Warrior Trading Blog

A $12K Red Day :(

12k red day

Oh hey, I didn’t see you there. Well, another red day, down almost $12,000 today. They say you got to take the ups and the downs, hand in hand. But I’ll tell you, the red days are not as easy as the big green days. So today’s one of those days where I gave back some profit, was a little too aggressive, saying pretty much the same thing as yesterday. But being aggressive is how you make $117,000 in a good month, which for me, was the month of January. So here we are in April, finishing right now up $55,000 on the month. Most people would be really, really excited about that. I am too, it was a great month. It’s been a great month. It’s not as good as $75,000. And I didn’t hit my $100K goal, but $55,000 is good.

 

Five years ago, six years ago, 10 years ago, I would have been over the moon with $55,000, so I feel good. Green is good. And you know what, I’m going to be back in the saddle, first thing Monday morning. We’re going to try to finish up April on a good note and get May off to a strong start. Let’s break down all of today’s trades, in today’s Midday Market Recap.

All right everyone, well daddy fell off the horse today, fell off the wagon. I got dragged behind the wagon after I fell off it. Today is a big red day. It’s not the biggest red day of the year, but it’s not a good one. This has been an interesting month because I had such an awesome start to the month, $32,000 in the first week, $32,000 in the second week, and another, what was it, $10,000 last week. So I was actually sitting up $75,000 on the month. I had this mental goal of $85,000, and I just, I don’t know, I just let it fall away. In the last one, two, three, four, five, six, seven, eight days, I’ve had two, four, six, out of the last eight days have been red, which is not good.

This is kind of what happened to me in February as well. I just got stuck into a rut, and had a bunch of back-to-back red days. Ended up coming out of it in March making $45,000, which was a great month, all things considered. Being up $55,000 right now in April is a great month. I have no right to complain at all, and I’m not going to complain. But this is one of the challenges with trading is that five years ago, if someone said, hey Ross, you can make $55,000 in April, I would have been like, hell yeah, I’d love to. But if they said, well you’re actually going to make $75,000 in the first three weeks, and then you’re going to lose $25K, or $20K in the last week, how would you feel? At that point, I would have been like, who cares, $55,000, I’ll take it.

But now, years later, I look at it and it’s like, if feels like I’ve said before, I’m finishing a race. I’ve just run a ten-mile marathon or something, and I came in first place but the last mile I had to crawl. So I just feel like I’m not finishing with confidence, I’m not finishing with strength. I’m not finishing with my head held high, I’m finishing kind of getting knocked down at the end. And that’s the hard part about it.

But this is what it’s like to be a trader. You’re going to have days where you make a ton of money, 15, 20, 30, 40 thousand dollars. And then you’re going to have days where you give back some of those gains. So you know, you don’t want to count your chickens or your hens, whatever, before they hatch. And that’s the thing, right now I might say well, I’m up two hundred and whatever thousand dollars on the year, but it’s not said and done until the year’s finished. You just know that you’re going to give back some of those gains. It’s impossible not to. It’s like we’ve talked about with all these examples, the UPS driver, FedEx driver in Manhattan, you’re going to having parking tickets, it’s life, you can’t avoid them. This is the cost of doing business in a lot of ways. That’s what you have to think of it as.

So the beginning of the month is when I was taking in all that revenue, and here at the end of the month is just when I have to pay the bills for the inventory. You just have to compartmentalize it in that way, so you don’t get stressed out about it because right now being down almost 12 grand on the day, I could definitely spend, if I wanted to, I could go into a hole thinking about how disappointing that is. I could spend the weekend sitting and crying in the basement, thinking about how I could have spent this $12,000 on a used Volvo or something like that. But realistically, that’s all tunnel vision. When you step back and you look at the bigger picture, the bigger picture is that you don’t get to make a $117,000 in one month, which was my month of January, without taking risks. And this is what it looks like when you take risk and you’re wrong.

For me, my accuracy is generally about 70%. So I take 100 trades, 70 of them are winners, 30 of them are losers. The problem is that the losers are usually clustered together. The winners are usually clustered together as well. So I’ll have four weeks or three weeks of a really great hot streak, where I’m right 85% of the time, 90% of the time. And then I’ll have a streak where I’m right only 40% of the time or something like that. So it ends up leveling out to 70%, which is great. I’m sitting right now, up over $200 grand on the year. And it’s April, so life is good. You know, it’s just that it’s funny how the wins and the loses are clustered together. And right now, I’m in that rut where I’m having a hard time getting good follow-through.

So, looking at the trades from today. So very first trade was on GNPX, this one was strong yesterday. I missed it, it ended up making its move in the afternoon. I was, you know, I didn’t trade it. So today I was watching it. I had my order ready to buy 7500 shares at $14. I wanted this to open under $14, I was going to get in at $14, my target was to sell it at $15. A break over the pre-market high of $14.50, a squeeze to $15. Well that’s exactly what happened. It squeezed up to a high of $15.75. The problem is that it opened at $14 and immediately surged up to $14.50. So I wasn’t able to get in at $14. I got in at $14.48 and I added it at $15, and it hit $15.75, but I was hoping and holding for maybe a bigger move.

