I haven’t been this mad at myself as a trader in a long time. After the trade I vocalized, “That was such a stupid trade. That is exactly how not to trade.” I was pissed. Furious. I had a family issue that placed me in a foul mood right before the Open. To the point where I almost got up and didn’t trade the Open. Maybe I should have.
I was trading CAVM mainly on the short side for an opening drive to the downside. I caught some of that. Then I recognized the selling that drove CAVM down was not the same. Next I saw an upmove. Still next a bullish buyer sat and absorbed a significant amount of stock at 26.50.
Now I am generally slow to flip. For me with a set up such as the above I am concentrating on hitting CAVM if that 50c buyer drops. But it was right on the open. And there are no trends in the first fifteen minutes of trading. There is price discovery.
So I started to wonder if I ought to trade with more flexibility for this trade. The same seller was not there. There was an aggressive buyer. CAVM had a lot of room to run if I caught this reversal. It appeared I could easily control my risk if the 50c buyer dropped. So I bought a few lots and watched.
The buyer dropped and my stops were triggered. If I have multiple lots I often use stops as this is now easier to control my risk. Then it appeared the 49c offer was holding. It wasn’t, I was just too aggressive here with an overflip. I got short. It held a little more. I got short some more. But then CAVM came back and started holding the 50c bid again. Argggh. I covered one lot.
Generally when I exit a short I like to bid out. I am not a big fan of paying the offer to exit as this can be costly for the active trader. A skill a good intraday trader must develop is how to bid out of a short and save the spread. I started to bid out of my last lot. I bit 52c and nothing. Someone stepped higher. I bid 56c and nothing. CAVM spiked to 7oc offer. I bid 61c. CAVM spiked to 83c. I bid 71c. I just couldn’t get CAVM on the bid. Ripper.
I paid 27.01 to cover. Did I mention I was pissed? I sensed I was in an angry emotional state. Like most traders I considered the home run trade to make all of this pain go away. I can control those emotions and passed on that idea. I wanted to bang my keyboard. That was just gonna make some noise and I wasn’t down enough for that nonsense. Should I get up and take a walk? No I know I need to make One Good Trade and then One Good Trade. I remained patient and looked for a clear trade that made sense to me. I used my anger to focus on an excellent risk/reward trade. I have also used this frustration to eliminate this overflip from future sessions.
That was a day changer trade. I got caught for one lot short for a 51c loss. I should have captured a one lot gain for 80c and still be long another $1 in the money for my other lot. At one thousand share clips that is a $2330 difference. And just because of that one mistake to overflip.
Bella
5 Comments on “Caught in an overflip (CAVM)”
Very interesting to know that as an experienced trader, that this still can happen. I’ve only been daytrading for a year, and it used to happen to me all of the time. I would take a lousy trade, start in a hole, and just dig myself deeper into the hole by taking revenge trades. I personally stop trading for the day after I break one of my rules. Saves myself a lot of mental anguish, not to mention money. Thanks for sharing.
I love the brutal honesty and the description of what is going on in your head. These guys are the real deal, willing to to show the occasional weakness/fault for the greater good of the developing trader. It’s apparent that it’s not always sunshine and ice cream from bell to bell even for the most experienced trader. This is why they teach us to journal and review in order to find patterns in our trading style as well as behavior and how they may affect our trading.
I know it may not make you feel any better now, as it is probably water under the bridge, but I am thinking that the mental recovery after the rip was extremely more difficult to pull off than the trade itself. Because of this, I would consider the whole experience a success. Good work.
When you guys say you trade the open, are you guys are still waiting the first 15 min for price discovery before you take a position ?
Haha, I experienced nearly the same thing that morning with CAVM with a bull call spread at the open that I intended to stagger out of quickly. I closed them out via the in door with both sides. Just a wrong side of the bed sort of move that usually doesn’t happen, but got caught up with the same bid side action when trying to close the long on the way down, and then stuck with the short while it moved back up. Stopped out at 27 and was like wtf just happened!
no often we trade right when we open or even in the premarket. today was a good example as we were trading SLV before the open.