Warrior Trading Blog

Day 69 of the $583 Challenge -$7k

swinging for the fences

Day 69 of the $583 Challenge -$7k


We’re going to do a little mid-day market recap, go over the trades from today. This is day 69 of the 100K challenge, or the $583 challenge. It’s not a good day. This is actually one of the worst days I’ve had of the year and it’s obviously frustrating. I hate having big red days. No one enjoys it. We’ve got to go over what went wrong today. I’ll show you my PNL here. Finishing the day down $7,042.04. That gives back Monday and Tuesday’s gains, puts me down about 1100 on the week. It’s definitely disappointing for Wednesday.

Where did I go wrong? Well, I’d been on a hot streak, seven consecutive green days from last Monday through yesterday. In that hot streak, I made about $20,000. I had a red day the Friday before that and lost I think it was $4,000 or something like that. In the five or seven days preceding that loss, I’d also made about $20,000. Seems like I’m moving up about $20,000 and then dropping down X amount.

Today was a bigger setback. Good news is that I’m still trending up. I’ll open tomorrow around $115,000, little bit of a setback, but I’ll bounce back from this just like I bounce back from every other red day that I’ve ever had.

I think it’s a good idea to take a look at the trades I took today and where things went wrong. On our gap scanner this morning, we had NOVN on the scan. It’s kind of interesting because I said it was not a very good chart, which is true, it wasn’t. It was selling off, we had resistance at the 50 moving average which wasn’t great, but right at the bell, it started to look to me like it was about to pop up.

I actually jumped in this thinking that if it popped over 7.80, it would probably go back to $8 and that was realistic. From 7.80 up to $8, we could probably get a quick 20 cents over 8, a quick move back to 8.50.

Then above 8.50 which is sort of this pre-market consolidation, we’d get a move back up towards 9. I jumped in this 5000 shares at 7.80 and it dropped to 7.44 like that. Just like that and I was down 1800 bucks. That was a very quick loss and I wasn’t expecting to take a loss on it so quickly. It was just, it happened like that. That was in the first minute. Then, I think I let … I felt frustrated by that. I was just like, “Whoa. I just got really slammed on that one,” and I flipped over to CNTF, which was also on the gap scanner as a pre-market gapper.

I was watching it for a move over 3.50 and then up to 4. Good daily chart, no resistance, and so on this one, I saw the first candle was like this and I was thinking, “I’ll do an opening range breakout.” I jumped into it at 3.30. I thought 3.30 would get, most likely, a quick move up to 3.40, 3.50. Then from 3.50, clear path to $4.

The problem is, I was compensating for the fact that I just lost $1800 and I took 10,000 shares. I took 10,000 shares at 3.30. We popped up to a high of 3.45. I was up 1500 bucks. I was like, “Good. That’s nice. Okay, let’s keep it going. Over 3.50, up to 3.60, I’ll be back in the driver’s seat.”

Then you can obviously see that this just dropped back down to 3.10 and it happened super, super fast. If I back this up to 15 second chart, or something like that, you’ll see that this is a challenge as a trader, that these opportunities can be so quick and just a moment of hesitation, I didn’t take the profit when it was up at 45 because at that point, I was thinking it was going to go up to 50 and break over that level and we were going to have a legit red to green move. Well, next thing I know, 30 seconds later it’s down at 2.97 and I’m down 3 grand.

I was like, “Well, at this point, I’m just going to hold this for a second.” I knew that when I closed this trade, I wouldn’t be able to take another position today. I would be at my max loss. This is where I was doing something that I … I hate it when I do this, but I said, “I’ll just hold this because I don’t want to go below my max loss.” The way my max loss works is that once I’m below a realized loss, not unrealized, but a realized loss of below 5000, I can’t take a new trade. My broker won’t let me, so I was like, “Well, I’ll just hold this unrealized through this consolidation and in the meantime, I’ll look for something else. Maybe this will consolidate here, and it will give me a red degree in move. I just have to wait on the five minute chart.”

I was like, “I’ll just hold this for a second.” During that time, I jumped to the NADL, 5000 shares. I got into this at 58 for a red to green move, and I was emotional on this one as well because … Let’s see. We’ve got a high here of 75. I got in at 58 with 5000 shares, so I’m in down here at 58. It goes all the way up to 3.89 but I was like, “No, I’m not going to sell it because that’s only like 1500 bucks and that doesn’t really help solve this issue of being down 5 grand, or 4 grand, on CNTF,” so I just held it and then stopped out break even when it came back down right here.

