Warrior Trading Blog

Day 72 of the $583 Challenge -$4.4k

Day 72 of the $583 Challenge -$4.4k

All right guys, so time for our midday marker recap. Today is a red day recap and this is a day that I am admittedly much more frustrated than I am on Most red days. Most red days I’m just kind of like, “Red day’s annoying,” but I don’t usually have a strong frustration or really strong emotion about it, but today I’m quite frustrated. I think it’s partly because I lost on the same stock that I lost on yesterday. So it’s like I went back to that same stock and it got me again and I think that was probably the most frustrating thing.

I’ll show you the setup. So I’m finishing the day down $4400, which is just annoying and frustrating. The loss itself is not the end of the world it’s just annoying more than anything and it’s me trying to trade aggressively through a choppy market and I … Honestly, I didn’t think this stock I took today would be that bad but it was.

We’ll start with first trade of the day, CBLI. CBLI, I was watching it pre-market and I said, “Pre-market, it doesn’t look good. I don’t like it.” Which is true, that was 100% true and so I didn’t take a gap and go trade on it. I said, “I’m just going to sit tight and wait.” I said, “It needs to break outside of this downward channel.” Then all of a sudden, starting at 9:41 it starts to squeeze up, and I felt like I really showed composure because I saw it at $4.20 and I was like, “It looks interesting, it needs a 1 minute pullback.”

I saw it at $4.40, and I said, “Aw, it looks good but I need a pullback.” $4.50, $4.60, $4.70, $4.80, and I was just like, “Okay, I’m going to wait for a pullback, I’m not just going to chase this even though this thing just ran $0.70, I’m going to wait for the first micro-pullback, the first [inaudible 00:02:24] pullback.

So on this one here, we had the first red candle which had a high of 79. So I said, “All right, first red candle, we’ve got the 1 minute micro-pullback. The next candle to make a new high will be my entry, so I’m going to get in over 79.” So I did, I got in right here at 80, right at high of day on this one minute candle, we went from 80 all the way down to 35. I was just like, “Are you kidding me? This is ridiculous.”

I waited for the right entry and the immediate feeling was the frustration of being wrong after having showed the patience of not chasing it, which would of work because it squeezed up $0.70, I waited for the pullback, I got in at the right place and then it dived down to $4.35. I was just really frustrated.

Yesterday, obviously I traded this several times and lost $1600 and it ended up closing at high of day at $4.88, so I was like, you know … I got chopped out, I got stopped in the choppiness. I didn’t hold through the whole move and, you know, I would have done better not selling at the bottom of pullback, just kind of waiting through them yesterday.

So on this one I said, “You know what, I’m not going to sell into this drop, this is ridiculous, it just dropped $0.40. I’ll let it pullback and [inaudible 00:03:58] and then first [inaudible 00:04:00] will make a new high, I still had this kind of mental target that we would break over yesterday’s high, which was $4.88, and then break over $5.00 second day follow through.”

So I was like, “I’ll just wait on this, I’m not going to sell into the drop,” and it drops to $4.30, and then it drops to $4.11 and it gets halted on a circuit breaker, and it reopens lower and drops to $3.87. That is a pathetic, horrible, horrible drop. It dropped a point off of the highs and this is a $4.00 stock. It dropped 25% and I don’t really understand why it got rejected so hard there, I really don’t. We had 2, 4, 6 green candles in a row, nice push, usually the first pullback gets bought up and we continue higher. On this one, the first pullback got rejected and then it dropped a point.

I’m not sure. This was a trade where, it was, to me, kind of irrationally weak. Usually we’re trading stocks that are irrationally strong. I know short sellers are probably saying the same thing as me, like, “Why did this stock just go up four or five points, it doesn’t make sense, why would this happen?” It doesn’t have to make sense, it’s just the chart and the combination of market sentiment.

