Warrior Trading Blog

Ahh! Another Red Day Recap!

another red day recap

Ahh! Another Red Day Recap!

 

 

 

 

Alright guys. So time for our midday recap, we’re gonna go over the trades from today. This is another red day recap for me. This has been a really tricky week. This is actually my third red day of the week, which is crazy. This month, I’ve only had four red days and three of them occurred this week. Up until this week, I mean it was a really decent month in terms of only one red day. That red day was an $8,000 losing day, but aside from the dollar amount, the month had been pretty good. Not a lot of red days, fairly consistent.

However, my biggest green day this month as of right now is $3,000 and that was my first day, that was the first day of the month, that was July 3rd. So this has been a month where I really haven’t had any big winners. And you know, I consent that I’m starting to get a little frustrated that it’s been a while since I had a really nice winner. Even in June, my biggest green day was only $5,000, which isn’t bad but it’s been a while since I had a nice 10, 12, $15,000 day. And I think I’m starting to get a little frustrated with this kind of daily grind that it feels like … Now let me give you a real life example.

So this week I for the first time ever, tried to go wakeboarding. And I’m out here in California, I was hanging out with Jeff, we went out on his boat on the Sacramento River. And he’s like, “Yeah give it a try.” And I get in the water, I’m floating there on my back and I try to get up. I start to get up and then I fall back down, I start to get up and then I fall back down. And you can only do that so many times before you’re like, “Okay I’ve had enough. This is getting frustrating. I drank about a gallon of river water and I’m done.This is just not fun anymore.”

And that’s kind of what this month has been. So like, I get up, I get a little bit of profit and then I fall back down. I get up, and I fall back down, I get up and fall back down. And yes I’m still steadily making progress. My profits are, you know I’m still green on the month and everything like that, but it’s just is starting I think to get a little taxing that I’m not having that easy follow through.

I’m not having that popping up and now I’m just riding the wave, and I’m doing it and I’m having fun and it’s working. That’s not happening, and I don’t know really what to attribute it to other than the natural ebbs and flow of the market. Sometimes we have fantastic days, fantastic months and other times things just are slow. You know for me, I started the year with $583, I turned it into $130,000 in three months.

I broke $100,000 in 44 days. And since hitting 130,000, for the last three months I’ve just sort of been fairly stagnant, I mean I’ve been moving up, $10,000 and then dropping back down three or four. And then moving up 10,000 and dropping down three or four. So my equity curve was like sharp up for the first three months and now it’s really kinda leveled out. Having said that, $10,000 a month is certainly not bad, it’s just not really the level that I would like to be at since I’ve performed at such a higher level on so many months.

So you know, I think that’s sort of the challenge, that’s kind of what I’m going through right now is, each day I come into the market looking for these A quality setups and instead of getting a 5,000, 8,000, $10,000 winner, I’m getting like 400 bucks. Or, on my first trade today I got $7 profit. So it’s like just I think that might be starting to weigh on me a little bit and it … So you know, let’s say that’s a trigger, you know this kind of long period of not seeing really big gains. How do I respond to that trigger? And I think my response to that trigger has been to trade with bigger size because I know even if I’m not capturing big percentage wins, if I trade with a larger dollar amount, those smaller percentage wins will be more money. Alright so 2,000 shares is only giving me 400 bucks, maybe 10,000 shares will give me 800 or 1200, so a slightly bigger size.

And then of course, there’s that stubbornness which is, you get into a trade, it goes the wrong way and instead of just letting go, you hang on to it cause you’re frustrated, because you’ve been in this grind and you don’t want to take a big loss and maybe it’ll bounce back. So it brings out some different emotions and this is something that we talk about a lot. Of course in the chat room, in these midday recaps, and also in the classes. The psychological challenges to trading, because those are the sort of the two sides of the coin. You’ve got your skills, your strategy, your tools, and then you have your ability to implement them and your ability to manage risk and maintain composure. And there’s not a single one of us who are traders who won’t have a day where you let your emotions get the best of you. It’s just impossible, you know we’re human.

