Warrior Trading Blog

False Breakout -$2,237 on $RKDA | Ross’ Trade Recap


What’s up, everyone? All right, so, here we are, Friday morning. I busted out the raccoon shirt. I’ve got my Grateful Dead shirt underneath it bringing all the good luck, and guess what? Today we had a 100% mover. Finally RKDA taking off and here I am, I’m the idiot that somehow managed to lose money on it. I made $1,000, $1,200 at the a kind of breakout right around Circuit Breaker Hall, which we’ll talk about during the recap. And then I went back in for seconds, tried to take another trade on the break at $4.50, a half dollar break, false breakout flushes down. I get back all my profit, drop into the red and I said, “That’s it, I’m done.” So I’m taking this thing off. I thought it brought good luck, now I’m not really 100% sure. I’m just going to work the rest of your day with this shirt and I’m trying to let it go. This has been a week of blah, terrible, no good follow through. The one big, big opportunity, I end up screwing it up. So that’s August trading, so that’s all right. You know, I’m just going to put it behind me. From every loss, there’s a lesson. Soak that in, enjoy the recap today. I’ll see you guys first thing Monday morning.

All right, everyone, so we’ll do our midday market recap here. Super frustrating for me on RKDA. I finished the morning up about a thousand bucks on it. This is the stock that was right off our watch list, and we knew it was probably going to be tricky. Right out of the gates, the bell rang and it sold off. I didn’t take any trades on it, and it didn’t take any trades until my first trade right here, right around 10:05. It squeezes up, breaks for the view app, and gets halted going up. Now at this point I already had like 10 million shares of volume. It was pretty crowded, but I did jump in and coming out of that first halt, and my first trade was a break over $4. I made $200 on it, and then I got back in right here for the second break over $4, and made a about a thousand. So, I was up about $1,200 on the stock.

It then sold off from a high of $4.28, all the way back down to $3.64, which I thought looked pretty bad, but it bounced right back up and went back to high of day. I mean, I was impressed, I was really surprised. But then off of high of day, it did this red shooting star and it failed. So at this point I didn’t take this trade. I did not take this trade, and I didn’t take that trade. I left it alone for awhile. I let it consolidate on the five minute chart, and really prove some strength. And then as it curled back up right here, this is where I started to get interested in it again because I was like, “All right this thing is actually holding up, and we’ve got room up to the $5 gap fill here on the 200 moving average.”

So I started thinking that if this broke over 55, that this would give us a nice breakout. And so I got back in it, and, I went a little aggressive on the share size right here as it broke over … actually, was right here as it broke over the half dollar, it broke 50, and I was like, “360,000 shares of volume coming in, in this one minute candle.” I jumped in and then it flushed down here at 27, and I stopped out. And I went from being green on the name to red on the name, and then it rips up to 75. So, what a slap in the face, man. This stock has been frustrating. It’s up 110%, but boy, when you get chopped out like that, there’s almost nothing more frustrating, because you had the right idea and the timing was wrong, and I had confidence in this one.

The fact that it was holding up this well, I really thought this was going to make that move and … but I had to respect my stops. Just like traders right now as it’s dropping, you have to respect your stops, because it can go down a lot further. I mean this thing could come back to the view app of 370. You don’t know how far it’s going to drop. And so, you follow your stops, you bail out, and this is a stock with nearly 40 million shares of volume, it’s tug of war. We’re not seeing … I mean, we’re seeing volatility but we’re not seeing … it’s not parabolic, it’s not going straight up. The biggest move here was right in this area and it actually would’ve been really difficult to trade unless you were watching it at that time, because it took off so fast.

So I’m very disappointed that I went from green on it to red. But I’m going to respect my rules of the max loss and say that I’m going to live to trade another day. I’m not going to revenge trade this stock and try to make back what I lost on it. You know, hey, the market still is open for a couple more hours. You know, I can keep trading, but that’s not a good idea. The smartest thing for me to do at this point is just to step aside. If the market’s rough, if you get shaken out a little bit, step aside. As I look at sort of where I’m sitting on the month, I just kind of keep having small loss … I mean this, this for me is … I would consider this to be a small loss, because my daily goal is $2,000. So, to lose my daily goal in one day is not a big deal for me.