So I’m just used to being on the right side of these types of moves and so to get into a stock and then have it drop instantly, to give it a few minutes to pullback and then first [inaudible 00:05:37] make a new high and just have it keep going lower and lower and lower is not something that I usually see. This was obviously a lesson in bailing out faster, I should have maybe sold at the half dollar of $4.50. It hit $4.50 and then it suddenly dropped to $4.40 and I was like, “Well, it’s probably going to get right back up, I mean this is … I’ve seen this happen before, it’s probably going to come back up.

Next thing you know, it’s at $4.30 and I was like, “Are you kidding me, this is not good at all,” and I had 5000 shares so I was like, “Geeze, this is not looking good,” and then I just kind of said, “Whatever. I don’t know, I guess I’m just going to lose on this one. Maybe it’ll pop back up or maybe it won’t.” At that point, I was just sort of like, “Whatever.” Threw in the towel emotionally on it, or mentally but I was still holding the position. Then it was halted on circuit breaker, it opened lower.

Just an annoying move but I guess I’m paying my dues and this is a trade that the sure sellers won on and they probably did really well unless they got squeezed right here. In which case, they got squeezed and then maybe they got back in and made it back, I don’t know. Maybe everyone is frustrated on this trade, I don’t know. At the very least, it didn’t work out well for me, I was frustrated with it. Just very irritating.

Obviously it’s irritating when you come into the market, you have a game plan, you execute that plan and it completely fails. That’s irritating. This was a pretty good example of just a total fail. It was a failure that the setup didn’t work, but then it was a failure on my part to not stop out sooner. I could have stopped out at $4.50 or $4.40. That still would have been like a $2000 loss, so it still would have not been fun, but it wouldn’t have been as bad as $4200.

That’s kind of … On this one, I let frustration get the best of me definitely not any … There’s no good reason that I held it as long as I did, other than just being frustrated and being stubborn essentially. I’m not sure what to say but I’ve kind of been feeling frustrated the last week or so. It’s been about a week. Last week on Tuesday I made $3200.

Then I went into a two day red streak, I was green yesterday but only barely and now red again today. I’m just feeling choppiness, I’m not seeing clean patterns. Even the patterns that last month worked really well, like this one that would have broken $4.80 and gone to $5.20, $5.30 and been a $2000 winner, they’re either chopping around or they’re just complete rejections.

This is the ebb and flow of the market where we see this shift between long bias traders and short bias traders and who’s sort of dominating the market. On a day like today, maybe it seems like the short bias traders are making out pretty well. Even yesterday, CBLI, it made a big move but the move was mostly later in the day.

The early part of the day it was fairly choppy. It just wasn’t clean. Big red candles here, choppy here, choppy here. Not clean follow-through in the predictable sense. I don’t see any clean obvious bull flags on this, I see a lot of false breakouts and a lot of tall candle wicks.

That brings us to the next one which is [IDXG 00:09:43]. This one I wasn’t super interested in. I did get in it, but I only lost $100, I wasn’t aggressive on it. But then look at this, right here at 11:19, it dropped from $4.20 and over the course of three minutes, all the way down to $3.00, another 25% haircut in three candles. So this was driven on a headline on news so at least it made sense, there was bad news out, it made sense why this was selling off more so than CBLI. Just these really sharp pullbacks.

When you have a big red candle like that, this is a payday for a short seller, absolutely. And it’s the stuff of nightmares for long bias traders who are sitting and holding. If you were in the type of position where you were sitting and holding through this consolidation, you look away for one minute, you look back, 10,000 shares, you’re down $10,000. I’m sure there’s a long bias trader who was holding this for a bigger move thinking maybe this will be the one who goes to $5.00 or $6.00 or $7.00 and then suddenly you get the big drop.

I don’t know. I think that the … Right now because we’re seeing a lot of these false breakouts where the stock pops up and then drops sharply, combined with the, just the breaking news headlines or whatever it is that causes these big drops, I think that short sellers are going to start to feel more confident.

These were two trades today where they could have done really, really well and long bias traders are going to start to feel a bit more finicky. What’s so interesting on this chart on IDXG is this similar kind of, this is by the way, the place that I got in on this was the first one minute pullback after the fresh breakout, I got in right there.

