You might think it was pretty nifty how I escaped getting crushed by the AIG pile driver this afternoon(see 11:59 post). Well it was nifty, but my reasons for bailing out mere moments before the red candle of death were based more on human behaviour patterns than technical indicators.
First, I had a substantial profit that it would have been foolish not to bank, second it was Friday afternoon and who wants to hold over the weekend, third every daytrader and his/her dog that got or missed a piece of AIG earlier this week would be trading it dreaming of getting rich, and fourth, those shifty eyed, hawk faced, bald headed market makers who got reamed out by their puppet master bosses for letting the price get run up before they could get their full load, were bound to want to exact some revenge on the unsuspecting.
I kid you not 100% true, all these things went through my mind as I clicked sell. It would have been twice as sweet if my broker had shares so I could have shorted it then. Alas no. As it was I just shook my head when it happened. I imagined the howls of pain from a 1000 traders as those MMs played their dirty trick. All I could do is wait for it to go low enough to take out all the newly set stops and exhaust the downward momentum, throw a market order in and ride the bounce. Stocks bounce like rubber super balls on concrete sometimes. It’s one of the safest and one of my favourite plays.
I know somewhere in my blog writings I mentioned the “unknown forces”. This one of them. File it away in your memory to use again another day.
Posts
4 comments:
Part of the education I get here is the disruption of and disassembly of former beliefs about how both trading and the general markets really work.
For so long I believed that trading and the markets were a succession of decisions, like following a flow-chart. If X does this, and Y does that, then the market will do Z. If Z presents itself, then I will click buy. I will then hold until the price gets to this point, and I will exit. I saw it as methodical, fixed, decidedly quantifiable; with enough experience and aptitude, it could be mastered. Like cracking a safe. There was one combination and once I got it, I was "in."
This was my comfort zone because it is how I process thoughts every day and have for all my life.
I saw the markets and trading as water travelling in a pipe... precise, controlled, with well defined boundaries. In reality, and what I've learned here at FNG is that the markets and trading are more like water poured from a pail; splashing everywhere, without a clearly defined pattern. But in it, there is some direction. Just as water dumped out on the ground will follow the contours of the earth even amid the chaos of drips and splashes.
-
It really has been eye-opening and legitimizes non-traditional approaches to learning this art; study of mental acuity and the power of concentration. The standard use of linear thinking and "exactness" of thought do not fit well with this approach to trading.
I successfully traded the AIG break above $28 yesterday and, like you, got out just in time...in at 28.13 and got out at 28.75 just before the dump. I held to see if it would break above $29 and when it was clear that it wouldn't break it, it was time to get out.
Thank god for my F12 hot instant close-out key!
BCT - You really hit the nail on the head with your description of the market. It is all of that.
But every once and a while a rhinoceros comes charging through your nice, sunny picnic area intent on messing it up.
Certainly there are stocks that move quietly along, not making much noise, always predictable. But what happened in AIG and JRCC this afternoon is a reminder never to be complacent with the unknown forces that lurk around.
Yngvai- nice trading then mate! AIG is a good trading stock. It went on my watchlist a few weeks ago after it started to move up again. Good daily trading range, small spread, big volume-everything you need.
Post a Comment