I’m glad I stopped out at break even, but I didn’t take the profit because that $1000 wasn’t enough and I just felt like it wasn’t worth taking the trade or locking up the profit. I was thinking I need a bigger win in order to justify it, so that was stupid. I was being emotional. Came back down to 3.63. Stopped out break even and got slippage a little bit, so made $7 on that instead of having $1000 winner which would’ve been good. Being down 6000 isn’t as bad as being down 7000. I could’ve taken that win, but I didn’t and so then I go back to CNTF and I’m still holding it, still holding it.

During that time, it had dropped here down 2.95. I was still holding it, and finally I sold it right here. I got filled, the low of my exit was 75. The low of this pullback was 75, so I got filled at the lows and lost 5 grand. That’s a 50 cent loss with 10,000 shares. There’s really not a very good excuse for losing that much. To ever lose 50 cents is, you should never really lose 50 cents. Obviously NOVN dropped really fast. It was a 35 cent loss.

CNTF did drop really fast and would’ve been a 30 cent loss if I had sold it right here at 3, which I could’ve done. I could’ve sold it at 3, or when it came back up to 3.19, I could’ve sold it but I didn’t. Then it dropped down here, and I continued to hold. Then it dropped down here, and that’s when I sold. Just overall, it wasn’t very good management of the trade. I was really more managing my PNL and not the trade. I wasn’t following the exit indicators of the position. I was just looking at my PNL. That’s not, obviously that just made the situation worse.

I didn’t manage my PNL that well either because the loss became much larger and I didn’t book profit on NADL or sell it when I saw the exit indicator when I normally would’ve. Just all in all, today was not a good day for me. The fact is, in the first five minutes, first ten minutes, I took three trades. Even though NADL was up 30 cents, it wasn’t the best trade anyway, so three trades. None of them were good, and that was my cue to get out of the market. At that point, I was down $6,799 and then ADP comes up, and I’m below my max loss. I can’t take a trade on it.

I’m looking at it and I’m like, “Well, here’s the deal. If I had not had that max loss on my account,” I was thinking about this, “how is that max loss effecting my trading?” Well, the max loss is why I held CNTF longer because I knew below my max loss, I’d have to call my broker. I’ve never done that. I’ve never called my broker in the middle of the day and said, “Take the max loss off my account. I want to keep trading,” because it just feels embarrassing.

Instead, I held it longer hoping that maybe while I’m holding this, an [A 00:09:49] quality setup would come along that would get me out of the hole or make up for this loss which is a really silly thing to do. The max loss on my account really didn’t help me there. Of course, if the max loss was at $1000, I wouldn’t have even been able to impulsively jump into the CNTF trade. I think that it was a little impulsive to jump in it with 10,000 shares. To get that aggressive was compensating for a loss that I had just taken.

Perhaps it would be better to keep that max loss at $1000 and not allow myself to have jumped into this trade. On the other hand, maybe I would’ve held NOVN even longer thinking that, “Well, I’ll hold this and wait for an A quality setup to come along.” I don’t know, neither way is a good situation. I have to think about it, but in any case, ADPT pops up and it pops up to 1.70 right here. I’m looking at it and I’m like, “Yeah, this looks good, but obviously I can’t trade it.” If I could’ve traded it, I think there’s a really good chance that it would’ve taken 10,000, 15,000 or maybe even 20,000 shares, and why would I have done that?

It would’ve been emotional. It would’ve been me trying to compensate for the fact that I just got smoked on these other two. In this case, it would’ve worked really, really well but in another case, I might’ve gotten in there with 20,000 shares and lost another 30 cents and that be another $6000 loss and I’d be down 12,000 on the day. I don’t really want to lose 12,000 in a single day, so that’s where it gets dangerous. Obviously, I mean, I’d like to think I’m at a point where my accuracy is pretty good. Accuracy is around 70, 68/70% so generally speaking, I have pretty good intuition about what’s worth taking and what’s not regardless of how many shares I’m taking.

On a trade like this, this was the right setup, it was the right entry. On NADL, getting in for the red to green move and the move up into the 80’s was a good trade, and I had the right idea, and I was up 30 cents on it. That was not a bad setup. The move on CNTF over, let’s see, over 3.30 was not a bad idea. It just didn’t work and I didn’t bail out fast enough. Then I got myself backed into a corner because of this max loss and just because I’d gotten myself so aggressive. The trade on NOVN also, neither of these were really solid one-minute setups. These were both gap-and-go trades and both of them failed miserably.