I was like, “That makes sense, right?” We just got these six candles in a row, one minute pullback, I get in and it only goes up $0.07. Then I end up getting out basically, whatever, a $0.02 loss on 7500 shares. I got in, I was looking for the move over $4.20 to continue higher and then we just stalled out.

So if you were able to get in down here, that’s fine, but when I was looking at it right here, I was like, “Guys, this has three [inaudible 00:12:14] candles in a row. One, two, three. This is choppy. So why would I want to buy it at 44 when the last time it hit 44, a minute later it dropped down to $3.18. It just feels like buying it here would be buying it really extended.”

Well, next thing you know up it goes from $3.44 to $4.18 or whatever it is. So tried the first pullback, didn’t do anything. Yes, I suppose long bias traders maybe could say this is a good market for them, but I’m not finding it really for myself. Yes, this was a move here. CBLI was a move yesterday but not in the cleanest sense.

In any case, I’m kind of just grinding a little bit. I’m taking a couple steps forward, a couple steps back, a couple steps forward, a couple steps back. I’m not really making a lot of progress. Definitely for the month of April. I didn’t do as well in March as I wanted to.

Came in a little short and then April so far is … We’ve only got a week and a half left and I’m not even up $10,000 anymore. I was up like $20,000 and now I’ve given back more than half of it. Kind of strange that I was up $68,000 in February and now here in April I’m just having a little bit of a hard time.

I think that if … It kind of depends on your mentality a little bit. I think my mentality has been to push it pretty hard and to go in with large size, 10,000, 15,000 shares on a lot of these trades and when they work, I can do really well, but when they don’t work, I start to get a little more emotional because the loss is bigger, I hold it a little too long and I sort of have been screwing up my profit-loss ratio because of this.

If you were trading focused really on income on generating just $500 a day, I think that your gains would probably be more consistent because you would be more focused on very short term goals and you wouldn’t be trying to think about hitting a $5000 or $10,000 winner, which is kind of what I keep thinking about, hitting that next big winner, having that next big step forward.

So even when I’m up $500 on a trade, I don’t take the profit because I’m looking for more. In fact, on a lot of these trades, I’d double my position when it goes up $0.20. So I start with 5000 shares, it goes up $0.20, I’m up $1000 and I double to 10,000, now I’m up $1000 on 10,000 shares, it comes back down to break even and I stop out flat, or it drops quickly and I end up losing $500 instead of taking profit.

That type of trading is very aggressive and when it works it works phenomenally well. Obviously as it did in February and even January and March were really good, too. But in a market that’s trickier, where you’re only getting $0.20 or $0.30 moves, doubling just basically decreases your profit because you’re not getting that secondary push. You get the first move, the pullback and then it just fades. It doesn’t give you the first move, the pullback and then the second move. At least in the last week and a half or so.

I kind of need to … I think I had this same thing happen, I can’t remember what month it was, but I kind of need to switch my strategy a little bit from trying to get big winners to just trying to make my $1000 a day, just hit my daily goal and not swing for the fences.

To take the $0.10 when I have it because in this market, if you don’t take it when you have it, there’s a good chance you’ll lose it. I could make that adjustment, I could also say that, “Whatever,” I’m up $140,000 or $150,000 just under on the year, so if I have a month of sideways chop between, after hitting that level, then that’s fine. When the market does pick back up, this strategy will give me another really big green month.

It’s good to be able to adjust your expectations and I think that’s the hard thing to do. You make $68,000, $70,000 in one month, you want to be able to do it again and then when you start to come up against the wall, instead of stepping back and saying, “Well, I’ll just take a break,” you just keep going into the wall again and again and again and sometimes you can’t break through that wall.

That’s maybe been an issue needing to kind of adjust my expectations and not feel that I need to hit $50,000 this month in order to have a good month. If anything less than $50,000 is a bad month, then that’s kind of setting the bar really, really high, setting a very high expectation and kind of setting myself up for defeat or frustration if I don’t achieve that level. I’m not going to achieve that level this month, that’s just not going to happen.

