Warrior Trading Blog

Day 62 of the $583 Challenge +$6,417.92

Day 62 of the $583 Challenge +$6,417.92

All right guys, we’re going to do a little bit of an earlier Midday Market Recap here this morning. It’s about 11:15. Normally I go on right around lunch time, 12 noon, and do the Midday Market Recap. Today things have slowed down, just completely. We had some good opportunities right out of the gates, and by an hour in the markets have just been dead.

If we look at the overall market, you can see overall markets are rolling over as well. I’m finishing the morning. This is, I believe it’s day 62, let me just confirm that. Yeah, today’s day 62. Finishing day 62 of the 100K challenge, up $6,417.92. Three stocks I traded, two small winners, and then one really solid trade.

I’ll break down these trades in one second, I just want to show you the overall market. You can see overall market there rolling over a little bit. Those of you watching on Facebook Live, you can see the gains there. Today, 6,417.92. Three trades; APOP, CYCC, and PRAN, P-R-A-N.

Okay, as you guys know, Friday was a disappointing end to the week as I lost $5,000. This number may seem big, $6,400, but when I’m having good days these are the type of days I have. When I’m having bad days 3, or 4,  $5000 losses are the type of days I have unfortunately. That’s just part of the deal with trading with big size. Really, that’s all it is. My focus is to look for A quality setups and then be aggressive when I see them.

As you guys know last week we started live day trade course with class one on Monday. We taught class one, class two, class three and class four. Each class was a minimum of three and half hours. The longest one was over four hours long. These classes are now uploaded on the website. You guys can start streaming them. But in the first four classes of the day trade course, what we talk about is building your foundation for success as a trader. That really rests on a couple of important elements.

First is your ability to manage risk. Now, Friday for me wasn’t the best display of risk management. Even after years of trading there are times where you will have a little bit of a setback, you get a little bit emotional, you get frustrated, you take it out on your account, and the market’s going to remind you really quickly that when you do that you’ll get slapped in the face, and that’s what happened on Friday.

Risk management is first and foremost. If you’re able to manage risk 95% of time 98% of time that’s what you have to do. There will inevitably be a couple of times where you make mistakes. That’s part of trading, that’s part of life, but you just have to always have that in the back of your mind, what’s my risk on this trade.

By understanding risk you can now do proper analysis of whether the trade is even worth taking. If you know you’re risking 1,000, and the potential profit is only for 400 or 500, is that a trade that’s worth taking? The answer is no, that’s not. You risk 1,000 when you have the potential to at least make 1,000, if not 2,000 or 3,000 for 2 to 1 or 3 to 1 profit loss ratio.

If you don’t understand risk before you take a trade, you know what you’re risking, then you probably also don’t know what you really stand to gain and whether or not you can even justify taking the trade. This is one of the reasons that a lot of beginner traders end up blowing up their accounts. They jump into the market with real money without understanding really simple concepts like profit-loss ratios, require percentage of success to be profitable and that sort of thing.

The second element that you need understand is stock selection. Every single day I’m searching the market for a handful of stocks that meet my criteria for having home run potential. During the phase when I was still in strategy development, which took almost 2 years, developing my strategy, refining it, trying to figure out what works, what doesn’t work, I realized that almost every single day there’s a stock that moves 20 to 30%.

That’s true. Today we had a couple stocks make big moves. PRAN made a move this morning from 320, all way up to 410. That’s a huge move. That’s in excess of 30%. We had APOP make a pretty big move here on the screen, red to green candle, as we went down and it bounced back up, a low of 9, 916 up to a high of 1,060. It’s 10, 15% bounce. We had CYCC that went from a low of 430 up to a high of $6. Again, in this 20, 30% moves. These are the types of stocks as active day traders that we want to look at.

If you have a small account, and even though my account’s over 100 grand right now this is still relatively a small account. If I put this money into mutual funds at 5% a year I’d make $5,000 a year.

Well, today I made over 5% just one single day. So if I want to grow my account quickly I need to focus on the type of stocks that are more likely to make big moves, and then if I capture half of that move or a quarter of that move I can build up my account really quickly. So stock selection is absolutely critical to your success as a trader.

A lot of traders get into the habit of trading the wrong type of stocks. If you trade the wrong type of stocks, you’re not going to see the big moves, your risk management going to be all screwed up and almost inevitably you’ll lose money as a trader.

The first key concept and corner of your foundation is risk management. The second one is stock selection. The third one is identifying the strongest chart patterns. Now these patterns are what I use to find a low risk entry, an opportunity to get into a strong stock with a minimal amount of risk.

