Trading Tip #6 Hit the bid –Take the Offer and Just Do the Trade!!!
I was away from my desk today and I wanted to short NFLX. So, I called one of my brokers and told them to sell ( Short ) NFLX at the market and hung up the phone. NFLX was trading at 175. 25 and I waited for the email on my execution, knowing that it wouldn’t be exactly there, but I had hoped that it would be close. The email came and, yes, I was filled at 173.46. I had to laugh for a moment because it was trading $176.00 when I got the email. In response to my request for times and sales, I received an email showing me that the order was placed at 9:35, along with a note from my broker saying maybe next time I should use a limit order*. First off all, I called to place the order at 9:32. 3 minutes to fill an order in this market is an eternity. In the pit, if an order took 3 minutes to fill the clerk would have 3 as@holes and the broker would have 2 – by getting chewed out by the client. And, most likely, the broker would have to adjust the client from money out of his own pocket. Continue reading →
THERE IS NO HOPE IN TRADING. It is like I tell my executive coaching clients who trade – If your thoughts keep returning to “I hope it goes up” or “I hope it goes down”, GET OUT!!! Get flat and take another look at your view of the market. Hope is on a date with an old friend of mine and, trust me, it is not going well. Too many traders are concerned about being flat and missing part of the trades. Don’t be. You can always get back in. No one catches every part of a trade. Being flat is the best and only way to think clearly, even if its just for a moment. How many of you have been crushed in a down move by hoping the market would go back up or saying “ this market has to bounce“? The most important thing about understanding market movements is that the market doesn’t have to do anything. No one is bigger or smarter than the market, and if you think you are, in time you will be carried out like so many traders before you that you never heard about. Continue reading →
This goes for the all types of traders, from the smallest to the largest. Once a position is established long or short, it’s best to test and test often. Let’s go with the long position for this example. Looking at the recent move in Facebook, let’s say that Trader one is a short-term day trader who likes to be flat by the end of the day, so he/she buys 500 Facebook shares at $27.75. The stock moves to $28. I would suggest testing the market by selling just 100 shares at $28.
As President of Sterling Commodities, part of our risk management for the Clearinghouse was to go over all of the traders accounts every night. We needed to watch and analyze their trading patterns so that we could tell when it was time to talk to a trader and tell them to pull back or even take a few days off to regroup. We were able to tell when traders were about to move to the next level of trading – both in size of positions and risk tolerance – and then give them guidance. We helped them move to the next level. Continue reading →