Warrior Trading Blog

There is Always Hope +$685! | Ross’ Trade Recap

What’s up, everyone? All right, so here we are, the end of August. I am so happy about that. Finally, the month is over. It’s been a choppy month, no doubt about it. So I’ve already flipped my calendar to September, said I’d never look at August again.


But I’ll look at it one more time for this video. I had to cover up the first three days of August, because I didn’t want to look at them for the rest of the month. I sometimes do that. So if I sneak under here, I see a $10 thousand red day. I see a $4 thousand green day, which is good, and then a $5 thousand red day.

So I started down $10 thousand basically the first three days of August. What a horrible start to the month. Now, as we get ready for September, let me remind myself, “How did you start August. You started it really bad. How do you want to start September? Start with confidence, with strength, a couple small winners. Don’t get out there ready to swing as hard as you can and then strike out and fall on your face. Take small base hits, get yourself a little bit of a cushion, and then once you have the cushion, you’re in the driver’s seat, you’ve got confidence, then you can increase the risk.”

And the worst is you take a little step back but you’re still green. So I started down 10 thousand. Monday the 6th, I lost another $2 thousand, so at that point, I’m down $12 thousand on the month. That is my low water mark. I then start to build back up. Tuesday, I made 33 hundred, Wednesday, 22 hundred, Thursday 3 thousand, Friday, 2 thousand. So I ended up making 8 thousand that week. So I’m back up, but still down four grand on the month. The following week, I make 4 thousand. So at the end of the second full week of trading, I’m break even on the month of August. And then we have last week.

Last week I lost a thousand dollars over the course of five days of trading. One step forward, one step back, one step forward, one step back. Down a thousand. And now here we are this week, and I’m going to be finishing up … Well geez, I actually didn’t even do the math to see what I’m up this week. But I made 23 hundred on Monday, I was break even on Tuesday, I made 3 thousand on Wednesday. So that’s 5 thousand. And then I lost 11 hundred yesterday, so that’s 38 hundred, and then I’m up 600 today. So right around 4 thousand on the week, and my total profit is going to be right around like $2 thousand on the month, plus or minus. maybe you think it would be 3 thousand, but I think when all the commissions are said and done, it’s going to be a little less than that.

So this is not a month to write home about, but at the same time, I was never green on the month. I was never green on the month except for a moment last week, so I’m pretty much closing at the high of the month, which is kind of nice. My account is at all time highs, even though it feels like over the course of the last month, it just was going down and coming back up. It doesn’t feel incredibly good, it’s actually true. So right now, as we go into September, I look back at the month of August and I’m going to do this in the recap today, I asked myself, “What did I do right? What did I do wrong?” The biggest challenge in the month of August was that my average winners were really small because we didn’t see a lot of home run trades.

My average losers were the same as they always are, and that, while you could say, “Well, they’re the same as usual,” it’s a problem. I didn’t adapt quick enough to tighten up my stops to accommodate the fact that we were seeing smaller winners. So coming into September, like I said, it’s about getting myself in the driver’s seat, building confidence, standing tall, and then if I get a nice cushion the first two weeks, then the second or the third and fourth week of September, I’ll be able to really step up to the plate. So anyways, we’re going to break it all down in the recap. And remember, markets are closed on Monday. Why? Labor Day weekend. So that means we are hosting our annual Labor Day sales, 30% off everything at Warrior Trading. Use coupon code Labor Day to save 30%. All right, so any questions, any comments, leave them below. I’ll come back through and answer them this weekend. I’ll see you guys all on Tuesday morning.

All right, everyone. So we’re going to go over the trades from today. Finishing the morning up $685.11. So another green day here, which is great. Finishing the month in the green, not by a lot, but green is good. And that’s kind of where I’m at right now. I’m just happy to put August behind me. It’s been a very choppy month, but the great news is that things always pick up here in the fourth quarter. So September, usually things start to pick up, and then October, November, and December are usually really hot. So that is what I’m looking forward to. So putting the calendar to a new month starting on Tuesday.