When you choose the best stocks, when you trade the strongest patterns, you again are reducing risk. So it kind of all comes back to risk management as the most important concept. With stock patterns, or chart patterns, today on PRAN the reason I was aggressive on this is because we got a clean one minute pullback.

Now, this clean one minute pullback right here in the context of a stock that is $35 a share would not be something I’d be interested in, but this was the right type of stock to trade for a couple reasons. Number one, it’s a former runner. This is a stock that just the other day I made good money on. Let’s see what day did I trade it.

We traded this one on … I can’t remember what day. This was Thursday that we had the big move on this one. Thursday this thing popped up. Yeah, I remember this one. We had this move here from a low of 275 all the way up to a high of 458. I didn’t do as well on it as I wanted to do, and I was disappointed because it made such a big move and I missed the initial entry.

It pulled back, and we had one day of resting. The first day to make a new high is what I was watching and that meant this candle, green candle today, had to break yesterday’s high of 331. This is a stock that was on my watch simply because of how volatile, how big of a range it’s had.

Now I figured today if we had the first candle to make a new high, we would get a bounce. Anyone who is short from up here as this candle starts to move up will likely cover. If you’re holding a short and you see the daily candle making a new high, that’s a good place to get out especially when you have increasing volume.

I knew that this would be a spot that we would likely get a big move. From 330 up to 360, $4, maybe higher. That right there is an opportunity for a 10, 20, 30% move. So even though I didn’t really know if this would go all the back to high of day of 458 I thought the very least we would get a nice 20% move. That’s exactly what happened.

It starts to pop up. I see it on the scanners. I watch the pullback and I’m like, okay, here we’re getting a pullback and this set up has really two setups in one. The first set up is the first one minute pullback on a strong momentum stock. The second setup is that it’s right under the half-dollar of 350. I guess the third setup is that at the same time we’re having a daily breakout.

When I say this I was like, “This looks awesome. I like it. I want to jump in. I’m going to be aggressive,” and I jumped in right away with 5,000 shares. I doubled to 10,000 at 350, and then I added another 2,500 shares up in the 70s. This popped here up to a high of 365. Other traders recognized the same setup, and then we squeezed up to a high of 388, 389. At that point I had I think 13,000 shares with an average of 357. So my average was a little on the high side.

Now this was halted because it squeezed up 10% in basically two candles. This is the type of stock that’s more likely to get halted anyways because of the big range you had the other day, traders see it, anyone who’s short starts to cover, long bias traders jump in for the squeeze seeing, “Oh look, PRAN’s in the scanner again, I want to jump in.” This if the same type of thing that we saw on HTGM, on APOP, on ETRM, on so many others. This is a setup, a pattern that repeats itself.

Okay, so we pop up here, and as we squeeze over $4 I add another 2,500 shares. We pop up to a high of only, let’s see, 4 and an only 410. What was interesting is that out of the halt we actually opened just a little lower. We opened at … Actually we opened flat at 389. We dipped down and then we surged back up, and as we surged back up I was expecting we would break not just over four and go to 410, to 420, 425. I wanted to see that big move potentially up to 458.

As soon we popped up and I was seeing a lot of selling going through, and I wasn’t seeing the price moving up as much as I wanted I said, “You know what, I’m going to get out.” I hit the bid and sold 12,000 shares right around 4, at 405, 402, 401, and I sold the remainder of my position at 377. In that one trade from an entry at 350, 12,000 shares, up to a high of 410, $6,281. Now if that gone up to 425 or 450 it could have been a $10,000 winner.

My best day of the year so far is a $22,000 day. Obviously back of my mind potential is that this could be a really huge winner, but at the same time if I’m seeing weakness I need to be quick to take in profit because I have a large position. Every 10 cents I lose I’m going to be losing 1,500 bucks of profit, so I got don’t want to have 30 cents of slippage.

Now on Friday on the trade I lost on, I had 12,000 shares. I was down 2,500 bucks, which was 20 cents, and then when I hit the sell button I got basically 20 cents of slippage and lost an additional $2,500, so it doubled the loss which is obviously horrible. I really didn’t want that to happen on this one. For sure I didn’t want to go back to break-even, but I just had to make sure that I took profit when I had it.

That was PRAN solid trade on the one minute setup. We got a pullback here, which I was hoping we would get secondary opportunities on this, but because of the volume profile where the highest volume of the day was selling, it just didn’t really hold up. Now on the daily you have two [inaudible 00:12:58] candles, the shooting star candles. With this tall upper wick we’ve got one here and now we have one today. This is obviously not ideal. That’s PRAN.