You know, it’s going to put me down around $5,000, 6,000 on the month right now, and that’s obviously not the right direction. But at the same, I look back at my last hot streak, and on my last hot streak, I made $27,000 in seven trading days. The hot streak before that, I made $55,000 in 10 days, averaging 5,000 a day with $21,000 being my best day. So hitting $5,000, and $7,500 days becomes a regular occurrence when the market picks back up. And in the meantime, I do have to try to keep the losses as small as possible, because at this point, that first green day, that first really solid green day is going to have to make up for these last five or six kind of smaller red days. And I really wish rather than getting me back to break even, that green day was going to put me nice and big in the red … in the green, but that’s not going to be the case this time around.

Those of you who have watched me trading over the last, well two and a half years of this small account challenge, or over the last five plus years I’ve been putting videos on YouTube, you’ve no doubt seen me go through periods of incredible hot streaks, making more money than even makes sense. I mean ridiculous green days, $30,000, $40,000, $50,000, $40,000 days, I mean, you’ve seen it. And you’ve also seen me go through periods where I’ve kind of had this type of stretch, where I haven’t had a lot of home runs. Stocks that usually I would trade and get … have big wins on, like this, a stock that’s up a 100%, I don’t have profit to show for it. You know, it ended up being a choppy stock.

I took a lot trades on it, but I wasn’t able to turn that into into some decent profit. So this is no doubt part of trading, and it can get frustrating when you have a series of days where things don’t line up quite right, or where you’re too aggressive. And I’ll be really proud for all of you guys who finished the day green on RKDA, who knew the right time to take your money off the table. And I should’ve just done it. I said … I was like, “I’ll probably just finish the day up $1,200, but you never know, maybe I’ll stick around.” And the only reason I was really sticking around was because I know that I’m red on the month, and I felt like I got to put in a little more time here to try to turn the month around, and instead of turned the month around, I just took another step back.

Now on the one hand, there’s a little FOMO in there, which is the fear of missing an opportunity past my peak time of day. On the other hand, there is a part of me that genuinely feels like there are opportunities in the afternoon that usually I kind of have the approach of, I did well enough in the morning, I’ll focus on other stuff in the afternoon. And it’s not because I don’t think that there’s money to be made, it’s just that I prioritize my time to trade in the morning, and then I have other work in the afternoon. But because the morning trading hasn’t been getting me where I want it to, today, I was like, “Well, if RKDA is the biggest moving stock of the entire week, which at this point it is, then you know what? Let me maybe put in the extra hours and watch this thing, and see if maybe … if it’s the one strong stock of the month that ends up breaking five and going to six and seven, I’m going to regret that I didn’t spend an extra couple hours watching it. Because we’re in a season where there aren’t as many opportunities, so when they do present themselves, you got to dig deep and try to maintain discipline, and trade a little longer if you can.

And I did that today, and unfortunately … I had the right idea. This was not the wrong idea for a break over 55, I just had the wrong timing. I was too early, and because I used relatively tight stops, I had to flip out rather than hold through the pullback. I will hold through certain pullbacks. But on this one, I’ve seen it do some sharp pullbacks, and so I knew that this isn’t one that I should hold through the pullback and think it’ll probably come back up because it could just as easily not, and then as it dropped here, I don’t want to hold something down 50 cents, that’s not going to work. So whatever. It’s a little disappointing that the price action wasn’t better on this one, that we didn’t get strong breakouts, that on the one minute chart … let’s count the false breakouts for a second. I’ll full screen the one minute. Let’s go back to the beginning of the day.

