The Five-Thousand Dollar Mouse Click

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Well, today's "action" on the market – – if you want to call it that – – hasn't changed anything I have to say one iota, so instead of wasting my time and yours re-hashing what I've said so many times recently, I will share with you my painful tale from this morning. It sucks out loud, but I've built an audience by being open, so here we go:

1226-tacksYesterday was, of course, Christmas, and my family hosted a banquet here for the extended family. It went from 1 in the afternoon until past 10 at night, and everything went smoothly. Lots of food, folks, and fun – – sort of like McDonald's, except with much better cuisine and less risk of diabetes.

Since I went to bed late (for me, at least) for two nights in a row, I failed to get up automatically at 5:30 a.m. as I usually do. I actually woke up at 5:15, glanced at the clock, went to sleep again, and woke up at 6:51.

Ah, wait, let me back up a bit for some more information vital to what follows: I use a system called RealTick which is my trading console to my prime broker. As most of you know, I usually have a lot of positions on (as of last night, it was 80), and I have a stop-order for every one of them. In the past, from time to time, I will get completely horrendous fills right at the opening bell. For instance, a stock might be quoted at 16.25 bid, 16.27 ask, and I'll get filled at something insane like $17.50 because of some utterly bizarre rule sets that the exchanges follow.

I was sick and tired of these early-morning rip-offs, so a few weeks ago I made a big change: instead of having stops on a "good 'til cancelled" basis, I made them day orders, and I had a way to re-enter all the stops via a spreadsheet. So each morning, well after the opening bell, I'd import a spreadsheet into RealTick, click a few settings, and let 'er rip.

The first time I did this, I was terrified, because I was concerned one little mistake would close out all of my positions. I checked, double-checked, and triple-checked everything……….took a deep breath – – clicked the Submit button and – phew – it worked. The next morning I did the same thing. And the next. And the next. Each time I was a little less nervous, but I was terribly careful each time. {You may now commence the spooky music, as the foreshadowing is probably pretty obvious at this point}.

On a typical morning, I am completely prepared for the opening bell. I'll get Springheel Jack's post up; reconcile my spreadsheets; see if there are any positions that are going to open up weird; maybe do a post myself to publish later in the day; grab a cup of coffee.

This morning, however, was nothing like that. I was completely unprepared. I hadn't reconciled my accounting. There was no Jack post (it's Boxing Day over there, remember). And, of course, none of my stops were in place (a handful of positions had already violated my stop-loss level, but of course, since there was no order in place, these were still open positions).

So, blearily-eyed, I pulled up my StopOrders spreadsheet, copied and pasted the relevent cells (symbols, stop-loss prices, quantities), saved the file, and loaded it into RealTick. I then clicked a few settings. For a moment – – just a split second – – before I clicked Submit – – I had a sense that something wasn't quite right. It was an almost imperceptibly-short amount of time. But I clicked Submit.

And then – voom, voom, voom – my window showing executed orders filled up with 76 fills. I had covered every single position. Every. Single. One.

I literally started quivering at this point as the consequences dawned on me:

(a) I had just paid commission on 76 closes that I didn't want;

(b) I had no positions in the market at all, and the early-morning spike was already starting to fade;

(c) I would have to put together a sheet to re-establish all of the positions, paying commissions again to get back in;

(d) I'd suffered unnecessary slippage, having covered all the positions at their ask price and having to re-enter them now at their lower bid price

So pile all those emotions onto a brain that wasn't exactly working 100% already – – – and the gnawing fear that the market was really going to start sliding (which it did, although thankfully a little later in the morning).

This is one of those fight-or-flight type situations. I'd have loved to wave a wand, jumped back in time a few hours, and found myself peacefully in bed again. But I had a choice: either resign myself to a flat account or hustle and get back into position, albeit with the inefficiencies mentioned above. I decided to do the latter.

Instead of blithely going back into every single position, I raced through my charts and decided that 56 of them were well worth re-entering. I put together a spreadsheet, loaded it, and ever-so-carefully made damned sure everything was right. I executed it, was back in position, and then ever-so-carefully entered the stop orders spreadsheet as well.

So, in twenty hair-raising minutes, I went totally flat in a very complex account, re-analyzed all the charts, re-entered the positions, and re-entered the stops. Just to torture myself, I managed to keep a separate spreadsheet to track what my P&L would have been if none of this had ever happened. At one point, it was $5,000 higher than my "reality" spreadsheet. So one careless mouse click had cost me $5,000 (and a few years off my natural life). By the close, the spread had narrowed to $4,000, but it still stung like mad.

My broker has helped a little by waiving half the commissions, but that takes very little of the burn away. It really stings to let a millisecond of bad judgment cause such a fat mess, but the only thing I'm proud to say is that I stuck with it and got back into the battle again without completely freaking out. I'm sure there are plenty of people who can point to a split-second of bad judgment leading to horrific consequences (prisons are probably packed with them).

What can you learn from this? "Don't be stupid", I guess, would be the words of wisdom. I've never done anything so fumble-fingered in my trading life, and frankly I'm more nervous than ever about using this feature of RealTick. Anyway, since I kept hinting at my "fat finger" this morning, I thought I'd just lay it out. On a cosmic scale, maybe the laughter ensuing at my error helps balance out the suckiness on this end.

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