Warrior Trading Blog

Another Red Day Recap?!! Why me?!?

red day

Another Red Day Recap?!! Why me?!?

 

 

All right guys, so let’s do a midday market recap here for this morning. Today’s another red-day recap, I’m in kind of a little bit of a slump I guess. This is the fourth red-day recap in the last eight days. I don’t know, I was red last Monday, not this past Monday but the Monday before, and then red Thursday and Friday.

Monday, made 3,000 bucks. Tuesday, didn’t trade, didn’t see anything worth trading, so no trades. And today, you can see here, my PNL on my trading platform, Lightspeed. Two trades, two losses. Kept it simple, didn’t over-trade. I traded a little bit past my max loss because the first trade put me down just over $1,000.

The thing with that one is that I didn’t actually intend to take as much size as I took. I was trying to take 7,500 shares, and I pressed the buy button what I thought was three times. I look, and I only have 2,500 shares, and I’m like, “That’s weird. What’s going on?” I pressed it two more times, and then I’m looking and I look back and I’ve got 12,500 shares. I was like, “Ehh.” I don’t know? Whatever happened there.

Maybe just a little bit of a lag on my internet connection since I’m in a hotel. It happens, it’s not the end of the world. In any case, let’s look at that trade. First trade of the morning was on CLSN. Now, this morning we were going, we were looking at the gap scanners and I said, “There’s not a lot that I like, CLSN is decent, and ARMN, and we had a couple others.” CUR was the other one.

When I was looking at CLSN, I was like, “You know, this one’s kind of iffy because the last few times it’s gapped up look what it’s done on the daily chart. It gaps up and sells off, it gaps up and sells off.” It’s done it once, twice, three times, it just kind of keeps doing it. I don’t know, it’s gapping up here, I don’t know if it’s going to go. What I decide to do is get in a little early.

Now, I got in early because I was anticipating that we would break over this pre-market resistance of 1.95, and from there we would almost surely pop up to $2.00, I’d be able to sell at 2.03, 2.04, 2.05, something like that. 7,500 shares and an entry at 1.90, 1.93, I’d be out with 700 bucks profit. That all sounds good. I got filled at .93, which is the top of my limit, didn’t really appreciate that, but got filled at the top of my limit.

It drops down to .84, and I’m like, “All right, well now I’m just kind of managing this. Let’s give it a second, first candle to make a new high will be the red to green move.” It pops back up, does the red to green move, hits a high of 1.95, and I’m like, “Okay, this looks good. It’s got to break over 1.95 though.” Lots of volume, lots of buyers, lots of buyers, couldn’t break that level, and we drop back down. I stopped out as it dropped back down, took the loss, and got out of the way.

But the problem is because I was sized with an extra 5,000 shares that loss was that much bigger. It meant in the first three minutes I basically had hit my max loss. I was like, “All right, I’ll give myself a little bit of forgiveness today on that max loss because whatever, just was a little bit of a tech issue there, that’s fine, we’ll see if something else pops up.” That was my first trade of the day. Next trade was MTBC, this was hitting our high day MOMO scanner. Hitting the scanner, looking decent, and I’ll scroll back up here so you can see. In at .93, tried to put orders at .99, didn’t get filled, stopped out at .84. Then I jump in MTBC at .79. Now, the frustrating thing on this one is MTBC was a good entry.

If we look at the chart you can see here my entry right here, apex point, first candle to make a new high, right there, one minute pullback. In there with 10,000 shares at .79, .80, so right around .795. It pops up to .90, and maybe I was too aggressive on this one. I decided to add 5,000 shares because I was like, “You know what? I’m up $.10 and it looks like this thing’s going to pop up to two bucks. Looking at the daily chart we’ve got room up to 2.12, so I was watching 2.12 as daily resistance.

Above that we had room to 2.68, so I had a couple levels that I was watching. It popped up to a high of .92, so I’m up about 1,400 bucks. Then in this candle it drops all the way back down to .75 and I had to stop out. I stopped out at .78. My new average was now .83, I tried to sell at .89, and .85, didn’t get filled, stopped out at .77. Which is kind of interesting the way it shows there. Oh, 15,000. Yeah, I was going to say, it shows only 5,000, which is weird, but it was because of the way it was scrolled.

But anyways, that’s two trades, that’s it, done for the day. Just no follow through, and I’m going to be the first to admit that it gets a little frustrating coming in day after day looking for quality opportunities and not seeing anything. I mean it’s frustrating. We’re all coming here for one purpose and that’s to make money trading. When we come in, we sit down, we’re looking for opportunities and we don’t see anything or we end up taking a sub-par setup and then losing money, it can be definitely a little frustrating, a little demoralizing. Here we have for me, early July, I mean I was like, “I’m not going to have one red day in July.”

Let’s see, we had one, two, three, four, five, six, seven, eight, nine, 10, 11, 12, in 13 trading days in July, in the first three weeks I only had one red day. I was like, “My accuracy’s on fire.” I was pretty consistently doing $1,000 to $1,500 a day. But then that last week, last week of July I had three red days, closed the week red. We weren’t seeing follow through, just frustrating. Good quality setups like MBRX, or MTBC, or like CLSN, just weren’t working. Now we’re seeing that continue this week.

Now, my first trade on Monday, the one good trade on Monday, just like MTBC, I got in on that one minute pullback, that was at $4.00, sold it at 4.43, $.43 profit, $3,300. Just like that. That one worked out great. Today, I step into the same trade, I lose 800 bucks, no follow through. Fortunately, it’s definitely nice to see Mike has been crushing it on the large cap. These are the ebbs and flows. Right now he’s in a bit of a hot streak, I mean maybe from earnings and things like that, these catalysts have been driving the larger caps a little bit more. But he did really well last week on Amazon, Apple this week.

