Don’t Get Tempted by Forum Posts

The market sold off yesterday, and I formulated my plan to trickle in the longs over time at key support levels.   Today I was able to add second lots for UPRO and SPY and the market bounced a bit.  All according to plan.  Of course, the plan to go long was based on the following premises:

  1. QE2 is to continue until June
  2. This is the 3rd year of the presidential cycle
  3. SI indicator still advise buy on dip

Of course I don’t know if Libya’s instability (among many others in the region) which causes flights to safety and panic on oil supplies could be black swan enough to fade the above premises, but this is part of speculation – as long as my entries are appropriate.

Now, I got tempted to participate in ICO due to a post on stocktwits.com and got into trouble.  The market was selling off all morning except metals and energy.  ICO was in coal which is not exactly oil, but it was one of the first to retrace the early drop and was green at the time.  So my first entry was on a backtest of upper trend line, then I added on the lower trend line.  By now my position size was already non-trivial so I reduce position on back test to the broken lower trend line which was a good move.  Then the general market sold off in late morning and I ended up having to do my usual fire fighting.  All was well except as I was getting rid of my second lot, I was afraid it wouldn’t get filled (fear due to inappropriate position size) and so I sold some odd lots before the order got filled AND I FORGOT to cancel the original limit order, which eventually got filled.  As a result, I had a lot fewer shares remaining than I had planned.  Instead of 1000 shares I only had 400.  I sold them on a weak candle and missed the reentry by 2-3 cents and ended up a losing trade ($192), and missed the run.  The gross loss would have been ($400).   I know I should count my blessing that the trade didn’t go out of hand, but the order entry error was costly.  I also should just focus on my own list and plan and not get distracted by the posts by others.  These posts normally don’t serve well for many reasons:

  1. I would not be familiar with others’ stocks
  2. These are normally high beta stocks
  3. They distract you from your own trades

 

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