Warrior Trading Blog

Day 106: Finishing the week with 3 Bull Flag Trades

bull flag

Day 106: Finishing the week with 3 Bull Flag Trades



Okay, so let’s go over the trades from today. I’m finishing the morning up $376. It’s not the most impressive morning. Having said that, it’s Friday and I didn’t really want to push my luck too much. I’m also actually trying to kind of just bounce back a little bit. Not bounce back in terms of revenge trade, but just sort of clear the slate from the red day that I had yesterday. Yesterday was one of the biggest red days I’d had in like a month or a month and a half, so that was kind of disappointing and it was definitely …

It’s just interesting how one trade that you get a little impatient on and get a little too aggressive on can just so badly throw off your day, your week or even your month. Trading is one of these things where you have to be able to maintain composure through every moment that you’re taking a trade. Even one 15 minute lapse in judgment can cost you tens of thousands of dollars potentially.

That’s a little scary. It’s almost like trading is like being, it’s like being a surgeon. Every trade has to be calculated. You have to make good decisions. Now, unlike a surgeon we can afford to be wrong 30% of the time and that’s fine, but even when we’re wrong, it has to be within the parameters of what we can tolerate in terms of risk. We can’t be wrong and lose 100 grand because you can’t make a living as a trader if you do that on a regular basis.

So anyways, today my goal was simply to have a green day, just finish the month with a green, finish the week with a green day, not do anything crazy. Having said that, there wasn’t a lot that looked good this morning. That was a little bit of a concern, so our gap scanner here, I’m going to run this for a historical date. We’ll do this at 9:20AM this morning. This is exactly what the gap scanner looked like this morning.

So as I sat down I was like, “Okay, well ADHD is the leading gapper, up 19%,” but I said I don’t trust it. This doesn’t look that good to me. I really don’t think I’m going to want to go for it, so we’ll see. Maybe over 140, but this week has sort of been weird because we’ve had these low price stocks have been moving up, but like DRWI, both days it gapped up. It sold off you can see on the daily chart.

Actually in fact that last one, two, three, four, five, six, seven, right, nine days have been red on this stock. Despite gapping up substantially, it sells off. It’s just been really not an easy one to trade, so that was DRWI. Yesterday there was HUSA low priced stock. Kind of broke through $1 and then back down to 70 cents, down 30%. We had ABIL which is the one I lost on yesterday, squeezed up but rolled over hard. Couldn’t hold these levels. I got in too high.

OHGI earlier in the week was interesting but is not being able to hold up. So when I saw ADHD on the scanners I wasn’t super interested in it. I just felt like oh, another $1 price range stock. Just kind of sick of these. Next one down, KMPH, and it’s not just that I’m sick of them. It’s that there’s a 27 million share float gapping up 19%, 600,000 shares of volume. It just doesn’t have the look for something that could go to a two, three, 400% move potentially. It doesn’t have that potential.

KMPH, the next one on the scanner, this one has the five cent tick spread, and in fact, it ended up not even being a gapper. Right? For some reason it was gapping and then it opened flat. So obviously nothing there. DFT, 77 million share float at $60, not in my price range. CNIT, 24 million share float, $1.06. Again, what’s the potential on this? Five, 10 cents? Potential is still limited so nothing on that one.

Let’s see, and then we had CAMT on here. This one I said, I was like, “Well, I don’t like it because it’s kind of a bounce off the lows. It’s not a very good daily setup.” But what I did think was that possibly over 630 it might be a scalp. A scalp up to 640, maybe 650, 660, that’s kind of what I was thinking. Just a quick 10, 15 cent scalp of relief bounce, a pop off the lows. I wasn’t expecting it would move back to seven or anything like that, but just a little bounce off the lows.

That was really the only one that I saw out of the gates that I thought looked decent. So when the bell rang and it started to popup and breakthrough pre-market highs, I was like, “Okay, this looks good.” I took 2,500 shares at 629 and added 2,500 at 630. It popped up to 637 and I was like, “Okay, this looks decent.” Then it dropped down to 610 and so I lost 800 bucks on it. It was like that was stupid. Yes, I had the right idea, but the problem on this one was that the daily chart wasn’t that great and I knew that.

