A lesson learned - I hope

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sway

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Post Number: 21
Registered: 12-2005

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Votes: 0


Thursday, May 31, 2007 - 02:08 pm:

I post this message so that others will be aware of a costly mistake I just made.

Yesterday I was looking to unwind some of my positions, since they had done quite well and I was getting a bit spooked by the Shanghai index gyrations and general negative sentiment. PRG has been bursting upwards this week and I decided to play hard to get with the buyers. After the market closed at $5.78 I was still holding and decided to move my sells to $5.85 and $5.89 for today's open.

After thinking more and looking at the charts, I decided to cancel the sell orders and let PRG run a bit more. This was my BIG MISTAKE.

This morning I was busy and didn't get a chance to check my positions before the market opened. Just after the open, I was delighted to see PRG up around 7% at $6.20, then horrified to realise that I had sold at $5.85 and $5.89. After a few calls to E*Trade I found out that if you amend an order after the market closes, then subsequently cancel it, the amendment is processed at approx 7am the next day, BUT THE CANCELLATION DOES NOT HAPPEN. This is apparently a characteristic of the ASX SEATS trading platform and applies to all brokers.

As I post this, the daily high for PRG is $6.47 and last trade at $6.09. This little blue has probably cost me $10-15k. I will definitely learn from this one.

Still smiling (weakly)
Geoff

smallworld

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Post Number: 607
Registered: 01-2004

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Votes: 0


Thursday, May 31, 2007 - 06:28 pm:

Sway
I'm not sure I would agree with Etrade's position.
When you amend an order after hours it is not send to SEATS but is queued up on the Etrade side, and any subsequent cancellation is also queued on the Etrade side. In the morning, Etrade would need to open the gate and release the orders held up. Some brokers will examine all the queue orders to make sure they all valid before releasing them. It appears this failure is on the Etrade side. if they blame it on SEATS, then I believe they are not being all that truthful. If I were you and If I can prove that I sent out the cancellation, I would definitely be looking for compensation.

(Message edited by smallworld on May 31, 2007)

sway

Member

Post Number: 22
Registered: 12-2005

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Votes: 0


Thursday, May 31, 2007 - 06:35 pm:

Yes, I wondered about that as well. Has anyone else experienced something similar before, with after hours orders not being processed as intended?

I will send an email to E*Trade and complain . After all, when you log in and cancel an order 11hrs before the market opens, surely you would expect it be be cancelled.

Thanks
Geoff

ohkoolnutz

Member

Post Number: 598
Registered: 10-2005

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Votes: 0


Thursday, May 31, 2007 - 10:55 pm:

The problem I see is the interpretation of your action:

1. By pushing cancel did you cancel the amendment only?
2. By pushing cancel did you cancel the amendment and the original order?

There are three ways to fix this problem:

1. Run a 24/7 stock exchange
2. Only allow amendments while the market is open
3. Don't allow amendments period

Considering that a cancellation and a new order costs as much as an amendment it would be wise to never use an amendment. A cash account used up to its limit undergoes the cash crunch problem if you are trying to cancel/resubmit your orders while the market is closed.

---
ohk

Lies, Damn Lies and Technical Analysis

sway

Member

Post Number: 23
Registered: 12-2005

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Votes: 0


Thursday, May 31, 2007 - 11:11 pm:

The sequence of events was:

3pm Wednesday
I had unfilled sell orders at just above the market price

4pm Wednesday
The market closed

4.30pm Wednesday
I submitted amendments to the orders

11pm Wednesday
I submitted cancellations of the orders

7am Thursday
The amendments were processed. The orders were not cancelled

10.00am Thursday
Thee amended orders were filled

The lesson I believe is to check everything shortly before the market opens.

Geoff

macca888

Member

Post Number: 181
Registered: 10-2002

Rating: N/A
Votes: 0


Monday, June 04, 2007 - 11:06 am:

G'day sway (got a certain swing to it)

I have a joblist I methodically work through at EOD and BOD. (I get too involved with other things to remember everything I have to do for each trading day for each portfolio I maintain).

The first job on the list both for EOD and BOD is as follows

"In 'broker' review all orders currently in the market and adjust All Orders Watchlist and post-it notes. Check expiry dates of orders."
AT BOD I work through the list after I have done any necessary netbanking.

I know of other traders/investors who have been helped by a list to check both before entering and exiting a trade as well as separate list for day to day management.
It's restrictive and disciplined but it helps me cope and has saved me from myself at times.

Hope this helps
888

"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein

"A prudent speculator never argues with the tape. Markets are never wrong - opinions often are". Jesse Livermore

"The only sound reason for buying a stock is that it is rising in price.
If that is happening, no other reason is required.
If that is not happening, no other reason is worth considering".Nicolas Darvas

sway

Member

Post Number: 24
Registered: 12-2005

Rating: N/A
Votes: 0


Monday, June 04, 2007 - 11:18 pm:

Thanks for the tips macca. I am working on a written checklist to keep me a bit more organised.

BTW, Sway comes from the song that was playing at the time I registered for IC ...Did you ever wake up to faaaaaiiiind ...Rolling Stones/Sticky Fingers/Sway. Great song.

Geoff

macca888

Member

Post Number: 182
Registered: 10-2002

Rating: N/A
Votes: 0


Tuesday, June 05, 2007 - 08:33 am:

G'day sway

I grew up with the Rolling Bones.
In early high school I saw them perform "Not Fade Away" on TV on Top of the Pops (I think) and was blown away by the driving energy of the beat.
Still one of my all time fave pop songs.
I remember taking flak from schoolmates because I thought they were so great. Little did we all know then just how things would turn out for the Stones.

888
PS Saw them in one of my first attended concerts at the Horden Pavillion. Craziness personified.