And so, today is a day where I think I had taken two trades, first trade was on, on KOOL, K-O-O-L. I only got a partial fill on this one at $4. Let me back this up here on the one minute chart. I got a partial fill of $4, it pops up to 4.25 and then it drops all the way back down to 3.88. And so it pops up 25 cents and then drops 40 cents. And then what happens? It goes back up 40 cents, back up to 4.25. And then what happens? It comes all the way back down to 3.75. So it goes up 25 cents, down 40 cents, up 40 cents, down 50 cents.

That’s a lot of chop and that’s very difficult to trade. On the one minute chart, you can see that the two highest of volume candles of the day were both red and they were huge, just bearish engulfing candles, bigger than the previous candle. And this is a stock that had news, looked decent, but it just did not have clean follow through. So that was certainly a little bit frustrating, not to see decent follow through on that one, only made $7 on it. So you can see my P&L here.

So $7.67 on KOOL, next trade, JAGX. This one I was a little hesitant on because it was below a dollar. But I thought because it was our leading gapper, it had a chance of breaking over a dollar and then once it broke that level, you might see a decent move. So you can see this little one minute consolidation here at 95 cents. I got in at 95 cents, 10,000 shares, pops up to 99 cents, I’m up 400 bucks.

Obviously not taking a profit cause I wanted to see it break over a dollar, but we had a 10,000 share seller sitting right at $1, sorry a 70,000 share seller sitting right at $1. I was hoping that that level would break, we will go up to 1.05, 1.10, 1.15, maybe halt on a circuit breaker, back on my main target, 1.25, 1.50. That could have been 2500, maybe five grand. Didn’t happen, stopped out, $41 loss, which with a 10,000 shares is not bad.

And then, at that point I was like look guys I’m down 30 bucks, you know I’m not seeing a lot today, maybe this is just a good day to call it quits. And I was prepared to do that, and then I saw AGRX pop up on the scanner. Someone called it out in the room, I looked at it and I was like, okay this one looks decent. I checked, I saw that it had news. So this is a gapper with news and you can see right here it was consolidating just under 5.20, 5.15, and then it pops up to 5.44. So as it pops up there, I’m looking at it and I’m like, okay this looks decent, it’s kinda curling up, so I jumped in for the break over the half dollar, getting in at 40, right around 5.40 on this one minute micro pullback and then adding at 5.55 or 5.50. So I had a 5.45 average, 10,000 shares. It’s kind of a bigger position, maybe a little too big.

If it pops up to 5.60, I’m up 1500 bucks, and I’m like okay, this looks good. It taps 5.60 and then in the next minute, it drops all the way back down to 5.33, I go from up 1500 to down 1200 almost within 60 seconds. So at that point I was like okay, that’s not what I wanted to see but let’s just give this a second. It consolidates right here. Now I know immediately on this red candle, this is not looking good, it’s not. And at that moment, this was 10.10, so this five minute candle closed as a green shooting star. And I’m like this does not look good, I’m not sure if we’re gonna be able to get back up to 5.60. And I could have sold right here, but I didn’t want to take that loss and I was feeling frustrated and feeling stubborn I guess.

So you see it consolidates here, it drops down to 5.22 and I’m like well, let’s see if it bounces off the 20 moving average, maybe it will give us a five minute setup, first five minute candle will make a new high, this could form a bull flag consolidation. First candle will make a new high, it will be over 5.44, maybe that will bring us back up to 5.60, I’ll be able to sell on the move back up. So I’ll let it flag out, it’s consolidating. And then on this candle here, it broke support and dropped from 5.23 all the way down to 4.92, like that. And I got stopped out, I got stopped out at 5.05, I mean I got an extra 20 cents of slippage. So it is what it is, you can see here the P&L.

Was this avoidable? Yeah, this wasn’t the best setup. I jumped into it, I was too aggressive on my share size. I thought because we had news, because it was a good daily chart that it would go higher and it had just moved up from 4.80 to 5.40, so it already had shown some strength. So I thought I was jumping on that momentum and gonna continue to ride it. The thing that you never know is, when you’re jumping on a stock that’s up 10%, if it’s gonna go another 10, 15, 20%, or if it’s gonna come right back down. And that’s the thing that’s challenging. And you have to be able to position yourself so you can step out if it starts to pull back. And on this one, it pulled back so sharply and so quickly that suddenly I was pressed up against this sort of emotional wall which was, I don’t want to take $1000 loss today.