So false breakout, red to green move right here, that was the first one. This … it’s not really a false … I mean this is kind of a false breakout, because it broke above three, and it looked like it was going to work, and then it flushed down to the short side. So the second false breakout, this was very strong. This was a false breakout right here, third false breakout. This retest back up to the high was not a very well sustained one, so that’s probably a fourth false breakout, and this would be the fifth one, and this would be the sixth one. This was a really nasty one right here. That was not pretty. Through here, it’s just sort of choppy. And then, yeah, that was a really nasty one, and this was a really pretty nasty one as well, and this was just a fail.

So this is a stock that I’m sure I’m not the only one that got slapped around a little bit by it, and it’s just kind of part of the deal. Ultimately, any day that you can walk away red and say, “You know what? I walked away at the right time, because if I had kept trading, I just would gotten myself into trouble,” you deserve a pat on the back, and it doesn’t feel like it because you’re finishing the day red, and being red is never what you want. But it’s certainly better to have a small $2,000 red day for me, than have an $8,000 red Day.

I mean, let’s talk about my worst red day of the year. I mean, I don’t know if I want to talk about that day actually, but … that was a terrible day. But I’ll just look back here. Here’s a day in March, I lost $5,800, $5,800. Here’s a day. Let’s see, in May, I had a day where I lost $7,000. Another day where I lost $5,000. June, here’s the day where I lost $9,000. Now mind you, I’m still up $265,000 on the year. $265,000 and it’s August. I still got September, October, November, December, four really strong months ahead of me. But to get to that $265,000, I have had a few red days. July, there’s a day where I lost $5,000. There’s another day where … let’s see, back here in June, I lost $14,000. So in the last week … in the last five days of trading, yeah, I’ve lost about $5,000, $6,000, and I guess I would say that I’m actually pretty impressed that despite the market being as difficult as it is, I’ve been able to keep the losses as small as I have, because losing $5,000 over the course, or $6,000 over the course, whatever it is of a week for me, boy, I’ve done a lot more damage in one bad week than that.

I’ve had a bad week where I lost $20,000, and that comes with the territory of trading with big size. You don’t get to $260,000 on the year without taking risks. You don’t make $500,000 in a year without taking risks. So it’s all about risk versus reward. My worst week of this year … my worst week of this year … well, it was definitely in March. I’m not sure which of these two weeks was worth worse. This week I was down $15,000, the third week of the month. So $15,000 is actually the worst week of the month this year.

That’s a bad week, yeah. I mean, I was down on the month … on the the entire month, but I actually made money the first half, and then lost money the second half. So yeah, a $15,000 red week. Now I had … what’s interesting on this week is that I made $8,500 on Tuesday, I lost 28,000 on Wednesday, and then I made back $6,000 on Thursday and Friday. So it was … you’ve got $14,000 in profit, and $28,000 in losses. It does build character, no doubt about it. Something that I’ll remind you guys, and I was really going through it in March, I was telling myself, “Where you are today is exactly where you are meant to be.” I was a day away from crossing over the $583 to $1 million goal before I lost about $28,000, and what I realized was that there was another lesson that I needed to learn in this journey before I could cross that level, and this is the very real human experience of ups and downs and the market, you see it every single day.

So, you’re going to have this in life, and ultimately this all will make you a little bit wiser, and a little bit more tolerant to the ups and downs you experience in other areas. To be able to get beaten up and get back on the horse is life. So we do it every single day as a trader. There’s other careers where you’re simply not forced to experience these ups and downs in the same way that we experience them as traders. When you’re, when you’re up, you feel like you’re never going to be down. When you’re down, you feel like you never going to be up again. You know, that’s the saying. So you just, you have to find equilibrium in that, and be able to get through it without getting shaken.

