Oops - trading error

[MichaelD]

One of my systems is a day trade system; enter on the OPEN and exit on the CLOSE. It signalled two trades today (perfect setup conditions for the strategy), so positions were duly entered.

The positions performed appropriately.

Time to close the positions...start up the trading platform at 3:30pm...that's strange...no trading action since 2:30pm.

D'OH!!

Not exactly the very best time to have large open positions or to forget that the ASX closes early on the day before a public holiday.

(For anyone reading this down the track who doesn't realize the significance, 'tis Thursday and tomorrow is Good Friday).

 

[kingie_d]

Oh! Nasty!
You don't want a gap opening after Easter in the wrong direction!!!!

 

[nizar]

One of my systems is a day trade system; enter on the OPEN and exit on the CLOSE. It signalled two trades today (perfect setup conditions for the strategy), so positions were duly entered.

The positions performed appropriately.

Time to close the positions...start up the trading platform at 3:30pm...that's strange...no trading action since 2:30pm.

D'OH!!

Not exactly the very best time to have large open positions or to forget that the ASX closes early on the day before a public holiday.

(For anyone reading this down the track who doesn't realize the significance, 'tis Thursday and tomorrow is Good Friday).

Oh no.
Seems like even the best of us make mistakes.

 

[Julia]

Michael, goodonya for making it public. Hope there's no significant damage.

 

[RichKid]

D'oh!! haven't we all done something similar at some stage!!? Congrats for facing yourself instead of looking elsewhere for an 'explanation' Michael.

If the position is large enough to warrant it maybe you could hedge somehow?? Not sure if the markets are open atm though, maybe a MM style cfd provider or the like with 24hr markets? (eg if it's a commodity stock maybe you could hedge the underlying (depends on the commodity's price relationship to the stock)....dunno really, Wayne or Sails or someone who knows derivatives maybe able to help, hope it works out for you. All the best.

 

[cuttlefish]

ouch! long or short? I'm assuming long, short would seem too obvious on an opening down gap. (but then again I don't day trade - when I try to I usually lose money lol).

I hope the weekend brings you what you need and Monday (woops ... Tuesday) turns out to be a bonanza. So would it be possible to come up with a system that capitalises on day traders forgetting about early closes on days like today. (maybe a one in 3 year system that combines a volatile open with a pre-public holiday ...).

 

[MichaelD]

Both positions are long as it happens, not that this particularly matters - it's more the irritation of carrying unexpected risk over the Easter break.

I'm not overly worried about the trade outcomes since; 1. whilst the position sizes are large compared to my usual position sizes, they are not deal breakers or blow-up potentials by any stretch of the imagination, and 2. there's nothing I can do about it until Tuesday so there's no point in being stressed about it.

'tis just the cost of education ultimately - it isn't the first trading mistake I've made and it certainly won't be the last.

 

[cuttlefish]

Frustrating situation nonetheless - you are coping well and good to hear that they aren't blow up position sizes though based on your prior history of commentary I would not have expected anything else.

I would have spent at least half a day blaming someone else (just ask my wife lol) before finally acknowledging it was my own fault lol.

I hope you wake up to a green Friday tomorrow (and not as a result of one too many glasses of red).

 

[wayneL]

Perhaps hedge with SP500 futures? The correlation on SYCOM is very strong and could protect you if the US market cops a bullet.

 

[MichaelD]

I would have spent at least half a day blaming someone else (just ask my wife lol) before finally acknowledging it was my own fault lol.

Hehe. My wife actually executes our trades (minimizes the chances of trading errors due to me overriding our systems) and she was saying that something about these trades was niggling her all day - she kept on checking how they were going, which is something she virtually never does.

Note to self: Add "listen to wife's intuition" into trading plan.

 

[Timmy]

Good info thanks Michael. That Murphy guy has a lot to answer for.

 

[MichaelD]

The answer to "what to do" is so blindingly obvious I didn't see it immediately.

The system involved is fully backtested (100% positive expectancy), so I simply slightly changed the code to backtest closing the trades either on the OPEN or the CLOSE of the next trading day - the idea of course being to work out which adverse outcome would be the better choice - close out the positions on Tuesday's OPEN or CLOSE.

Turns out that the best choice is to close these trades on Tuesday's CLOSE. In fact, it improves system outcome significantly - less drawdown, more profit and higher % winners - the best of all worlds from a system trader's point of view.

Looks like it's time to change the system.

 

[cuttlefish]

Hehe. My wife actually executes our trades

Oh there you go then - case closed - you're off the hook! lol.

 

[Prospector]

Is the US market open Monday? If not, given the overnight rise, maybe in this case you will be happy!

 

[wayneL]

Is the US market open Monday? If not, given the overnight rise, maybe in this case you will be happy!

Yes the US is open Monday.

 

[Prospector]

Yes the US is open Monday.

Hm, so if the pattern continues the overnight rise will be cancelled out when our market opens again.

Guess we can always hope for 2 DJ rises in a row?

 

[GreatPig]

Turns out that the best choice is to close these trades on Tuesday's CLOSE

That may be the best average choice for the system over a length of time, but has no bearing on whether it will actually be the best choice in this particular case.

Of course, the latter won't be known except in hindsight, so you gotta go with something.

GP

 

[MichaelD]

That may be the best average choice for the system over a length of time, but has no bearing on whether it will actually be the best choice in this particular case.

Quite so - all I am doing is going with the highest probability choice.

 

[MichaelD]

Trades now closed, both for good profits (approx 2R in total).

Interestingly, my wife fell to pieces and couldn't face closing the trades, so I had to close them. Much to analyse there, too.

The only outstanding variable now is whether or not we'll get hit with fail fees since the trades closed on T+1 instead of on T and the account is funded only to cover drawdown.


Bad trades, good result. Much to reflect on.

 

[Trembling Hand]

Boy thats nice when an error works in your favour.

I have done the same thing with the HSI when I first started trading it sold 30 seconds before the afternoon close thinking I had another 15 min to go! got hit something like 800 points!!! when it gaped up 4 % the next day. My biggest single loss in the last 3 years!!Not nice.