Warrior Trading Blog

-$9.4k in 4 days, Now what?!

4th day

-$9.4k in 4 days, Now what?!

All right. Let’s do our little mid-day market recap. This is a very uneventful day and I’m not even really sure if I consider these days when I don’t take any trades because I don’t see anything as a one of the days. If I take the day off, it’s obviously not, I’m not gonna count it as one of my trading days. If I set here all day long and I don’t take a trade, I don’t know. It’s a zero.

This could be the 163rd trading day or I don’t know. I didn’t count Tuesday, which I didn’t trade. I’m not sure what to do with that. But regardless, this is just a very strange … Really, it’s a strange start to the month, and I think last month, August the 15th, on Tuesday, that was I think the first day of the year that I sat here all day long and didn’t take a trade. It’s so uncommon for me to do that. I mean, it’s just really uncommon. But August was a pretty slow month. Then, of course, September here is even worse.

Someone asked me earlier today if this is statistically the worst month of the year, or the slowest month of the year. The reality is, I haven’t consistently had over all my years of trading one month that I say is the worst month of the year. That’s just never been the case. Last September … Let me just scroll down here … Last September was pretty good. I’d made about $18,000. But in August I made $29,000. September was slow relative to August. This August, I made $6,000 and right now I’m down $9,000 on the month of September, which is horrible.

At this point, getting myself back to breakeven and up to $5,000 or $10,000 would be a blessing. This may end up being my worst month of the year. But in May, or sorry April of this year, I was down $4,000. That, so far, is my worst month of the year. April of 2016, I was up $19,000. My worst month of 2016 was May and I made only $4,400.

See, now this is kind of the luck of the draw. I mean, it’s really hard to say. Sometimes, on my best month of 2015 was, I think, December. So, it’s really … It’s not about the month or the season. It’s really about what the market’s doing and we’re in a market right now that is kind of … I mean, it’s just slow. The best opportunity today was probably on RACE, R-A-C-E. It’s Ferrari. I didn’t trade it though. It’s really, it’s outside my price range at $110 a share. Mike shorted it at $111, covered on the move down to $109, two points. It’s a good move but it’s just not my go-to to trade that price range. I felt like when I’m coming back from a red day, and yesterday was a red day, the best thing for me to do is look for my go-to setup. Get in, get a trade, and get out. So, today, my job was to look for the go-to setup. I didn’t see the go-to setup.

What were the gappers this morning? We had CLNT. I said, “Look, you know, this is one that I’m not sure I can trust because look at the market that we’re in.” The market that we’re in is that when these are gaping up, they seem to sell off. Now look what happened. It gaped up and sold off. ZAIS, this was also on watch. What did it do? It gaped up slightly and then it sold off. CUR, same type of thing. It gaped up and sold off.

Now, the unfortunate thing is I don’t have shares available to borrow on any of these and most of the traders in chat room are in the same boat. Now, some of these you might have shares available on but, the majority of them we don’t. Obviously, when you’re trading in an IRA account, retirement account, you can’t short so, this is a market that’s a little bit different, a little bit difficult, for a long biased trader.

Although, I certainly saw a good number of short biased traders who got smoked in September and in July. July and August, on these kind of surprised moves because all of a sudden, they’re used to most of them fading and then, you get one like MYOK that goes from $20 to $45 so, these sort of surprised moves, they fake them out. Then, us long side traders, we don’t take it because we’re used to things not working so, we end up missing the move. Then, we just kind of, we’re getting a little bit … Whatever, a little may be annoyed.

But patience is a virtue. Cash is a position. I’m sitting in cash. I would love to go back to the trading that we had in the Spring, or the late Winter. January, February to make $70,000 in one month in February. I mean, that was incredible. I would love to see those types of opportunities continue but, right now we’re just not seeing them. So, I know that I can very quickly get myself … get big boost in my PNL when we have great opportunities.

You know, a really good A quality setup, $10,000 winner, $15,000 winner, $20,000 winner. If I have to wait a month or two months until we get five of them in a row, when I get five of them in the row, my account is going to instantly shoot up. That’s what happened earlier this year. It was just like straight up and now it’s kind of like flat lining, sideways, up and down. Generally up but a little bit of the grind.