Essentially, that’s what happened. This was a gap-and-go. I was looking for the break, over the pivot of 7.85, move back up to 8, got in a little early to anticipate it and got smoked. CNTF was a gap-and-go trade. It didn’t work. Having said that, I’ve taken lots of gap-and-go trades that worked really, really well which is why I have that strategy. Today was just a day where I took two of them and both of them failed right away. I don’t like to make new rules to my trading strategy based on one bad day, especially when I’m up over $150,000 on the year in four months of trading.

You have to have, you have to be able to take the bad days with the good. That’s just part of trading. There will be bad days. It’s not necessarily your fault. It’s not something that you can ever 100% or entirely prevent. You will have bad days. That’s just part of trading. Today, what could I have done differently? If I look back, what could I have done differently?

The place I really went wrong, I feel, was not necessarily on NOVN. NOVN was okay, it just didn’t work. I think the place I really went wrong was here on CNTF when I got super aggressive on this trade, a one-minute opening range breakout based on a bad five-minute chart. This was a bad five-minute chart. It really wasn’t good. Look at that big right candle right before the open. I got in thinking it would do a red to green but this was showing a lot of weakness right at the open, so not a very good setup.

The better red to green setup is when you’re strong pre-market and then out of the gates, you sell off but you’re not broken on the pre-market chart. You’re [five-minute 00:14:27] is not broken. Regardless of that, red to green has never been my favorite setup.

Red to green on CNTF is not a great setup and a red to green NOVN is not a great setup either, so I got aggressive on one of my less than ideal momentum setups. Red to green inherently means the stock was red before it went up. Red is weak, so you’re trying to capitalize that maybe you’re going to get a reversal. You’re going to get that quick shift of momentum, but you’re buying a stock off the low, or off the pullback, which is always a sign of weakness.

I’d rather buy, I’d much much prefer a setup like ADPT. This was a very clean momentum setup. This was really a picture perfect setup. It really, really was and I couldn’t trade the first pullback because I was at my max loss. I couldn’t trade the second one because I was at my max loss. It gets [inaudible 00:15:23] on a circuit breaker. I call my broker and I say with my tail between my legs, “Can you please take the max loss off my account and just do it for today?” They said, “Okay. That’s fine.” It’s not like they really care, but they were like, “Okay. We’ll take the max loss off your account. That’s what you want to do, that’s what you want to do.”

So I was like, “All right. I’ll get in for the first five-minute candle to make a new high.” I got in at 95, pops up to a high of $3, drops back down, I make $14. Was it even worth it? No, not in this case but I at least showed restraint and I didn’t go back into revenge trading or doing anything crazy. I thought this was an A quality setup and it was. It just, I missed the first one and then I missed the second one on the one-minute pullback. Then the five-minute by that time, it was too extended so overall, just a day where I came into the market and got burned a little bit.

I don’t know what to think about the max loss, if maybe … I know that I was trading around it today. It was the fact that I had a max loss on my account was changing the way I held and it changed the way I traded CNTF. It did. It really did. That probably cost me an extra 2 grand. Realistically, an extra 2 grand because I was down 3000 like that, so cost me an extra 2 grand.

Well, maybe that’s okay because if I had kept trading when I was in that state of mind, losing 1800 on this and then losing 3 grand on that, maybe I would’ve jumped into ADPT with huge size and maybe the day I do that is the day it pops up and then tanks 40 cents, and now I lose even more.

I don’t know. Again, I don’t want to change the way, change my rules based on one day. I just obviously have to be mindful of the challenge of being at max loss. Now, I think the good news, the silver lining in all of this, and to look at this as being the cup is half full is that tonight’s class, class 11 of the Day Trade course is on the psychological struggles that effect traders. This is really going to put me in the right mindset to give you guys a great lesson on how to deal with frustration, how to deal with trading around your max loss, and it probably couldn’t have come at a better time.

I’ll have some fresh ideas for class tonight, and this is just, again, I can’t say it enough times, it’s just part of the deal of being a trader. You’re going to have big wins, and then you’re going to have losses, and you have to be able to handle it. The good and the bad. Yes, this is a little bit of a setback. If I log in to my Trader View Stats here, let me pull this … I’ve got to log in. We can look at where I’m at for the last few days, or the last … We can just look at the whole thing up until now. First I’ve got to get myself logged in.

