Warrior Trading Blog

Drowning My Sorrows After A Red Day -$5K | Ross’ Trade Recap

drowning

What’s up, everyone? All right, as you can tell by the lights behind me, can we get these any brighter? It’s another red day recap. Why? Two red days. It’s the third trading day of August. I’ve got two red days.

 

This is where I’m at. I’m frustrated because it’s not uncommon for me to start the month in the red.

The first day of the month, it’s very common for me to start with a red day. I think it’s partly because if I come off a strong month, I sort of have this expectation of let’s just keep it going, let’s jut try to get that cushion started quickly on the month, try to hit a good trade, and get in the driver’s seat, and that doesn’t work.

Maybe because traders are a little more apprehensive at the beginning o the month, just sort of let’s see what this month’s going to be like. Other people may have the exact opposite instinct that I have. Mine is to be aggressive. Other people might be like, “Let’s take it slow until I have profit on the month, and then I can be aggressive mid-month.”

For whatever reason, the beginning of the month is often a little bit tricky for me. I lost money on Wednesday, and then I made back 4,000 yesterday, then I lost it today. I’m down five grand on the day. It’s one step back, one step forward, another step back, and I’m in the hole for the month of August, and now, I’ve gotta work on digging myself out the hole.

One of the things that’s frustrating is that feeling that to get out of the hole, I need to continue to trade with large size, 10,000, 15,000 shares because that’s the quickest way to make 10 or 15 grand, but that’s not a centered way to approach the market. That’s an emotional way to approach it.

On Monday, I’m going to bring my share of size down for the first few trades down to 6,000 shares. Today, one of the reasons that I lost as much as I did is because I got into a trade with 8,000 shares, and when I was down 30 cents, instead of just cutting it short and taking a loss, I was looking at a $2,400 loss, and I was like, “Oh, man. Let me give a second to bounce back up that hole. Give me a second to bounce back up. During that time, it drops another 30 cents. Instead of losing just 2,400, I doubled my loss.

I’m going to set as my new rule for the month of August. We’re getting a lot of rules here. This is not a good sign. A new rule for the month of August is to try to keep tight stops. Now, I don’t use live stops on any of my orders, and some people will say, “Ross, that’s really risky. That’s why you end up having these trades that occasionally are 50 or 60-cent loses because you’re not using live stops,” and I hear that. On the other hand, I feel like in order to take into account from $583 and turn it into what is now 700,000, you have to be aggressive, and it’s kind of like, to me, stop losses are sort of like training wheels. They’re really helpful as you’re getting started to keep max losses, but as you start to trade with bigger and bigger size, they can actually hinder you.

Imagine putting training wheels on Lance Armstrong’s bike in the Tour de France. It’s going to slow him down. It’s going to cause issues. It’s not going to work. When you’re at that level, training wheels are going to hold you back. When you’re really trying to do a high level of performance, you gotta take the training wheels off, and you gotta go, and you gotta go with your instinct.

Sometimes, you’ll be down 20 cents, and your instinct is, “This is a bull flag forming. I’m going to hold through it,” and you’ll trade out of it, and it’ll end up being the winner. Other times, that flag will form, and it’ll drop, and you’ll end up taking a loss, but you get to a point where you need to be able to trust your instincts.

The training wheels for me of using stop orders, those are really critical for when, they’re critical for managing risk during the period of time when you’re still honing your instincts, when you’re still learning, but then you get to the point where you’re ready to graduate.

Now, obviously, having a $5,000 red day is certainly disappointing for any trader, but in the context from of where I’ve come from, from 583 to 700,000, this is a very small pullback. It’s almost, it wouldn’t even on the chart be very noticeable. You put it in context, and it’s like, “Okay, yeah. It’s a red day, but this same strategy that cost me 5,000 today is the reason I’m up 700K in the last 18 months. It’s the same reason I’ll cross over that million dollar mark. Whether it’s in December or January, it’s to be determined, but you have to be willing to be aggressive.

