Warrior Trading Blog

2nd Red Day! September is off to a choppy start!

choppy start

2nd Red Day! September is off to a choppy start!

 

All right, so let’s do our midday market recap here. We’ll go over the trades from this morning. So today is my second red day. I didn’t trade at all yesterday, no trades. I didn’t see anything that looked good. There was nothing strong and I had my first day of September on Friday was a red day, so I started the month with a big red day.

Coming back on Tuesday, I just felt like I didn’t want to get too aggressive and take a poor quality setup, so I decided to sit tight and wait. Today, I jumped into one day trade made 288 bucks, and then I took a swing trade and I got hammered on it, which is super disappointing. So puts me down again. So two red days in a row. So today is my 162nd day of trading and it’s a red day recap, minus 4,700 bucks.

So you know, it’s definitely not the way I wanted to start the month, for sure. It’s a little disappointing but I will go over the trades from today and give you a sense of why I thought FSNN was a good swing trade and what I was thinking on SAIS. All right?

So SAIS, this is the first trade of the day, you can see on this one, a pretty strong pre-market popping up and so as soon as the bell rang, I was just thinking this thing looks good for a long, so I jumped in at 7, sorry, I jumped in at 310 and it popped up to a high of 330, and then up to 333.

Now, it dropped back down to 295 and I was holding through that drop. I tried to sell and guess what happened? My order once again got rejected. I can’t tell you how many times this happened to me in the last couple weeks, but my order got rejected, and so I’m just sitting there holding the shares.

It ends up coming back up and I stopped out of it for two and a half cents profit, $288. So just really annoying there. I don’t understand why I’m having this problem, but there’s obviously an issue with the way my orders are getting routed, that’s causing them to get rejected immediately. They’re not filling and they’re just getting rejected. They’re instantly canceling themselves.

And I’ve asked about it and they’ve said that it’s … I mean, they’ve just giving me a couple different excuses of why it’s happening. So I don’t know, but that in fact, on this one, actually probably saved me, because I was going to stop out at three bucks. That’s where I tried to stop out, that’s where I said, I was like, “All right I’m out,” and then I looked and I was still holding the shares, and so I was like, “All right well, I guess I’ll just hold on to this for a little bit and if it comes back up that’s good. If I end up having to take a bigger loss, then that’s just the luck of the draw.”

So it ended up coming back up here and I sold it just above breakeven. So nothing super exciting on that, and then of course here, you can see at 10:40 it suddenly pops from 305 up to 350, which is a really nice move. So you know this is the thing with brokers, you’ll never find one that’s perfect. I haven’t in all my years of trading. I’ve always had issues with different brokers. It’s just part of the deal.

Some are better than others, I’ve been happy for the most part with Lightspeed, but this routing issue has definitely cost me some money, so it’s just part of the deal. I’m sure I make more because of the hotkeys than I lose when I have these issues, but it’s just something to be mindful of.

So anyways, that was my first trade, ZIAS, and then FSNN, this was … I thought this was a fantastic daily chart. Now, when I saw it, this was a green candle. It was green, it had opened right here at whatever this was. 282. And it was looking like this, it was a nice big, good-sized green candle moving up.

So as I saw that, I was like, “This is a great daily setup. This thing looks good for a move up to 357.” That’s what I was looking for. I was looking for that move up towards 357. It’s a simple setup. Bull flag, first candle to make a new high as the entry, so I jumped in at 298.

Now, whenever I buy at an apex point and this was an apex point, I’m expecting almost immediate resolution. I thought this was going to go to 350 today. I thought it had that potential. So I was more aggressive on my share size. I wasn’t planning on holding the whole position overnight, I was planning on holding half of it or maybe a quarter of it.

So I started with 10,000 shares and then I doubled to 20,000 at 98, and I was thinking if it squeezed up to 330, 340, 350, I would sell 10,000, maybe 15,000 and keep 5,000 for the remaining swing trade. I wasn’t expecting that within an hour of getting in, it would get completely rejected.

