Neophyte stock trader rides online roller coaster
Sunday June 06, 1999
By Liz Garone
SAN JOSE -- Make $6,643 in 13 minutes, no experience necessary. Lose $3,875 in an hour and 41 minutes, no experience necessary.
Welcome to the topsy-turvy world of day trading.
At 6:30 a.m. PST, the opening bell sounds, and everyone is off to the races, including this reporter, with $100,000 of play money to burn at Pacific Day Trading.
Despite a double handicap of sweaty palms and market naivete, I somehow move my mouse fast enough to buy 1,000 shares of little-known -- but highly volatile -- Hauppage Digital stock in the first minute of trading.
I have no idea what Hauppage does, but it's been hot in early morning Internet chatroom discussions. Not necessarily good enough reasons to invest close to $30,000 in a stock, but what the heck, I'm looking for volatility.
Then, I wait patiently like the day trader disciples-in-training around me -- but not for too long.
By 6:39 a.m., I'm out of Hauppage and $2,306 richer.
I like the feeling. Now, it's time for the big one, I think to myself.
Hauppage continues to climb, so I jump back in for another 1,000 shares, grabbing them just before the stock really starts to take off.
Tick, tick, tick. The bar keeps climbing into the green, up and up. I gently rest the tip of my index finger on my mouse, waiting, ready to pounce.
It doesn't take long before the line ceases to climb, and turns red, possibly for a long and potentially, rapid-fire descent.
Click. I make the sale. It's 6:43 a.m., I'm out of Hauppage again, and up another $4,337.
$6,643 in 13 minutes. Not bad, I think. Maybe this is my lucky day.
Too bad it's like one of those pre-game warm-up strikes in bowling: nothing to show for it.
Quickly tiring of Hauppage -- and unwilling to risk my luck a third time on a stock I only heard about for the first time in an Internet chat room hours before -- I move on to Dell, selling short 1,000 shares at 7:07 a.m.
Nothing. The stock doesn't budge.
I sit, I wait. I adjust my monitor. I contemplate a quick trip to the bathroom. Instead, I cross my legs and do a fast head roll. The horror story of the New York trader who lost it all while on such a break rings loudly in my ears. At 7:35 a.m., Dell turns green and inches upward. I find myself smirking ever so slightly. Almost immediately, the smirk turns to a pout as I remember I'm in short. I repeat my short sell mantra, "Green is bad, red is good."
And I get out -- but not in time. Dell's moved up an eighth of a point. Quick calculation: I'm out $125 plus $44.90 in commission. Ouch.
I'm still a little cocky from my Hauppage winnings, so I make one of the riskiest choices out there: I bring priceline.com -- a highly-volatile Internet stock -- up on my screen. Everyone on the trading chat circuit is talking about the stock.
"This stock should be a daytime soap opera," posts JT, a trader, on www.daytrader.com. "Minus 30 since my last short call, blew through my target and never looked back...Use CAUTION!"
Bob Carlson, Pacific Day Trading's operations manager, frowns on my choice. "We don't recommend Internet stocks to our clients, he says. They're too risky, there's just no history on them."
Carlson has a point. Priceline stock has ricocheted from a low of 103 to a high of 139 in the past week.
Knowing all of this, I plunge in anyway.
What the heck. I'm ready, I think. And Priceline looks like it's in for a big fall after an hour of early morning highs. With the ease of one finger, I click the sell button -- or what I think is the sell button -- for 1,000 shares at 121, translation $121,000.
I sit back, stretch my legs a little, call work to check my messages. The line moves the way I think I want it to: down, dropping almost a whole point within a couple of minutes. My eyes light up with dollar signs.
This is easy, I say to myself.
And then I see it. The words "Bought 1000 shares" in purple letters. Cocky as a newbie trader can be, I had inadvertently pressed the buy button when, really, I wanted to hit sell.
I look around, ashamed of a potentially very expensive error. Carlson is off helping someone else. The stock continues to fall fast.
Get out? Stay in? Get out? Stay in?
I decide to stay in. Eventually, it's got to go back up, right?
Wrong. An hour and 41 minutes later, I'm still sitting on it, and my little mistake has already cost me more than $3,000. Yikes!
"You've got yourself on the edge of a cliff," Carlson mutters to me over my shoulder as I contemplate staying in a little longer.
Head between my legs, I get out of Priceline, taking a $3,875 loss.
It turns out I will be relieved come the end of the day. Had I decided to remain in Priceline, I would have seen what can only be described as freefall. Priceline closes at 104. My error could have cost me $17,000.
Dejected, I consider calling it quits for the day. But now I'm hooked. Where else can you make $6,000-plus almost instantaneously?
It's almost quitting time: three hours of trading being the limit I have set for myself. So, I execute one final trade, hoping to make up for my Priceline losses.
Despite having thousands of stocks from which to choose, I return to Hauppage, my one big winner for the day.
At 8:55 a.m., I buy 1,000 shares, betting it will go up. It does, but ever so slightly. It's already almost lunchtime in New York, so the market begins to slow to a snail's pace. Forget whole points, now I'm watching eighths, sixteenths, even looking for thirty-seconds.
At 8:59 a.m., Hauppage has moved three-eighths of a point, $375 minus commissions.
Chump change, I think to myself. I yearn for the big high and low scores of the early-morning rally.
But it's time to walk away; I do so with $3,164 and change after $229 in commissions.
Not bad for a first-time trader.
<<<< Back to my Index page.