Today I made I mistake I rarely make – I let my bias take over my trading. I came in with a small overnight short in MGM and in AIG. Both showed huge relative weakness yesterday and both were working great in premarket with the gap down. The plan was simple, I would add to the positions once below important support levels or short into resistance levels established the previous day.
I wanted the sucker to plow through 43.5 so I could add to my short. I wanted it to break below 43 so I could crush the stock. I am trying to buy a place in South America and I was thinking if AIG went down to the mid 30s I would have some extra cash to furnish the place big daddy style… oh yeah, mistake number two. Can you say focus on the trading and not so much and what I would do with the money if I crushed it. yikes!
AIG went nuts right before the open for lack of a better word. It went from 44.4 to 43.3 back up to 44.5 through 45 back down to 44.5 all in less than a few seconds – could have been a couple of minutes but it was fast nonetheless. Luckily I was shorting into the pops and covering into the retarded downticks. It wasn’t fun and certainly got my heart pumping for a second.
The market opened and AIG was screaming as a long on the tape. I was a half point + in the money with some size and I didn’t cover. I let my bias of the tape and relative weakness from the previous days cloud my judgement. I tried but not hard enough to cover some of the short and before I knew it I was getting taken for some shorts at the prices I wanted but then it turned ugly. That sucker was getting ready to party on the long side. My out was above 45.6 and I could tell I was fighting the momo but I refused to cover and get long as the tape indicated it.
My day would have been a lot differently had I actually traded the dopey stock appropriately. Luckily there was plenty of opportunity today in HOG, WYE, and the casinos for me to make back that silly rip. I wrote down plenty in my journal to remind me in the future of how quickly I can get in trouble when I let a bias take over my trading. Hope your trading day was a lot more fun than mine. Happy trading!
