Warrior Trading Blog

Day 60 of the $583 Challenge +$411.79

Day 60 of the $583 Challenge +$411.79


Hey guys. All right, so we’re going to do a little mid-day market recap here and go over the trades from this morning. Today is the second slow day that we’ve seen this week. I decided to really respond to the slowness in the market by tapering back a little bit. Now, as you guys know, the last few weeks have been really fantastic for trading. We’ve had a great hot streak, and today’s, I think, actually my eleventh consecutive green day. In these eleven days, I’ve made, let’s see, twenty, definitely over twenty thousand dollars. Looks like right around twenty-three thousand dollars.

This has been a great eleven day hot streak, but before these eleven green days, I had four red days where I lost fifteen thousand dollars so that was obviously a real set back. Dropped down fifteen thousand, losing four thousand a day for four days basically and then I’ve had to rebuild so I’m only up seven thousand, or eight thousand dollars net in the last really three, three and a half weeks. I’m up, fortunately, thirty-four, thirty-five thousand on the month because I had a really good start to the month so in the first, let’s see, one, two, three, four, five, six days of the month, I made like twenty-something thousand dollars, twenty-five thousand dollars.

I had a really good hot streak, but then I gave it back on those four consecutive red days, so my decision today was to not have a repeat of that pullback and that draw down that I had in my account, so when the last hot streak came to an end, I had an eight thousand dollar day and then the next day I made only three hundred bucks, so I was like, “Whoa. Clearly there’s been a shift in the market. Now on Tuesday, I made four thousand and then yesterday I made only a hundred dollars. Yesterday was a slow day.

Today I was concerned that if I pushed it, I would go into the red because the last time I had a three hundred dollar day and then the next day, I lost thirty-five hundred and that was the beginning of the red streak. So today, I was very mindful that I need to slow down, look for A quality set ups, not chase momentum. That’s what I was doing on those four red days is I was chasing good setups. Basically I was missing the good setup and then instead of just waiting for a pullback, I was chasing it so today I decided not to chase. I decided to be a little more conservative and I’m finishing the day with four hundred, eleven dollars and seventy-nine cents.

Now, I’m perfectly content to grind on small numbers while momentum is a little bit slower and wait for better opportunities to come along. I don’t want to be super, super aggressive when trading just, when we’re seeing false breakouts and we’re not seeing as clean of setups. The trades I took today, BVXV, this one like the trade yesterday that we were watching was up a ton pre-market and just totally, just totally sold off. It was so weak it couldn’t hold these levels, so it got over-extended pre-market.

This is one of those stocks that the short sellers really, I’m sure, have a great time with it. For me, this wasn’t even something I could short, so finding shares available to borrow is always the challenge with the low price stocks but in any case, it was not good for a long setup. I took a scalp on it with a thousand shares only looking for a red to green move and I made six cents per share so not a lot of risk. It’s no big deal.

PRAN, I was watching this one, I was watching it pre-market but then because it opened lower, I thought, “Well, I’m not sure it’s really good,” but it did start to pop up. You’ll notice on this one, what happened after the first pop? We talk about this all the time. The first pullback got bought up right here, so the entry, the best entry on this was right here at three sixteen. The high of this candle as it broke was entry at three sixteen, stop at the low of that candle which is three zero four. That was a really good setup.

From there, it went up to three ninety, and then it pulled back. Now, this was kind of the second one-minute pullback. Little one-minute consolidation at seventy-nine and then it popped up to ninety and then pulled back to fifty-three. That’s where I kind of got nervous because I was like, “Well, this is a place I normally would buy but felt a little too extended so I didn’t buy it. The reason I didn’t buy it is because the low of this candle was three forty-five. The proper entry point was three-eighty. I didn’t want to buy something that’s forty cents or thirty-five cents off the low of the pullback. That’s too much risk.

With four or five thousand shares, I’m risking thousands of dollars. I just don’t want to do that, not on a day when I’m up only sixty bucks. If I already has a big cushion, and we’re seeing really good momentum, well that’s a different story but that’s not what we were seeing today. This was the first stock showing strength and I just wanted to be a little cautious that I didn’t buy it at the top and get faked out. I didn’t want to get in there, it pulled back here and I thought, “Okay. Well, over sixty-seven, sixty-eight is a possible entry.” That’s this little [doji 00:05:53] candle but now I’m feeling a little conflicted because this is almost the third one-minute pullback.