For me, if I put out a stop order on a 15,000 share position, and the market suddenly dips for a second and like a hundred shares go through at the bid, and then I’m marketing out of 15,000 shares, it’s going to be a bloodbath. It’s going to not be good at all.

That’s for me where I need to have the instinct to make the decision of when to stop out, when to start unwinding a position rather than marketing out 15,000 shares selling half on the ask, selling on the bid, a quarter on the ask, a quarter on the bid, whatever kind of unwinding a large position.

Where I’m at right now on the month, I need to focus Monday on smaller size, being green, being consistent. It’s not about hitting home run. It’s just about trying to have a couple green days, clear the slate a little bit, and acknowledge that August, historically, has been a difficult month for me.

It was like five years ago that I was doing one of my first trader rehabs in the month of August, and then I’ve gone back into trader rehab multiple Augusts since then. My last trader rehab was in May of 2017, but I’m only a couple more red days away from checking myself into rehab, trader rehab. I really need to pull it together here and just get focused, be discipline.

Remember, trade the market I’m in, not the market I want to be in. Yeah, I want to be in a market where I can hit 8,000 or 15,000 a day, but if we’re not in that market, I can’t be swinging for the fences with this type of size. I can’t be holding and expecting really a good follow-through. If we’re in a choppy market, I gotta bring the size down, take the 10, 15 cents when I have it, make a thousand dollars, and just grind on these smaller numbers until things open up because I know when I have a strong market, I can make 30,000 or even 40,000 in one morning, but in a weak market, that same strategy is just going to cost me money. You can’t let it ride. You can’t hold for the bigger move because you don’t see bigger moves.

Anyways, this has been a long intro, but hopefully it helps give you a little bit of a sense of what I’ve been going through the last couple of days, what I’ve been thinking about and what my plans are for Monday morning. I hope you guys have a great weekend. Enjoy the recap from today. Any questions, any comments, leave them below. I’ll come back through and answer them this weekend, and we’ll be back at it first thing Monday morning. All right, I’ll see you then.

All right, everyone. We’re going to break down the trades from today, and this is a sad Friday. It is a red day recap. It’s the second red day of the month of August, and it’s only the third day, so this is not looking good. I’m disappointed to start the month in the red. I started in the red on Wednesday, made back $4,000 yesterday, and then lost 5,000 today. That’s frustrating, basically sitting down right around, I don’t know, 9 or 10,000 on the month, so it’s not as bad of a start to the month as I had in June. It’s always good to keep things in perspective, but no doubt about it, it’s disappointing and a bit frustrating.

Today’s a day where I kept my $2,000 max loss, my $2,000, that’s my max loss. I didn’t take another trade when I was down more than two grand, but I had this one trade on NSYS that got me for $5,000. One small trade on WMLP. Basically, today’s a day where our leading gapper was WMLP gapping up 156%, which is crazy. What was really strange about it was that when the bell rang, it did something really unusual, which I haven’t really seen before. The bell rang, and in the first minute, there was only 9,700 of volume. In the second minute, only 52,000 shares. It’s like the bell rang, but nothing happened. No one really started trading it.

What I noticed was NYSE, NYSE, had a 99,000 share order to sell at 5.50 and a 99,000 share order to buy at 4.50, so it was kind of like pegged right there with a big buy order and a big sell order, and I think, I know for me, that made me sort of skeptical. I was like, “What’s going on with this stock? This is weird.” It started to pop up, so I tried to get in at 5.50 as I saw the 99,000 share seller what looked like it was going to move, and then it popped up to .58. The seller came back, and it dropped back down. It was very strange. Then from there, it volume came in kind of maybe more as it sold off, so just really weird price action. I lost $17 on it, which is no big deal, so whatever. That was that.

Then someone in the room called out NSYS. It’s always kind of risky when I trade things that people call in the room because if they’re not on my scanners, they’re not on my scanners for a reason, and this was not on my scanners. It started to pop up, but not being on the scanners, it was because the relative volume was so low compared to the really high volume on Wednesday and Thursday, so I don’t know.

