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

Wednesday, February 14, 2007

Fortunes Won & Fortunes Lost

Gross: +$658.95
Net: +$340.30
Loss From Top: $647.28
Trades: 82
Shares Traded: 295200

Stocks Traded Today (net profit/loss):
General Electric Company (GE): +$844.64
CSX Corporation (CSX): +$118.27
Deere & Company (DE): +$105.76
Southern Copper Corporation (PCU): +$99.96
Alcatel-Lucent (ALU): +$75.07
Companhia Vale do Rio Doce (RIO): +$27.73
Arcelor Mittal (MT):-$6.27
The Coca-Cola Company (KO): -$86.32
Time Warner Inc (TWX): -$114.87
EMC Corporation (EMC): -$133.23
Pfizer Inc. (PFE): -$590.43

Ah dammit....

I had an absolutely horrid time trading this afternoon (see my loss from top...lost almost $650 this afternoon).

The morning had started promising enough...

I watched Deere (DE) open and managed to catch a good trade on it (see good trades below) for a nice $457 profit. But it could have been more....

This morning the system seemed to have a multitude of problems with orders...either they weren't being accepted, were pending, or you couldn't cancel orders. These problems were intermittent for about an hour or so.

I had just gotten into that Deere (DE) trade and watched DE just climb. I took partial profits and I was intent on holding the rest of my position. But then some of the other traders were screaming that they had problems with their orders and so I decided to exit the balance of my position just in case the system went down. Well DE just continued moving without me.

I was kind of upset that I got out of that one too early and shortly afterwards I got into it again...but this time, I'd take a $345 loser on it (see bad trades below).

Just like that, I had made some good profits, but it was taken away just as quickly.

Well that didn't really bother me that much....it was still early in the day and there was going to be lots more trading ahead.

Well the morning went by just great as I caught a couple of good trades on General Electric (GE) and by lunch I had close to $1000 net profit on the day.

I'm not too sure why, but I decided to stick around for the afternoon. Well that was a mistake.

I'll admit that most of this afternoon went by just fine...losing a little here, gaining a little there (a typical afternoon when I've had a good morning). And I was being very conservative this afternoon (for those who follow this blog closely, you know I often get screwed over by afternoon trading).

But then it happened.

I got into a trade on Pfizer (PFE) which I thought was a fairly good position. I went short 5000 shares and I was only really expecting to take 2-cents or even a 1-cent winner. PFE was downtrending and you could see the urgency of a big seller (big size kept moving down and wiping out the bids). PFE had also broke some support.

But then PFE does this crazy-ass move up, wiping out huge sizes on the offer along the way (I'm talking about wiping sizes of 800+ and 1000+ on the offer!). And it was a straight up move too and I was thinking "Crap! Some kind of news has come out on PFE!!!" and I was putting out orders like crazy, trying to get out of my position.

Dumb PFE and it's crazy-ass moves!

Well in my haste to get out of the position, I ended up getting triple filled...that 5000 shares I covered resulted in a $220 loser (see bad trades), but now I was long 8400 shares and PFE was quickly falling back down!

Dumb PFE and it's crazy-ass moves!

I would eventually exit that 8400 share long position out for a $256 loser (see bad trades).

Just like that 1/2 of my profit on the day was wiped out within two minutes!

Dumb PFE and it's crazy-ass moves!

At that point I was totally fuming and I would struggle for the rest of the afternoon, losing a little bit more along the way.

A long time ago I swore on my life that I would never trade PFE ever again. But slowly PFE crept back into my trading and today reminded me of why I stopped trading this stock a long time ago.

As I sit here typing this all up, I realize now that I should just be happy I came away with profits.

I could have easily lost it all because near the end of the day I found myself taking on 10,000 and 20,000 share positions for no particular reason (well actually, it was the deadly cocktail of wanting to make a quick buck mixed in with some revenge trading). It's a good thing I was sane enough to know when to exit those positions for break even (because all of those late day positions would have been extremely costly had I held onto them).

Three good trades and three bad ones.

Today illustrated how easily fortunes could be won and how easily they could be lost. Take the Deere (DE) trades as an example - good profits made on it, but were quickly lost on a bad trade on it. Also take my morning trading and afternoon trading as an example - good profits in the morning, only to be lost in the afternoon.

So what's the moral of the story here?

Respect the markets. Just because that previous trade you put on made you good profits and it seemed easy to come by, it doesn't mean the next trade will be just as easy. Those Deere (DE) trades are an example. That first DE trade was a good one and it seemed fairly easy to come by...DE just kept moving up and it's moves were pretty smooth. But then I got in again, thinking "Hey! DE is providing good easy money!". Well, not so because I didn't respect what DE could do to me.

Another example is my morning and afternoon trading. It felt as though the mornings profits were fairly easy to come by. I was thinking "Hey! That $1000 net profit was easy to come by...the afternoon should be just as easy!". Well, not so, because I'd end up losing 2/3 of what I made in the morning.

Respect the markets!