I trade the first and then this is the second which was kind of a fake out. This is sort of the third. It’s not at the twenty moving average, which is a good level of support. It’s kind of floating up here. I don’t know, it feels a little risky so I didn’t get in. Next thing you know, it breaks, it squeezes up to four seventeen. Then this little one-minute pullback here, and it goes up to a high of four forty-seven. The pullback here, and this is a false break. You go to a high of fifty-eight and then you come all the way down to four zero seven, so if you traded every single one of these one-minute setups, this is the one that would’ve eventually trapped you, right up here.

Then of course, it pulls back, pulls back. I said, “Okay. It’s pulling back. Now we’re getting the five minute pullback right here. I’ll take a five minute setup on this. I’ll buy the first five minute candle and make a new high.” The high of this candle was ninety, so as we start to come up here, I jump in at ninety, we pop up to a high of ninety-seven. We go all the way up to four dollars, and then what was really interesting is we saw lots of buying right at four, all this buying, all this buying and you only saw a hundred shares on the ask, or maybe a thousand.

You’re like, “Okay. I just saw at least twenty thousand shares go through, and not one thousand share is not moving.” This is a problem. There’s a hidden seller holding this down. That’s when I started to think, “You know what? Just get out.” I bailed out. I hit the bid, bailed out. I didn’t even try to sell on the ask. I just hit the bid, bailed out, and I was fortunate to make four hundred and sixty-seven dollars. I got out right at ninety-eight and ninety-seven.

Then of course, it dropped all the way down to three sixty-seven. This was, on a five minute, a false breakout, a complete fake out. I was kind of, the back of my mind was that this could be a false breakout because the stock went from three dollars to four sixty. That’s a really big move, and a lot of times when we see a move as big as that, it’s so exaggerated, the first pullback doesn’t end up getting bought up very well. Not too surprising, and then from there we had HTGM pop up on the scanner. This one, I got in and got out quickly which was good because it was super weak but I was trying to do a little pullback setup.

Let’s see, where was that? I got in, it was right … Gosh, where was that? Now I can’t remember. I think it was right in here. I think I got in this right in this area at forty-five looking for the break over the half dollar. It was right around this area here because we have this big squeeze up, then we pulled back, we popped up. It popped up for a second, it couldn’t hold those levels, and I got out as it came back down. I can’t remember exactly where it was but anyways, a second stock with not very good follow through so that was three in a row basically.

Two small winners and one small loss, and that’s when I said, “You know what? I’m going to throw in the towel.” It does not take much for me to lose a thousand dollars. With five thousand, ten thousand share positions, it can happen fast so I said, “You know what? Don’t push your luck. Let’s just step back, step out of the market.” I would rather have my slow period be days where I’m only making sixty or a hundred dollars than having days where I’m losing four thousand because I’m stepping up to swing for the fences when it’s the worse conditions to possibly do it.

I need to be able to have that kind of awareness of what’s happening with the bigger market. We can get so tunnel vision on hitting our daily goal and hitting our weekly goal and our monthly goal and for me, hitting the hundred thousand dollar challenge, that you can lose sight of the larger market environment that we’re trading in. Sometimes you’re not in a current environment that’s really good for being aggressive.

By having that awareness, you can start to adjust your risk perimeters each day based on the strength of the market. When we’re having a really strong market, you can really push it, get aggressive and that’s when you have three or four back to back days where you’re making four or five thousand dollars. Then when it’s slow, you taper back. Really quickly you have to be able to make that adjustment.

It’s not easy. Even for me, it’s not been easy. It’s something I’m still working on and it takes time to get to that place, and it takes experience because that experience is what guides your intuition, your ability to look at a chart or to look at the market as a whole and say, “You know what? This isn’t the day that I’m really feeling it.”

Obviously, I’m trying to articulate all of these things in the morning, in real time in hope that you guys will, those of you that are in the chat room, will recognize, “Okay. This is a day that Ross is stepping back a little bit. He has been doing this for awhile. There might be a reason. What’s the reason? Maybe I should take the cue,” so anyways. I’m not going to hit, doesn’t look like I’m going to hit the forty thousand dollar monthly goal that I had set for myself. I’m at thirty-four thousand right now, thirty-four thousand, one hundred eighty-seven dollars, plus or minus.