But anyways, I see it popping up to 5.20, and when I looked at that, I was like, “Okay, this thing has just squeezed up from 4.50 to 5.20. It’s showing strength.” When I look at that, I see that as a sign of strength. This thing is moving quickly, so I jumped in at 5.22. Let’s see. I was in this at 5.15, yeah, 5.15. I got a partial fill. 5.18, 5.19, 5.20, 5.24, and 5.25. I got weird fills on this one. You could see just even five shares on that fill. I don’t know, I was just getting weird fills, but anyways, I jumped in at 5.20, 5.23 average with 8,000 shares.

I’m in with 8,000 shares, and it pops up to 5.35, and I’m like, “Okay, that looks good.” I’m thinking 5.50’s next target, and see if it maybe gets a little short squeeze from the sell-off yesterday. I jump into it, and it pulls back for a second on a one-minute pullback, and it drops to 4.97, and I was like, “That’s not good. I’m down 2,000 bucks on the bid.” It pops back up to 5.25, and I’m like, “All right, see this through. Let’s wait for the first candle to make a new high.” This is always risky because if I used a automatic 20-cent stop, let’s say, I would’ve stopped out right here, but the reality is, this is a perfectly valid one-minute micro pullback, and if it made a new high, then boom, we would’ve expected to move up to 5.60.

I don’t like to get stopped out during this type of consolidation, but on the break of this candle, I had to stop out, and you can see it drop down to .71, and I held it for a second, and then I actually stopped out on this candle here. I could’ve minimized my loss a little bit more. I kind of held and hoped and stepped at .60 and .55. I guess I was thinking, “Well, this is a very volatile stock. As quickly as it popped up, or as quickly as it dropped down, and it could pop back up. I’ll give it a second.”

That’s that, $5,000, and that sucks. I made 4,000 on it yesterday, and then lost 5,000 on it today, so I am red on this stock, and I’m disappointed and frustrated. Two red trades today. The month has gotten off to a little bit of a slow start. My accuracy’s been a little on the poor side.

Thursday, I had … No, it was Wednesday, I had three back-to-back losers on RXII. Remember, that one was super frustrating. Then took FOMO trade on NSYS, or NS, yeah, whatever it is, and lost money on that, so it was like, just disappointed, but the reality today is for the rules I set for the month of August, I didn’t break any of those. No new trades if you’re down more than $2,000. Didn’t take any new trades. Three losses, and you’re done. Well, I only took two trades today. Shut down your charts when you’re done trading, and I’ll do that once we’re done with this recap.

I didn’t break any of those rules. The NSYS trade, again, you could say, “Well, jeez, Ross, you didn’t wait for the pullback. You just jumped right into it.” I don’t have a rule on this right now because of the fact that in a strong market, what you’ll see is stocks go like this, and they don’t pull back. They’ll go straight to 5.60, they’ll get halted, they’ll open at $6, 6.25, and then they’ll pull back, and so if you sit and wait, sometimes you miss the entire, the biggest part of the move. That’s the problem.

I like to jump in at half dollars and whole dollars. If I see strength, I’ll jump in. That works for me more often than it doesn’t, but today, it obviously didn’t work. We’re still in this choppy market. I would say right now, last week, I only made about a thousand bucks, and this week, I’m down like 8,500, so this has been my first red week since, let’s see, since June. It’s my first red week since June. First red week in basically two months, and it definitely is marking this kind of shift in momentum. Just, well, last week was a bad week, and I managed to squeak out a little bit of profit. I finished green, but not by a lot. This was a difficult week, and I wasn’t able to stay on the right side enough times, and so I’m finishing this week red.

