I am a worrier. At least about things that matter. Or rather, things I think matter.
Yes, right or wrong, good or bad, when it comes to the things that mean a lot to me, I am most definitely not carefree.
As an example, both Katherine and Diana have now had their first two swim meets of the short-course season. Things I worried about:
- Goggles flipping off. (It happens, but only to Diana.)
False starts. (Yep, Katherine slipped off the blocks once.)
Slow starts. (I think my kids are hard of hearing.)
Missing their event. (Not yet.)
Going out too fast. (Occasionally.)
Going out too slow. (Regularly.)
Breathing too much. (Constantly.)
Underwater pullouts. (I know, swimming esoterica.)
Oh, let's face it, I'm a Nervous Nellie on the sidelines! Why, it's all I can do to not jump in the water and swim the race myself.
Overly concerned? Focused on the little things? Of course. But, here's the key: These little things matter. A lot. They might only mean a difference of 1/4 of a second in a 50-yard race. But that's often enough to separate first from fourth.
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My thinking is this: The big things -- conditioning, technique, the competition -- are already taken care of way before race day. No, the only things that can be tweaked and fine-tuned the day of the race are the little things. Make sure your goggles are tight. Know your event number. And don't breathe on your first stroke!
The link to trading? I'm also a worrier there, too. But the big things -- entry, exit, money management -- those I don't worry about. If I've done my homework, they take care of themselves.
No, it's those little things I pay attention to, especially on race -- er, trading day. Does your list match mine? It should.
- Has every trade I did the day before been recorded properly with my broker? You'd think this would be a no-brainer, particularly if you're using an electronic broker. You'd be wrong. Whether I was using
E*Trade (EGRP) ,
Ameritrade (AMTD) - Get Report or my current broker,
Yamner & Co., things happen. Bits don't get read. Orders don't get transcribed correctly. Stuff happens!
So instead of you having a long closed for 57 5/8, it gets posted as 57 5/16. No big deal, right? Wrong. They're
all big deals.
Or the prices are right but the amounts are wrong. More than once, I've covered a short only to find myself long the next day with an additional 1,000 shares. How did it happen? Who knows, but I want it fixed. And as soon as possible.
Have I triple-checked every new order I'm doing that day? I do a lot of trading. More than most, I guess, except for daytraders. And I've done it all. Bought IIXC, instead of ICIX. Shorted
(DOW) - Get Report, when I meant to short the Dow Diamonds, or
(DIA) - Get Report. Covered 2,000 shares when I was short 2,200 shares. Bought 1,000 shares of
eBay (EBAY) - Get Report -- once when I meant to, and once only five minutes later because I forgot I had just entered the order!
Now, these things are easily corrected, of course. But call it
Murphy's rule of trading: The screw-ups always go against you. Forgot to cover that extra 500 shares? Sure enough, that stock is up 3 by the time you realize it. Bought
(CA) - Get Report, instead of
(CL) - Get Report? CA's down 5; CL up 5.
You just will not win, trust me. So double-check your work.
Do I have a physical or mental order in for every open position? Did you think you had a good-'til-cancelled order when, in fact, you only entered a day-only order? It's happened to me.
Or in the morning rush, did you forget to enter a limit order entirely? I know I've lived through positions hitting my target, only to realize later that when they reversed, I had no order in place to snag the profit.
If your target was hit and you did have an order in place, was it executed? Look, specialists and market makers screw up. Therefore, I set alerts on all my positions, so even if I'm out all day, the alerts signal me when I log back on, letting me know if any of my targets have been hit.
So, I then check to make sure I've been filled, and if I haven't, I check with my broker to figure out why not. Often, there's a good reason, like a misprint or only 100 shares being filled at that price. But, sometimes it's just a mistake. And so it gets fixed.
Are your brokerage charges and credits correct? Oh, it's not just commissions you have to worry about. No, it's margin charges.
Securities and Exchange Commission fees. Money market credit.
Now truthfully, I don't go over this with a fine-tooth comb. But I know approximately what I net each month, so if my account balance is significantly off, something's usually wrong. And it's usually buried somewhere in an errant charge or a credit that should have appeared, but didn't.
Is your slippage appropriate? This is a major, major concern of mine, and frankly the most overlooked problem most traders face. In fact, it's worthy of not just one, but a few columns. Suffice to say, unless you're using all limit orders, the amount you get filled at is usually not the price posted when you make the trade. So you may be looking at the last transaction -- say a sale on the bid -- but have to buy on the ask, which, depending on the spread, might mean a half-point difference.
The problem is, when you're back-testing or even forward-testing your methodology, you invariably underestimate this slippage. That's why I'm a hawk on this stuff. Start getting up there in lot size and 1/32 of a point slippage doesn't seem like a lot. But at five trades a day and even 1,000-share lots, that's $30,000 a year!
It's not hard to check, by the way. I just look at a time and sales log and make sure that when my trade was executed, I received a fair price. And frankly, some brokers manage to give you a fairer price than others. (See my "Penny-Wise, Pound-Foolish" series,
Part 1 and
OK, six things to think about. And believe me, I'm just getting started. But, for now, let's concentrate on those.
Remember, unless your trading is just some goofy hobby, then this is a business you're running. So pay attention to this stuff if you want your bottom line to be as large as possible.
Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes five technical analysis columns for TheStreet.com each week, including Technician's Take,Charted Territory and TSC Technical Forum. While he cannot provide investment advice or recommendations, he welcomes your feedback at