Good Trades
9:44:00AM - Deere & Company (DE) opened strong and was moving up and when the $110.00 level broke, I went long 500 shares. DE just exploded from there. I held on and quickly took partial profits on 200 shares. At this point, I was totally intent on holding the rest of the position and to let the charts tell me where I should exit the balance of the position. But then several other traders started yelling and screaming that orders were not cancelling or not going through and knowing the problems we were having in the morning, I got out (just in case we went offline and I can't exit my position). I got out as follows: 29-cent winner (200 shares), 133-cent winner (300 shares) ($457 profit before fees ; Long 500 shares @ $110.00 ; Out: 9:46:17AM)


10:00:20AM - General Electric (GE) had been moving up all morning and approached the $36.00 level. Right at 10AM, the markets exploded as it digested what Bernanke had to say, so I went long 10,000 shares @ $36. Seeing the strength of the Futures move, I put in another order to get long another 10,000 shares @ $36, but GE had already moved. Then we started having system problems with our orders again. I had a difficult time trying to enter, cancel, and move my orders around. I was upset that I got out when I did, because I felt as though I could have had a lot more profit had we not had all these system problems...half the time I didn't know if my orders were accepted or not nor did I know if I had successfully cancelled my orders. Somehow I got out as follows: 4-cent winner (5000 shares), 5-cent winner (1500 shares), 6-cent winner (100 shares), 7-cent winner (1800 shares), 9-cent winner (1100 shares), 10-cent winner (500 shares) ($556 profit before fees ; Long 10,000 shares @ $36.00 ; Out: Did not record as I was too upset I got out at the prices that I did)


10:57:56AM - General Electric (GE) was coming up to test resistance at $36.10 and when it broke, I went long 10,000 shares @ $36.10. GE moved upwards and I waited until it started rolling back down when I got my entire position out for a 3-cent winner ($300 profit before fees ; Long 10,000 shares @ $36.10 ; Out: 11:00:13AM)


Bad Trades
9:48:53AM - Deere (DE) continued moving up after I got out of that good trade (see above). Well I was upset that I got out of my original position (as I was afraid we were experiencing system problems) and when DE reached the $112 level, I hit it and went long 500 shares. Well DE very quickly told me it was a bad position to take and I got everything out for a 69-cent loser ($345 loser before fees ; Long 500 shares @ 112.00 ; Out: 9:49:13AM)

2:44:53PM - Pfizer (PFE) started moving down and there were some urgent sellers that kept wiping out the bids. Huge size kept taking out level after level, so I went short 5000 shares @ $26.58. I thought this was a fairly good position because PFE was moving down and it had broken some support at $26.58. The next thing I know, PFE jumps up rapidly, wiping out all the huge sizes on the offer. I panicked a little as I though some major news announcement was released, so I hastily put out orders to exit, but when prices kept moving away, I put out more orders. I got this particular position out as follows: 4-cent loser (3000 shares), 5-cent loser (2000 shares) ($220 loser before fees ; Short 5000 shares @ $26.58 ; Out: 2:45:04PM)


2:45:05PM - Continuing from the above trade, I found myself triple-filled on my orders (I got filled to cover my shorts, but then I got filled long on 5000 shares AND a partial fill long on 3400 shares) and I found myself long 8400 shares. Damn PFE and your crazy-ass moves! PFE slowly moved back down and I'd exit my triple-filled position as follows: 2-cent loser (3000 shares), 3-cent loser (2000 shares), 4-cent loser (3400 shares) ($256 loser before fees ; Long 8400 shares @ various prices ; Out: I was too upset I didn't record) (sorry - no chart for this one...I didn't really record where I got overfilled...)

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8 Comments:

  • well, that's the way the prop trading goes...u make fortune on several cents the market moves, and lose fortune on same amount of few cents...i should say it's not a good career for health...it simply damages trader's health, mentally, physically...

    By Anonymous Anonymous, at February 14, 2007 6:50 p.m.  

  • Anon@6:50PM,
    Yea, I know what you're talking about. There are some traders at the office at where I work that sometimes go into a rage and it looks as if their heads would explode. I just have to not let it get to me and I think I'll be fine. I think I should also look more for good moves and not try to go after small cheezy moves like on PFE. Well, I'm still young, so I should be able to handle the stress!

    All the best, good luck and good trading to you!

    By Blogger J.C., at February 14, 2007 7:08 p.m.  

  • I live at the don mills and eglington area.

    Does Swift have an office close to that area?

    Thanks!

    By Anonymous Anonymous, at February 14, 2007 8:59 p.m.  

  • Anon@8:59PM,
    Thanks for your comments. Check the SwiftTrade website at:
    www.swifttrade.com

    The only ones that I know of within Toronto itself is the head office and the one at the U of T campus. There's also a Chinatown branch, but I've heard they are very strict there.

    Good luck!

    By Blogger J.C., at February 14, 2007 9:28 p.m.  

  • I checked the swifttrade web site, their locations page is not working.

    Thanks.

    By Blogger Zoe, at February 14, 2007 9:44 p.m.  

  • Zoe,
    Thanks for your comment. Hrmmm.....you're right. It might be because there are too many new branches opening up (and maybe some that are closing) and no one was able to update the page.

    Well, you can maybe either give them a call or send them an email to see which location is closest to you. I would assume that the head office location is the closest (it's at St. Clair and Yonge), but give them a call or email to see.

    Hope it helps!

    By Blogger J.C., at February 14, 2007 9:56 p.m.  

  • JC
    Good post. I had a $1300 loser to start the day, but ended in the green. Was proud of myself that I was able to just relax and focus on what I can do to crawl out. I was green before lunch, with smart trading. Also, I was gonna say I remember the post where you swore off PFE!!

    Question, when you have a 20K position, what kind of size are you able to give off at a time without moving the stock, especially if you want to get out fast? Are you hitting inside bids at market or using limit orders and waiting to get filled, I'd like to hear more about your technical approach to that.

    Thanks,
    Mike

    By Anonymous Anonymous, at February 15, 2007 7:29 p.m.  

  • Mike,
    Thanks for your comment. Usually when I trade 10,000 or 20,000 share positions, they are on stocks that can handle the size. Usually if I want to get out fast, I'll just hit the bid. Since the stocks I trade with these share sizes are fairly thick, I usually have no problems getting out. If I want to get out of a profitable position, I'll sit on the bid or offer using either Island or Arca (just so that I can get some credits for the trade, which will help offset some of my fees).

    Hope it helps!

    By Blogger J.C., at February 16, 2007 5:07 p.m.  

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