Warrior Trading Blog

Day 48 of the $100k Challenge – Red Day Recap Pt. III -$2.6k | Ep. #52

Day 48 of the $100k Challenge – Red Day Recap Pt. III -$2.6k | Ep. #52

Guys, here we are on day 48 on the 100K challenge. Today unfortunately is the third red day recap in a row. This is the first three day red streak I’ve had in 2017. I’ve had, I think, two other, maybe three other two day red streaks, just two back to back red days, but this is the first of three red days in a row.

Definitely not something that I like to have happen. To try to understand what the issue is, yesterday I felt like maybe I was too aggressive on a setup that wasn’t very good on the daily, but today, for the most part I really don’t think any of the setups I took were that bad. I will go over the trades I took today.

I think what we’re experiencing, one, today is obviously a snow storm, but I don’t know if that’s really why the market, that could be part of it for some of the big blue chip S and P 500 type of stocks. For small caps, I don’t know if that’s really the issue. I think today thought, for whatever reason, we just didn’t see good follow-through. I’m finishing the morning, down 26 hundred bucks.

Three red days in a row. The big loss came on RLJE, which was a gap and go trade. I’ll show you guys who are watching on Screen Share. There are today’s gains, losses, the PNL. Three stocks, I traded, and I guess green on two out of the three, but pretty deeply red on that third one. For those of you watching on Screen Share, I’ll put this up for you as well.

RLJE, just like a really crappy gap and go trade. Look at this. The set up pre-market was fine, 50 thousand shares of pre-market volume. I got in here at 270 for the break of pre-market highs, got in 270, 280.

Actually, I might have gotten filled as 279. I did, actually. I got filled at 279. I was in at the top of that candle. I was looking for the break of 280. Pre-market high was 280. You look at this and it’s like the ugliest candle of the last more than a month on this stock. It totally encompassed yesterday’s candle. It squeezed up to 280 and then came all the way down to 220. That’s really brutal. I don’t know what the deal was, but we didn’t see follow-through on the news.

There was a headline this morning. It was 2016 Full Year Results, and Achieve Significant Digital Channel Subscriber Milestones. That was a headline this morning, but clearly, there were not traders with a long bias on this, I guess other than just me. I got in 275, 280 for the break of 280, thinking we would get a move up towards three dollars, which was this resistance on the daily, and that just didn’t happen. Completely rejected. Boom, 26 cents down from my entry up here, lost 26 hundred bucks.

Disappointing trade on that one. It was a fine setup. It was a gap and go set up, and I stopped out as this candle broke right here, the low, which was 261. The stop was right but I got a little slippage. A little bit of a disappointment there. I accidentally went short a thousand shares, which I ended up making a hundred bucks on. That was nice. I shaved 130 bucks off the loss. Ended up being a 25 hundred dollar loss on that one. A little disappointing.

Then NVLS. On this one, this is one of those times where I didn’t jump right into it as it was squeezing. This stock went from three dollars to 360 this morning. It was first called out in the room around 310. I saw it and I thought, “Well, I just lost 26 hundred bucks, so I don’t want to just throw 10 thousand shares at this and lose another 16 hundred.” I got to be smart. What’s the smart thing to do?

It’s wait for the first pullback. Wait for a good setup. I said, “That’s what I’ll do.” It goes up to 320, and then it goes up to 330, and as it broke here up to 356, I was like, “Ah, what the hell? This is so frustrating.” I just missed a 50 cent move on this thing and sat on the sidelines. I wanted to wait for a good entry, and I didn’t get it. In this case I would have done better just jumping right into it. That’s how it always is.

One this one, I wait for the clean setup, the pullback here, first candle to make a new high. I take 10 thousand shares. It pops up to a high of 347 and then it tanks. Fortunately made three dollars and 89 cents on it, and didn’t get smoked, but just disappointing. I took two trades on this actually. The first trade was an entry on this one minute right here, entry at 355.

We popped up to a high of 363 and then fell back down, stopped out of that, got back in for the break here, [inaudible 00:05:55] candle to make a new high, couldn’t hold that level, came back down. These are three days in a row where I’m paying my dues. I got up to 101 thousand. Thank goodness I broke the 100 thousand dollar mark, because now I’m eight thousand dollars away from it, or 75 hundred dollars away from it as of now, which is annoying. I broke over the mark and now I’m pulling back a little bit. It is what it is.