The goal for next week will just be to close the week green. The bar’s set very low. Just green is good, and I would say that probably the right thing to do is to trade with smaller size. This is always the hard thing because I can say the right thing to do is to trade with smaller size, but the instinct is that if I trade with smaller size, and I’m down 10,000 on the month, with smaller size, it’s going to take a lot longer to dig myself out of the whole. For me to get out of this hole, I need to hit a couple of good winners with 10 or 15,000 shares; however, if the market continues to be the way it was this week, and I continue to trade with 10 or 15,000 shares, well, I’m going to continue to lose money, and I’m going to be losing more than I want.

Last Tuesday, I had a $10,000 winner, so that was one of those examples of even though the market had been choppy for the previous three days, I was still trading with big size, and boom, I got that $10,000 winner. It was like out of eight trades, seven were nothing, and then I had the one big winner. The problem is, right now, or more in the last week, those seven trades instead of being break-even have actually been decent size losers. I would say that probably the thing to do on Monday is to start the week with smaller size. I’ll put in my trading warnings. Maybe the thing to do is just focus on 5,000-share blocks, put the max at 5,000 shares for right now.

I mean, it’s just so hard because if I get into a stock at 5.50 like this one, or I get in at 5.20, it squeezes up to 5.50 and it gets halted, or it’s about to get halted, that’s where I always want to add, so if I have this 5,000-share max position size, then when I try to add, I’m going to get an error. It’s going to say, “No, you can’t add,” and then I’m go under-leverage the opportunity, and the winner won’t be as big, so this is that struggle of maybe the right thing to do is to trade with small size, but then I feel like I will get punished for doing that because I’ll miss a really great opportunity.

I increased my share size here to 3,000 shares because I’ve kept it at 2,500 for like, forever, and I was like, you know what, I need to start increasing share size a little bit, start stepping it up, so maybe I’ll put this at 6,000 shares. I’ll put it at 6,000 shares for right now and use that as wax size. I’ll start with 3,000. If it’s strong, I’ll double, and if not, I’ll hold tight. I can always, I can, like down … Well, I won’t be able to do it because I’m capped at $5,000 max loss, but if I try to take a trade now, let’s just say I try to buy at 3.72. It’s going to say, “Can’t take any long positions on my account,” so they’re like, “Nope, you can’t do it.”

If I try to take a, whatever, 15,000-share order, it’s going to say, “Hold up. You gotta confirm your order because this will exceed your limit,” so I can’t do it with a hotkey. If I press enter, enter is highlighted on no, so I have to manually mouse over and click, “Yes, I want to override that,” which when a stock is about to get halted, it’s squeezing up really fast, you don’t always have time to do that, and so that’s where it’s like, ugh. This is the struggle that we go through. I need to be aggressive so I can get myself back out of the hole, but if I’m too aggressive, I’m going to dig the hole deeper like I did today, so it’s like where’s the equilibrium, where’s the right spot to be?

I’ll keep it at 6,000 shares for money. If I make money on the first couple trades, if I made a thousand bucks, then maybe I’ll trade three or four. Once we’re seeing momentum, I’ll be comfortable stepping up the size, but if not, I’ll have to just keep going small.

Last year, George is saying, “Remember 2017,” so if I log into my Traderview account here, if we look at 2017, the reality is, 2017, I had … The summer 2017 was not great. June, July, and August, they weren’t good months for me. I can’t remember how to show the calendar on like a … Win/loss days. Does it have it by month? I know it does somewhere, but … Days and times. Performance by month of the year. This was last year. This was 2017. February was the best month, well, up until August. You could see these were really difficult months here. Oh, actually, May was good. I had hardly any losses. I only had $1,200 in losing days. That was great. But these three months were not good. I had some good-sized losing days, and it was difficult.

