{"id":2105,"date":"2009-10-02T15:47:33","date_gmt":"2009-10-02T19:47:33","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=2105"},"modified":"2013-02-14T10:30:23","modified_gmt":"2013-02-14T15:30:23","slug":"wow-that-was-some-bad-trading","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/wow-that-was-some-bad-trading","title":{"rendered":"Wow, That Was Some Bad Trading!"},"content":{"rendered":"

This morning I highlighted AIG in our Stocks In Play call before the Open.\u00a0 I discussed a great short entry based on the premarket price action.\u00a0 AIG had been trending down for over a week since it failed above 50.\u00a0 In today’s premarket it was below 39.80 which was the price it rallied from on September 21st.\u00a0 In the premarket it dropped from 39.50 to 38 where it held the bid.\u00a0 I suggested that if it popped to the 39.50 area on the Open it would be a good entry for a short.<\/p>\n

The market opened and AIG popped to 39.46.\u00a0 I was offering 800 shares at 39.45 on ARCA.\u00a0 I didn’t receive an execution and watched it quickly trade down to 38.\u00a0 I got long at this price based on the premarket buying.\u00a0 The 38 bid got hit aggressively and I hit out of my stock.\u00a0 When it failed to break down and rebid I bought it back at 38.\u00a0 Then it decided to collapse to 37 in about one minute.\u00a0 Ripper!!<\/p>\n

After it failed above 37.50 I shorted aggressively into the next down move.\u00a0 The next major support level was 36 and I thought based on the premarket weakness and the heavy selling on the Open that 36 was a realistic target.\u00a0 During the next several minutes it became pretty clear that my short was not a good position so I covered for a 30 cent loss.\u00a0 AIG began to hold above 37.50 and large offers were being cleared aggressively so I changed my bias to the long side.\u00a0 If that had been my final trading decision of the day it would have been a great day.<\/p>\n

Unfortunately, when AIG failed to lift 39 I got short again.\u00a0 I shorted more below 38.65.\u00a0 The bid wouldn’t drop 38.60 and I had a chance to cover.\u00a0 The tape was indicating the stock was a long but I decided to wait to cover until th 39 offer lifted.\u00a0 Huge mistake!\u00a0 When the 39 offer lifted the stock was instantaneously at 39.30.\u00a0 Another large rip!\u00a0 But that was nothing in comparison to the rip I took when I hit the 39.30 bid and the stock popped to 40.70 in the next three minutes.<\/p>\n

I managed to cover most of my position on a pullback to the 40.30 area but couldn’t get long as I was beyond my self imposed daily stop loss limit.\u00a0 What was particular silly about not getting flat at that point was that if I hadn’t been short I would have been looking to get long at 40.30 based on the tape.\u00a0 Instead I covered into the next vicious up move.\u00a0 A waste of 500 dollars.<\/p>\n

I got up from the desk at that point and went into my office.\u00a0 Had some water and an energy bar and thought about what had transpired.\u00a0 Not getting the initial short execution on the Open affected my judgment and caused me to trade to aggressively at the morning lows.\u00a0 If I had been short for the 2.5 point down move on the Open there is no way I would have been aggressively shorting at 37.30.\u00a0 I would have been looking to short into a pop.\u00a0 I reflected on the price action in the stock during the first hour and concluded that AIG would probably trade higher and probably touch 43 which was the price it broke down from yesterday.<\/p>\n

I sat down at my trading station and got long at 40.70.\u00a0 But when it couldn’t trade above 41.50 got flat.\u00a0 I then shorted again when it dropped 41.\u00a0 It quickly traded higher and I covered.\u00a0 I got long again on the break above 41.50 and it traded up to 42.\u00a0 When it finally broke above 42 I got long more stock.\u00a0 I attempted to take a sale at 42.34 because yesterday it failedat 42.40 in the afternoon.\u00a0 As soon as I tried to get a sale at 42.34 it began a down move to 41.50.\u00a0 Instead of hitting the bids when 42.25 dropped I continued to offer my stock for sale.\u00a0 I finally gave up and hit out of my position at 41.60.\u00a0 Huge Ripper!!!<\/p>\n

The error was compounded by my getting short when it began to tick down again.\u00a0 Talk about a stupid idea.\u00a0 The stock had broken out from 41.50.\u00a0 It was a good place for a possible entry on the long side.\u00a0 But because I was so exasperated by the failed breakout above 42 I made another rookie mistake.\u00a0 In the meantime Gman was eating his lunch and just holding his long until the stock reached his 43 target or broke the intraday uptrend.\u00a0\u00a0 I finally covered my short above 42 and called it a day.<\/p>\n

As I write this blog AIG is hitting the 43 price target I had established for it when I got long at 40.70.\u00a0 As professional traders we need to constantly take our emotional temperature and have a good understanding of our current energy level.\u00a0 Both of these factors may be determinative in how we execute on any given day.\u00a0 Although AIG presented several\u00a0 great opportunities today to make money I was in not physically or mentally prepared to take advantage of them.\u00a0 I overreacted emotionally when I missed my initial short at 9:31 and was too tired to recognize that once it had exploded to the upside from 39 that all short positions should have off the table until the next major longer term level which was 43.<\/p>\n

Looking forward to getting some rest this weekend…and beating the crap out of AIG next week \ud83d\ude42<\/p>\n

Don’t forget to follow us<\/a> on Twitter!<\/p>\n

\"aigreversal\"<\/p>\n","protected":false},"excerpt":{"rendered":"

This morning I highlighted AIG in our Stocks In Play call before the Open.\u00a0 I discussed a great short entry based on the premarket price action.\u00a0 AIG had been trending down for over a week since it failed above 50.\u00a0 In today’s premarket it was below 39.80 which was the price it rallied from on September 21st.\u00a0 In the premarket … Read More<\/a><\/p>\n","protected":false},"author":143,"featured_media":2119,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,8],"tags":[],"class_list":["post-2105","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-comments-2","category-steven_spencer_steves_blogs"],"yoast_head":"\nWow, That Was Some Bad Trading! | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/wow-that-was-some-bad-trading\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Wow, That Was Some Bad Trading! | SMB Training\" \/>\n<meta property=\"og:description\" content=\"This morning I highlighted AIG in our Stocks In Play call before the Open.\u00a0 I discussed a great short entry based on the premarket price action.\u00a0 AIG had been trending down for over a week since it failed above 50.\u00a0 In today’s premarket it was below 39.80 which was the price it rallied from on September 21st.\u00a0 In the premarket ... 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