APOP, this one is been extremely volatile. We’ve had some really good opportunities on this one. Today we were opening higher, and we had this big kind of whip right out of the gate switch. It was pretty wild really. I jumped in this at $10, which was a little bit of a chase, so I only took 1,000 shares. In it $10.

We got a high of 1,064. I sold 400 shares at 1,060, and then I sold the rest break even at 10, and then we dropped all the way back down to 930. I mean just such a range. In that range is an opportunity to profit if you’re quick. If you’re able to understand the right entry and the right exit you can do well, but if you overstay your welcome on these obviously it can get pretty nasty. Fortunately I was able to book a couple hundred dollars on that one.

Then CYCC, I got in this out of the halt. It spiked up and was halted the same as PRAN. Then we got this little pullback and we got the break up and over 550 up to 565. I was in at 550, got to move 565 all the way up to a high of 605. I added at $6 for the break of the whole dollar and there was a hidden seller. We probably saw 50,000 shares of buying going through at $6, but the seller wasn’t moving.

It just kept showing $6. So you saw all that accumulation, traders buying, buying, buying, and then when that couldn’t break up to the next level traders just bailed out. They hit the bid, they got out, and that’s when we got that big flush here right down 48 cents to 552. I was out of that, but I did take a little bit of a loss and that’s why I’m up only $99 on it.

Today was really about one solid trade. The other two had the right idea just wasn’t able to get full position sizes, or got a little bit of a fake out which happen sometimes. That was the reason those weren’t as big.

STDY was on the scanners this morning as a gap scan. Stock gapping up, looking to move higher. [Inaudible 00:15:37] has 5 cents tick. It trades in 5 cent increments, and I knew because of that it wasn’t going to be easy to trade and so I just left it alone. It ended up having a lot of volatility, but no trades on that one for me. That was STDY.

We also had another one on the scans this morning that was the same way. Being able to quickly look at these stocks and recognize okay this is a five cent tick, these are the reasons it’s not going to have home run potential, it’s important to make that analysis really quickly. This one, NVCR, you can see squeezed up pre-market to 1430 and then pulled back down to 12 once the bell rang, so not the easiest one.

All right guys, that’s about it for today. A solid day, and the first day of April, first trading day. I actually wasn’t thinking about it being the first day of the month, which is good because when I think about it being the first day of the month sometimes I can get myself into kind of a weird head space where I’m trying to build my cushion as quickly as I can.

Fortunately, today was just a really solid day. 6,400 bucks, and hopefully that momentum continues through the week, but at the same time remember right now as of today I’ve made more money than I made all last week. Last week I made 10,000 and then I lost 5,000 on Friday. I only finished the week up about $5,000.

As of right now Monday morning, I’ve done better than I did all of last week in five days of coming to the table every morning to trade. With that in mind I do need to taper back my risk a little bit. Obviously I want to have $10,000 weeks, that gives me 40,000 a month, but at the same time I need to take A quality setups. Less is more.

Focus on the best, leave the rest. Trade the best quality setups. Don’t trade the junky stuff. If there aren’t good setups tomorrow or through the week I’ll trade less. When we see a good opportunity like PRAN I’ll jump in with size, catch the 4, $5,000 winner and then step back and wait for the next opportunity.

That’s kind of how you have to trade. You have to just sort of scan. Look for the best quality setups. It’s almost like spear fishing. You’re just sitting, waiting, waiting and then you strike. Then you get it, and now you sit and wait, and wait, and wait, and wait, and then you strike, and then you sit and wait. That’s how you have to trade in my opinion.

It’s about accuracy, getting in, being aggressive, capture the profit, get out of market. I did it today. Up $6,400. Feeling good about my trades this morning. That was really my goal that I told myself this morning as I came into the market I was like, “Look, you had a red day on Friday. Don’t worry about trying to make back what you lost.

Your goal today is to manage risk on every single trade. And if you can do it you will have earned yourself a little bit of caffeine.” This is my reward. It was just staring me in the face this morning knowing that if I was good and I traded smart I’d get a reward. Fortunately, I’ll get a reward and that’s good news for everyone in class tonight.

We’ll prepare ourselves for another three, four hour class. Maybe it’ll be shorter. I don’t know we’ll see. That’s it for now, and I will catch up with you guys a little later this after. Okay, thanks guys.

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