I’ve been branching out a little bit. Taking some swing trades. Swing trade accuracy so far is right around 50% but I got smoked yesterday on, what was it? FSNN, which was disappointing. Whatever, that’s the luck of the draw. I got aggressive on the wrong one but hopefully we’ll see some good opportunities. I’m not going to take any swing trades today, going into Friday. The market is red and I don’t see anything that looks good. I’m not going to take a swing trade on Friday to hold over the weekend. So, I’ll be back Monday looking for new swing trades. Monday, Tuesday, Wednesday. The watch list will be updated on the website.

As far as day trades go, Fridays had been pretty good for me. I’ve had a couple of really good Fridays but, I don’t know what tomorrow is going to look like given the fact that I’ve only traded one day this week and I lost money on that one day. I’m not feeling incredibly optimistic but, it’s the surprise move. All of a sudden it comes out of nowhere and boom, it’s just a huge opportunity.

So, we got to be patient. We got to wait for the good quality setups. As I said yesterday, someone ask me if I was going to put myself into trader rehab because I’d had a couple of red trades in the last week or whatever. You know, I’m a little bit conflicted on whether or not I want to do that. The last time I had … Let’s see, I had a three day red streak. Where was that? It was in … I’m trying to remember what month that was. Now I can’t remember if that was June or it was … It wasn’t July. It was longer ago than that. I had a three day red streak where I lost like $15,000. Out of that, I was asking myself, “Okay, well sense I just got smoked out pretty badly, how am I going to try to rebound?” Yeah, I had that in April. The last week in April was brutal. I lost like $13,000.

So, it was kind of like, okay. At that point, I put myself into trader rehab, stayed focused on small size, looking for A quality setups and that worked out fairly well because in May I was still able to trade pretty much everyday and still was doing about $1,000 a day, which was nice, slow and steady. The thing is, right now, today, I was looking for setups and I didn’t see anything that, to me, looked good and was worth trading. I had another three day red streak in March. I lost on that three day red streak about $12,000. It was actually a four day red streak. $12,000 in the red and I came back pretty strong. I came back with a $4,400 winner, $4,900 winner, $4,200 winner and in the course of three days, made back $12,000 because that was the market that we were in.

Yeah, I got aggressive and I had a little bit of a drawn down but I came back swinging and boom, bounced right back up. I don’t know that I’m going to be able to do that right now because I would need A quality setups but, I also don’t know that I can really … that I am really going to do super well if I put myself into trader rehab because I’m not seeing a lot of good opportunities. Rehab means I’m going to max my share size at like 2,500 shares.

So, if I only see three good trades a week and I’m limiting myself to 2,500 shares, I’m not going to maximize on those opportunities. But again, it really depends on how those A quality opportunities are playing out. If an A quality opportunity, right now, is only giving us a 5% winner, or an 8% winner, then that’s really not very impressive. I want an A quality opportunity to open up for a 20 to 30% move. Like a really big move. That’s when I’m going to be feeling good about amping up the share size.

So, right now, I’m not going to feel comfortable taking big share size until the market shows me that it’s really worth it to take that risk, until things start to feel a little hotter. So, I’m going to have to trade with somewhat smaller size. I definitely over leveraged myself yesterday on the FSNN but when I looked at then, I thought it was just a great daily setup. I really did. I was really confident in it. I thought I was getting in at the Apex point. I thought it was going to go right away. I mean, it just looked great. It ended up being really heavy on the sale side. Yesterday there was news that someone sold like 575,000 shares. It’s just like the worst timing but, you know, what can you do?

I mean, it’s the luck of the draw and right now, kind of in a little bit of a slump. It feels a little raw because it’s like right after you fall down, you’re still kind of like ‘eh’. Once you start to get back up and get yourself back in the driver seat, you start to feel better. Like, “Alright, I got my game plan. I’m getting back on the horse. This is what’s happening.” That’s why I really love after a red day to just have a green day. Doesn’t even have to be a lot of money, just close the day green.