Remember guys, market’s closed on Monday for Labor Day. Labor Day kind of marks the end of the summer, a lot of kids going back to school, so it’s a great time for you guys to get back into the studying routine as well. Take the next couple months to really learn how to trade the market, and then when things really are just super hot in the kind of late Fall, November, December, January, you’re able to make some really good money. All right, so that’s why Labor Day we always host our 30% off store-wide sale. So coupon code Labor Day will save you 30% on the Warrior Starter, the chatroom, the Warrior Pro, normally 42.99 on the website, you’ll be able to join 30% off. So would love to have you guys join and become part of the Warrior Trading family for those watching on YouTube and Facebook, those of you that are already in the chatroom and your in the classes, you’re welcome to upgrade and just add more time onto your subscription.

So if you do it, you don’t have to email us or anything like that. If you are currently in a three month subscription, you add a year. You’ll just add a year to the end of your three month subscription. You’re not going to lose anything by upgrading in the middle of your subscription. All right, so today’s a day where I’m coming out on top, pulled a little profit out of the market, and that’s good. And for any of you that were also able to do the same, you’re doing something 9 out of 10 traders can’t do consistently. The thing with trading is that in a lot of ways, this is a incredibly easy job. All you do is you come here, you sit in front of your computer, you press some keys for about an hour, and you’re either walking away green or red.

I mean, physically, it’s incredibly easy. Mentally is where it’s a little bit more challenging. But the actual skill of how to trade, how to buy shares, how to sell shares, how to read to level two, this is a skill that really pretty much anyone can learn. I mean, it’s not like surgery or anything like that. It’s pretty straight forward to learn this, and this is what we teach in the classes. Once you get this down, now comes to the emotional side, which is being able to maintain composure through the ups and the downs. Someone asked me on YouTube … Or no, it was on Twitter last night. He said, and this is a fair question, he said, “Ross, how ….” Can’t remember how he worded it, but he said, “Is your strategy really a consistent strategy when you have some months like the month of August here, or the month of February, where you really don’t make that much money? Is it not just kind of maybe a luck strategy? That it works when the market’s hot and it doesn’t work when the market’s cold?”

And I think my sort of feeling on that is that I don’t know if there’s any such thing as a strategy that performs exactly equal through all markets. If there was a strategy that performed exactly the same in a hot market and exactly the same in a cold market, yeah, that would be a very consistent strategy, but I really don’t know if that exists. I think that any strategy that you trade, and I know this just through talking to other traders who do trade different strategies, that they’ll say, “Oh, large caps were on fire here and here and here. And then they kind of died down.”

Now, some of those cycles are tied to earnings calendars. So when we have lots of earnings reports coming out, that creates more volatility, that’s more opportunity. So then what do you do in the in between times? And I think for me, my strategy is one that during a hot market for my strategy, it’s not a hot market for the S&P 500 or anything like that. It’s not a hot market for the Dow Jones. It’s just a hot market for my strategy. So during a hot market for my strategy, I can make a lot of money. And during a cold market for my strategy, where we’re not seeing really big breakouts, it does become more of a grind. And so is there something that can be done to supplement that? Is it possible that while my strategy is in a low period, there’s another strategy that’s experiencing a high period?

And then by having both of them going simultaneously, you so level out the lows, right? You may be during a market where mine is really hot, the other one is experiencing its low. So I think there’s something to be said for that if you have the aptitude and the desire to try to build out additional strategies. So today, for instance, this trade on LULU that I took, Lululemon, this was a $367 winner. This was $158 stock. This is not a cheap stock by any means. What I did on this is I saw it squeezing up here, and I decided, “Okay, this looks like it’s going to be a short right around this level.” So for those of you guys that are in class, you know exactly what I saw that made me think this is a good potential short.

