The Perils of Day Trading
The following is true. Imagine it were you. Today, I saw a headline on the news service about a contract that NAVR had acquired. I watched the stock pop to above 7 dollars. I was preparing to short it. Then, Joe Kernan on CNBC hinted that he was going to do a story about a stock that had "almost doubled today". He didn't want to mention the name of it because he thought it might run up when he did.
I knew he was going to mention NAVR, and I knew that it would run like he thought, at least a point or better.
I was in 2 other trades, but I had a little money to spend. I prepared my window to buy some shares just when he mentioned it. I won't say how many, you can make up a number. Let's say I spent more than I made last month; about half of my available buying power. It was a pretty sure bet, so I was going to load the boat.
Kernan said "Navarre", and I pushed the button.
The stock was at 7 1/2.
Unfortunately, I had not changed my screen from sell short to buy. I had instantly shorted the stock at 7 1/2, and then my screen locked up from the massive buying. The system overloaded, I could not enter an order.
I watched in utter horror as the stock ran higher and higher. I could not unlock my screen to get out of the trade. Finally, the screen unlocked. The stock was at 10.
I was in shock.
I snapped out of it, figured the stock would go down fast, and shorted a like number of shares at 10 5/16, leaving zero buying power.
The stock ran to 11 fast. I thought I was utterly and completely screwed.
I was having heart palpitations. It was unreal.
Then I watched as the stock backed off a little and then ran back up to above 10. It hovered, trying to go down but it wouldn't. It looked very strong.
I knew I was doomed. I sat back and waited for the carnage. Then I thought that maybe, maybe somebody with a lot of buying power was squeezing the shorts that had loaded on just like me at 10. It worked really well. The shorts bailed out as the stock rallied and fell back, looking for all the world like it was ready to go to 12 or 13. Then it backed off to 9 3/8.
I relaxed a little.
The stock went down, but not fast, it ran up and down but slowly went down lower and lower.
I got out at 8 11/16.
Not the most fun time I have ever had. |