In fact, I basically buy at the high. It went up to a high of 302 and then it just immediately turned around and it really, really surprised me that that happened. And I really I wasn’t expecting it, so now I was kind of like, “Okay, well, I still have my stop, which is the low of yesterday. So whenever I take a bull flag setup, my stop is the low of the previous day, which is right here. So I was like, “All right, well, I know my max loss.” If this had gone up to 350, it would have been a $10,000 winner, so my max loss down here at 75 is $5,000, that’s a two to one profit loss ratio, which is a little low for a swing trade, but it’s fine.

So I was like, “All right, well, I’ll just leave my stop where it is and give it a little bit of time, if it needs to curl and go sideways and then start to open up, then that’s okay. I’ll just give it the time that it needs.” So that was the plan and then you can see here, all of a sudden it starts to drop. It drops and breaks 275, drops to 266, and then on this candle, it drops all the way to 242.

So I got stopped out. I was in it for like an hour. I was looking for instant resolution and we didn’t get it. So it’s the luck of the draw, I mean, I don’t know what else I can say. It was a great setup, it’s great daily setup. The only thing that I would have preferred, the only thing that would have made it a slightly better setup is if it was resting on the nine moving average. That would have made it a little bit better, but we’ve seen tons of setups just like this, slightly above the nine moving average, go right back to the highs.

It’s a stock that’s a former runner, had a history of making a big move, so you know, it was good there, had the recent catalyst, wasn’t too concerned about the financials. Even though they’re not amazing, I wasn’t super worried about them, wasn’t super worried about the risk of a secondary offering. This one just … it just got hammered back down.

So that’s the way it is. My accuracy is 68%, so this is part of the 30% of the time that I’m wrong. I get in, I think something looks good and for whatever reason, something that’s out of my control, it ends up going the other way. So there’s really not a lot you can do about it except just recognize that your success is a matter of statistics and ratios. So my ratio of success is … accuracy is 68%, profit loss ratio about 1 to 1, and that’s what’s gotten me to $170,000 on the year, but starting September with two red days was certainly not in the plan.

So now I kind of have to re-evaluate the month because I’ve gotten myself into a bit of a hole. You guys who have been here for the entire year, who saw me start with $583, you’ve seen me move up and then have this drawdown, and then move up and then have drawdown because this is just part of the life of a trader. So you’ve seen me have to dig myself out of the hole and get back into the green, and then of course have some really great hot streaks.

So right now, I’m in a spot where I’m back in that hole. It’s a familiar place, been there a thousand times and I’ve got to work myself back out of it and I took more risk on FSNN, which is fine. I was comfortable taking the risk on it because I thought it had the potential. It’s all about risk, reward. Now, I might say I only want to risk $1,000 and that’s fine for a day trade, but again, it’s not even really about risking $1,000, it’s more about if I’m down more than $1,000, I don’t want to keep trading. That’s really what it is.

I don’t mind risking $2,000 or $3,000 if it has the potential to make $6,000 or $9,000. My best day this year making 22,000, I didn’t get there by risking only 500 bucks. I had to take more risk. It’s risk, reward. But when you have the ratio and you have a good quality setup, then that’s what gives you the confidence to step up to the plate. And I stepped up to the plate today. I was pretty confident and I just got … it was a strike out.

So that’s part of the deal. I really can’t beat myself up about it. I just have to adapt a little bit and say, “All right, the market is kind of beating me up here the last couple days, it’s not behaving the way I would expect it to, so I need to adapt a little bit,” and pretty much when I say that it means that I would typically change my approach to just trying to make $500 a day, bring down my share size until things start to smooth back out and look better.

But yesterday for instance, I sat here all day long and I didn’t see anything that was good. So that makes me also think if we’re in a period where I’m not seeing as many good setups, then I kind of have to be more aggressive when I do see them. Because there might only be one or two trades a week that can give me my weekly goal. So if I’m really conservative on them and I take only 2,000 shares and it goes up 50 cents … I’ll call them back. If it goes up 50 cents, then I’m not going to have … I’m only going to make 1,000 bucks. It’s not going to be that big winner. It’s not going to tide me over.