At this point, I think, I’ll see how the market looks tomorrow and Thursday and Friday. Hopefully we’ll see some good opportunities. Generally, what we need in order to see momentum shift strongly back towards the buyers is that one stock that goes 200% or 300% and is easy to trade.

It gives you the really clean, predictable bull flag. Stock like CBLI, it went up a lot for sure but you didn’t get really clean entries. So it made it kind of like expert-level trading. It was much, much more difficult to trade than a stock that pops up and gives you a very clean bull flag and then it gets bought up and goes higher. Then the next really clean bull flag. We see that a lot.

There’s tons of examples in the courses that I go over, like picture-perfect setups. Those are the ones you want to go for, those are the ones you want to take 15, 20, 25,000 shares of. Those are the ones you want to be aggressive because they will make up for weeks of trading like this. The problem is that in between those perfect setups, you need to try not to loose a lot of money on the chop. I’m giving up a little too much on the chop being stubborn and not wanting to accept that, “Maybe the best I can do today is only $500.”

Pretty much everyday that has been a red day, if I had switched my focus to just making $500, I probably would have been able to make it. It was the fact that on those days, I was still trying to go for $3000, $4000, $5000 days and being up $500 or $700 or $1000 felt like it wasn’t worth it.

Being able to adjust my own expectations on myself will probably reduce some of that pressure that I’m putting on to try to have really good days and to be too aggressive on poor quality setups. You’re not going to make $5000 if you don’t take 5000 shares or 10,000 shares or maybe 15,000, that’s just not going to happen nine times out of ten. That means I know how I have to position myself in order to get a big win.

The question is, is this stock worthy of that level of risk. In the last month or so I’ve shown that I’ve had a tendency of reducing the quality of the stocks I’m willing to trade because of kind of this desire to quickly grow my account from $500 to $100k and to keep delivering really, really high level of performance. But that seems to be clouding my judgment a little bit and so … And even today, I came into the market saying, like, “You need to be centered.

You need to be calm. Yesterday it was really sloppy, today I want to pull it back together,” and then I took that trade on CBLI and it was like immediately like logic was out the window and I was just frustrated. I was just like, “Not again. The same thing as yesterday. I get in and it just … You know, you got to be kidding me.” You know, a false breakout and it got me a second time. Just very annoying.

This is a stock where, when you look at my stats at the end of the month of the names that I’m the most green on and the most red on, this will be right there at the top of probably the most red. I’m down $4300 today plus $1600 yesterday, so almost $6000 on a stock which is so stupid, considering the fact that it went up from $2.00 to $5.00.

I’m the guy who, despite that move, couldn’t find a way to generate a profit. Being too aggressive, buying in the wrong spots, it wasn’t behaving in the way that works well with my strategy and so I got chopped up by it. It’s a little bit annoying. Then of course, I wasn’t in the market during the time when it actually made that big move in the afternoon. I had already thrown in the towel on the day.

Anyways, the big picture’s that $4400 is not a big deal dollar wise. But ten days of losing $4400 and you’re down $44,000. So all these small days add up and you have to really look at what you’re doing right and what you’re doing wrong. This is one of the things that traders always have to deal with, not just me but any trader out there.

You make mistakes, you have to reflect, you have to adjust your strategy, you have to be able to adapt to changing markets. The ability to adapt is the most important because that’s part of changing your expectation based on the type of market we’re having. I’ve already gotten pretty good at changing my expectations for Fridays because Fridays I haven’t been doing very well, so I just kind of scale back on Fridays. Having an entire week where the market is slow is a little bit hard.

There’s, I think, a sense of impatience and just a desire to trade and so not seeing good quality setups can get a little tiresome, a little draining and it can encourage you to say, “You know what, I’m just going to jump in this one.” But next thing you know, you do that and you know the only way that trade will be a $3000 winner is with 5000 shares, you jump in and next thing you know you’re down $0.20 on 5000 shares, you’re down $1000 and it just adds and adds and adds if you don’t stop out.