And no doubt, two years ago when I was in the middle of my $583 challenge, I set the goal at $1 million. After I crossed over $100,000, I still had 90% of the way to go. You know what I mean? Like, I was at $110,000, and I was like, “Okay, I’ve got $890,000 to go.” I believed that I could do it, but I was only 10% of the way there. I had a really long way to go, and I was a bit nervous about it, and it unfortunately became a six month long stretch of really slow trading. It was from May until like September that I didn’t make a lot of money. So I really quickly made about $100,000, and then I got it up to like $120,000 or I don’t know, whatever it was. And then from May until September, I only made another like $30,000. So I was like, “Geez man, I really put myself … I set the bar a little too high a little too soon.” Let me pull up my metrics here. We can just take a look.

All right, so reports view, we’ll just look at January 2017 to December. So this was the small account challenge here, not a bad year, not a bad year at all. If I can make another $100,000 this year, I’ll top out a that year, which would be great, but let’s look at the win/loss expectation, because this was the year. I could’ve walked away right here and come back right about here, and skipped … if I could have skipped out on all of this, because this was the stuff that builds the character. This was the stuff where you learn the discipline. This was the stuff that was not fun. I mean, this is a one month long period. Yeah. I turned $583 into $110,000, a little bit of a pullback here, below $100,000, and then back up here to about $136,000, dropped back down to $117,000, back up to $120,000, back down, back up here, back down. It felt like I wasn’t making a lot of progress. Here’s a one month stretch where I was basically flat, right? Even longer than that, that was a two month long stretch, okay? And I was just keeping my head above water.

I was just trying to keep my head above water, survive until you thrive, knowing that I will thrive when the market is strong. I’ll survive when the market is a little slow, and then look at this, we opened back up. I mean this is incredible. This is the month of November in 2017, then a little bit of a pullback, you know? I went from up $300,000. I gave back what was that? $17,000, $17,000 in the red over the course of two weeks, and then right back up. I finished the year super strong. So you never know when you’re going to have the ebb and the flow. It’s not like … it’s not necessarily seasonal. It can catch you by surprise, and that’s just part of the deal. So buckle up, you’re on the ride, on the journey and right now I’m kind of in this type of period here. If I go seven, six, 19 to whatever, I’m sure … see if that’ll filter that, this is kind of where I’m at right now.

You know, it’s like … it was up and down, and up and down, and this is just in the last two months. I mean, maybe we go back here to the beginning of the year, get a little bit of a better picture of the year in its whole. This year has been a little tougher for me, you know? I mean, I’m transparent. This is full disclosure, I’ve had years that have been a little easier than this one. This was not super fun right through here. I would say this was primarily self-inflicted. It was completely avoidable. I was too aggressive at the wrong times, and started swinging for the fences, and had some strikeouts. That was my own fault. Right through here, I was a little too aggressive. This was the beginning of the Italian trading challenge.

I took a trade where I was up $15,000, $20,000 and turned it into a $10,000 loser. I was down $14,000 on the day. I could have done without that, so that was self-inflicted. That was … and it’s one of these things I’ve … when I teach you the strategy, when I teach you the templates of how to trade the market, you’re then on your own to trade the market based on the strategy. And we all at times deviate from the strategy. It is not within the strategy to swing for the fence the way I did here, or the way I did here. However, sometimes swinging for the fences works for me, and sometimes it gives me a $40,000 green day like it did right there. So I’ve gotten into the habit of occasionally deviating from the strategy, and taking quite a bit more risk than I probably should.

And it it pays off more than it doesn’t, but this year has been a little tough. Right here, here in June, and July right now, or August right now I’m down 6,000 off of this level. So I’m like basically right here, I’m not … I’m just a little bit below the low of this 312, so like right here. So that’s the last week. All right, so let’s keep things in perspective, the strategy works. Sure I could adopt secondary strategies and things like that. Those of you guys that want to trade large caps, you can trade them with Mike. He’s the expert there, and I don’t want to step on his toes by trading large caps in the small cap room. You want to trade futures, go trade them with Steve. You know, you’re welcome to learn additional strategies. I’m the type of person that I feel like I can be really good at a couple of things, and I can’t be really good at a ton of things.