The worst thing to do is to have a second red day in a row, or a third, or a fourth red day in a row. That’s why after a red day, I’m going to be that much more careful about what I’m going to trade and because I’m being careful, I didn’t see anything worth trading today. I’m remaining in this kind of point where I would love to turn it around, I would love to get back into the green cycle but I’m just going to have to wait til tomorrow. It’s 11:30 now, haven’t traded yet today and the odds of me seeing something at this point aren’t good.

Even yesterday, there was only … Well, FSNN was a swing trade setup that I knew … I suspected that it would work well enough that I would hit my first profit target intraday and I would scale back my share size and then hold a smaller position overnight. That one didn’t work and my day trade that I took yesterday didn’t work out very well either. So, in the last three days of trading, let’s see. Well, four days of trading, I haven’t seen a single really, really good setup that was within my strategy and it worked out perfectly.

Yeah, better thing to do right now is to sit tight, rather than push it and try to grasp for straws and try to find something. Doing that is going to get me into that sort of desperation mode and I’m going to get too aggressive.

Switching gears to do something like trade, higher priced stocks, like RACE or to trade gold or ETFs or something like that, that’s a completely different strategy. So, that’s walking away from something that, over the course of years of data, I can feel strongly confident in to doing something that’s really untested and unproven. When you do that, your likely hood of being successful is very low.

Now, you could say the same with the swing trades because I’m not … I don’t swing trade nearly the way I day trade but, the swing trades that I’ve been focusing on have been stocks that I would normally just day trade but, I look at them and I’m like, I think it’s actually strong enough that not only can I day trade it, I can hold some of it overnight. So, it’s kind of an extension of what I’m already doing.

The trade on FSNN was a bull flag that I would say we were talking … You know, if we saw this as a gapper, I would be like, “Yeah, this thing looks great for a gap and go setup.” Or not a gap and go but for a … Well, if it was gaping up, I would say yeah it’s a good gap and go setup and it’s got a great daily chart, which is a perfect combination. MRNS, same thing. MRNS was a great daily chart. It was a really clean flag and in fact, it really … I mean, it hasn’t gone down much from where I got in it but it didn’t work out the way I thought it would, right?

You can see here, I got in three. We popped up to 312 and then we dropped down to 285. Then, this, yesterday, we popped back to 315, now up to 318. This may end up working but it didn’t work … It didn’t give us that instant resolution on the same day, which was what I was expecting. Those two setups, it’s interesting that the daily bull flags, which usually work very well for both day trades and continuation into a swing trade, haven’t been working. But the swing trade setup that has been working quite well has been the small cap breakout. WVE was on my swing trade watch list last week, right here at $18.80. I said I like it over $18.80 for continuation because it has room up to $22. It hit $25 yesterday.

This was a great continuation trade. The way I found this was, I was looking for stocks and this was on August 25th. I was looking for stocks that were up 4%, or more. Between four and 10%. I wanted to see stocks that had put in a pretty good move that day and I was looking in the evening. Then, I would look for continuation into the next day. This one was perfect. Small cap break out scanner. So, that was on my watch list on the 25th.

JASO, J-A-S-O, this was on my watch list. Remember it, 666, right here after we had this breakout. Look at, it went up to 760. So, this one formed a little pull back here, but for the most part, just continued stronger. So, these ones, the small cap breakouts, seem to be performing better than the bull flag, for whatever reason. I’m not as particle to the set up because it doesn’t feel as quite as well defined but it’s been working out a lot better. IMMU, this one was also on my watch list. Same thing. It was a small cap breakout. So, it was after that first day that it made a 4% move. I was watching it over 840 and then, went up to 13.

So, those have been doing a lot better than the bull flag. Those are the types of setups that are on the watch list but, I didn’t trade them because I was more in my mind looking for something that I felt was that daily bull flag, which I thought I would be more confident in. I’m scanning for this setup. I had a couple I was watching this morning but, I didn’t feel really good because the overall market this morning, we were dropping down. So, I kind of felt like, “Well, it’s Thursday. Market is dropping down. Maybe I should just give this a second.” I know that I wouldn’t want to hold over the weekend so, that means that it would have to work out tonight or tomorrow. So, I’m going to, I think, wait until Monday before I look for a new swing trade but, tonight my account is going to be all cash. Last night my account was all cash.