So let’s just hold this and see if I can ride it out and it curls back up. But obviously, that’s not what happened and then we got a flush of selling here and another flush right here. So this was very disappointing just in terms of no follow through. And if you step back and look at the chart, you know it came all the way back down. I mean it just totally retraced that entire move. So probably the best entry would have been 5.15, right on this five minute setup and to sell into that push. You know people ask me, “Well why did you buy where you bought? Because I don’t see a very clear setup there, there’s maybe a little one minute pullback, it’s under the half dollar.” And I get that, it doesn’t look like the cleanest setup and it’s not. But, the reason that I’m more aggressive with these setups is because we have seen so many times, stocks that on setups just like that, they’d never pullback.

They squeeze from whatever it is, $2 to $4, $5, $6 and you’d never get a clean pullback. So you end up, if you want to be in it to the long side, getting in at places like half dollars and whole dollars. I think that if anything, I should have used maybe smaller size because this setup was a little riskier. I’m just scrolling back here to this chart on TEAR from last week, where you can see this really big move from 2.20 all the way up to 3.20 or 3.40. And you can see that this didn’t give you really clear pullbacks. So you know, if you added here at the half dollar of 2.50, which is one of the places that I often add, in this particular case, it worked out fantastically well, it ended up just taking off. If you added again for the break of $3, right up here, adding at half dollars and whole dollars can work very well and it’s kind of the rhyme or reason, why does it work on this trade and it doesn’t work on another trade.

Well you know, that’s kind of the mystery of the market I suppose. The good news is that my accuracy is 68%. So I’ve got pretty good accuracy when it comes to making that determination of whether it’s gonna do this like TEAR or do something like AGRX today. So AGRX is part of the 30% of the time that I’m wrong. What’s of course frustrating is when you allow those losses to be larger than your average winners. So literally like this month, my biggest losses are far bigger than my biggest winners, and that’s a problem. Both on Wednesday the 12th, when I had that really big loss and then you know even again today on this one. My biggest winner, I’m actually not sure what my biggest single trade winner of the month is, but my biggest green day is only $3,000.

So to have a day where you lose $4,000, I mean it might not seem like a big deal, but the problem is that the losses are bigger than the winners. So if your losses are bigger than your winners, what does that mean for your accuracy? It means that if you’re right 50% of the time, you’re not profitable. Because if you’re right 50% of the time, your winners and losers need to be equal size. So if your losers are bigger than your winners, you need to be right 60% of the time to break even or 70% of the time to break even, and my accuracy this week was not particularly impressive. I can see if I can pull up to see exactly where it’s at. I’ve certainly had fluctuations in my accuracy. It was really good at the beginning of the month. I was at 95% for several days in a roll.

So let’s see, this week, I’m at, let’s see, I’m only at 42%. So this week was just, I was totally off on my accuracy. Whether it was the market or something else, I don’t know. Now if I look at my average for the entire month, I’m at 67%, which comes right back to my typical average. But this happened to be a month or a week where I was below average. If I scroll back to the last six weeks, I’m at 71%. So my accuracy from the beginning of the month is kind of tiding me over and helping compensate for the lower accuracy of this last week. But here’s today, three trades, one winner. Yesterday was same situation, it took full five trades and only had one winner. Day before that was two trades two winners, green 1000 bucks. The day before that, six trades four winners, 1700 bucks. But this is a week where I am gonna close in the red by a little over $5,000.

So it’s definitely disappointing and especially considering this hasn’t been the most exciting month. This has been a month where I’ve been kind of like just climbing along, small steps, small steps, so then when I slip and I have this big five step pullback, it can just become a little bit of a feeling of defeat. That’s the emotion when you allow yourself to start trading with that feeling of defeat that you start doing things like get more impulsive, get more aggressive on your share size, get more stubborn about taking your losses quickly cause you just get frustrated with the market. So you know that’s kind of where am at right now.

It’s been a while since we had a really good just fantastic hot streak with really strong momentum. A day where we saw multiple stocks making 100 to 200% moves. We’ve just, it’s been a while. The last time we saw that was in the first quarter of the year, so January, February and March. I hope that we’ll see another hot streak like that soon, I know that’s when I’m able to really capitalize. If I started over with the $500 challenge today or tomorrow, it probably wouldn’t go as well because the market right now is just a little bit more difficult.

