The Bumbling, Blundering Trader

It gets lonely sitting at my trading desk all day, with no one to talk to except the dogs and a few AIM buddies. This familiar isolation has triggered a number a mental lapses over the years that have translated into botched entries, bizarre positions and other incredible trading bloopers. I'll share a few of these amazing blunders with readers today.

Let's start with something stupid that happened just this week. I had stalked a newsletter stock for days, watching a well-defined trend line. Price finally cracked resistance and broke out. I bought some shares immediately, and then bought more as it pressed higher. So far, so good, until my brain cramped up when it was time to go to the dentist.

I pulled up my trading screen to enter a profit-protection stop under the entry price. This innocent act inadvertently sold the stock because my fast fingers couldn't tell the difference between "sell" and "stop." Fortunately my broker executes at the best available price so I still made a few bucks. But the strong issue continued to rally while my teeth got drilled.

You might be thinking to yourself, at least the dude grabbed some greenbacks despite acting dumb and dumber on that particular trade. But what about the times my ten thumbs have cost me huge wads of cash? I humbly admit I made the following error not once but twice in less than three months back in 2002.

I was trading in the post-market, watching a popular chip stock that had enjoyed a decent rally in the regular session. Suddenly, it was being offered for thirty cents less than the closing price. I quickly scanned the news to see if there was any reason for the odd pullback, but found nothing.

So, greed kicked in and I took the offer, helping myself to a large chunk of the stock. Bright red lit up my trading screen immediately. My tired eyes had failed to notice the bid-ask spread was 42.25 by 44.27, not 42.25 by 42.27. I had just gone long almost two points above the close, losing several thousand dollars in less than a second.

---

At the time of publication, Farley held no positions in the stocks mentioned, although holdings can change at any time.

Alan Farley is a professional trader and author of The Master Swing Trader. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback; click here to send him an email. Also, click here to sign up for Farley's premium subscription product The Daily Swing Trade brought to you exclusively by TheStreet.com.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.