So let me pull up the video and just replay this for you. All right, so let’s see. Do, do, do, do. I record these videos and then I add them to the classes so students can re-watch them later on. All right, so Lululemon. All right, so this is going to go into here. All right, so on this one, this is the live recording of me trading Lululemon. All right, so LULU has a high right now, it’s basically squeezed up here. It’s at the high of $158, and what do I see on the level two? I see a 600 … Sorry, so 65 thousand share seller right there at 70. And so as I looked at that, I thought, “Okay, if this is a big seller, that’s a really big seller.” I mean, huge. So a huge seller right there, multimillion dollar type of seller. That’s huge.

So I’m thinking, “Okay, if that seller does not break, that’s going to be high of day and the stock is going to come down off that level.” So what can I do? I can take a short right here at 158.60, with a stop if this level breaks. So if all the sudden I see buyers come and it goes 65, 64, 63, 62, 61, 55, 50, 45, 30, 28, 27, 26, 25, 24, et cetera, then I’m going to press the buy button, I’m going to cover. And so what I did is I risked $100. I took a short position at 60. Now, I got into the short position right here, I pressed the button to short at 158.60, as I started to see some sellers go through, and my stop is at 70.

So I’m risking $100. And what do I do? I enter the order right now at 158.75, all I’ve got to do is press the buy button to cover the short position. So this is not my typical momentum strategy. This is a reversal strategy. Do I trade it a lot? No, I don’t, because I don’t make tens of thousands of dollars on this strategy. And so I don’t really feel a strong desire to be aggressively looking for these types of set ups. However, this one was particularly good, very low risk, and I made with $100 of risk $370, or $350 of profit. So three to one profit loss ratio, which is fantastic.

All right, so let’s play this. So I see okay, I’m here, I’m like, “Okay, you know what? I might have been wrong. It’s back at 70.” So I’ve got my hand over the buy button, ready to cover. Watching. Watching the level two, watching the time in sales. Okay, there we get a flush. That’s good. So now what I decide to do on this one is I’m still just kind of watching it for a second. I’m only up like a teeny bit. So then what I’m going to do is I’m going to open LULU in a second window right here, and on this second window I’m going to start preparing my order to cover the position for profit. So this is going to be still with the order ready to cover at a loss. And this one here’s going to be ready to cover for profit.

So here I’m going to type it in, LULU. I do have hotkeys that I’ve created for covering shorts, but they cover at the bid. So right there, I covered at 126, which was actually between the spread. So where I press that button to cover, it was between the spread, and I got filled right away. So now I’m going to put an order for 250 shares to cover more. And on this one, I’m going to set it as a profit target. So what I’m going to do is I’m going to actually move the order just down below $158. So watch here, I put it down at 157.96 right there. And I put out the order. Because I’m thinking if it flushes below 58, it’ll pick up my order.

So I put it there just below that level. And what happens? It flushes below, and my order gets filled. Fills at 96. All right, so now I’ve got $330 of profit, and I’m still holding 250 shares. So I could have covered the rest of it here and I would have made 400 bucks. But I wanted to hold thinking we had more potential to the downside. And it ends up kind of going sideways here for a second and then popping back up. And so I end up covering it as it pops back up. Now, it ends up coming down, what is it at right now? Well, it’s at 157.22. So it’s down like a dollar from where it is now. But whatever. So I cover it up, cover up the rest of it as it pops up here to 60, because I’m thinking, “This thing might be going right back to high of day.”

Pulled back to the nine, squeezing back up, so in any case, this is a strategy that I don’t trade a lot. But it can help add kind of some supplemental income during months where the momentum strategy is a little bit slower. And so for that, it is kind of nice to have that in my back pocket. I think that that’s sort of the best thing that I could do during what is a slow market for my small cap strategy. Now, some people will say, “Well Ross, why don’t you just short small caps?” And again, the problem here is that number one, the biggest problem is availability of shares. If we look at YVR, you can see this one. This one ended up being really kind of choppy, and I’m not sure where … Would some people have shorted it on this first red candle? Maybe. And then covered it as it went higher.

