Wednesday, April 23, 2008

Sold 200 TSRA @ 20.00, Profit: $104.30

So after having re-bought into TSRA another 200 shares on thinkorswim for $19.4285, my trailing stop limit triggered at 20.00.

This is because I was fundamentally misunderstanding the utility of the trailing stop limit, which is to say, simpler than I was making it. Instead of a trailing stop that only triggers once it hits a limit, it's instead a trailing stop that triggers instantly, with an upper limit that will force a sale no matter what. A bit less useful, but basically a hybrid way of placing an order with two levels of protection in a single order.

TOS does allow you to create triggers and rules, though, so the way around this and to get the desired behavior I was talking about yesterday would be to create your basic bracketed OCO with a low stop where you want it and then to create a trailing stop with the MARK - whatever value, and a "AT OR ABOVE" trigger on the mark price.

Fortunately, TSRA swung back down just after hitting 20.00, but not before hitting 20.22, which means my TS would've triggered at 20.12, basically killing $20 in profit. Probably the cheapest form of that mistak I could make; if it had triggered on the next 20.00 touch, where the stock broke out all the way up to 20.70, I would've been much more pissed.

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