To borrow a term recently used by the famous Warren Buffett, today was a “subpar” day for us. Yes, it was a positive day on both point and percentage bases, but there were several instances where we identified a clear and measurable opportunity but failed to execute it well or in a timely fashion, leaving money on the table.
AAPL short is the first instance. After closing under the 430-435 level on Friday, AAPL was weak all day. We had a profitable short trade in the morning from about 425 to 422. After a feeble bounce over lunch time, AAPL once again started weakening and rolling over in the afternoon. As you may have seen in our StockTwits or Twitter streams, we identified and called out a trading opportunity in AAPL from 422 to 420. This is exactly what happened, (AAPL actually went to 419 before bouncing to close at 420) but we never managed to get involved, mostly because we were preoccupied with managing other trades. We certainly hope some of you were able to take advantage of this opportunity.
The second missed opportunity was PCLN long. After the initial morning rally, it consolidated in a nice flat and narrow base through the lunch hour. It moved out of this consolidation around 1:15pm and we tweeted that this was the place to get involved with the possible target of 710-711. The trade worked in our favor initially and we were able to take two profitable pieces off. The remainder of the trade was stopped our around 706 around 2pm. Shortly thereafter, PCLN regrouped and then rallied all the way through our target zone closing at 714. First thing we could have done better is not use such a tight stop. Second, after PCLN managed to rally back above 708, the right thing to do was to re-enter the trade, something we failed to do.
As you know, missed opportunities are a part of this business and they cannot be avoided. But it is good to talk about them periodically because they provide good lessons learned. After every trading session I review every trade to identify what we did well and could have done better. A process like this is essential for every trader serious about this business.
Despite the missed opportunities, both AAPL short and PCLN long trades were profitable. Other notable green trades were THLD, DCTH, HA, SQNM, ISIS, and ALXN, while the biggest losing trades were CHTP and PRAN.
March 4, 2013: +3.88 points / 0.27%
- Number of trades: 13
- Green trades: 9
- Biggest point winner: +2.10 (AAPL short)
- Biggest point loser: -0.09 (PRAN)
- Biggest % winner: +6.19% (DCTH)
- Biggest % loser: -3.98 (CHTP)
For more information on today’s trades, please see attached log.