My plan coming into the day was to do battle with the big mouth stocks and go long the steels after the opening. One of the stocks was PAL. It was up a big amount and had never seen that type of gap before. I was hoping to short in the 11.00-11.20 range. It started trading very early. I was aggressive and got short 2000 shares at a cost of 10.97. It spent the rest of the premarket trading between 10.75 and 10.95. I thought I had a big winner. Problem was that the decline stopped around 8:30 and the stock started slowly moving up. The plan for these stocks is short at 8, cover after a decline or 9-9:15, go long if conditions look right, sell long into the opening pop and then go short once the speed of the pop dies.
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I didn't follow the plan. I thought the pop was going to be minor. Most of the big mouths stocks had not popped a lot recently. Boy I was wrong and to add to that, I had orders in to double my position just above the premarket price. Suddenly with in about 3 minutes, I had a position that was $2000 in the red. I wanted to add more to the position but never add to a loser unless it is part of the plan. So I sat seeing the big Mo was slowing and the stock started rolling over. I covered 3/4s of the position on the first dive down only pennies over my cost but I was stupid and held on to a quarter. I covered the rest at a much higher level fearing the highs would be retested. I nearly picked the top tick of the morning. All in all, I felt okay. I did not panic. Was able to reduce my loss a lot. The bad thing was paying so much attention to one stock, I missed beautiful buy signals in the steels. If I took them would have covered the loss easily.
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By time time I could think again - my trading mind was shot. Most important I walked away without a big hit. The lesson is do not predict the market but follow it.
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The numbers - Gross - 435 net - 485 shares traded 8000
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I didn't follow the plan. I thought the pop was going to be minor. Most of the big mouths stocks had not popped a lot recently. Boy I was wrong and to add to that, I had orders in to double my position just above the premarket price. Suddenly with in about 3 minutes, I had a position that was $2000 in the red. I wanted to add more to the position but never add to a loser unless it is part of the plan. So I sat seeing the big Mo was slowing and the stock started rolling over. I covered 3/4s of the position on the first dive down only pennies over my cost but I was stupid and held on to a quarter. I covered the rest at a much higher level fearing the highs would be retested. I nearly picked the top tick of the morning. All in all, I felt okay. I did not panic. Was able to reduce my loss a lot. The bad thing was paying so much attention to one stock, I missed beautiful buy signals in the steels. If I took them would have covered the loss easily.
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By time time I could think again - my trading mind was shot. Most important I walked away without a big hit. The lesson is do not predict the market but follow it.
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The numbers - Gross - 435 net - 485 shares traded 8000
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