I was thinking a retest of yesterday’s highs, and then I stopped out coming back down. So only a $223 loss on that, but it’s one of those things where, it just opened up a little bit pre-market and screwed up because it popped up to $14.25 pre-market, and then it dropped down, and then popped back up. It just didn’t work out super well for me. Dropped back down, consolidation, and then you can see here, made a little bit of a squeeze off of this pattern at $14.50 again. By this point I was already at my max loss and I couldn’t afford to take the risk. I take this trade, I lose again, and I’m down $14,000 on the day, I can’t do that. So got to draw the line in the same some place. So anyways, that was GNPX.

Next trade, FCRE. Tried to get in a couple times earlier, orders were rejected for risk check. This sometimes happens when you have … I guess this is not showing, but this sometimes happens when you have a stock that pops up really quickly from 70 cents, all the way up to $1.68, so a big move. I was eventually able to get in with 10,000 shares at a $1.53 and $1.55. I sold at 66, and sold the rest, basically break even, 61, 65. So $796 on that, nice green trade. Nothing too exciting but green is good. So, that was FCRE.

And then KBSF, it hits the scanners. It was actually on our watch pre-market. And I wanted to get in at $5.80, as it started to pop up here, but I was a little slow on my orders. I put the order out. I got filled at $6.11, and then added at $6.21. It taps a high of $6.46, and look at this. I mean this is ugly stuff. In one minute, it goes from a high of $6.45 to a low of $5.62, and a minute later, it’s hitting $5.22. So this is what we call false break out. This is a rejection. You can see on the daily chart, it’s going to show as a big doji candle, a squeeze up and then a rejection. It’s actually nearly a bullish, a bearish engulfing candle, where the red candle is bigger than the green candle is big. So this is one of those trades where, for whatever reason, short sellers hammer this back down. It drops lower than the price it started at, because of the imbalance on the sell side. You’ve got this many sellers here. So just not good at all. Ended up taking a nearly $10,000 loss on it.

So this is the one that really is disappointing, it’s one of the worst trades of the year. It’s tough. Like I said, it’s really hard when a stock drops nearly a dollar in one candle. It’s hard for short sellers when a stock pops up a dollar in one candle. It’s hard either way when you have that much volatility, because you’re just not expecting that a stock could move that much. I mean, you’re thinking that yeah, it’ll pop up 15, 20 cents, maybe 30 cents. Yeah, maybe it could drop 15, 20, maybe 30 cents. You’re not thinking that in one candle, it could do something like that. It’s not a lot to say on it other than, it dropped very quickly. It did pop back up for a second to 60, and I was like, well I’ll give it a second, next thing you know, it’s back down at 20, and I’m stopping out at $5.20. I got nailed on it pretty bad. So, that’s the way it goes sometimes. Sometimes you win, sometimes you lose. If you’re winning more that you’re losing, then you’re doing something right, and I am, but this is one that got me pretty good.

So what could I have done differently here? Well, I jumped in a little on the high side. The right entry was at $6. It was at the whole dollar, and I got in at $6.15 average. Getting in high has worked well in the last three weeks because you get in high and stocks continue higher. Right now, that hasn’t been working. So I probably should have said, you know what, you missed a good entry at $6, just leave it alone. If I’d had a hard stop on this, like a live stop order, I would have probably gotten stopped out at maybe $5.60, or $5.50. I certainly would have still taken a big size loss, maybe not quite as big, because I would have gotten slippage. And that’s what would have happened. I would have gotten some slippage, and I might have gotten filled right at the same at $5.22. I mean, I might have gotten filled right at the bottom.

I know John took this trade, he got stopped out also, but he sold on this pop back up, so selling, obviously we like to sell on pops versus sell into flushes when possible. That’s what we go for, but it just couldn’t happen on this one because it was just too weak. So I think probably the big thing would have been waiting for a better entry.

On HEAR, it’s sort of the same thing. I jumped in this for the break of the half dollar. It tapped a high at 59, and then it came back down. Again, I really should have waited for at least a better quality, one minute setup. I was buying at $5.50 because that was a daily chart break-out price and I should have just said, I’ll wait for a better entry. So I think the issue here on both of these trades is waiting for better entries. The problem is that when you’re in a really, really hot market, if you wait for a really good entry, a lot of times they’re going to run without you, and that’s what’s frustrating.

In a hot market, waiting for good entries means you miss trades. In a slow market, waiting for good entries, well, it might mean you don’t trade at all because you don’t have good entries, but you’ll have less red trades. So it’s kind of managing that. So how do you know when the market’s hot, and you can afford to chase and be more aggressive? And when the market is slow, and you need to taper back. I’m still, after years and years of doing this, not good at that transition. You know, because I’ll have a red day, like I had last Wednesday, and I’ll think, okay well, you know, it’s a red day but stocks were strong, I just mismanaged risk, I was too aggressive, so it’s just part of the deal. I’m not going worry about it.

