Warrior Trading Blog

Choppy trading first week of August!

choppy trading

Choppy trading first week of August!




Alright guys, so time for a midday market recap. We’re an hour into the day, but we’re not seeing follow through at all. So we’re not seeing good opportunities on the small caps, large caps Mike is trading Tesla, which is fine but that’s not my go to set up. SHPG has some volatility but you know that’s not my setup either. So today, it’s the 142nd day of the year and we are just not seeing good follow through in this market, it is very tricky out there.

So unfortunately it is my second red day of the week. Log into my account here. So finishing the day down eight hundred and something dollars. Hang on, I gotta login, I get myself all entangled up here. There we go, okay. So yeah, it’s kind of interesting, we’re just in this market that’s so difficult to trade.

You can see I took two trades today, I kept it simple, I didn’t overtrade. MTBC, lost 360 bucks, MBRX lost 476. So kept the stops relatively tight, 7500 shares on both trades but no follow through. So it’s just that same grind on … Let’s see, so finishing down $840.87.

So let’s look at these trades here. Let’s see. So MTBC you can see this one here, it’s just kind of crazy. We have this nice pre-market consolidation under 2.40, I was like this looks good for follow through. Continuation setup, I jumped in as soon as the bell rang at 2.33, anticipating the break of 2.35, we had a hidden seller at 2.35.

Just all these buying going through, basically 100,000 shares went through at 2.35 and that just filled someone who was selling at 2.35, a hidden seller. Drop down, popped back up to 2.35 and that seller is still there and then we faded off that level. So 7500 shares, four cents loss or whatever, kept the stop pretty tight but it just couldn’t break over that level, so no follow through.

So first trade, instant loss, next trade was MBRX. This one popped up on the scans, I was like okay, let’s go for a one minute micro pullback, which is what I did. You can see here my entry was at 3.05, pops up to 3.07, I’m up 2 cents and then boom, drops down to 2.85.

So kept the stop tight on that one as well which is good but I’ll be the first to admit that it gets frustrating when you are … I mean it’s kinda like you’re doing the same thing every single day and sometimes you have different results, which is confusing. What I’m doing right now is not anything really that much different from what I did in February when I made $70,000. We just are seeing a different reaction in the market. So you know that kind of is, lends itself to two schools of thoughts.

One school of thought is that obviously the strategy that I have works well during certain types of markets and during other types of markets, it’s more stagnant. What’s interesting is that the setups are the same. We’re looking at the same quality setup, the same Bull Flag, the same Flat Top Breakouts. But the market reaction to those setups right now has not been as strong on most of the trades. So this week or in the last couple days, I’ve take four trades and I lost on all four.

This week actually I’ve only had one winner. That winner was $3300 though. So because of that one winner, I’m green on the week, and it’s kind of what’s the rhyme or reason why with 7500 shares on that trade I made 44 cents. But on every single one of these others I keep getting stopped out. Average loss has been only six cents, so I’m keeping the stops really tight which is good, but it’s kind of confusing. What’s the rhyme or reason, why did that one work and these ones didn’t? I have no idea, I’m not really sure. It’s hard to say.

So you know right now, kinda going through a little bit of a slump, just sort of like a grind, a little bit of a slow period. The goal during any of these types of slumps is not to fall too deep into the red. Just to allow like, you know you step up to the plate, you take $300, $400 of risk for the trade and if it doesn’t work, okay fine you stop out but you don’t want to just have days where you’re like losing $5000 back to back cause those will become a really big setback.

So if I look at my TraderVue account here, let’s see. I’ll do a reports view, last 90 days net. So let’s see, 90 days. So you can see that it’s kind of this grind of … I can show you guys the chart, let’s see. So that’s the grind here for into the last 90 or so days. It’s like up and then down a little bit and then up and then down a little bit. Up down and this is sort of been this grind that is where we finished the month of July, just sort of grinding here. So you see this is the P&L.