I’ll be a little below my goal, but you know what? Thirty-four thousand dollars was my best month for all of 2016. Right now it’s my worst month for the year so far. That puts it in perspective. Last month I made over sixty thousand, the first month of the year I made over forty. I’m actually up a hundred and forty-four thousand dollars on the year right now. First quarter, that’s not bad for first quarter, so we’ll see if we see continued momentum in the market.

I was super, super aggressive in February and I was just, I was in the zone, I was working towards this goal, and it’s one of those things, like you think of those guys who use to build skyscrapers and they’d be up a hundred stories or fifty stories, or whatever it was. They’re balancing on these beams. They’re so focused on their task that they might not even had been aware of all of the risks surrounding them.

I think that’s kind of the way I traded in February. I was just so focused and driven on hitting my goal that I wasn’t thinking as much about risk as maybe I am now, that my account has gotten a little bit bigger. I’ve hit the goal and I’m kind of like, “Okay, this is a hundred thousand dollar account. I don’t want anything to happen to it. I’ve got to be a little more conservative.”

I think I am tapering things back a little bit, and if that means thirty, forty thousand dollar months instead of sixty or seventy, well I think that’ll be okay. Again, this is not about … I know that for me, the hundred thousand dollar challenge was a sprint because I wanted to do it as quickly as I could, number one to prove that it can be done, and then number two to achieve that goal.

That’s how I’ve always been. When I set a goal for myself, I want to get it accomplished I guess as quickly as I can because there’s that sense of gratification when you achieve a milestone, so you want to get there.

You can’t get through high school in more than maybe three years, if you skip a year, but for the most part, most of these goals take time. When you create your own goals as an adult, some of them you can achieve pretty quickly if you set your mind to it. That’s definitely what I did with the hundred K challenge. At this point, I’m not changing the challenge to a hundred fifty, or two hundred or anything like that. I’m just going to keep trading with this account and keep being transparent about my gains and losses.

When I hit a milestone, like crossing a hundred twenty-five or a hundred fifty, whatever it is, I’ll blog about it, we’ll talk about it, but I don’t want to put the pressure on myself of continually setting the bar just a little further, little further, little further. I think that’s going to be just a lot of stress and so that’s my plan for right now. Now, with the five hundred eighty-three dollar challenge, I’m on day sixty and I’m at a hundred and ten thousand. That’s the plan moving forward.

Right now my focus, of course I’m actively trading in the mornings so my focus right now is really working with students in the afternoons teaching this classes. Yesterday we had class three. It was another three and a half hour-long course. It’s going to be uploaded to the website this afternoon, so we’ve got classes one, class two, class three.

We’re going to have class four tonight and I expect it’ll be another long class, so it’ll be starting at four PM eastern probably around until seven PM, maybe seven thirty and then we’ll get that uploaded to the site on Friday.

That’s my focus right now is really trying to improve all of the contents for the course, just add everything into it that I have learned about trading and all the things that have helped me get to where I am today. I think for right now it makes sense for me to have my focus be there on the course for the students, and with my trading, I’ll keep trading each morning, keep building this account but I don’t need to be as hyper focused on that. I’ve got a new priority, at least for the next month.

That’s where we finish the day here, day sixty. I don’t know, I didn’t see how John did today or how Roberta did today. I think those guys did fairly well. They may have done a little bit better than me if they got in that first trade on PRAN. When I realized I had missed it and I was starting to get frustrated, I actually got up and I walked away. I walked away from the computer for a second because I was feeling frustrated. I was like, “Ah. I missed it. I could’ve been in this at three sixteen,” and that I just totally missed because I looked away.

Then by the time it was up here, I hesitated and just chose not to get in that high. Hindsight is always twenty-twenty so you can always kind of beat yourself up and say, “Oh, I should’ve been in this. I should’ve been in this. This could’ve been the thousand dollar winner today, and I passed on it,” so I was feeling a little annoyed.

I got up, stepped away because I didn’t want to let myself do something impulsive like just jump into it when it was extended. That’s me having that presence of self and of mind to say, “I’m feeling frustrated. This is the type of situation where I’m apt to get impulsive, get a little reckless, act on that emotion so I just need to step back, take a breath and come back.”

I would much rather finish the day with only sixty dollars of profit than be down three or four thousand dollars. I know that during my four day red streak, there were people that were giving me a hard time for losing four days in a row, and I know if I have four days in a row where I’m only making sixty dollars or a hundred dollars, there will be people that give me a hard time for that. “You’re supposed to be a teacher and you’re only making a hundred dollars a day, that’s pathetic,” but this is me tapering my risk because I would rather have small green days than have big red days.