I don’t have a recording on NVLS, but here’s what I did. I had the two trades. The first trade, I got in at 55. It popped up to 63. I had 35 hundred shares, and it dropped back down to 52, and I stopped out of that actually with 145 dollar loss. I came back in right here with 10 thousand shares. There was a seller at 38, if you remember, right up on the level two. At 338 there was a seller.

I jumped in at 338 with five thousand, and then doubled to 10 thousand, expecting that that candle would then break over 344, the previous candle’s high. As we surged up there, up to 344, that’s when they added, giving me an average of about 340. As it came back down, I marketed out and I got filled at 342 and 341, which gave me a penny and a half of profit, which was like 147 dollars, or whatever it was. That’s what got me just back up to above red on that name, between those two trades.

Obviously lost on commissions, and lost on ECN fees. Overall, just a disappointing day, no follow-through. Same as yesterday, same as the day before. Although what I’ll say about today, is that I really feel good about the trades I took. Even though RLJE didn’t work and flushed down, it wasn’t a bad setup. It just didn’t follow through. Even though NVLS didn’t work, it wasn’t a bad setup.

It just didn’t follow through. I feel fine about those trades. I would be upset with myself if I did something stupid. I would actually probably be a little bit annoyed with myself if I did just jump into this NVLS with 10 thousand shares, here at 320, because you had a micro setup at best, a micro one minute setup at 320. I know you guys were watching it at 320, and I was looking at it too. I was thinking about it, and I said to myself, “No, it’s too risky.” because that candle had just dropped down to like 312 or 311, and I knew if I took big size that I would risk slippage.

This is really the problem with scaling, with larger size. These three days, the reason these draw-downs are bigger, is because when you have 10 thousand or 15 thousand shares, you can’t usually market out with one order. You’ve got to sell in two or three blocks, your commissions are a little higher, you’re getting slippage on the way down. It makes the losses a little bit bigger.

The only way you can compensate for that with the winners, is if you’re selling your winners on the ask. We’re not always able to. Sometimes we just hit the bid. This is the market, one of the tricky things about trading, the fact that as soon as you get into a trade, pretty much no matter what, you’re red because you’re getting in on the ask and the bid is lower.

You always have the odds stacked slightly against you with trading, which is why you really have to be so selective about the setups you’re going to trade, and why you have to be so smart about how you position yourself on each of these trades.

I may have maybe positioning myself a little on the heavier side in the last three days. Average share size has been six thousand one hundred shares. Positioning myself maybe a little on the heavy side. The previous week though, I was averaging about eight thousand shares. I have sized down a little bit, and I’ll continue to be just a little bit more cautious until we see that next parabolic stock. That’s really what we want to see, is a stock that goes just completely parabolic. That’s what’s going to start the next round of momentum.

At this point, I’m done trading for the day. We’ll come back tomorrow. Hopefully we’ll see a stock that’s stronger, but I do have to be waiting on the sidelines for that stock that just goes from three dollars to four dollars or five dollars really quickly with a catalyst. That’s what’s going to get traders excited. Right now it seems all of these pops are getting targeted by short sellers. We’re not seeing the sustained moves, and so it’s just a choppier environment.

We sometimes see these last for a couple of days at most, maybe a week or two weeks. It’s pretty rare that we would see a cold streak where we don’t have really any momentum last for more than two weeks. We’ll see what we get here through the rest of this week and going into next week. I think we’ll probably see something that starts to pick up. In any case, that’s where we’re at today.

Third red day recap in a row. Hopefully I can break the red streak tomorrow and start to move into the green, but it’s very disappointing to be red on Monday and Tuesday, when those are usually some of the strongest days of the week for me. Now I know I’m going into Thursday and Friday, on the other side of Wednesday of course, that are typically my red days. That’s not really what I want to have happen in any case.

This is just part of the deal with trading, like I say. I was really aggressive with my account. That’s how I was able to grow it from 500 dollars up to 100 thousand, but being aggressive also means when you have draw-downs, that they’re a little bit bigger. This is part of the deal. It’s what comes with the territory. You got to be able to handle it. If you can’t handle it, then you got to scale back on size. Guys, that’s it for now. I will see you all first thing tomorrow morning. Thanks, guys.

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