I knew that. I knew it wasn’t an A quality setup. If I only traded A quality setups this week, I probably wouldn’t have traded yesterday. I wouldn’t have traded on Tuesday and it’s kind of hard to be a day trader and to sit here all day long and then not trade, so inevitably we end up saying, “Well, if there’s no A quality setups then I’ll trade B quality setups. If there’s no B quality setups, well, I guess I’ll trade a C quality setup.” How far down do you go until you finally say the market is not worthy of my money today?>

Well, I took this trade and probably shouldn’t have doubled. Probably should have stuck with the 2,500 shares. It popped up to 637, was up 100 bucks and then pretty much just like that, down to 620. As it broke 620 and dropped to 608 I stopped out, but I got some slippage. A little bit of an annoying trade there.

On another day though this setup could have given us a move up to 640, 650. It’s not unthinkable that that could have happened, that we could have gotten a 10, 15 cent maybe 20 even 30 cent move. It just didn’t work today. I knew that the daily chart wasn’t that great and we’re in a market right now where we’re not seeing a lot of follow through, so it’s probably not the best time to take stabs at B and C quality setups.

Anyways, that was kind of annoying, started the day down 850 bucks. My only goal today was to close the day green, so that all of a sudden made my job that much harder. Now I needed to make 850 just to break even. I needed to make 1,500 to close the day up four, 500 bucks or whatever it is, what it would have been. So at that point I sort of figured well, I’ll watch my high day scanner. I’m not seeing anything on there. I saw high price names like Ali Baba breaking out, but it would be very silly for me to switch from trading a $1 stock or a $2 stock to all of a sudden trading $150. This is not my price range. It’s not my go to strategy.

You know what? Look at what happened here in the first like five minutes. This is honestly like my kind of what happens to me. I’d be like, “Oh, look at this. The first candle to make a new high little pullback here. I’ll get in right here at 147.” Next thing you know it drops down to 144 and that’s why I just, I really avoid these high priced stocks because they’re not as predictable.

Look at the five minute chart. Up to 147 all the way back to 144 and then back up to 148 and then back down to 145. This is choppy. These are some huge ranges. It doesn’t mean you can’t make money on them, but you have to be really, really dialed in on your entry. These are stocks where buying the apex point, buying the breakout point rarely works. What you have to do instead is accumulate a position at a support level or short at a resistance level assuming you’ll be down 0 or 30 cents before you are up.

You’re just kind of legging into the position because these have such range. So if you are able to buy on a support level and then sell as it moves away from support, you might make a point, a point and half, two points on a good trade. So being up or down 20, 30 cents is irrelevant. Trying to get in at the first candle to make a new high to make a 20, 30 cent scalp doesn’t justify the risk. You can’t trade these stocks that way.

So for me I just find them to be, I just find them to be difficult to trade. I’m not as successful on them and I don’t make as much money on them, so inevitably I gravitate towards the area of the market where I make the most money. That stock’s between 2.50 and $10. That was Ali Babba. Nvidia, NVDA also huge range on this, squeezing up from 164 to 166 and then selling off here down to 156. So big range on this one.

Right now my account has $42,000 in it. If I wanted to take 1,000 shares of this I’d be using all of my buying power. That’s a lot of risk, you know? It’s a lot of risk, not that you expect this to get halted and then suddenly resume at $90 a share, but if it did you’d lose 60 grand. So you’re putting yourself in a position where if worse case scenario happened it could blow up your account, whereas worse case scenario on MOSY for instance, I got in this one. This is the next trade I took. I got in this one with even if I took 10,000 shares at $1,50, I only took 3,500, which meant my total cash outlay, 3,000 times a $1.50. It’s very low.

Well under $10,000 of outlay. Worse case scenario, gets halted, drops 50%. I can recover from that, right? Almost any trader could recover from that. So these are more forgiving in my opinion. Your risk is a little bit lower if you have a worse case scenario type of event. Knock on wood that you won’t have that, but in any case MOSY started to pop up and on this one, someone in the room called it out. They said, “Hey, look at MOSY. It just popped up.” That was when it popped from $1.40 up to $1.50.

I looked at that consolidation, this one minute micro-pullback under $1.50 and I was like, “I can get in this at $1.50, 3,500 shares.” I actually pressed the order for 5,000, only filled 3,500. All right? So got a partial fill. I was like, “That’s fine. I’ll take the 3,500, cancel the rest of the order,” and immediately it popped up to 164, pulled back. Popped up then to 171, 170, yeah, 171. Through this move to 171 I was holding. I didn’t sell any of it. I just held the position.