Next day, I have a second red day in a row. I’m like, okay, well again, is that the market or was it just the way I traded? And that’s where it starts to have a little bit of an issue. And then the third red day in a row, I was like, okay, clearly things are slow. But then on Monday, I made $5,000. So we bounced right back on Monday, great green day. Tuesday, slightly in the red. Wednesday, $2500. Yesterday, not a good day, again, I was being a little aggressive. So you know, it’s just that mental part, and that’s when we talk about trading, it’s 50% skill, or whatever we want to say, 60% skill, and 40%, 50% mental. It’s the emotions. It’s how are you going to trade when you’re in a rut? How do you respond to losses and it takes practice, it really does. And even doing this for a long time, there are weeks where I get myself frustrated, and I’m not responding the way I should. It’s like I know it, but I’m not really in the moment when I’m making trading decisions, able to fully adjust.

So to fully adjust, I’d say I’d probably have to reduce my size even further, because 10,000 shares was too aggressive, so that’s number one. But number two, it’s not just share size, it’s entry point. If I’m not taking good entries, then that’s what I need to focus on. So better quality entries. Like I said though, the challenge is when you start seeing stocks just run and run and run, and they never gave you a good entry, so you’re like, oh man, I should have been more aggressive. I should have jumped in at the half dollar or the whole dollar. You see a stock hit the high day momo scanner, and it runs up 70%, and you’re like, man, I should have just been more aggressive, and jumped on it instead of wait.

Look at this one, MTSL yesterday. The stock literally goes from a $1.80 all the way up to $2.80, that’s a full dollar per share. That’s a huge move, and it really in this area, didn’t have a pullback. The first pullback was right here at a $1.48. And we took that trade, we got in, in this area, and this was fine, but this is an example where if you had jumped in at $2.00, or $2.15, you got in at a little high, it would have worked. And then it faded, and that was it. That was the only opportunity on that stock. It was one opportunity and then it was done.

Earlier in the week, UAVS, this was one that started to pop up. We’ll go back here. We had a couple daily charts setups on this, a red to green move. If you waited for a good pullback, you probably wouldn’t have gotten any trades at all. I don’t have the metrics right now to say how much I make on risky entries, where I’m buying something high or I’m buying right at the half dollar or whole dollar to try to ride the momentum. So I couldn’t say with confidence that I make more being aggressive than I lose. But I would say that again, you don’t make $117,000 in one month without being aggressive. This month, I had a chance at having a $100,000 month, but it forced me to be aggressive. As it turns out in the last week, the market’s been slow, and I haven’t been seeing good follow-through and being aggressive hasn’t worked, and so I gave back some of those gains.

So I came to the table thinking, I’ve got $75,000 profit on the month, I’m going to risk a little to try to get a $100,000 month. And this is a month where that didn’t work, and so I’m going be at $50,000, $55,000. Was the risk worth the reward? And I think that it was because I know I’m capable of $100K a month. It just didn’t happen this month, but maybe it will happen next month. And so next month I might continue to be aggressive. Once we start to see momentum turn around, we’re seeing some really good squeezes and stuff like that, I’ll probably amp up the risk again, and that’s when I’ll probably start have $10,000, $15,000, you know, $20,000 days. And that’s the time where I’m again going to say, well am I going to try to push it, am I going to try to be aggressive, because that’s when you get the $100,000 month? Or, am I just going to be conservative?

I’m the type of person that is going to be more aggressive. I’m going to push it, and this is true with anything. You guys know … When I’m skiing, I push it, I’m aggressive, and sometimes I fall down, it’s inevitable. Sometimes I get hurt, that’s why I was out for a week in February because I got hurt skiing. It’s the same with driving cars. When I go to Las Vegas, and I’m driving fast around the track, sometimes you go off the track and you get into the sand, and that’s the way it is. So that’s personality type, and you might be a personality type that says, I want to be more conservative, and that’s fine.

You can be a more conservative day trader. There’s a large spectrum. Mike is even a little bit more conservative than I am. He doesn’t push it quite as hard, he prefers a little bit more dialed down, a little slower. He prefers the higher priced stocks because they’re a little easier to manage. John, he likes to push it a little bit harder the way I do. Jeff, I’d say in some ways pushes it even harder because he’s taking these options trades where the loss is 100%, if you lose, often, maybe 50%. But the profit is like 200%, 300%, that to me is almost too extreme for me. But there might be days where Jeff is risking $10,000 to make $30,000, because he’s taking pretty large positions with the option contract. So there’s a spectrum, and you’ll find your place within it. It really comes down to your strategy is a reflection of your personality. So my personality is get aggressive, get in, get the profit, get out. When it works, it works. When it doesn’t, it doesn’t.

Anyways, today is the day it didn’t work, but I’m not going to beat myself up about it. I’m not going to sit around and be depressed all weekend. I’m already putting it behind me. I’ll be back at it Monday morning. This is a day where I just had the bills come in, and paying the bills, and it is what it is. It’s part of trading. So overall, it’s been a great week. Well, it’s been a great month, $55,000 on the month is awesome. I’m happy about that. So, that’s where you’ve got to keep the picture. $200,000 on the year, and it’s only April, that’s awesome. I’m still tracking for a $600,000 year, and that’s my goal. $665,000 is the goal by the end of this year.

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 any time I go live, or upload new videos. Until then, happy surfing.