I could’ve stepped up and swung for the fences on this PRAN up here at the very top and I would’ve lost forty cents per share. With ten thousand shares, that’s four thousand dollars like that. It can happen so fast.

That’s the challenge with trading. Even a momentary lapse in judgment can give you a big, big set back that’s going to take days, weeks, or even months to get out of so you have to be on your A game 100% of the time when you’re trading. If you feel like your A game is slipping, that’s a good time to step back.

There are days where I’ve been frustrated in the morning for whatever reason, the dog knocks over a glass, or whatever it happens to be, tracks mud into the house, and I’m just in this agitated state of mind and I realize I need to not let myself take that out on my trading.

There were a few questions that folks had asked about today’s trades, so I want to make sure I answer those questions for you guys. Let’s see, I know Phoenix had one earlier. Let’s see where that one was.

Jason had a question. He was asking if I’m going to change my strategy to a more short biased strategy since momentum in the last couple days has been off. I said that I wouldn’t because number one, I only have my one trading account and if you’re a short biased trader, you usually need several accounts to get good access to shorts. I’m not going to go open several new accounts and have to pay the monthly platform fees on all of them to start testing out a new strategy.

For me, the setups like PRAN where you get this reversal here, that’s certainly a place where some people would short it. The reason people would short it is because it’s a false breakout, so when you see a stock giving a false breakout where it looks like it’s about to go and then suddenly it shifts directions, it’s not a bad place to take a short with a stop just on the other side of the breakout.

I could’ve shorted this at ninety with a stop at four zero four, or four zero two, ten cent stop. Now it’s down in the forties and it’s probably going to keep fading. It looks like it will.

Volume is tapering back, fewer buyers are interested, but at the same time, you’d have to find shares available to borrow so that’s the challenge there on that one. Let’s see, who was that other question? I just remember Phoenix had a question. Oh, here it is. “Ross, how do you manage to keep a ten cent mental stop when a low [float 00:20:51] stock moves so much?” That’s a good question.

Keeping a really tight stop can definitely be a challenge. When you have a stock that’s like PRAN that’s moving really quickly and it has, in the period of a one-minute candle, forty cent range where it dropped down forty cents and then came back up, that can make it tricky so for me, it’s pretty easy for me to get in at dimes and nickels.

I kind of like to get in at dimes and nickels. I like to get in at half dollars and whole dollars, like three fifty or four, but I also like to get into places like three forty, three thirty, three thirty-five, three forty-five. For some reason, I just, I prefer those types of entries.

Whenever I do that, it’s very easy for me in my mind to calculate a ten cent loss. “Okay, I’m in at thirty-five, I’m out at twenty-five. I’m in at forty, I’m out at thirty.” It can be tricky, though, and tough to hold yourself to that mental stop, whatever it might be, ten cents or twenty cents.

Usually, this is one of the things I talked about in our classes is that breakout or bailout mentality. Usually when I get into a trade, I’m getting in at the apex point so for instance with PRAN, if I got in at three sixteen here, I’m expecting it’s going to break high of day immediately and it did. It went all the way up to three sixty without me, but the apex point of three sixteen worked.

Now, the apex point here at very high day would’ve been an entry at three forty-one. That worked, it went up to three fifty-eight but as soon as it came back down, that’s showing weakness and I would just bail out instantly. I wouldn’t try to hold it any longer because it’s not a good sign.

This one here, where we’ve got the first five minute candle to make a new high and we popped up to four, and we tried to break it, we tried once and on the first tap, we got up to ninety-seven and then we came back down to I think it was seventy-eight. Then we came back up a second time to four dollars.

We couldn’t break it, and as we came back down I said, “Okay. That’s it. I’m not going to give this a second, another try to get up there,” so there’s two ways you can do it. The first way is to just get really good at hitting that bailout button, control Z, out of the trade. The second is to put a live stop on your order so as soon as you’re getting into the trade, you’re setting either a ten cent stop or a ten cent trailing stop or something like that.

Now, one of the things I’ve said is that for me, personally, I don’t like usi- … I wouldn’t use a live stop on a ten or fifteen, or twenty thousand share order because if that goes through, I’m going to get in one order so much slippage. When I have to get out of a trade with big size, I piece out of it five thousand shares at a time. I try to sell some on the ask, some on the bid.