So something to think about a little bit, those two approaches. The one of size down on all the trades, just go for really small winners and go for lots of small winners, but that doesn’t work if you don’t see good opportunities. So if you only see one or two good opportunities a week, then in that case, it might make more sense to be aggressive on them.

Martin, so the thing is, I didn’t want … well, every trade has to have a max loss. So I had a max loss on this. If I’d held it down to 42 or down to $2 or further, then I’m no longer respecting my max loss. So the way we establish a profit target or what would be a good profit loss ratio, is by knowing the profit target versus the max loss. So you don’t risk 10,000 to make only 5,000. So if you’re if my target in this case was to make $10,000 and my max loss would have to be half of that, that’s 5,000. So that’s why I had it there.

Sure, I could hold it for a few days, but as soon as I hit my max loss, I got to get out it. I just have to. I have to have that line in the sand, and this isn’t a stock that I would want to hold as it goes down to $2 and down to 180 and 160 and 140. Because what if it does do that? Then I’m down … if I held this to $2, I’d be down 20,000 bucks. If I held it to a dollar 50, I’d be down $30,000.

So at some point, you’d be asking, “Well, where do I finally cut the rope? Where do I finally let it go?” So you make that decision beforehand of, “Okay, this is my max loss, this is my profit target. Does it make sense?” And if it does and you like the setup, then you take the trade. But it means you have to follow your rules, which is to get out when it happens, when you hit that loss.

And that’s disappointing for me because when I take a swing trade, yeah, I do want to hold it for longer than just an hour, and obviously, when I buy something at an apex point, I’m expecting pretty immediate resolution. So to have it get rejected is disappointing and to get stopped out so quickly, it’s certainly not what we go for.

But again, this is just part of the deal. This is the one that immediately stopped me out 25 cents. Now, you know, let’s say I take a similar setup tomorrow, it might immediately go up 50 cents. So between those two, I’ll take in two trades and if I hit my profit target on the second one, then still I’m green plus $5,000 across the two trades.

So that’s based on having that positive profit loss ratio, where I can be right 50% of the time and still be profitable. If I have a third trade and I lose on it, then I’m breakeven. So my breakeven is only 33% accuracy, which is fantastic. If I can be break-even at 33%, I’ve set the bar really low. All I have to do is be better than 33% and I’m making money.

So if I can be at 50%, I’m doing great. 60% I’m making really good money, 70% I’m doing fantastic, and I’m at 68%. But today is one of the days where I took a loss, so big picture is, I’ll bounce back from it and this is just one day. If I get really tunnel vision on this one day and I’m just looking at this one candle and it’s really red and that’s scary, but you zoom back out and you say, “Look, I start with $583. I’ve built my way up to well over 100 grand. Having a little setback here and there is not the end of the world.”

So back to basics, yeah Dennis, I mean trader rehab is fine, it might not be a bad idea. I’m just concerned right now that we’re not seeing very good setups. And so if I do trader rehab, trader rehab is reducing share size, bringing it back down to 5,000 shares max size. Maybe even smaller. And that generally requires you to trade a little bit more than just once a day. You need to trade at least once a day to make some good profits.

And today, I really only saw like two decent day trades. I saw CBIO, this one I wanted to trade. I tried to get in it at 440 and I was maxed out on my buying power. So I tried to get in this with 10,000 shares at 440, for the move here from 440 up to 475, but my buying power is maxed out because I was tied up in this other one.

So anyways, yeah, another phone call. I’ll call them back in a minute. But that’s about it for now and we’ll bounce back and I’ll be back at it tomorrow morning. Hopefully, we see some good opportunities. All right, so I’ll see you all first thing tomorrow morning. All right, bye guys.

Oh hey, I didn’t see you there. I was just working on the dream board for my next home run trade. Hopefully, it comes soon. Until then, make sure you subscribe to get email alerts anytime I go live or upload new videos. Until then, happy surfing.