So, I’m under leveraging myself by not holding some positions overnight and I know that. But, I want to make sure that I hold really strong ones so I don’t go further into the red. So, anyways, that’s kind of the game plan. Tomorrow, try to take a couple day trades and then, early next week, Monday, Tuesday, Wednesday try to find a couple good swing trades that I can hold for couple days and then have them closed out by Friday. And finish the week all cash.

That’s what I’m thinking right now and those of you in the chatroom, you can access my swing trade watch list from the dashboard. Members dashboard, scroll down, you’ll see swing trade watch list. You can check that out there and hopefully we can find a couple good opportunities that will kind of tie this over until we start seeing some better opportunities with the day trades.

Alex, my day trades do better when the SNP is down but, swing trades that you hold overnight are more susceptible to the overall market and especially the types of stocks that we look at for a swing trade don’t necessarily have a fresh catalyst. So, the overall market is going to influence the way they trade a little bit more. That’s the challenge there is we’ve got to have that extra layer of due diligence.

But, in any case, check out the watch list. I might mention ideas tomorrow that I’m watching for early next week. In fact, right now, I would keep IMMU on watch because it’s doing a bull flag but, the bull flags haven’t been working out super well so, I might start it as a day trade and if it works, then hold it. But if it doesn’t work, cut it loose. Kind of the game plan there.

In any case, as I said yesterday, you guys who have been with us since the beginning of the year, you’ve seen me go through a lot of ups and a lot of downs. This is part of day trading. This is why I’ve done this video mid day recap every single day that I’ve been trading. I didn’t do one Tuesday because I left early. I only sat here for a little while. Didn’t see anything to trade and then I was out so, Tuesday basically didn’t count as a trading day but, today, sitting here all day long or all morning and I just kind of wanted to, I guess, cover why I didn’t see anything Tuesday and why I didn’t see anything again today with this mid day recap.

So, you guys see the journey from $583 to $130,000, or whatever it is at now. It’s interesting because I was so strong in the first quarter and second and third quarter have been really slow for me. So, my PNL month by month, this year has gone from January at like $50,000, February $70,00 and then, down to like 30, 19. Down to smaller numbers. I hope that it curls back up. Whereas last year, I started really slow and then, I got really strong into June, July, August where I made $90,000 and then, I slowed down coming into the end of the year, which then brought me into January where I picked back up.

It’s these kinds of ebbs and flows and they’re strongly based on what’s going on with the overall market. We just have to kind of go with the flow. We really can’t fight that current. We can try to and I sometimes will try to and I’ll try to get really aggressive and force a trade. And that’s usually what puts me into the red. It’s so much easier to go with the current, go with the flow. When the market is hot, you take bigger positions, you hold a little longer, you let it work. When the market is not hot, you got to scale back.

I know it feels boring to sit here and not be super aggressive but it’s the way you survive as a trader. Anyways, last year I finished with $221,000. This is I’m just under $170 total on the year, combining my two accounts so, I’m like $50,000 off last years high and I’m hoping to match that but, September, three weeks left in September. October, November, December, I’ve got four months so, need to be around $10,000 a month to do it. That shouldn’t be an issue but we’ll see. We’ll just kind of have to take it day by day and right now, rather than trying to focus on that big picture, or that big goal, I’m just going to focus on tomorrow.

Right, exactly, Peter, I’m not going to try to focus too much on the yearly PNL. Just one day at a time. If I can do $500 on Friday that would be great. Get back into the groove of $500 a day, I’d be really happy with that. That’s also the thing to remind yourself. If you’ve had a big red day, or if you’ve had an event that I’ve had in my trading history where you lost like 30 grand in one day, you’re not going to get it all back in one day. You get it back just rebuilding one day at a time. The reality is, even if you have a day where you lose 100 grand, it’s … Yeah, it’s disappointing but, if the next day you make a change your strategy and now, you’re making 500 a day consistently, then that 100,000 you lost doesn’t really matter because now, you’re a consistent trader. You can make a living off of $500 a day. Almost any one of us could. That’s 100,000 a year. Who cares what happened before? It’s learn that lesson and now apply it so you can become a more consistent trader.