Would some people have shorted this false breakout here? Maybe. And then it went higher. And then it dropped down. And then would some people have shorted right here? Maybe. And this was the only one that would have been kind of clear. It was very choppy, both long and short. It’s not like, “Oh, I lost money on the long side. This would have been a easy short.” That wasn’t the case with this stock. It was not, in my opinion, an easy short. I mean, yeah, it finally failed here, but it could have just as easily kept going higher, it was just very difficult to time.

It’s the same with BLIN yesterday. Yesterday, BLIN consolidating kind of in this range. It does a false breakout to the upside. And we’ve seen so many times where stocks do these kind of false breakouts, and they pop up. So here, it traps early buyers going for the break out. And then it drops down, and now people are short. And now they’re holding kind of flat. Or what about here? It kind of traps short sellers in some of these early drops. So I think if you say, “Well, I’m just going to … The longs are choppy, I’m just going to trade short.” That’s not necessarily true. I think there are some stocks that are simply choppy both ways, whichever way you try to trade them, and they’re difficult and they’re frustrating. Does it make a big move here? It does, but it was sort of not predictable.

Does it start to fade here? Yes, but was it a predictable fade? I’m not really sure. So that’s kind of the challenge. Finding shares available to borrow, and then the fact that when these stocks are choppy, they’re choppy both ways, both long and short. Certainly there are times where it may be easier to be a short seller of small caps and maybe that’s the month of August. I’m not really sure. Some of you who do actively short them might be able to say, but I think that for me, what makes more sense is to have a supplemental strategy that’s not dependent on finding shares available to borrow of these small caps, but that is instead based on sort of completely different strategy like reversals on higher priced stocks.

This $300 is not a $3 thousand day, but it’s a green day, so that helps me get a little bit of profit. For me to start shorting these small caps, I’d have to open an account either in the Bahamas or put up a $50 thousand minimum with CenterPoint, which I really right now don’t want to do. So for right now, I’m going to be okay with the fact that my strategy does have some ebb and flow, and will have months that are a little bit slow, and then I know I make up for it on the other side. Would I like to have another strategy that was equally profitable as this one? Sure. I would love to. But right now, I just don’t have it. So even for me, I’m at a point where if I can work on developing another strategy, it’ll just make me a better trader. And that’s probably the same with many of you.

But it’s about mastering one first. And when you really have that one down, then at that point, going on kind of looking at, “Okay, what’s the hurdle to start doing this the other direction?” I think my other concern is the risk of flip flopping where I have a long bias and then I flip short and then I’m short and then I flip back along and I’m concerned that that can kind of get me into like a little bit of a revenge thing. If I lose money short, then I go long really aggressive, or if I lose money long, then I go sort really aggressive to try to ki like revenge trade it. So I sort of see that as a potential trigger for me only because I know that that did happen to me when I did have my account in the Bahamas, and I was able to flip both directions, I would sometimes do that.

Maybe now I’m a little bit more composed than I was then and I’d be able to manage it better, but that’s something that I’m just a little bit mindful of the potential risk there. And I think the reality is I could say I’m not going to flip short after a loss. But that might mean sometimes that I miss really great opportunities. Because sometimes that is the right decision. So it’s like how to you gauge when it’s the right decision versus when you’re doing it through FOMO or through emotion or something like that. But again, right now my focus is to try to finish up this $583 to a million dollar challenge. I don’t really want to be live trading an untested strategy, so I’m going to focus on what works for me knowing that some months will be slow, and then other months will be incredibly hot.

And I really at this point need like three hot months to finish up this challenge. And then yeah, maybe at that point I’ll … I don’t know, maybe I will open an account with CenterPoint or set up one of the accounts in the Bahamas and start taking some more shorts. But I’m not sure. I’m really … I’m not sure if that’s the way to go. I think for me, the biggest short set up, probably my favorite one would be shorting into halt going down, because they almost always open lower. Just the way I like buying into a halt going up. That is kind of like the no brainer short. But in terms of shorting false breakouts on one minute micro pullbacks and stuff like that, these are scalp shorts, shorting a scalp of a false breakout, stuff like that, it would add some additional profit, but it would create that issue of very quickly trying to be long in one account, short in another, or flipping directions, and I don’t know.

