Stock Traders Blog

Act out of emotion:
I keep reminding myself that the most dangerous enemy is my emotion. But still I can not help being emotional today. When I thought about how Goldman Sachs manipulated the stock price of Wells Fargo and Bank of America for their underwriting job, when I thought about those so called influential financial analyst are only corporate puppets, when I thought about how investors are given investment suggestion without providing with sounded quantitative analysis my emotion and my angry build up.

What kind of investment environment this is. Investors are put into very unfavorable situation when they are not connected with one of those influential investment banks. And don’t think that the US market is big and efficient. It can be easily manipulated by a number of institutions. In fact this is where the systematic risk of financial system lays in. Company like Goldman Sachs, BOAC and Citi and Well Fargo should be broken down into small pieces. However the government is going about the opposite. It is trying to build up a smaller group of bigger financial institutions which can direct where the market goes on a daily based. Market messages are frequently miss-interpreted to suit institutional needs. I seriously belief some kind of mechanism similar to those preventing price fixing needed to be implemented into the financial system to prevent market manipulation.

Surprised Gain:
Anyhow my trades today are totally acts out of an angry and gambling mind. I covered my 1000 share of BAC short position at $12.08 and a few minutes later I took 4000 shares of BAC short position at $12.11. I set up a trade trigger to cover it once the ask price hit $11.80 before I left for work. I was preparing to get cooked again. When I was on my way driving to work I kept thinking what BAC’s price would turn out to be when I arrived at office. If BAC’s price was over $13 how much lost I have to suffer thoughts like that. Fortunately my short position was covered at $11.79 when I arrived at office. So I feel relief and my angry subside.

Reflection:

I start thinking probably my blog is not able to provide me the control I want any more. In just a few days after I set up this blog I starting acting out of the guidelines set forth in this blog. I have to admit that today’s gain is completely surprise to me.

I went over the exact same situation when Wells Fargo offered new shares. Wells Fargo’s stock was actively traded above the closing price in after market on the day it announced the offer at $20 ~ $22 a share. The next day Wells Fargo was traded higher in pre-market and it trended upward toward market opening. The same thing happened to BAC yesterday. It was actively traded above the closing price yesterday. It opened higher in pre-market and trended upward toward market opening. This was happening with the same pattern.

A vice strategy would be to go long yesterday after-market or to go long today early in pre-market then sell on market opening. If I went with that strategy I would net the same gain with a lot less money at risk. I actually thought about that yesterday but I chose to fight the tide because of emotion get involved. In any case I shouldn’t do that again.

Account Balance Change: +$508.51

Related posts:

1. Trading Out of Discipline and not Knowing How to Stop Caused Big Lost
2. Wells Fargo Is Over Valued at $25.70
3. I Should Increase Holding Position When Obvious Earning Opportunity Presents
4. Trader’s Mind is Full of Dilemma – My Thought Gone Wild With Bank of America
5. I Have Got to Treasure Selling Opportunity