We Committed Our First Short Selling Mistake!

Earlier last week, Mr Budget made a stupid mistake which we thought we wanted to share more here.

As we have previously mentioned, we are actively looking to sell off our Singapore shares to fund our increased appetite (a better way of saying “greed” haha) for US stocks.

Hence during the recent rebound of the Singapore stocks, we took the chance to further offload some of our Singapore shares.

What happened was that, we entered the limit order to sell our counters at XXX price.

However, instead of waiting for the orders to be filled at our price target, and because Mr Budget was impatient for the counters to hit the intended sell price, Mr Budget executed a new market order to just sell off the shares in the current market rate.

After all, a +0.01 increase may just be a 0-1% incremental return for us. The cost to wait for these funds which we plan to spend on buying certain high momentum US stocks, may equate into losing out on potentially gaining 3-5% on those US stocks – that’s how volatile the US market is.

Also, who knows the Singapore index may decide to drop again and we may never get our orders filled at the price we want.

In the midst of all these gancheong-ness and executing the market order, it seems that Mr Budget did not cancel the limit order after executing a new market order!

What this means is that, our broker had sold more stocks that we own (both the market order and the limit order), and hence we committed a short sell by mistake!

We were pretty sure that we cancelled the existing order, but it seems that the system had oversold the counter.

Because of that, we received a notification by our broker DBS Vickers that we had short sold our stock.

The governance around that is, your broker will help you to purchase the stock to cover your short position.

And because of that, we have to incur additional fees for the trade, and we ended up with unwanted expenses. We ended up paying an additional S$283.75 in brokerage fees to cover the shorted stock.

Here’s the email by DBS Vickers, which we are looking forward to changing our broker.

The worst part is that, even though we manage to buy the US stocks that we were eyeing, those counters continue to drop and we are overall still down on those counters.

So we lost money on both sides – the Singapore counter as well as on the US counter, because we were impatient. Should we have waited another 2-3 days, we would have made more money in our SG counter as it continued to rally even more, and we would have reduced our paper losses on the US counters we purchased.

Moral of the story? Dont be so gancheong and there will always be opportunities in the market. Dont be like Mr Budget.🙂

Side note – we are still pretty sure that we cancelled the limit order because executing the market order. And the filled limit order was not the full order we entered.

Also Read: Our Airbnb IPO Experience

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s