I try to unwind the position in a way to reduce my loss, but as a beginner trader who’s needing to learn the discipline of just getting out of a losing trade, having a live stop order or having a live trailing stop is not a bad idea because it basically delegates the difficult task of selling the loser to your broker and they’ll take care of it for you.

Yeah, you’ll get some slippage because when a stop fired, the stock is almost always going down so you’ll lose a couple more cents with slippage so if it’s a ten cent stop, figure you’ll probably lose twelve cents on average, maybe thirteen. If you use a trailing stop, again figure you’re going to lose a couple more cents but in an effort of building discipline and conditioning yourself to experience lots of small losses and it to not be a big deal, it’s worth it. That’s my two cents there.

In the simulator, we use control T to set that automatic ten cent stop. By doing that, you’re managing your risk on every trade basically as soon as you get in it. We also, I have a hot key for Speed Trader that I’ll share with students in the live classes where you’ll place the order and then it’ll immediately trigger a ten cent trailing stop without even pressing twice. You just, as soon as you press the buy button, a trailing stop is now on your order minus ten cents or whatever. You can change it if you want to.

I wouldn’t use that personally because, like I said, with five, ten, fifteen thousand shares, if I get stopped out with a live stop order, I’m going to get slippage especially if it’s a stop market order. Even a stop limit order with twenty thousand shares, or fifteen thousand shares, whatever, it’s going to be bad. Again, for the sake of students learning discipline and for those of you who are trading with small size, four hundred shares, eight hundred shares, a thousand, it’s not going to be too much of an issue.

All right, so anyways. I’ll have those hot keys available in class, I think it’s class twelve or thirteen. That’s a little ways away but just know that that will be coming soon. All right. I think that answers those couple of questions. John’s asking, “How do I put in a trigger to buy?” Now, that’s a good question. I personally don’t use trigger orders as buy orders.

A trigger order is an order that fires when a certain price is crossed so that price is the trigger price. The type of orders that work with triggers are stop orders, so when you set a stop, you’re in a stock at three-fifty and you set a stop a three-forty, when three-forty triggers, when that price triggers, your stop order is going to go through.

For instance, if I wanted to get in the stock PRAN at, let’s say, three ninety, I could set a … I could use a stop order. I could say, “I want to buy stop.” Not a sell stop. When you’re doing a stop order for reducing losses, you’re selling when that trigger hits but for a buy order, if you want to get in at three ninety or let’s say I want to get in at four dollars because the breakout spot was four zero one, so I get in at four dollars and set the buy stop there, and now I’m going to have this live order sitting down here waiting for the stock to cross four dollars.

Now of course, if I had that order today, I would’ve gotten filled at four even though I could see there was a hidden seller right there so that’s why I don’t like to use it. If I set the order for four zero one, there’s almost no way I’d get filled at four zero one because of slippage.

I’d probably get filled at four zero five or four zero eight or maybe four ten, and now that’s mis-managing risk, so I would prefer instead to use not trigger order or stop order, but a regular limit order with a limit price of, let’s say, four zero five, or maybe four zero three.

As the stock is coming up to that level, I’m watching it. I’m watching the level two, I want to see the buying volume, I don’t want to see hidden sellers. I want to see that the stock is moving and then if it looks good, I press “buy once”. I press “confirm”.

You can turn off the confirmation right here. I press it a second time, and that’s how I … Sometimes I press it three or four times, I’m just pressing the buy button in the order window that’s already been prepared.

Now, I do that for a lot of the trades I get into but I also use shift one, to just use my hot key, to buy twenty-five hundred shares with a five cent offset. When I just want to get in, I don’t have time to type the limit order, I’ll just press shift one and I’m in like that. Okay, so hopefully that answers your question there on the trigger orders. Again, if for some reason you prefer to use the trigger order, that’s fine. That’s just not my strategy. That’s not something that I find particularly helpful.

For what it’s worth, for most of the students that are profitable, I don’t think they’re using those trigger orders either. You can check with John and Roberta, but yeah. I would just use a regular limit order personally.

Hot keys for shorting aren’t set up right now in the simulator but you can just go to the hot key manager and build them yourself if you want them and they’re easy enough to script. All right, so with that, I’m going to go grab a little bit of lunch and I will be back this afternoon for class at four PM. All right guys, so I will see you there and for the rest of you, I’ll see you first thing tomorrow morning.

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