I am facing my first serious challenge as a manager, as I have quickly discovered that while STOCKKBROKER exceeded my expectations, I have a pair of traders who just have trouble cutting losers short (and STK confirmed this as he has been trading with them for a while).
This morning I called LM on XBD strength (45.4), and futures went up, K took some and both of us were in the money by 20 cents at one point, then futures tanked I got out immediately. At the time there was a quote server issue as we got no feed from primary quote for a few minutes, and I am thinking maybe he didn't switch to backup quote in time and allowed it to go against him for what, 30 cents?
He held it all the way down to 48.6, and then on a squeeze to 48.8 I told him to get the hell out as futures looked really weak. He lost 60 cents in a stock that took half an hour to move that much, that is plain unacceptable. He asked me to up his size (currently 300 shares) because he was net up $100, $200, $50 first three days, and he was up today and allowed that one trade to go against him so much. This is plain bad discipline and I have to keep him at 300 for at least rest of the year given the way he holds on to those losers (it has happened before). I know he is still up overall but I need more time to evaluate his performance. I may not be able to get the monitoring software until the new year when my contract is complete, once I do I am going to take this kind of things personally. In a thin stock like that, what hell are you looking for, a squeeze? That is the kind of stock that can go down 1 point without a squeeze!
That said, I haven't go on K's case at all because he is still up, and I do not want to babysit anyone, it is both disrespectful to a trader's ability AND it hurts their confidence level. I want them to play their own game with zero interruption from me if at all possible.
In the case of S however, it has been a total disaster of a start, and I am really sorry for him because I can see that he has intensity and passion, just that he has been trying to do too much. He has been up decent money (for 300 shares, $150-300 is decent money) at some point during every game he played here on the team, yet he finishes down, every single day, through churning. Last three games it just hit the fan as he managed to lose $600 on Tuesday, $400 trading 200 shares (reduced by risk management) on a great trading day on Wed shorting RYL instead of going long, $650 today trading 200 shares with that nasty ASW trade.
Every day he does well, then one big loser trade destroys him. I take my duty as a leader very very seriously, and I have a very high demand for my ability to lead. I want everyone on my team to be successful, which is plain impossible but I will give it my 100% effort. Today I had to play the role of villain because he was down $500 in ASW and shorted two hundred more shares at 18.50, which in hind sight was one hell of an entry and would have probably allowed him to make his money back. But on a squeeze I told him to cover it, and he did.
I got a nasty feeling in my stomach and I didn't trade in the afternoon because of it. If he was even flat entering this game, hell if he had one up day since he started, I would have never ever interrupted his trading. I firmly believe that as a new guy on a losing streak, he has zero reason to be in a stock that moves from figure to figure, as this is the kind of stocks that can truly blow him out.
But there is no doubt that he will be asking himself what if he held on to that short, and inevitably, I feel guilty because I basically forced him out of what would have been a huge trade. I understand my duty being a leader, that I can not let someone lose $600 trading 200 shares, $2000 in six games after they got into our firm with my own rates and what should have been a fresh start. I believe I have done the right thing, because no one knew where the stock would have ended up, and at the speed it was moving, the kind of mentality he had, it could have been a four digit down day trading 200 shares!
Yet still, I forced him out of his best opportunity for a come back, did I do the right thing, yes. Do I feel good about it, no. It is eating at me as we speak. I DID NOT want to tell him what to do, but I had to protect both the firm and him, I had no choice.
Fortunately I had a conversation with him afterwards and he seemed ok, but I know he will be asking himself many times tonight what if the Hitman didn't tell him to cover those 200 shares. He has a great personality, and he seems to be very matured and did understand my position, but I hope that I will never be put into this situation again (when I absolutely must force someone out of something, it better go against their position further from there).
You can not teach discipline, they have to touch the stove and learn it fast before they lose their hands. That said, I am at a crossroad with the real time filters we have. One of them picks up stocks that tanked at least half a point within the last 2 minutes, so basically you try to bottompick it on a squeeze.
Now, ASW did not came from that filter alone, everyone and their mother saw it and tried to bottompick it. The guys on my team were trained by someone who is supposed to make a million dollars a year and a significant part of his strategy is picking those short term bottoms. Given his size, I am sure whether STK admits it or not, his team has a lot more respect for his opinion than mine, and I FULLY understand that, as I would be in the same situation.
While I have seen people picking bottoms like that successfully, I just don't believe it should be a big part of any newbie's game, if you want to do that strategy, do it once you have some capital in your account. I believe it is a loser's game, but I know people who do it successfully so I can not call it a loser's game just because it doesn't work for me.
I am trying to be an open minded manager, and I DO NOT want to kill any idea my teammates come up with. When they told me filters is a big part of their game, I had questions on my mind as I don't believe filters should be a part of any newbie's game, you must develop your bread and butter stocks first as the ability to consistent shoot and hit anything that moves is the ultimate level of trading. Still, I negotiated with the firm (and believe me they do not want new guys to be on filters), I got a First Alert station, I didn't put it on my desk, I gave it to STK and S after I configured it.
The problem is, bottompicking in a downtrending market like today is death, and it is not the money they lost from trading this filter that worries me, it is the way this filter gives them bad habit to pick anything that went down hard and fast (ASW) that worries me. Coupled with a gap-up filter, you get to pick tops and bottoms, and I just don't like the idea of new guys doing this.
I don't want to take away creative freedom of my traders, but I was very close to lock that filter out for good after ASW happened. Honestly, picking those "order imbalance" gap-downs will make you pick every gap-downs, and if your discipline is not there, you will get blown out no questions asked.
If tommorrow turns out to be a massacre of bottompickers again I am definitely shutting that filter down until team's P&L improves. No offense if you are reading this STK, but I think you make far more money from sector trading than that filter (EPG was a gift and you could have saw it if you were watching XNG too).
I need to take over the situation and fast, before the situation worsens. Until a trader proves to me that they can make money without filters I probably won't give them access to it anymore. Tommorrow will be the judgement day.
I don't care if they were trained by guys who made seven digits, I need to put an iron grip on some of the stuff they do until they show me some green on they P&L. I mean, the guys just escaped a slave contract, left behind a big deficit that is mostly commissions, he is eager to play in this new environment, I can not afford to let him digging himself a new hole, the psychological effect on him could be career-threatening if he digs himself a new hole, this time mostly in actual P&L! I have to stitch up his wound, or at least slow the bleed.