Something to think about. But for me, sitting right now, up about 365 thousand on the year or whatever the case is, it’s been a great year and we’ve still got four months left, so I still have a great chance at hitting my $600 thousand goal. 500 thousand would be sort of minimum target. 50 thousand a month. Shouldn’t have a problem getting there, so we’ll see if I can get to 600. That’s still the goal and it’s still within reach. So starting in September, it’s just really back at it, nothing is going to be that much different. I’ll keep my share size relatively small until we do start seeing some really good opportunities and stocks really opening up.

So for the first … Tuesday when we get back at it, I’ll take it a little easy. But when we see thing start to take off, then I’m going to step up and start to increase my share size for sure. So I started this year with … I don’t remember how much was in my account. I think I was still holding like 70 thousand, or maybe 100 thousand. I’m not 100% sure where I was starting the year. It wasn’t any particular amount. I started January, 2017 with the $583, and as of right now, I’m at about 700 thousand in profit. So I’ve got 300 thousand to go to hit the million dollar mark, so that’s why I’ve kind of got my sights set on crossing 600K this year. But I do need some strong momentum in the fourth quarter.

I hope that we get it. I think we will and as soon as we start to see those stocks taking off, I’m going to step up to the plate, 10, 15, 20 thousand shares. Stocks squeeze up, get halted, open higher, and those are going to be quick, 5, 10, 15, 20, 25 thousand dollar winners. So a few weeks like that will go a long ways in helping me get to the other side of this challenge. All right, so that’s about it for me today. No class for students. We finished our last class yesterday. But next week, we’ll be back at the regular mentor schedule Tuesday, Wednesday, Thursday mentor sessions.

So we’ll see you guys then, and hope you all have an awesome weekend. Enjoy the long weekend. We don’t get a lot of them. So enjoy it. Relax, if you finished today in the red, or you finished August in the red, take a breath and put it behind you. What I would do is take a few minutes just to take a breath, relax, and then come back, look at your metrics. I’m going to do this for all of you guys on Monday once I’m able to import all of my metrics. I can import my metrics as of, let’s see, as of yesterday. So maybe I’ll do that right now and we’ll just take a quick look at them.

But basically, my process, any time I have a really bad red day, or I have a red month, is to go back and look at my metrics and ask myself, “Okay, I’ve got a red month here. What did I do right? What did I do wrong? What are my metrics? High level, what’s my accuracy?” And what I’m doing is I’m trying to figure out is there something that I did wrong? Is there something I can pinpoint? A clue at what I was doing wrong and can I correct that? And if I can, then that’s awesome. I mean, that’s the goal. And if I can’t, then it’s like, “Okay, well maybe the market was just choppy. Maybe there wasn’t anything that I did wrong. It was just a difficult market and we’ll get to the other side of it soon enough.”

But 9 out of 10 times, when I’m looking back at those metrics, I’m able to say, “You know what? There’s something that … Here’s a clue of what wasn’t working.” So what I’ll do here, let me just import these real quick into Trader View. All right, so I’m going to import my light speed, executions. There we go. Refresh. So these are going to be as of, what is it? Yesterday. All right, so I’m just going to look at the month of … Well, we can look at year to date as of yesterday. So year to date, net $363 thousand. So feel good about that. Accuracy year to date, 65%. Profit loss ratio is one to one. My average winners and average losers are about the same.

So if I take 100 trades, I’m going to have 65 winners at a thousand dollars, that’s $65 thousand in profit. And I’m going to have 35 losers at a thousand dollars, that’s $35 thousand in losses. So my net is whatever it is there. All right, so let’s look now just at the month of August and see why August has been so difficult. Accuracy, not bad. I mean, a little below average, but not horrible. This is where there’s a problem. So the problem here is that my average winners and my average losers are not balanced. I have a negative profit loss ratio. So why does that happen?