Let’s see. I’ve got to import some of my trades here. Yeah. This, at this point, to me is who knows? Maybe it’ll go back to the highs but it really did suffer quite a big pullback there, so probably just let it be what it is and not overdo it. It’s not my routine to trade in the afternoon anyways, especially on a day when I’m at my max loss. It’s just, at a certain point, you’ve got to see the writing on the wall, take the hint, and just get out of the market. On good days, in the first three minutes, I’m already up 1000 bucks.

Yesterday 3100 bucks in the first 30 minutes. Day before, 2500 bucks in the first 30 minutes. That’s pretty consistently what I’m doing, so yes, I made 20,000 in the last 7 days and then gave back 7 of it, so those are 3 steps up and one step back, if all 3 steps are 7 grand. Disappointing, but it’s part of trading. Let’s look at my, let’s see, let’s look at my report here for my Trader View Stats. I just imported the last couple trades.

Let’s see. We’ll do 90 days and we’ll do net. This shows you … Oops, switch back to 90 days. This shows you this trend that I’ve been on. I had a fantastic run in February. February was the best month I’ve ever had of trading, $68,000. It was huge, but since then, a setback, grinding back up, a pullback, grinding back up so today is another one of those days that’s going to be a little notch down. It will be back up, a notch down, back up, a notch down, back up. That will just continue.

This has been continuing for years. It’ll continue, hopefully, as long as I continue trading, just up, a little pullback, up, a little pullback, up, a little pullback. Yeah, there will be some sustained pullbacks that are a week long or take a couple weeks to bounce back from, but this is what every single equity curve looks like. It is impossible to avoid these patterns. You look at the overall market, you put your money in mutual funds, they’re going to do the same thing.

Yeah, it’s over a much longer period. The growth is a much slower rate, but you’re up, you’re down, you’re up, you’re down, you’re up, you’re down. As long as you’re trending in the right direction, that’s the goal. Of course, trying to learn from days like today to become a better trader, to become a more disciplined trader, that’s obviously something that you really want to strive for.

I want to do as much as I can to avoid days like today. I think I did get a little bit of the revenge trading instinct on CNTF and there are times where I’ve been able to harness that instinct and it’s allowed me to bounce back really quickly and have a great trade. Today, that instinct, I just took it out on the wrong setup. It was a red to green setup. It wasn’t the right one, and well, that’s what happens. On my losing days, my accuracy is 25% and today would hold up as, again, being really low low accuracy.

My winning days, my accuracy is 77%. On a day where I’m already at 25% accuracy, I shouldn’t even bother taking trade number 4, 5, or 6. The market’s just not on my side, so these are the days when I need to put the pedal to the metal, increase the share size, be more aggressive. These are the days that give me those big leaps forward in the equity curve, and then these are the days where I need to seek shelter from the storm, just hunker down, not let myself get hit or beat up too hard, and that’s the best I can do.

It’s interesting having this day in February where I made 15,000 in the small account. It was really incredible. It was an incredible day, just several incredible days in February, and a couple in early March. Things have slowed down a little bit. I’ve been grinding on slower numbers and so it’s definitely disappointing to have what will be, today, the biggest red day of the year in this small account.

It’s consistent. Every single red day seems to be $5000 down. Today is a little bit bigger and that’s a little disappointing, but you can tell that I’m not … Yeah, I’m not happy about it. Obviously, I’m not happy about it but I’m also not going to go sit in the corner and cry.

I’m not broken up about it. I accept that this is part of trading. I don’t have the expectation that I’m going to win every single day. If I had that expectation, I would be very very disappointed as a trader. I have the expectation that I’ll have 3, 4 steps up and a step back. Then another 3, 4 steps up and a step back, so you get used to getting knocked around and you know that you’ll be able to bounce back from it. That’s part of the emotional conditioning that every trader has to go through.

We’ll, of course, be talking about that in class tonight. Definitely a good topic for every beginner trader because beginner traders have more losing days than seasoned traders so you have to deal with it more. It’ll be- … Sorry. Then we’ll have class tonight at 4 PM. My audio went out, so anyways. That’s it for now, and I will catch up with all of you guys either first thing tomorrow morning or in class. All right. Thanks guys.