I consider myself to be a pretty consistent trader. Yeah, I have some drawn down. I mean, I’ve seen traders literally loose 80,000 to 100,00, 160,000, $200,000 in a single day. My worst day was losing $30,000 and that was years ago when I was still kind of a more beginner trader. It was a bad day but, I’ve seen a lot of traders get absolutely smoked, just totally have their entire account evaporate in one day. You really want to do everything possible not to allow yourself to get into that situation.

But even if you do, if you can come back from that and just focus on $200 a day or $400 a day, $500 a day and you can do it consistently, over the long term, you’re going to more than make up all those loses. I mean, it’s just a matter of statistics. We were talking about this in one of the classes that I’m teaching right now. I was talking about how one of my goals is $200,000 a year. So, 70,000 goes to my taxes. 70,000 goes to my cost of living and then, 70,000 I can keep and I can reinvest and reinvesting.

So, I save $70,000, I try to save $70,000 a year. Now, saving $70,000 a year over 10 years, that’s going to be about 1.1 million dollars. Just by saving $70,000 a year. I’m in my 30s right now, so if I can do that consistently for 10 years, that’s 10 million dollars. If I do it for 20 years, the end of 20 years, I’ll have 4 million dollars. If I do it for 30 years, at the end of 30 years, I’ll have 12 million dollars.

That’s just because of saving and from compound interest. Saving that money and just putting into mutual funds. Not even aggressively trading it. Just putting it into mutual funds, putting it away. That’s the power of compound interest. That’s the power of savings and reinvesting in the market. So, $200,000 a year, if you’re able to save 30% of that and be smart about it, then you can secure really a lifetime of financial freedom for yourself down the road.

So, even if you’re that trader who lost $80,000 last month, if you turn it around today and you start getting focused on $500 a day, consistency. Not swinging for the fences and trying to make a million dollars at the end of the year but, just $500 a day and being really focused each day on being disciplined, not allowing yourself to deviate from your strategy, and you can be consistent on that. Then, over the course of years and years and years, all of that is going to add up. It’s going to really pay off.

For me, something that’s important is minimizing my draw down. I know something I was talking with John about is, asking yourself would you be able to get hired as a trader at a hedge fund? With your current metrics and your current strategy. I think that’s an interesting question to ask yourself because one of the things they’re going to look at is your draw down, right? How much … What do your drawn downs look like when you have bad days?

Yeah, my draw downs, when I have bad days, are right now, capped at about $5,000. That’s pretty much on average my worst day, which with $170,000 of profit on the year, is like whatever, 3%. So yeah, that’s not a good day. Obviously it’s a little disappointing but, it’s totally sustainable. Especially considering I started the year with $583 and I’m well over 100 grand. If you’re the type of trader who is swinging for the fences, who goes up from whatever, 100,000 to 200,000, then drops back down to only 130. Then goes up to 250, then drops down to 170, then goes up to 350, then drops down to 280. I mean, you’re all over the place, that doesn’t show consistency.

When you guys look at my PNL on trader view, you see the big pictures like, up, a little down, up, a little down, down 3%. Up, and then maybe down 4%. Up and then, down five or 6%. That’s just a steady trend. Let’s look at the overall market. Overall market, looking at the SNP 500, you put money into the SNP 500 in 2010, what happened to it? Well, 2010 we were down here. It was up and then down, up and down, up and down. Sure, you had some draw downs, of course. That’s just part of the market but generally, you’re moving up.

We’re not trying to get jobs working at trading desk and working at hedge funds, that’s not the goal. But, you want to trade like a professional trader in the sense that you manage your risks and you don’t allow yourself to do something stupid that could cause you to lose 50% of your account in one day.

