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Warrior Trading Blog

Day Trading Observations


Day Trading Observations

Hi all, John L10 here!

First, I apologize for those who enjoy reading my monthly article submissions, I have not kept up and the result of that is there is no submission for October or November. Fortunately, my trading stats are public through the November Warrior Trading Challenge, so we don’t really need to go through that. November was a really good month averaging roughly $2,714 each day the market was opened.

My general thoughts about November is sometimes you win, and sometimes you really win. November was really solid and the market helped a lot with that. I really didn’t trade any differently in terms of risk or size. The key thing is determining when the market shifts back to normal, or worse, when the market just becomes choppy. If I remember correctly, September was challenging and I averaged only $909 per trading day.

In the first installment of my articles I talked a lot about my business, and how I switch to that after trading. This is one reason why I have been really busy, business is good! Being busy can help traders get their mind off trading, whether it was a frustrating day where you missed out on some profit, or maybe you had a loss. Not sticking around all day in the market is extremely helpful.

Trading is already tough enough, without having to think about it all day and second guess everything. It’s best to have a set time when you stop trading and turn off your trading computer and move to the next task at hand. I think this has been a big key to my success, being able to turn off trading and move on.

I wanted to take a moment and try something new. Not long ago I asked members in chat to send me questions and I will try to address them in an article, so I have picked a few that I thought were good and will answer them below. If you have questions that you would like me to answer in the same manner, please email [email protected] and tell them to forward your questions to me John L10.

Questions & Answers

Question: Describe your pre-market routine, both personal things like meditating and professional like how you create your watch list, and why these habits work for you.

Answer: Being that I am on the east coast, and the market opens up at 9:30 for me. I generally try to be at my trading computer by 8. It might be surprising to know that I don’t eat any breakfast, only a lunch, and I don’t meditate. In the early mornings before 8 I’m usually checking emails and the status of my business. After 8, I am prepping my small cap watch list, usually in a calmer environment while drinking some tea or water.

The pre-market routine first involves dividing my watch list by what has news and what doesn’t, but still has potential continuation. Utilizing my pre-market scanners, I run down the list and divide them in that way. I draw or re-draw important technical levels in advance so I don’t need to be considered about it later on.

It’s important to keep track of stocks that were in play during the week or so, as they may always come back into play. It’s important for me to know what has news and what doesn’t, as this can tell me what might surprise traders and what might not.

At the same time, since many people know I also trade mid-large caps for the last few months, I am paying close attention to Mike’s watch list, as I don’t have time to build both watch lists myself. This is where it really pays (literally) to be in the Warrior Trading chat-room. Once you know the strategies, a well-constructed watch list is all you need. These days, I only share my small cap watch list to the inner-circle.

Question: Compare and contrast your best and worst trading days. What were the factors, both in the market and with you personally, that led to being the best and the worst?

Answer: I think the worst days happen due to a recurring losing trades. Maybe I trade a few different stocks, and somehow, lose on almost all of them. Those days can turn bad pretty quick since they are base hits, but all the base hits are losers, and in the end, it’s a big losing day. So that’s why it’s important to have a max-loss, where you walk away before things get out of hand.

It’s very easy to recover from a small loss, but when your loss is the size of 5 normal days it will affect your trading for probably two weeks as you try to catch up. The worst days are when I don’t realize that I went passed my max loss and now have a much larger loss than I was comfortable with. As far as the overall market, I don’t think it has too much of an effect of my overall strategy.

In contrast, the best days are two-fold, either a really nice win on the first or second stock I trade, and the gain is so good that I just shut down, or there are back to back small base hits that equal up to a really big day. The best days are simply when we have great momentum and follow through in the names we trade. Regardless if the market is up or down.

Question: How did you best what you do and why did these learning methods help you? Example, are you more of a reader and what books did you read? Are you more of a watcher and what videos did you concentrate on? Or are you more of a doer and what paper trading platforms did you use? Was it a combination?

Answer: I wish I had the time to read books but I just don’t, I also don’t have the patience. Historically in my trading career, I have been a scalper, so I get impatient very quickly. I think naturally, this is what the internet has done to a lot of people anyway. Instant gratification, click a button and get a result. I can’t do books at this point in my life. I get an email every 2 minutes there are just too many distractions.

I think what helped is I am a watcher, video examples really helped me in the past. Naturally, I am also a visual learner. I don’t know street names but I know how to get to a street by the way things look. Everybody is going to be different, which is why trading success looks different for everyone.

When I started to trade, I didn’t use paper-trading but I probably should have, I wasted a lot of money learning on my own dime. The only reason I am here today is because I had enough dimes to waste. Not everyone has that luxury, so I highly recommend paper trading just because you need enough time in the market to understand how the market and individual stocks work and react.

Question: Perhaps run us through some statistical data/changes. Like compare this time of year to the same time last year. Do you calculate your trading trifecta score? How has it changed over the last six months for example?

Answer: I hate looking at trading data, because it makes me too worried about performance. Once you have enough experience and are a proven, consistently profitable trader, you tend to just focus on trading – because the performance will be there in the end. The best example I have about comparing one year to another is an article I wrote back in April. “Reviewing 3-Years Worth of March Profits & Losses as a Trader”.

One of the reasons I don’t write a lot of content on Warrior Trading is because if I did, it would make it hard for somebody to read all of my articles. If I don’t write a lot, but make each article high quality, people are more likely to read all of the articles and gain a good understanding of how I think. If I wrote 1,000 articles, well, good luck reading all that! ☺

Anyways, I am going to wrap this up!

See you in chat!