He had another trade on, what was it? Those two reversals on Thursday or Friday. Someone in the room said they made $20,000 on those two reversal trades. MO, right. I think the other one was PM. I mean it’s good that we have the variety in the room, so when one of us is a little on the slow side, which happens to be me right now, fortunately we’ve got another one in the room that’s doing really well.

As I’ve said, I could deviate away from my core strategy and trade some of those higher price stocks and do things like that. I’ve considered it. If I see good quality opportunities I might do that. But when you deviate away from your go-to, you can start to make mistakes because you’re not as comfortable when you’re outside your comfort zone. It’s good to test the boundaries of the comfort zone a little bit and get more familiar with other strategies because it will help you during these periods when let’s say the small cap market is kind of sluggish, or when the large cap market is sluggish. You can sort of transition. I know Mike doesn’t really like to come down to the small caps, I don’t usually like to go up into the large cap, so you kind of find your comfort zone, you stick with it. You just figure, “Well, the ebb and flow, I just sort of have to ride it out.” That’s the best way to do it.

Even if you’re trading all of those strategies you’re still going to have ebbs and flows because the overall market has these ups and downs. Today, a little bit of a setback, but good news is I’m still green on the week and we still have Thursday and Friday to try to capture some more gains. It puts me red on the month right now since this is the first trade I’ve taken of the month, but that doesn’t really matter when it’s August 2nd. We’ve got an entire month ahead of us, so the goal will just be to keep grinding higher, looking for A quality setups. One of the things that was challenging for me through the month of June and July was the fact that my average losers were bigger than my average winners. This is something that no trader likes to see. I don’t like to see that my average losers are bigger than my winners.

I look at my average losses over the course of the year and my average losses are fairly consistent. The problem is the average winners have been getting smaller and smaller because the market just hasn’t been as favorable, hasn’t been giving me these really big … Just not as many of the really big winners, the eight, 10, 12, $15,000 days. Last time I had a day like that was in the spring. Now we’re getting to be months since my last $10,000 day, and that means my average winners are smaller. When I have losses like today where the average loss is like 800 bucks, it draws down the average. For June my average losses were 870, for July the average losses were 914. Let’s see, we’ll go back to May, May my average losses … Sorry, I skipped a month. May, my average losses were actually only $213. May was kind of an anomaly there, just really low.

Average losses in April, 1,300 bucks. Average losses in March, 1,100 bucks. Average losses in February, 1,300 bucks. Average losses in January and first part of February, about $900. The $900 to risk per trade is all fine, the problem is in order to have a good profit/loss ratio you need to be getting $1,600 average on winning trades. Right now it seems like my averages are more in the $500 to $800 range, so the average losers are bigger. The only reason that I’m able to be profitable with my average loser being bigger than my average winner is that I’m right almost 70% of the time. The accuracy is what makes the difference there, but obviously it would be better if my winners were bigger than my losers, and that means I have to have tighter stops number one, or trade with smaller size.

Now today, I really couldn’t have had tighter stops because my stop was $.09 on CLSN and $.06 on MBRX. I mean those are pretty tight stops. Average loss was only $.07 per trade. Problem was I had big share size. I’m not sure if either of those trades truly gave me 2:1 profit/loss potential. That’s the challenging thing with the $1.50 to $2.00 price range. Until it gets up above three or four, it can be a little tricky. You know what? I actually would like to see here is my average profits. I can log into my Trader View account here. I want to see since April 1st, my average profits based on the price of the stock. Because I’m starting to wonder if I’m maybe not doing as well on those lower price stocks. Let’s see, so detailed price and volume. Yeah, so that’s interesting. The majority of my profits are not on stocks that are priced under $2.00.

Maybe I should be a little more cautious at that price point. I think maybe that’s just a range where it’s more common that you’re risking $.10 because $.05, $.10, those are pretty tight stops relatively speaking. But your profit target is only $.10, so it’s one to one at best. $1.50, $1.70 stocks don’t usually run $.30 because that’s like a 20% move, I mean that’s a really big move for a stock that’s priced at $1.50. Maybe something to look into there in terms of price range. Yeah, so that’s the benefit of being able to really analyze your metrics, is to kind of have that thought of, “Well, wait a second, is this an issue I’m having with price range? Or market behavior? Or what’s going on?” Then being able to adapt to that change. Rather than making a change sort of just based on instinct, which may have no basis in reality. Being able to base those decisions on metrics means you’re making an educated decision.

I think one of the things for me is maybe focusing a little bit on the higher price, a little bit above, moving away from the stocks between $1.00 and $2.00. Both of these were below that $2.00 range. Best case scenario for both of them maybe was $.20 of profit. I’m just not sure either of them had the potential to do a $.30, $.40 move. To do that they would’ve had to be just almost parabolic because for $1.50 stock to move $.50 is a 33% move. I mean that’s a big move, you need some really good volume or really good catalysts to get that type of move.

Maybe that’s a little bit of insight from today’s loss that can help me improve my losses or improve my winners, reduce my losses for the rest of August. All right, so I guess that’s about it for today. Hopefully you guys did well on Apple, those of you that traded the higher priced stocks. Yeah, if you guys have any questions, those of you that watch on YouTube or Facebook, put the questions down in the comments section, I’ll come back and answer them later on and I will see you all first thing tomorrow morning. All right guys, have a good afternoon, I’ll see you in the morning.

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