Anyways, I hope this is all helpful for your guys who are at various points in your learning curve, whether you’re at the very beginning or you’ve been trading moderately profitable but you still have those red days. We all have them. Even after years of trading, I still have red days. I still have weeks where I get really frustrated, I have months where I get frustrated.

Having said that, I haven’t had a red month in a very, very long time. Years. I certainly, and I’m not red on the month right now, but I need to kind of reevaluate before that happens. I need to get back to just kind of grinding and between now and next week, hopefully I’ll be able to get myself back into the driver’s seat a little bit, back above $10,000 on the month, towards $15,000, $20,000. It only takes one solid trade. The biggest winner I’ve had this month, or the biggest day, is $6400 and that’s a little bit on the light side. The biggest day in March was $9000, biggest day in February was the day I had $22,000.

We’re kind of seeing … Biggest day in February was $22,000 in one day. Biggest day in March or in April is $6000. So obviously if my biggest day is 25% of the biggest day in February, maybe this whole month is just a little bit trickier and that’s okay. I can’t force it to be better, I can’t change the environment but I can adapt to it. That’s what I need to get a little bit better at doing.

I encourage you guys, of course, when you’re trading to take notes. For me, I was like, after that trade, I was just so frustrated, I was like, “You know what, I’m just going to run some errands.” Went to the post office.

As soon as I walked out of my office and sat down in the car and the car was nice and warm from the sun, I was just like … It was nice to just get away from staring at the computers and being kind of in this tunnel vision of really kind of a high level of frustration. So that was good, for me to just step back, take a couple minutes, drive down to the post office, whatever, come back, sit back down. Now I can reflect on things a little bit.

So that’s what I talk about. Whenever you have that losing trade, that you have this sort of procedure for how you handle it. If you take a big loss, usually don’t want to take another trade again within five minutes or ten minutes. At least just give yourself some breathing room to step back, slow down, walk away from the computer, get outside.

You need to kind of cut the cord that creates this tunnel vision that can encourage you, or at least for me, and even for the IDXG trade, I jumped into that when I was still in CBLI so I knew I was being kind of overly aggressive when I jumped into IDXG. But at the same time, the one minute setup was fine, I mean it was a good setup, it really was. And on this one I could have made $500 because I was up $500 but that wasn’t what I was looking for.

I wanted a bigger winner so I held it and then stopped out just before break even and got a little bit of slippage. But IDXG, there was news in the middle of the late morning, headline came out, something, not a secondary offering but I think something with … I don’t know, I can’t remember what it was. Anyways, dropped from $4.00 all the way down to $3.01 so pretty brutal drop there. I wasn’t in it for that, I was already done.

Anyways, that’s it for today and hopefully we don’t have to do another red day recap tomorrow. Hopefully the market’s a little bit more favorable but my goal tomorrow, $500. I’m not even going to say $1000, I’m just going to say $500 tomorrow. Just try to get back on the green side, have a green day, $500, break the red streak.

I was happy yesterday that I did $700 because I was breaking my red streak but at the same time I got there in a very sloppy way.

Tomorrow, probably look at two, maybe three trades right out of the gates, between 9:30 and 10:15 and then I would say, past 10:15 and past 10:30, I’ll probably be done for the day. I kind of need to just get back into this routine of, sort of, a little bit of trader rehab. Get in, get the profit, get out. Don’t overstay my welcome. A-quality setups. If there are no A-quality setups, then I might not trade at all. As strange as that would be to go a day without trading, that may be the best thing.

Anyways, I guess that’s about it for now. I’ll be back at 4:00 PM for class with our students. We’ve got class at 4:00. Last night, class went from 4:00 PM all the way to just about 9:00, so it was about four and a half, five hour long class. Another great class, we’re going to continue it tonight, Class 14. I’m definitely putting in 110% for you guys and I’m happy to do it. I know you guys are really enjoying the classes and you’re getting a lot out of them.

We’ll be back at it at 4:00. Between now and then I’m going to work on getting things ready for class tonight. Okay, and I just realized I’ve got a call at 12:30, so I’ve got to go jump off and do that. I’ll see you guys later this afternoon.