I was up 20 cents, which was 750 bucks and I was like, “This is a good trade. I’m just going to hold tight on this.” What I want to do in fact is add to the position on the first pullback, the first good pullback. As we pulled back here down to 164, I said, “That’s what I wanted. I’m going to add.” I added 5,000 shares at 165 and then as we squeezed up to 175 I sold the whole position and I made 1,000, I think it was $1,022.

So 1,000 bucks. That put me green on the day. At that point I said, “Okay, well good job. You’re green on the day. You took one trade.” This was to me a much lower risk trade. I mean my risk with the 5,000 shares, if I’d gotten filled the full 5,000, 10 cents, so 500 bucks of risk. Upside potential, a move back up to the high of this candle, which is 194. So 500 versus upside potential of potentially $2,500 even if I didn’t add. There’s no way I wouldn’t have added, but so upside potential really more like five, maybe $5,000 if it had worked really well.

So that’s a 10 to one profit loss ratio. I can take that trade. In contrast, CAMT, what was the profit loss ratio? Well, as it turned out I was risking 1,000 because I was risking 20 cents because this is a higher priced stock, so 20 cents become more logical. So 20 cents risking 1,000 bucks. Well, what was the potential? My target was 650. Well, that’s $1,000 so that’s a one to one profit loss ratio.

That’s not as good, right? Back of the mind target, home run potential on this, I didn’t really think there was any. Maybe 660. That’s $1,500 maybe. That to me is just the profit loss ratio wasn’t there on this trade for me. I took it anyways thinking well, it’s probably going to work. I’ll just get in, get right out. Grab a couple hundred bucks. That’s a dangerous habit to get into, thinking that you can just get in, get out and get profit because you’re thinking about the profit, not about the risk/reward ratio.

I’m not as happy on this trade, but I am happy with my trade on MOSY. So those are my first two trades on it. I got back in then for the first five minute candle to make a new high, all right? So that was my entry right here at 168. On this one I took 4,000 shares. I started with 2,000 at 66 just below the breakout and I added 2,000 as we broke over 68 giving me a 67 average with 4,000 shares.

We made a move here up to high of 80. I took the profit a little early in the move because you can see here we popped up to 75 and there was a 15 or 20,000 share seller on the ask at 175, right here where you see this at 161. Right here you see a 10,000 share bid at 60. Well, when you see a 15, 20,000 share seller on the ask, you know it’s little bit of resistance. So as it popped up there I said, “You know what? I’m only in at 67,” and it was at like 72 by 73, 73 by 74. I started selling on the ask. I got filled at 73, 72 and sold the rest at 69 or something like that.

It dropped back down to 65, you know? That meant I would have gone from being up two, 300 bucks on it to red and then suddenly it popped up to 80, but I’m fine with the way I traded this. I made $1,233 total on the name, about 1,000 on the first trade and about 200 on the second trade. So 1,233 minus 857 on CAMT puts me up $376.45. So that’s fine. That’s a fine way to finish the day. Could have been a better day if I hadn’t traded CAMT and it could have been a better day if MOSY had worked out a little bit better.

A couple people in the room were asking me during this second pullback here, would I take a trade like right here for the first, the second five minute candle to make a new high. We had the first pullback and then here’s the second pullback. I said no because usually what we want to see is we get the pullback and then we move higher up to like 190. Then we pull back and we move up to 210, 220. We don’t like seeing it pull back, go up to 180 and then come right back to the place where we bought the first pullback.

That’s showing weakness, so on this one I didn’t want to get back in and that was the right decision. Now, for me, I kind of have two schools of thought here for the month of June. At this point thanks to the red day yesterday I’m not looking as nice on the month as I hoped I would be coming into the second full week next week, so there’s sort of two things I could do. One approach is to continue doing basically what I did through the month of May, which is to go for small wins. Base hit here, base it there.

That gave me $17,000 in the month of May, which is a good month, but the other approach is when I was going for base hits, a lot of those base hits were B or even C quality setups that I was just kind of like, “Well, I’m not expecting anything big. I’m not expecting a home run.” My risk is a little on the high side. Trades like CMAT, you know? Just this was just a base hit. It was just a base hit and then it ended up going wrong, you know?

