A few months ago, I was away from my desk and wanted to short NFLX. I called one of my brokers and told them to sell NFLX at the market, then hung up the phone.
NFLX was trading at $175. 25 and I waited for the email on my execution, knowing that it wouldn’t be exactly there but hoping it would be close. The email came and I was filled at $173.46. I had to laugh for a moment because it was trading at $176.00 when I got the email.
In response to my request for times and sales, I received an email showing me that the order was placed at 9:35, along with a note from my broker saying maybe next time I should use a limit order*.
I called to place the order at 9:32. Taking three minutes to fill an order in this market is an eternity. In the pit, if an order took three minutes to fill, the clerk would have been chewed out by his broker, and the broker would have been slammed by his client. And, most likely, the broker would have to adjust the client’s loss from money out of his own pocket.
This brings me to Trading Tip 6: Hit the Bid, Take the Offer and Just Do the Trade. If you want to get in or out of a trade, GET IN or GET OUT. Don’t try to get every last penny out of a trade. I can’t tell you how many people have said to me, “I knew the market was going up but my order didn’t get executed. I missed the trade, but I was right.”
I would just look at them and say, “Seriously? And whose fault is that? If you didn’t have the trade in, being right meant nothing.”
When I was on the trading floor, the only time I bid or offered was when I wanted to test the market. If I was short and wanted to test, I would bid to see if the market came to me and took out my bid. If my bid did not get hit, it showed me that my shorts might not be that great.
If you want to be long, get long! If you want to be short, get short! The best way to do this is simply by hitting bids and taking offers. If you’re trading and 1 or 2 cents mean that much to you its time to rethink your trading style. Different trading styles will be talked about in future trading tips. Everyone should have more then one style of trading.
*Limit orders can be used if you have a trade on and want to leave a standing order in to get out at a specific price over the long term. It’s also used if you have a long term entry price that you want to get in or out at. But, if you’re actively trading, just hit and bid or take and offer and trade.