I know some of you guys are still holding some of DGLT. Is it DGLT? Is that the one that’s halted? Yeah, DGLT. I know some of you guys are stuck in this halt and, I could have been stuck in this halt too because I was looking at it. I decided not to trade it because I thought the risk was a little too high. This is at a $1.05 right now. It’s been halted since … It’s been halted for, be coming up on a month the end of next week. We don’t know how long this is going to stay halted for. It might stay halted for another month. Look at that trade … was it WINS or WIN? No, it was WIN. W-I-N. This was halted on, let’s see.

No, which one was it? Now, I’m trying to remember. It was WINS. W-I … Yeah, yeah. Right. It was at $200, yeah. So this one was halted at … This was halted on June 7th. It still hasn’t resumed, right? So, if you put your money in this … Let’s say I bought 1,000 shares. I’ve got $200,000 tied up for four months? Can’t do anything. My money is stuck. You have to think about risk management with that type of thing. Are you positioning yourself where, if one of the trades you’re in gets halted for three months, you’re out of the game? You can’t trade for three months? Or, you’re stuck. I mean, many of us have been in halts. These types of halts are … You could say they’re unpredictable because you never know when they’re going to happen but when you have a stock that goes from $40 to $205 over the course of three days, I mean it gets really scary.

DGLT, this one is kind of a surprise because we’ve seen a lot of stocks make this time of move. This went from 20 cents, all the way up to $1.10 in one day. That’s a little crazy and I didn’t feel comfortable getting in it because I was like, “It is already … It’s already moved up way, way, way too much for me to feel comfortable.” But, I wasn’t … I mean, part of me was thinking about scalping it at $1 and I think Sam took a small scalp on this. I get it. There was a setup there for a scalp over the whole $1. It’s very similar to what we saw in RBNT. Or that scout … Or RNBT, what was it? That scalp over the whole $1. It’s a setup. It is but, if you’re going to do it, you measure it against, well how much money am I willing to put in?

So, if I took that even with 10,000 shares, it’s only $10,000. It’s a small portion of my account. If you took it with 50,000 shares or 80,000, now you’re getting into the situation where you’re swinging really big and you’re either going to get home runs or you’re going to strike out. If you strike out, it could put you out of the game for a long time. We don’t get DGLT … Let’s see.

I don’t think I traded DGLT. Looking back, I don’t think that I did. I think that I was only looking at it. I think that I said, it’s really risky up here and I was watching it around $1 but, I don’t think I traded it. I’m trying to look. Maybe I did. What was the date? That was 8/16. Had RBNT, definitely traded RBNT several times. DRYS. Yeah, I don’t know. I don’t see it on here but, I could be wrong. I might have traded it. I’d have to go into trader view. Trader view will show me. Let’s login to trader view, let’s see what I did on it.

Let’s see, trader view. Let’s see, trades view and I’ll search for DGLT. Yeah, no, actually don’t have a trade on it. I think I was calling out the levels I was watching on it and saying that the risk was high but, yeah, I don’t have a trade on it in trader view either. So, I don’t think I traded it. I think I was just watching it. I think I was watching it around $1 and I was … I might have tried to get in and my order didn’t get filled or something like that. We could go watch the recap from 8/16 on youtube but, in any case, it’s just to say, think about your risk when you’re trading. Some stocks carry a lot more risks than others.

Same with swing trading. OTIC, this stock dropped 80% overnight. So, when we swing trade, we’re going to be more mindful about stocks that are pharmaceuticals, bio techs, because the risk there is for sure going to be higher. Okay? So, anyways that’s about it for today. Kind of a longer mid day recap but, just to kind of go over a couple of the things that were on my mind here as we’re grinding through the first week of September, which has been a disappointing week so far. We’ll finish it up tomorrow, Friday. Hopefully find a couple opportunities to capture some profit. I would really like to finish the week on just a green note. Even if it’s only $500. Just to kind of clear the slate. That would make me feel good going into the weekend.

So, that will be the goal tomorrow. At the same time, if I don’t see anything worth trading, I’ll sit in cash and I’ll be okay with that too. Alright, so that’s it for today. I’ll see you all first thing tomorrow morning. Alright, bye guys.