The green days have been getting smaller and smaller, the red days have kind of also been getting a little bit smaller so we’re just sort of just you know riding this little channel, which is not maybe my favorite channel to be in, I’d like to break out to the upside and see some more green days. But it is what it is. This is a market that we just have to trade through. There are a couple different things you can do.

Like I said, one school of thought is to say, well, the strategy works really well in a hot market. In a very sluggish market, it doesn’t work as well because we don’t have as much volatility. The volatility that we have is not as predictable, therefore during these markets, the best solution is reduce share size. It’s like let’s say, we’re a race car driver and the beginning of this year, we had clean track, blue skies, good weather and we were just ripping laps around that track. And then it started to get a little rainy. And now it’s like we just kinda have to go slower.

We don’t want to wipe out, we don’t want to do anything crazy, just gonna slow it down, pace ourselves. We still are in a good position because we had such a great first part of the year, so pace yourself, wait for things to clear up and then when they start to clear up, then you can put the pedal to the metal, start to get more aggressive and hopefully we’ll start ripping around the track again, but right now we’re in this sort of slow period.

So if you try to force it, you’re just going to spin off, you’re gonna wipe out. And that’s pretty much what we’re seeing. You gotta let the market tell you when there’s strength. Just simply by looking at stocks, holy cow, that stock just went from $3 to $5. Okay, we’re seeing some strength. Until then, we’ve got to really be smart.

So you know that’s sort of the game plan right now, like obviously it’s never fun to start the month with red days, but it in the grand scheme of things doesn’t really matter that much because these are just two laps on a 250 lap track or race, which is like one year of trading. So yeah a couple little tricky runs around but we’ll get it back. The other school of thought is that … So here’s two things, sticking with this analogy of the race track, okay you’ve got your summer tires, you gotta go really slow.

Option number two, you go into the pit you switch strategies, you switch tires and then you come back out. So that’s the question of how long is this gonna be raining? Are we gonna be dealing with rain for the next 60 laps in which case maybe we should go into the pit, maybe we should switch strategies, move to something that’s better suited for this type of condition. Or do we just kind of tough it out until we get back out on the other side?

My approach typically has been just to tough it out until I get to the other side because that way I’m very consistent. I pretty much do the same thing, the market is a little bit different but I can look at my metrics over a long stretch of time, like over the two, three years that I’ve been really aggressive on this strategy and I can see my accuracy, my profit to loss ratios, and I know that I didn’t really deviate out of that strategy.

At the same time, at a certain point, you do start to question, okay how long are we gonna be dealing with this weather and at what point am I just gonna start to make a change or switch the strategies? Some people have asked me why I don’t short these stocks more since they seem to pop up and then fade back down. Well I don’t have shares available to borrow. So for me, that change would require opening a new broker account and that would require a lot of our students to open new broker accounts, So if they want to also start shorting a lot of these stocks.

That’s not necessarily feasible, that’s a big change. There’s a learning curve to switching brokers, there’s a learning curve to adjusting to a different strategy especially a short bias strategy. By the time you get settled in there, it’s at when momentum comes back into the market and then do you switch back to the other broker that’s maybe more favorable, has better commissions so that you prefer? I don’t know.

Could you switch to trading the large caps, trading alongside Mike? You certainly could, I was watching his trades today on Tesla and I looked at that, I think he got short at 346, right in this kind of range, right out of the gates. And I was like yeah, that looks good, I was kinda thinking about it, I was like 500 shares? You know maybe 500 shares short, 346. Well next thing you know it pops up to 350 and now you’re down four points. Now that’s 2000 loss if I had taken that kind of size, so it reminds me okay gotta size down on these ones a lot.

Now he ended up being in a position where he was able to hold through that pop and then add more size adjusting his cost basis and then covering as it came back down to 344. It’s a different strategy, it’s a different ball game. With those types of trades you have to be prepared that they could rip 2 or 3 points in your face, so you don’t start with 2000 shares cause then all of a sudden you’re down six grand, eight grand.

Your P&L is just all over the place, so you gotta go in much smaller size, which is very different for me. So as I watched that, it kind of reminded me why I tend to avoid those higher price stocks because they can so suddenly go the wrong way and I’m not very good at managing that, I often when that happens end up holding and then just watching the loss get bigger and bigger for whatever reason, I’m just not as good at cutting those losses.

