Every once in a while we all let our guard down and become undisciplined in our trading, rarely does it work to our advantage. Yesterday I started the day with a bearish mindset and had early success with a couple of short positions. One stock which looked like it should continue lower for more than a scalp trade was Celgene (CELG) With my bearish bias, I shorted 500 shares near 50.10 in an an account I manage for my Dad and in which I generally position for slightly longer holds than the ones I usually mention. I got sidetracked for a bit and didn’t realize that the stock rallied over a dollar very quickly. When the stock was 51.20 (or so) I realized that I had an open loss of over a dollar on my 500 share position. I looked at the chart and saw the stock was firmly above daily VWAP and realized I would have to bite the bullet and take the loss. At this point I chastised myself for failing to set a stop on a stock I wasn’t going to watch closely.
I checked the P/L for the account and saw an open loss of approximately $5,600 and realized in horror that I had accidentally sold short 5000 shares, not 500! Emotions quickly turned to rage as I recognized what I had carelessly done. I knew I had to calm down and take an objective look at the stock before I puked my position and bought back all shares at a loss. I saw the stock was butting up against the declining 5 DMA and figured I would give it just a little bit longer to see if I may be able to minimize the damages somewhat.
What happened next was truly unbelievable. The stock imploded. It dropped so fast that by the time I entered my buy to cover orders in I had covered the entire position with a gain of $.68/share! In the course of just a few minutes I went from being down $5,600 to up $3,400. I wish all my bad trades went so well.
This type of luck cannot be relied upon (obviously) and while the money made will spend the same as it does from profitable trades I am more disciplined with, the experience left a very bad taste in my mouth. Reminders to self; double check open positions, if I am not going to watch the stock closely then set a stop.