Discussion in 'Risk Management' started by rcanfiel, Oct 31, 2007.
POLL: What was your best trade ever?
I was on vacation in Hawaii a few years ago and took my laptop along. I hadn't planned to trade...but...TYCO was just dropping hard and it was 5 mins before the market close. At that point in time I never shorted or traded on gut instinct. But a voice inside of me just said 'go for it'. So I pulled the trigger on 2,000 shares and turned off the computer.
I awoke the next morning, tuned into CNBC and saw Tyco down 5 points from my short entry. It more than paid for the vacation.
Sometimes you just get lucky.
I recall buying Yahoo, Inc. stock symbol YHOO about 1 week after the initial public offering, about July 1996. It was only 50 shares. I used yahoo.com at work and really liked it. It seemed like a critical thing, like a telephone book for the internet. I remember trade journals reporting that internet traffic was doubling every month. No one around me seemed to notice. If something doubles every month then in about two years it can be really big.
About that time I was reading Nicolas Darvas' book "How I Made 2 Million Dollars In The Stock Market" and I remembered the part about "there is no reason to sell a rising stock". Anyway the price of YHOO stock went down from about $ 25 / share to about $ 17 / share in the spring of 1997. Then the price values began rising and traded a few months between about $ 20 and $ 25 per share. Then the price values broke out of the trading range to new record high values. I recognized a cup and handle price chart formation and it was like a CANSLIM textbook example. This was about September 1997. I was a trend follower then, using about 2 or 3 month lowest price trailing stops or 50 day moving averages but I decided to let this stock run, allow for greater volatility. The price increased to about $ 90 / share. I recall a 3:2 stock split about then. Then the Long Term Capital Management and Russian Debt crisis of about September 1998 occurred. YHOO price decreased to about $ 70 / share and I bought more. As the crisis passed and stock prices increased YHOO appeared as a market leader. YHOO split again 3:2. I held 200 shares at an average price of about $ 9 / share.
Then the market went nuts. I remembered Mr. Darvas' words "there is no reason to sell a rising stock". I held. Price would increase 5 points a day, 10 points a day. In about one month price increased from $ 200 to $ 300 / share. Then price increased from $ 300 / share to about $ 400 / share in a week. It seemed everyone in the world wanted to buy YHOO and I was the only one who might sell. Price rallied $ 20 / share in one day and then an additional $ 20 / share the first hour of trading the following day.
I remember reading in Market Wizards how Michael Marcus would sell if volatility and momentum became insane. I recall Jesse Livermore exiting his trades if panic suddenly appears. I thought the time had come. I sold into the climax top. The date was 4 January 1999.
I bought at about $ 9 / share adjusting for splits and sold almost at $ 400 / share for about a 4000 % profit.
It was one of the most intense experiences of my life.
Later I bought a house on the beach with some of the profit. The profit was so big it paid for all my losses for my entire trading career.
YHOO price then proceeded to double, printing a high price of about $ 800 / share.
All I had to do was follow the long term trend. If I did not sell into the climax top, if I just followed the trend I could have made a lot more money. A three month low price trailing exit stop was all I needed. I did not know it then.
But I know it now.
Then the bull market in real estate came. The house I bought on the beach with the profit from the YHOO trade increased about 10 % during year 2001 then 50 % about year 2002. Then maybe % 50 during year 2003. Then about 30 % year 2004. I did not sell. So I guess compounding ran that initial 50 shares x $ 25 / share = $ 1250 up quite a bit. About a gazillion percent.
The best trade ever recently was basically caused by my brokerage and one of their floor traders. I sold 25 ES (S&P eminis) at like 1524.75 and then was on the phone with someone down at the CME and placed an order to buy 5 FULL S&P 500 contracts, at 1524.50 even, for a small profit at $312.50. The trade would then even out and close, because the E-minis are 1/5th the size of a full S&P floor contract. (Note: Not all brokerages automatically close out/balance out those arb trades, so contact them to make sure they will).
I got filled at 1522.50, making a profit of $2812.50 in just a few minutes. I was really glad that day, and if that floor trader is out there, I want to send my thanks.
Nice story bro.
Thanks for sharing.
And thats so true: There is no reason to sell a rising stock.
I selected: "My trading mistake that worked out in my favor"
Details of trade:
Yesterday I wanted to buy deep OTM call options on PetroChina Co. Ltd. (PTR) and entered to buy 10 contracts.
BUT because of my dyslexic condition I entered RTP (Rio Tinto plc) - instead of PTR - for symbol look up and bought 10 contracts RTP Nov 2007 400.0000 calls for $1.00.
Today (RTP) Rio Tinto climbed $80.00 and I sold those $1.00 calls for $50.00.
Once when I was in high school, some kid was willing to give me his Super Nintendo for my NES and Sega Master System, that trade made me happy for a whole year!
YHOO, the day before it got added to S&P 500 in Dec 1999.
The stock just went straight up all day till the end. I believe it went up about 100 pts. I just kept on buying and buying.
So frigging unbelieveable.
Back in 2005 I bot Sterling Construction stock, I think it was 500 shares. It was on the Amex back then, it's symbol was STV, it's on the Naz now, I don't remember it's new symbol.
I trade by technical analysis mostly, and I had no idea what the company did, and I didn't care. Right after I bought it, hurricane Katrina came ashore and wiped New Orleans off the map. When the clock radio went off to get me up that morning, the news was that the Dow was down hard. I thought to myself, "oh well, I guess I'm stopped out". I went to my broker's site to see what price I got, but I hadn't been stopped out, and the stock was actually up pretty good. And then over the next couple of days it was up REALLY GOOD. I looked into it and it turns out they are a construction company based in Houston TX and they lay pipe, etc for municipalities and everyone was betting they would get some sweet contracts to rebuild New Orleans. By the time I was actually stopped out a couple of weeks later, I had made about $4400 on those 500 shares.
And I don't know if they ever got a contract in New Orleans or not.
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