Brilliant Mistake

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Anyone who trades really actively has probably had a time or two where they made a simple human error. They buy when they meant to short, or they sold 500 when they meant to sell 5,000. You know….dumb stuff.

I've made a handful of these errors in my lifetime, and the most awkward are those in which I make a mistake and made money at it (such as a time back in the late 80s when I meant to buy calls on 3Com but bought puts instead….and made good money when the stock plunged unexpectedly). It kind of makes you wonder!

I had kind of a funny experience like that yesterday with Valassis Communications (VCI). I came into the day short. The stock opened up a little firm, and I decided to tighten up my stop. Somehow I changed the stop from covering 1200 to covering 2200. The stop was triggered (red arrow), and – unbeknownst to me – I was suddenly long 1000 VCI.

I went about my day, but my spreadsheet wasn't reconciling, and I was trying to figure out the discrepency. I then saw I was long 1000 VCI, and I figured out what had happened. The curious thing is that there was a nice profit on the position. I sold it (green arrow), thanked my lucky stars, and then noticed a little later that the price was mushed right up against the broken wedge. So I re-shorted it (blue line), and today it fell nicely. I've subsequently covered.

So what would have been a single unprofitable trade turned out to be one unprofitable trade and two profitable ones, which more than made up the difference. I have no position in VCI at this point, since I figure my luck is probably out with this one!