So I just try to be really good at one thing, and when that one thing works really well, I’m going to kill it. And when it doesn’t work as well, I have to be patient, and I have to slow down. And you guys are welcome. Someone like John [Elten 00:24:30], I’ve been truly impressed at how well he’s been able to trade multiple strategies. Some people really can do it, and it’s in their nature for whatever reason, they can flip the switch and do two different things at the same time. I mean, it’s like listening to Bob Dylan play the guitar where he’s like maintaining almost like a rhythm guitar while he’s doing … while he’s finger-picking a solo. I mean, it’s incredible. You know, how you could possibly maintain two rhythms at the same time, and yet someone who’s just at that level can do it. And so some people can, and I personally do, do, do. I can do my one thing, but then, I’m not super good at getting outside of that.

Speaking of which today is the 24 year anniversary of Jerry Garcia passing away, and I promised you that I would tell you the story of where I was when that happened. So 24 years ago, I was 10 years old and me and my mom were on a road trip. We were driving to … we were driving from Vermont … from Broad Brook, Vermont to Anchorage, Alaska, which those who haven’t taken that drive, it’s a pretty long drive. And so, what we did was we had a Toyota Corolla, and it was our … it was my friend’s car. His family was moving to Alaska and they didn’t want to ship their car, and I guess they didn’t really want to sell it. And so they said, “If you guys want to drive it we’ll pay you some gas money to drive it and you can …” the car was filled with their stuff, “And you can drive it.” And so, my mom and I took the drive, and my sister and my dad stayed home, and it took about a month. And during that drive, we were listening to the radio a lot, and the Grateful Dead was on some of the stations, not all of them, out in the Midwest.

But the news came August 9th that he passed away. It was … and we were on that trip. We were driving, and they did a … so like a radio … I can’t remember the name of it, but they did a radio special of playing some of his … some of the greatest songs that he’d been known for, and it was pretty cool. So I was 10 years old, and I never got to see them play live. My parents didn’t ever bring me to a concert, but I’ve seen Dead and Company, and some of the various iterations of the band, and they’re pretty incredible. So yeah, I encourage you guys to put on a record if you have one. And actually that is one of the first records … my parents had records, and that was one of the first ones. I think it was Workingman’s Dead that I played. When you had records, you’d play them just over and over again. So yeah, I have some fond memories, and that music brings those back.

But here we are 24 years later, and I don’t think I pictured I’d be a day trader, today and as an individual day, whatever, it’s not the best day of my career. But yeah, it’s kind of funny how life can give you some surprises, and that whole saying earlier of, I am today exactly where I’m meant to be through the frustration, through the ups and the downs, kind of on the downside of this little pullback, this is where I meant to be right now. And out of this, I’ve learned something about myself, about my trading that helps me take it to the next level. And I may not know all the reasons that I’m going through this pullback right now, I may not know exactly why I had to lose $30,000 before I crossed over the million dollar mark. Maybe I won’t know until a little further down the line when I look back, and I think, “Oh boy, that it was really that, was when things started to change,” and sometimes that’s not the case. But from every loss is a lesson, and that’s the thing that we just try to keep reminding ourselves as traders. So you’ll lose a little money and you gain a little wisdom. All right. So that’s it for me.

Anchorage was beautiful. I enjoyed British Columbia, and the Yukon driving through there. The Alaskan highway was … it’s pretty incredible. It’s long stretch of road. So yeah, and that’s kind of what … people that followed The Dead around, it’s all about getting … it’s the … it was the ’70s, ’80s, and ’90s version of being on the road, Jack Kerouac. So some cool stuff there, but anyways, I’ll let you guys go. I’ll probably jump on some point over the weekend on YouTube Live and Facebook Live, and at some point tomorrow, I plan to jump on, and do an Ask Me Anything session from the house. So you guys who are hanging out tomorrow, make sure you tune in and I will see you guys hopefully … probably sometime tomorrow, early afternoon. All right, enjoy the rest of the day everyone. I’ll see you first thing, of course, I’m Monday morning and I’ll catch some of you on YouTube and Facebook tomorrow.

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