Nice Idea But Poor Execution

sspencerGeneral Comments, Steven Spencer (Steve's) Blogs8 Comments

I was interested in shorting CLF this morning below 73. My price alert was triggered when CLF dropped 73. It traded down over the next few minutes to 72.50. I offered some stock at 72.88 thinking that CLF would quickly bounce back before downtrending for the day. CLF did pop up to 72.85 but never traded up to 88 cents where I was offering stock. As it traded lower I offered stock in the 70s and then 60s but noone was interested in paying the offer.

CLF continued to trade lower. I finally decided to get aggressively short at 9:47 when it was at 72.03. I hit three lots which was moronic. Immediately an HFT program responded by going high bid. I tried to cover by raising my bid four consecutive times all the way up to 72.20. Eventually I covered the position at 72.30 for a very nice size loss.

Why would someone at my level of experience do something as unsound as hit more than one lot in CLF after a quick 80 cent down move?

I believe the answer is one mainly related to emotion. I had some frustration from not receiving an execution at 72.88 where I originally tried to short. Also, RIMM was behaving very poorly immediately preceding my hitting the 72.03 bid in CLF and I’m sure that triggered some aggressiveness leading to me tapping my Sell Sweep key more than once.

There is no doubt that CLF was showing weakness on the tape when I got short. Also it had just made a new intraday low so there was ample justification for being short the stock. BUT, entries matter. It took some very good trading on my part to make the money back I lost in CLF over the next ninety minutes.

A very small part of being a consistently profitable trader is about having good ideas. A very large part is about execution. I was reminded of that today.

8 Comments on “Nice Idea But Poor Execution”

  1. Spencer…..

    I had a data feed issue that hit just as I entered RIMM for a quick fade this morning. I allowed it to screw up my entire opening session performance. So, I hear where you’re coming from.

  2. Spencer…..

    I had a data feed issue that hit just as I entered RIMM for a quick fade this morning. I allowed it to screw up my entire opening session performance. So, I hear where you’re coming from.

  3. i apologize if this question is too basic…

    how many shares is 1 lot on a 73 dollar stock? is it 100 shares? 1,000 shares?

  4. i apologize if this question is too basic…

    how many shares is 1 lot on a 73 dollar stock? is it 100 shares? 1,000 shares?

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