You know it happened and I guess good fortune that the market was really strong when I was doing that challenge. So if I started over now, it would be, probably really small gains for a couple weeks or maybe a couple months, being content with taking $100 profit or 150 or 200. It would be hard to have a five or $6000 day with a $500 account unless you have a stock that goes up 100 or 200% and does something absolutely crazy and parabolic.

So you know right now, things are you know like I said a little choppy, it’s a little bit of a grind, it’s becoming a little tasking but that’s part of trading. You have to be able to fight through those slow periods knowing that on the other side, you will have inevitably another hot period, another really good hot streak. So I’m of course looking forward to that, hoping it comes sooner rather than later. But you know in any case today is the 139th trading day of the year, I don’t seem to be able to find my pen, but 139th day of the year, closing the day down about four grand, which is like I said a little disappointing, but I will bounce back.

One of the things that I wanted to do this year was document every step in the journey. From 500 to 100k. I wasn’t expecting to hit 100k in 44 days, I thought it would take me the entire year. So I’m just continuing to document every day this year, the green days, the red days, today’s certainly one of those days that can be a little bit more difficult to talk about because it’s frustrating and nobody likes to lose money. But it’s simply a part of this job that we have to be able to talk about and get good at.

Alright, so fortunately I saw across in the room today that Mike was doing a fantastic job on PM and MO, two really solid trades. So you know, for those of you that like trading a higher price stocks, there were some really good opportunities today and that’s a nice thing with being in a community that gives you a lot to choose from. You’ve got some options. Now some of you may be good at switching between different strategies, trading small caps to trading mid caps or large caps. I am not as good at that, it’s kinda like you know areas of specialization. And you know you think of like attorneys and stuff like that.

Like you have attorneys who handle like civil stuff, and then you’ve got like divorce attorneys and you’ve got like litigation attorneys and you’ve got probably environmental attorneys. I mean everyone’s got that specialty. They’re some that are probably good, just general counsel can do a little bit of everything but you know in this chat room, my focus is heavily on small caps, Mike’s focus is heavily on the large caps and the mid caps, the higher price stocks. Jeff’s focus is on swing trading and on trading options.

Now if any of the three of us were pushed, we could probably branch outside our comfort zone and trade a little bit of each others strategy but it seems to make sense for each of us to specialize in the area that we really excel. So today’s a day where the small caps didn’t follow through and even in the last month where the small caps have been on the weaker side.

But the large caps have been stronger, so some of you guys can take it as an opportunity to learn a little bit about Mike’s strategy or learn a little bit about Jeff’s strategy and know that at the end of the day this probably all balance out. You know we’re three traders all doing the best we can to generate profits but we’re all gonna have ebbs and flows, ups and downs. So you know, you guys are able to see kind of all of it which is really good and that’s the benefit of being in such a large community.

So anyways, you know that’s it for today, tomorrow or Monday is gonna be our last trading day of the month. This is so typical of me that I throw away what was a decent month with two or three red days in the last week of the month, but, I don’t know, I guess it’ll be a fresh slate starting on Tuesday morning and that will be good. We’ll start cleaning on August 1st.

So July, a little bit of a grind, June, also a little bit of a grind. June I had a decent number of red days, I had one, two, three, four, five, six red days in June. I finish the month up only $8,000 versus 17,000 in May, so June was a little slow for me and now July is proving to be much of the same. So again, this has nothing to do with summer, last summer was fantastic, I made $96,000 in June, July and August. It just happens that the small cap market is not as active here in this last couple of months.

So we’ll wait for those good opportunities, possibly trading less is better. I’m not sure that the market really deserves my money right now or my order flow just cause I just keep jumping in these stocks and not seeing follow throughs. So maybe scale back a little bit, trade a little bit less, wait to see some better signs, better opportunities rather than keep kinda running myself up against this same wall and you know maybe I will venture out a little bit from the small caps, test the water with some of the higher price reversals. I do like trading those, that’s kind of the one setup that I like, is the reversals top and bottom. So maybe do a little bit of that but still stay focused on trading the first two hours which is really when I’m at my peak performance typically.

Okay, so that’s it for today, I hope you guys all have an awesome weekend, get a little bit of rest and we’ll be back at it first thing on Monday morning. Okay, enjoy the weekend, I’ll see you guys on Monday.

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