So yeah, I could branch out into some of those. Maybe I will. The ones that I really like are the clean reversals. And last week, Mike had that awesome trade on MO, which was a Flash Bottom. That’s the type that I like, I happen to not trade it, I don’t remember what I was doing that day, something else was going on. What time of day was this? This was at 10:45, I think I had already kind of thrown in the towel, but that was a really nice balance from 60 bucks up to $66. So those are the types that I really like, the Washouts or the top reversals but a setup like MO might come along like once a month. You don’t see those everyday, that was like picture perfect.

So sure, the next time we see one of those, I might be more inclined to jump in it, given the fact that I’m not making a lot of progress in the small caps but at the same time, you want to be mindful that if you deviate away from your go to, and you start live trading a strategy you’re not as familiar with, often it ends up compounding the losses because you just don’t know exactly the right way to trade those higher price stocks.

And you know stocks like MO I could have jumped in this with 2000 shares at 62, thinking yep, it looks good for a bottom balance and then boom it drops to 58, I’m down four grand. And it’s like, oh my God, I deviated from my strategy now I’m down four grand. I’ve had that happen before so that’s why I save out.

Anyways, today, the last two days have been a little frustrating and of course tomorrow is Friday. Fridays are not usually one of my best days of the week or actually statistically my worst day of the week. So I don’t know if I’ll trade tomorrow, I’m not sure. I might take the day off and then come back on Monday when I get back from this California work trip, recharged and ready to jump back in for what will hopefully be a decent week.

Statistically, the odds of me having a big winner are not on Friday, it’s next Monday, Tuesday, or Wednesday. Those are my three best days of the week, which was true again this week. So it’s possible that Friday we’ll come into the market and we’ll see a couple good setups, but Fridays in August, a lot of traders with deep pockets, big money take the day off. They go out to the Hamptons or something like that, so there’ll be less volume in the market. That means less follow through and you know less buyers at the breakout spot.

So I’m not sure what I’m gonna do tomorrow, but I might take the day off and then come back recharged the next week. At least right now I’m finishing the week in the green, which is good and better than I can say for last week.

So maybe I’ll be happy with that and jump back at it next week when we start to see some really good follow through. So if I’m not here tomorrow, you guys can keep an eye on John in the chat room, he’ll definitely be calling out the stocks that look good. I know he’s been branching out and trading some of Mike’s higher price stocks, I think he traded Tesla today.

So he is trying to, because we’re not making as much money in the small caps, try to get a little something over on the large caps, a little something on the reversals just to try to keep getting on that daily goal. And I say this market has been choppy and it hasn’t been good, last month was not horrible for me, it really wasn’t.

For the first three weeks, I was averaging $1500 a day consistently, day after day after day. Having said that, $1500 is a little on the light side for a daily average because I earlier this year was having five to eight, $10,000 days weekly. So that made it seem slow but of course these last two weeks made $1500 a week seem amazing.

So hopefully we can get back to that grind of $1500 a day, $1000 a day starting next week and try to get August back on track so I can make my way up towards … Even if I just finish the month with $10,000. At this point that will be fine and I’d be more than happy with that considering the way trading has been this last couple months.

So anyways, so that’s the game plan. I’ll keep you guys posted on tomorrow or definitely have Mike communicate if I’m not gonna be in the room and hopefully we’ll see. For those of you that trade, if I don’t trade, maybe you’ll see great opportunity statistically if I’m not in the office trading, you’re gonna see a home run trade, that’s the way it goes. So maybe it is better for me to not be here so you guys can get a home run.

And then I can have fomo about missing it. So if that gives you guys a good winner, I’d be happy for that. But anyways, I will catch up with all of you probably first thing tomorrow morning or if not Monday morning and you guys will hopefully all have an awesome weekend. Alright, I’ll see you guys, we’ll see first thing tomorrow morning maybe or back on Monday morning. Alright, I’ll see you guys soon.

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.