some better trading tomorrow.

Good Trades
There were 4 of them - two on GE and two on PFE

Bad Trades
There were 4 of them - one on KMX, one on COP (fat-fingered trade), and two on PFE

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5 Comments:

  • Lots of chop this week JC...

    Hang in there!

    Linda P.

    By Anonymous Linda P., at December 20, 2006 8:00 PM  

  • Linda,
    Thanks for your comments. Yea, I've just got to make sure I don't blow myself up during these choppy times! I should probably trade a little less in the next little while, just so I don't get chopped to pieces.

    Good luck to you and happy holidays!

    By Blogger J.C., at December 20, 2006 8:51 PM  

  • why don't you try booking at least half of your position with a scalper mind set and then let the rest ride?

    By Anonymous Anonymous, at December 20, 2006 10:52 PM  

  • I was hoping to get some action on KMX today, but it zigged when I was waiting for it to zag, so I stayed out of it.

    Are you liking the new charts, still?

    I like the new stocks_to_watch posts.

    By Anonymous Richard, at December 21, 2006 12:52 AM  

  • Anon@10:52PM,
    Thanks for your comments. Yea, you're right...I should have tried harder to book half of my position. I know that especially on the UNH trade when it started falling, I tried to book half of it, but it just collapsed soo fast that I ended up chasing my entire position out. I shall make more of a conscious effort to listen to my scalper-self.

    Richard,
    Thanks for your comments. Like my charts? No way....I love them! It feels so good knowing that I can change the stock on the charts without worrying about crashing the software or getting a blank chart (and hence an application restart!). I just wish I had a better time trading! As for my stocks to watch posts - yea, they were actually more for me to actively write down what I was looking for or what exactly the news was on the stocks I'm watching. Before these posts I was finding that I had written some stocks to watch in my trading journal, but when it came down to trading it, I didn't really have an idea of why I was watching it (i.e., was it for some news? earnings? or just technical stuff?). By me typing them up as a post, it sticks in my mind a little longer.

    Good luck to all and happy holidays!

    By Blogger J.C., at December 21, 2006 7:25 AM  

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