Hello all,
Today I'm going to share a blunder with you. I went into the kitchen to make a quick sandwich and it ended up costing me around $350. I was long 300 shares on AAPL as it had just bounced off of support and was showing some minor strength. I heard a growl, it was my belly and it needed some nourishment immediately.

I ran to the kitchen and opened the fridge. I then ran back into my trading office to set a stop. I set a stop order just below support and ran back to the open fridge to get the sandwich ingredients and whip up a monster with tons of mustard on it. I love mustard. MMMmmmmmmmm...

As I'm shuffling across the hardwood floor in my flip flops with a sandwich hanging out of my mouth I spot it from ten feet away just as I entered the room. The stock had tanked! I bolted to the screen and began chewing faster and harder. The sandwich was gone and I could finally shout the way I wanted to when I first saw it. " What the F%$*! This is unbelievable!!!" I just sat there staring at the screen for a few minutes before I exited with the loss.

This is my war story. Can any of you top it?

What we have learned from this is that you should never let your belly tell you how to trade.

Here is the actual chart from today.



Also notice the head and shoulders pattern. I didn't even see that until now. Ah well.

Hey Shootanappleoffmyhead,

Thanks for sharing that, the focus that is required to avoid situations like that when daytrading is one of the reasons why I personally stay away from it. I am too ADD and could see myself getting a phone call as i was putting on a trade and 10 mins later remembering that I was in the market and now down huge;-)

Best Regards,
Dave

__________________
Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.

Apple.. ( hope you don't mind me calling you by a shorter name)

The biggest black body candle i see all over the chart it's the one that happened when you got your sandwich.

Why did your stop didn't got executed? Was it a "Limit Order"?
When it comes to stops.. I use "Stop Market" orders.
As soon as the activation price it's touched.. The position will be exited
(expect a huge slippage when cases like this happen,, but is there any better choice?)

Good luck..
Appreciate your story...

-Daniel

Haha..yes I know. The minute I go to get a sandwich the stock decides to move the most it would move for the whole day, ironic.

To answer your question Daniel yes I normally do use limit orders for stops because they usually get hit with no problem on a stock with good liquidity, and I just can't bring myself to trust that my order is being filled at the actual market price when slippage on a market order is so ridiculously far away from bid or ask. Sometimes though, when supply or demand becomes excessive, it is not easy to get a fill at any particular price with a limit order when price is trying so hard to accommodate the many sellers that suddenly flooded into the market. It's almost like I was in a line and had to wait my turn to get filled on a sell order so if my limit was set to a certain price I am very likely to get passed by on the way down, and that is exactly what happened. These kinds of situations make it appear a good idea to start using market orders, but most of the time I am not away from the screen long enough to need a market order so I don't think I'll be switching over to the dark side anytime soon. If I had a chance to do it again I think I would do it the same way because I really have a pet peave about market orders.

Thanks for the reply and don't be afraid to share some of your stories on this thread as well. We all would like to hear them. I also think it is important for us to learn from mistakes and try to see what we are doing wrong when the market totally annihilates us.

Yea, it takes a special brand to be a daytrader...I think they call it riddalin.
No seriously I really have no problems watching the screen all day, without mind altering drugs that is. I actually enjoy watching the market all day waiting for a good set up. I feel like it fulfills the hunting instinct that every man has.

Am I the only one thinking "what kind of sandwitch was it?"

Just trying to figure out your trade, you bought on a bounce on minor support - what support did you see? Looking at the candles after the long black there was a doji. I'm not a daytrader so I'm not critiquing you but was just wondering if this was a "normal risk" type of trade or something more on the riskier side.

rocketman7

Hi Rocketman,
It was a very expensive ham and swiss with tons of mustard globbed between the top piece of bread and the cheese.

See the red line on the chart? Thats the support I was playing off of. Normally I don't use candlestick analysis because to me all of that seems silly. The size, shape, and relationship between candlesticks ( which is what this type of analysis is based off of) can easily change with a slight change in the time frame being viewed demonstrating the brevity of using a system which depends on so many conditions to be met before they allow a setup to take shape. Candlestick analysis has it's uses when dealing with timeframes that generally do not have much head room, like a weekly or daily chart, but as you descend the timeframe gamut dojis, bullish engulfing patterns and shooting stars tend to lose their significance. Support and resistance do not vary with timeframes, and that's why I mainly stick to price action and volume as my main methods of finding good setups. When using lower timeframe charts I have even been known to refrain from using moving averages at all. Again, with the higher timeframes these indicators are very useful to decipher the state of trend or consolidation the stock may be in.

As for the level of risk this trade held, under normal circumstances this trade roughly would have had a 1:4 risk/reward ratio which is considered to be a very good setup. I knew exactly where I would know if I was wrong, 174.20, and I had a price target of around 175 depending on what kind of energy the stock was showing as it approached this level. So this is actually the level of risk that I enjoy exposing myself to on a daily basis.

Thanks for the reply and I hope I explained everything so you could understand it. Have a good one Rocket.

Hello shootanapple,
Sorry about your loss...that was an expensive sandwich..but actually could have been worse...you asked if anybody can top it...Actually I think I can....I was long OEX (index) call options on October 19, 1987...(probably before your time) after a long run of successfull options trades...I thought I was a genious, but turns out I must have just been lucky...lost all my gains that 1 single day...all the options expired worthless....(this was way before informedtrades.com) I was out of the market for a long time (except mutual funds)...its only been last 1 1/2 years or so been getting back into some trading..lessons hard learned...
I have read your posts and enjoy your perspective on things...you also show that nobody is perfect and are willing to admit to your mistakes...congratulations... Jerry (miami)

Shootanappleoffmyhead

I'll be happy to share some bad experiences with the market. (I will work on geting some charts) Those moves that turned against me where bad enough to kick me out of the market for some time.. Thanks to that I was forced to study and read and try to figure out what did I did wrong.. That's how bad it was..

I got greedy and bought thousands of share for QXM. Similar with your sandwich incident. QXM tanked as soon as I committed my money. So many day in a year.. The the day I decided to go in big time.. hell broke lose. At that time I had no knowledge whatsoever of Tech Analysis and Money Management wasn't even in the picture.

Now that we where talking about Stops. I want to share this review of a book I liked a lot.

"Stop and Make Money" by Richard Arms
I liked that book because many of us take it for granted when it comes to buy or sell orders.. It's quiet an art to do it right and efficiently. This book explores many different ways of ordering... The mechanics of ordering and so on.

Will be nice if we share our trading stories.. Learning from each other it;s very useful.

-Daniel

Hi Miami Jerry,
Black Monday....I was 7 years old when that went down. Ouch, is all I can say to that one. I have heard so many black monday stories and they never get old. I always like to hear about how the market has the power to humble even the best of the best traders. It reminds me that the market can do anything it wants and that I have absolutely no control over what the market does, which happens to be the first rule of my top ten golden rules of trading in my trading plan.

That must have been pretty financially devastating for you since you stayed out of the market for such a long time. Of course, how can you touch a hot stove again when your hand just got burned off? Well, I wish you the best for your future of trading and can honestly say that your sandwich was more expensive. Thanks for the reply.