It’s probably best just to trade with small size and not try to think about August being a month of big profits sine historically it’s not, and wait for things to pick back up going into the fall, which they typically do. That was 2017 so far. For 2018, we can look at these metrics. It’s nice to have these at your fingertips because you kind of get a sense of what you’re doing right, what you’re doing wrong. You can see for sure the losses are bigger. I mean, $35,000 on losses on that month, 27,000 in April, 32,000 in May, 23,000 in June, 16,000 in losses in July, and I’ve already got like $15,000 in total losses and maybe $5,000 in winners for the month of August, so I’m already basically the same place as I was in July, and it’s three days in. That means this month is shaping up to have a large number of losses unless I can really stay focused on reducing losses for the rest of the month.

You guys have seen me go through this, the ups and downs of trading so many times over the years. I mean, it’s just more times than I can possibly even count. I’m trying to find my … I do get a little confused to how to navigate this. Let’s see. Where is my equity curve? Days/times, I don’t think it’s there. Nope. Ah, well, I’m trying to find my equity curve, just … Instrument. This is ridiculous. It’s not, I’ll tell you, it’s not the most intuitive overview. Recent, well, this is the last 90 days. It’s not really that helpful.

What I wanted to find was my equity curve since I started this small challenge, this small account challenge. This is crazy. Yeah, I just can’t seem to find it. Anyways, you guys have seen me go through these ups and downs just so many times. Here it is. That took forever.

You zoom in here, and this is where we’re at right now. Now, this was the summer here. Basically, I had this really good surge in my small account, from $583 to 100K on this day right here on March 9th. That was $100,000 or profit. Had a bit of a pullback, dropped down from a hundred down to 93, and then curled back you here to 118, and then basically from April through September, I was just grinding. I made money, but not a lot.

Then things really opened up, but look, here was a setback. This was a setback that lasted from November 16th until like December 8th, so that was like a three-week pullback. Then I searched back up, and here was another pullback. This was the whole month of February going into early March. What I’m having up here is the beginning of this little pullback. Now, I don’t know how long it’ll last, if it’s going to be, God forbid, like this, I hope not, or if it’s just a little pullback like this. This is what I’m used to right now is little pullbacks like this and this and this where I bounce back fairly quickly within a matter of weeks, maybe at most, a month, but that’s kind of where we’re at right now, and I still have this goal of one million dollars, and I’m 300,000 off that level. I’m at 699,000, plus or minus.

I’ve got, I’m 70% through this marathon. I’ve got a good amount still ahead of me, and I need to stay focused. We following the rules on Monday, and I’m not going to cap myself to 6,000 shares for the whole day, but I will start with 6,000 shares until we see good follow-through, and then I’ll bump up the share size, but if we don’t see good follow-through, I’m going to just keep it tight and try to grind on smaller numbers. Sometimes, just swinging for the fences and stepping up to the plate with big size does not work. As much as I’d love to trade with 10,000, 15,000, or even 20,000 shares, if this isn’t the market for it, it’s not the market for it. I have to trade the market I’m in, not the market I want to be in. It’s hard to remember, but it’s so important.

Anyways, that’s it for me, and we’ll be back at it first thing Monday morning. Again, reminder, any of you guys want to trade side by side with me in person, we’re going to be doing it in Orlando, Florida in September, so it’ll be a couple of days of hanging out with me, hanging out with a bunch of other traders at our Inner Circle Seminar. The link to join, we’ve got tickets available, it is in the announcements tab, so I’d love for you guys to come join, and hopefully we’ll all have a couple of good days of trading, we’ll make some money. Use coupon code “Ross,” coupon code “Ross” to save 500 bucks. We want to make sure we get these tickets sold, and then we can focus on the rest of the planning for the event.

All right, everyone, so that’s coming up next month, and I will see you all back here bright and early Monday morning. Monday’s a favorite day of the week, so … Why is Monday the favorite day of the week? Because, let’s look at my day and times, days and times, Mondays are my second biggest profiting day of the week. That’s $151,000 I’ve made on Mondays, so I’ve learned to love Mondays, and guess what I think about Fridays? I don’t love them, but I still made 100,000, so I don’t hate them either. Anyways, we’ll be back at it first thing Monday morning. I’ll see you guys there. All right, enjoy the weekend everyone.

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