Market orders can Kill!

Discussion in 'Trading' started by ddefina, Feb 28, 2002.

  1. ddefina


    Was short 600 shares of ESST this morning and had a nice $900 profit when disaster struck. I was short at $18.55 and figured I'd ride it down the rest of day when trading halted and 15 minutes later it gapped up to around $19.00. In 2 minutes it reached $23.55. My stop (market) was at $19.50 but apparently everyone elses was before mine because I didn't get filled until $23.20 Ouch! In 17 short minutes I lost $3,690 on a relatively small position ($11,000). Talked to my broker and they thought the trade looked ok, and also checked the Island T/S noting my fills. Lot of buy orders in right before mine.

    I don't believe a stop limit would've helped either, since too many people were trying to get out, but I guess this is just a risk of trading. Guess I should keep an eye on earnings releases as well, but I figure in the long run they even out. Anybody have a similar experience with this bast@## stock?

    Luckily having a good day otherwise, only down $2,000 overall.
  2. stevet


    "My stop (market) was at $19.50 "

    are you saying that you put in a market order when the price showed at 19.50, but it was another few dollars before it got filled?
  3. Commisso

    Commisso Guest


    I think he is saying that he had a live stop market in and it got filled with 4 pt slippage...
  4. ddefina


    Placed my $19.50 stop at the market open. Wasn't around when the stock was halted and then reopened for trading. My stop should've activated at $19.50 and it wasn't until $23.20 until I got a fill on a market order via Island. Had 100 shares filled on Instinet @ $22.55. Makes me wonder if my broker just left me hanging on Island instead of checking other routes, since I was using Best execution? Something I'm going to check into. Best price isn't necessarily a good thing if there's no liquidity.
  5. Ddefina; With that stocks' quarter ending March 2,I normaly figure it would be alright to be in to close of March 1 don't you? [Don't like to hold thru earnings day,might make exception ,in strong uptrend, or strong takeover target]Any ideas on protection from earnings suprise,I like market orders,regular market hours.........
  6. Earnings surprises tend to have an asymmetric effect. Strong, high relative strength, high P/E stocks tend not to jump a lot on good earnings news, but really tank on poor results. Low RS, low P/E stocks tend to shrug off bad news and respond well to good news. Therefore, in principle one should be prepared to hold a short position in the first type of stock through the earnings announcement and not worry too much about being either short or long the second type.

    That's the principle. In practive I am much too chicken and try to avoid holding any position at that time.