Well, in fact, my average losers are about the same as average, right? So knowing my average losers are a thousand dollars, the average loser of 900, that’s actually not significantly higher than average. Here’s the problem. The one thing that stands out in all of these metrics is that my average winner is half the size of typical. Okay, so why would my average winner be half the size of normal? And really, that’s what is out of my control. I can’t control how big my winners will be. I can’t control that. If we’re in a market where we’re not seeing good follow through, we’re not seeing stocks really open up, then I’m going to have a month where the average winners are smaller.

And that’s just the way it is. So this is a month where we didn’t see big breakouts. With saw stocks open up, pop up, and then fade and fail and just go down. So it was like these short little windows of opportunity, and if you got in a little too high, you didn’t capture a lot of profit. If you got in way to high, then you end up having a loss. So my accuracy, not bad, whatever, a little below average. But this is really the area that was the problem. So this is what I would call a poor month. 124 total trades. So let’s look at the month of January to contrast a bad month and a good month.

All right, so we’ll go to the 31st. Okay so for the month of January, my average winners were three times higher, 300% more. My average winner was 300% more than it was this last month. That is massive. My accuracy was also better. I mean, my accuracy was 76% so accuracy was better. Number of trades, only five more trades. But look at how that materializes to $177 thousand. So my accuracy was like 20% better, which is huge. And my average winners were 300% more. So really, the big difference was the average winners. If I had an average of $15 hundred winners this month with 62% accuracy, I would have made a lot more. I mean, you do the math just based on the numbers. So average winners of 15 hundred, I had 124 trades times 62%, so times .62.

Oh sorry, 124 divided by … Oh, I’m doing this wrong. So .62, okay, so times 15 hundred. I would have had $115 thousand in losers, and then 124 times .37. So this would have been $115 thousand in winners, and then times a thousand, minus 45. So 115 minus 45, I would have been up $70 thousand. With my current accuracy being the same, if this was my profit loss ratio this month, I would have made $70 thousand. So that goes to show how important metrics are. So if you’re a trader who’s not currently looking at these numbers, and you’re wondering why you lost money in August, this is the first thing you can do. Look at your metrics. You can export all of these, upload into Trader View.

And just ask yourself, “What am I doing right? What am I doing wrong?” If you can look at six months of data, then that’s where you can start to compare a good month to a bad month, and this is where I see this was the difference. So if I look at the month of October, 2017, we’ll go way back here just for the heck of it. This was a month that was … The metrics are going to be quite a bit different. On this month, I … Wait, no red November maybe? Was it October or November? Now I’m confused. I thought it was … No, I guess it was … Oh, no. Maybe I’m just confused. For some reason I thought that I had a month where my profit loss ratio was like ridiculously good.

I must be thinking of a different month, because the profit loss ratio here is pretty much flat. Accuracy’s great, 80%. That’s awesome. But yeah, no, this wasn’t the month I was thinking of. In any case, if you’re going to have … If the market does start to get slow, trying to reduce your average losers can help. Because then at least you don’t have the big losses. So to reduce your average losers, you reduce your share size and you keep tighter stops. So there are some things you can do about this, but there’s not a lot you can do about the average winners being smaller. If the average winners are smaller, then you just got to adapt. You’ve got to adjust the strategy for the month that you’re in.

And I don’t think I did that as quick as I could have in the month of August here this year. I kept kind of being aggressive the first week and I dug myself a hole of $12 thousand. So I had to dig myself out, but I got out, and I’m going to finish the month green. And so that’s good. Green is good. All right so anyways, that’s about it for me here this morning. I hope you guys, again, have a great weekend. Get some rest. Those of you watching on YouTube or Facebook, I hope that you join us. Coupon code Labor Day, you’ll save 30% and we’ll see you first thing on Tuesday morning. All right, I’ll see you guys on Tuesday.

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