Fixing Trading Errors Quickly
and Effectively

Don’t Let Trading Blunders Spiral Out of Control

We’ve all done it, and we’ll probably do it again.

Made a lame execution error.

What do I mean?

  • Gone long instead of short
  • Entered a position size too big
  • Traded the wrong instrument or expiry

Even the best in the world make these mistakes… you only have to Google “worst fat finger trades” and see a real selection of horrors.

But the real question is: what’s the right course of action when you make an error in the heat of the moment?

DEAL WITH IT

The correct approach is to deal with and rectify it immediately.

  • Don’t freeze.
  • Don’t compound the error.

Just fix it. Close the position, and swallow the loss.

Don’t try and be smart and ‘trade out of it’ just pull off the plaster!

Luckily I don’t make them very often but I made a really dozy error last week.

I accidentally traded the wrong instrument and saw a rather unnecessary red unrealised P&L!… (Thanks to a wider spread and bigger size in that stock vs the one I wanted, what a mug.)

After some swearing and shouting, I closed the position and took the hit.

And you know what?

If I’d left it, it would have been a disaster.

So, I see it as a cheap reminder to always do the right thing.

Talking of errors check out this short video from Linda Raschke – where she talks about fixing errors. It’s only a few minutes…

In it, she tells a story about her cat standing on a hotkey.

Yep – I’ve been there too.

Many years ago my cat jumped up onto the desk and decided to walk over a small execution keyboard I used to have, triggering a bunch of trades…

(He’s no longer with us, but that’s him in the photo above… Risk manager and analyst back when QQQ was trading at $35!)

Unforced errors happen, traders. Just swallow your pride, own it, and fix it right away.