Quote from lescor:
A little different weekly update to report this time.
Monday was uneventful, +4k. As I mentioned earlier I got clocked pretty good on Tuesday, -18k. A couple really bad trades, those outliers that just happen. They are part of the system and how I trade. They happen and I am ok with that.
Wednesday I got nailed in some INTC earnings-related trades, -7k Maybe a bit of poor judgment or oversight on my part. INTC was up a lot pre-market and I didn't adjust properly for some related stocks and hot hit. That happens too, it's part of the risk of how I trade and earnings season for me is largely about trying to avoid those sector related stocks that aren't always easy to discern.
Friday was really good, +15k. Had a couple good shorts early and the system kept me in as the market sold off. Made about 4 or 5k on the spike in intraday volatility caused by the GS news. Felt like a little slice of the good old days for a couple hours.
But the week was all about Thursday. -81k, over 1.8M shares traded. The single greatest risk with how I trade is operator error or some kind of major system malfunction. I send 1000's of orders before the open fishing for good opening prints. I only get filled on a tiny fraction of these, often times well under 1%. To mitigate the gargantuan risk of something going drastically wrong with this order volume, I've built in all kinds of fail safes and red flags to alert me to any kind of problem before I hit 'send'. Well on Thursday I found a hole in my defense and it bit me pretty hard.
I operate very much by rote in the pre-market. I have a routine that I don't waver from. It makes me efficient with all the pre-open prep I do and it reduces the risk of screw ups or forgetting something. It's so routine that I don't even remember doing this, but I somehow copied and pasted the wrong prices into the wrong column on the wrong spreadsheet, thus sending 1000's of orders at prices that were completely out to lunch. It was just a total brain fart.
The volume of fills and messages overwhelmed my system causing freeze ups and slow downs as I frantically tried to cancel all remaining orders. It was a couple minutes before I could do more than pound my fist and curse. When the remaining orders canceled I was left with over 250 positions, almost all short. Some of these stocks are pretty thin, especially in a sleepy market, and I created some big gap down opens. Of course the market just ticked higher non-stop. Even with the odd tiny pull back my pl just kept getting worse because I was short all kinds of stuff at terrible prices. All I could do was slice up my positions and try to exit as gingerly as I could. I was screwed from the get go, no doubt about it. It took about 45 minutes to get flat and the market never did anything but slowly and tortuously grind higher the whole time.
I've made these kinds of errors a few times over the years. Each time it causes me to re-think my approach, analyze ways to tighten up the system and consider if the reward is worth the risk. It's been 2 1/2 years since I've had one of these and I thought I had all the bases covered pretty well. I've already figured out what to do to prevent this specific error from happening again. The bottom line is that the system is not broken, it was 100% operator error. Looking back at this system for the past several years shows that even with this kind of risk, it is worth it to continue. But I won't lie, it was really hard to come in the next day and go through all the motions again and fire off all those orders. But for my mental state and to get over the debacle, I had to do it.
For me, mental recovery is measured by how long I can go without thinking about it. For the rest of the day I don't think I made it more than 15 minutes. Three days later now and I think I'm doing pretty good in getting over it. Writing this post actually helps.