In contrast, the other approach is to really focus on more of the home run setups. To trade less, but know that if I get one trade this month where I get in for the first five minute candle to make a new high with let’s say 10,000 shares and then I double over high of day and have 20,000 shares and it goes 50 cents, in that one trade I’ll make $10,000. Through the months of February, March, and early April I was routinely having eight to $10,000 days using that strategy.

I would probably prefer that. Less trading, but more aggressive on A quality setups. The problem has been simply that if I could have done that last month, I would have done that last month. We just didn’t see A quality setups. We didn’t see ones that gave us, even A quality setups, they didn’t give us the 50, 60, 70 cent breakouts at the apex point. I mean there were a couple that did, but they were few and far between.

Because they were few and far between, I didn’t feel comfortable sizing up on them. While part of me wants to try to get more aggressive and look for home run trades, I think that’s in part because I want to recover the $5,000 loss from yesterday, but then I have to remind myself that when you get knocked down the only way to get back up is just one trade at a time. A wall falls down, you rebuild it one brick at a time.

You can’t rebuild it with 15 bricks all at once. Yeah, you might find if you’re doing a field stone wall, obviously building with pebbles is going to take a lot longer than building with big stones or maybe building with one boulder. Sure is nice when you have that opportunity to get a big trade and when I see that opportunity I’m willing to step up, but the problem was yesterday I stepped up to the plate to try to go for a home run and I ended up way over extending myself on risk and taking a big loss.

Now I’ve dug this hole for myself that I have to get back out of. So in our Behind the Trades episode that we’re going to start here in just a couple minutes I’m going to be talking about getting out of a trading rut. That will be very topical, not that I’m really in a rut right now. I just had one red day, but I think it’s more about the mentality of how to react to a loss or several losses or a period of three, four, five weeks of just kind of consecutive choppiness and slowness.

So going into next week I’ve got it written down here to only trade the bull flags and micro-pullbacks. Basically just any type of pullback is fine. Just pullback entry, which is in other words, do not chase extensions. Now chasing extensions works when you’re in a really strong market because you have that feeding frenzy crowd mentality. Stocks start to squeeze up, traders just pile in and it works, but it’s not working right now.

I was definitely a little too aggressive yesterday. There’s a part of me that wants to get that big five, $10,000, $15,000 trade. I’ll get it, but I can’t force it. In between now and when I see that next really good opportunity, I got to just keep focusing on the base hits. One trade at a time and today it puts me up $376 on basically three base hit trades. I don’t think any of, none of them really have the potential to give me a $10,000 win, but they have small potential.

So if I can focus on the base hits and make sure that within them I take the ones that have the least amount of risk, I should be able to get this month back on track. All right, so that’s the game plan here. I feel good that we’re finishing the week on a green note. I’m not going to beat myself up for yesterday. If I beat myself up for every red day, I’d be, I mean I’d really not be doing well because traders have red days.

I average four to five red days a month. I don’t need to go into a deep depression every time I have a red day. I just have to accept that that’s part of trading. It’s a hard part to accept, but it is something you have to accept. So as we kind of come back on Monday, I’m just going to keep grinding away on the small base hits until I can see a trade that justifies me taking 15, 20, 25,000 shares and getting that potential big winner. I’m just waiting for that next parabolic stock right now. I’ll be excited when we have it. It will be an opportunity to have a big day hopefully, but right now we’re in between those stocks. That may last for a little longer than I’d like, but I can’t change that.

So anyways, that’s it for today. We’re going to finish the week here with a green trade, which is good, and clear the slate over the weekend and then be back on Monday where hopefully we’ll see some really good opportunities. Statistically we see the best opportunities at the beginning of the week, Monday, Tuesday, Wednesday. So Monday, Tuesday, Wednesday of next week I’m going to be fired up, ready to get some trades on. Hopefully the market will be on my side and they’ll give us some A quality opportunities.

If it does, well, it should be a great week next week. Okay, so that’s it for today here on the Midday Recap and we’re going to switch gears and go into our seventh episode of Behind the Trades. All right? So for those of you watching the recap on YouTube, make sure you go watch the next episode of Behind the Trades. 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 that you subscribe to get email alerts anytime I go live or upload new videos. Until then, happy surfing.