Warrior Trading Blog

Learn from my mistakes! Swinging for the fences DOESN’T always work

swinging for the fences

Learn from my mistakes! Swinging for the fences DOESN’T always work


All right, let’s go over the trades from today; today’s midday market recap. It’s a little after 1 p.m. now, and I want to go over the trades from today and how things went down. Today was a day that I hit max frustration levels, and, you know, this happens from time to time. This is not the first time I’ve had a day where I was at kind of max frustration, I’m sure it won’t be the last day. This is part of trading. Unfortunately I’m just … Today was really trying to get a really good size winner, and that didn’t happen.

I only took one trade today. The one trade I took was on DRAM. Now, I was hesitant on this one pre-market because of the fact that it had popped up to $3.30 and pulled back down to $3 on no news, and I thought that that was a little bit concerning. But when the bell rang I had it on my radar as one to watch, and it quickly popped up here to $3.35. It first popped up to $3.25 and on that pullback I added 3,000 shares at $3.25. It pops up to $3.35, I’m up $300. Could I have taken profit? Sure, I could have taken $300. I didn’t. I let it pull back right here and I said, “You know what? On this one minute pull back right here, I really like the way this looks.” Because on the daily we’re curling up. We’re curling out of consolidation and we have room up towards $3.82, right up here. Now, the things I liked about this stock was that the float was low, about 1.5 million share float. That tells me that this is a stock that has a very limited level of supply, and can potentially make a big move and can move very quickly.

Unlike some of the stocks that we’ve watched, for instance, some of the higher price names. Oh, let me update screen share for you guys, it looks like it’s lagging. Some of the higher priced names or higher float stocks, they just don’t move that much. Like IMMU for instance. So IMMU, for instance, one of those names that has a lower average true range, doesn’t move as much; lower risk but lower reward potential. So the stocks that we usually do really well on are floats of under 10 million shares, so seeing DRAM had a 10 million share float, or a 1 million share float, made me think, “Okay, this might have some potential, on the daily chart, to open up.”

So as it pulled back on the one minute micro-pullback right here at $3.31, or $3.30, I said, “You know what? I’m gonna add on the first candle to make a new high,” which is right here at $3.30. I added 10,000 shares, now I had 13,000 total. It moved up to $3.47 and I was up, I mean, I guess, $1,600, which is not bad. I was looking for the break over $3.50 and I actually was ready to add another 5,000 shares for the break of $3.50, which would have gotten me up to 18,000 with an average of around $3.35 probably, or $3.38. With a $3.38 average with 20,000 shares, or 18,000 shares, my target was a move up to $3.84. So if this had broken over $3.50 and gone to $3.60 and $3.70, I would have been up … let’s see, 38, 48, 58, 68, 30 cents. That’s about $5,000 winner potentially, and that’s what I was looking for.

My goal this week was to have one $5,000 winner, and I thought that this one could be the one. Unfortunately, what I did is I took a $1,600 winner and I didn’t take it off the table, I didn’t lock it up; I held it looking for the bigger move. And on this candle it came all the way back down to $3.28. And at that point, I’ve said this before, I had a really hard time when I was just up $1,500 to break even, I have a really hard time selling at break even. It’s really hard for me to do that. I’m not sure exactly why it’s so difficult, but I’m not good at selling when that happens. And instead, I held it, and I said, “Well, you know, I was just up $1,600. I’m gonna hold … I’m just gonna hold it. It’s probably gonna come back up.”

And so it ends up coming down to $3.20 and $3.18, and now I’m down $1,300, and I’m like, “Dang it! This is not what I wanted to do today.” Now it’s consolidating here and I’m thinking, “Okay, well first candle will make a new high is what I’ll watch.” Meanwhile, I’m looking at the five minute candle that just closed as a red shooting star and I’m thinking, “That’s not good.” It’s holding the 20 moving average, which is fine. At this point I’m already down $1,300, I’ll just see what happens. And I sold on this candle right here as it broke down, and I ended up losing $2,700. I went from being up $1,600 to down $2,700, and that’s max frustration I think. That’s when you go from being up $1,000 or $1,500, to down $1,000 or $1,500, $2,700, whatever it might be. Max frustration. You get it into a setup using good entry, totally decent entry. That wasn’t the problem, the problem was it didn’t break over the half dollar and then it suddenly dropped 20 cents. And of course, 20 cents with 13,000 shares is $2,600, so I ended up, instead of stopping out break even, taking a 20 cent loss on it. And I’m frustrated about that.

I know that there are traders in the room who are saying, “Good trade. I made money on it,” because they sold at $3.40 or $3.45, they took the profit. As, I suppose, the head of this trading community, the largest trading community, I try to lead by example. I try to make every trade I take fall in line with the strategies that I teach. I don’t like to sell three seconds or five seconds after I buy, it’s, you know, I like to give trades time to work. And on this one, the time I could have locked up the profit is if I sold it immediately, but that’s not really what I was looking for. I was looking for something a little bit bigger. And then, of course, the emotion with a bigger position is that when you hit the bailout button, you do get slippage. And so I hit the bailout button at probably $3.12 or $3.13, right as it broke here. The low was $3.18. I might have hit it at $3.15, and of course, I got filled at $3.14, 13, 12, 11, 10. You know, I’m getting filled on the way down and so, obviously a little disappointing.

I’d like to be, in a lot of ways, one of the first ones in the trade, but also, in a sense, one of the last ones out of the trade, in terms of our students. I mean, I don’t want to leave you guys hanging. I’d rather go down with the ship if it’s going down, unfortunately. I just … and in this case that’s what ended up happening. I gave at the time. You guys certainly had opportunities to get out for profit, for break even, or for a small loss, and I ended up, you know, holding it until it broke down here.

So definitely a frustrating day. It’s not just losing money that’s frustrating right now, it’s the fact that I’ve been, I feel, kind of up against a wall for the last few weeks. I keep coming up against it and pulling back. And that wall right now is $50,000 in my account. I keep coming up to $47,000, $48,000, $49,000 and then pulling back. $46,000, $47,000, $48,000, $49,000, and then pulling back. I keep hitting this wall. I don’t think it has anything to do with $50,000, I think it’s just that we’re in a bit of a tricky market. It’s a market where we’re not seeing as many home run trades. I mean, on Friday we had ZN … was it Friday or Monday? We had ZN, which was the surprise move that all of a sudden went from $2.50 to $4.00. So we had this one, but that hasn’t carried over whatsoever into other names. This was just one trade. It was one stock and every other one since then has just been flat.

So MD … What was it, MDRX today? Or MT … now I’m forgetting what it was. MTBX? MBTX? MBRX. This one, today, same story really. It just, right out of the gates kind of popped up, dropped back down, not easy to trade. So, for me, this is again, just kind of the month of June has not been what I was hoping it would be. Last June was fantastic, I made $32,000. This month, that’s not gonna happen. Last month I made about $18,000 or $17,000. It was decent but I really wasn’t that impressed with it. And of course, in the month of April I lost $4,000. So as of right now, I’m down about $2,000 on the month of June. I just haven’t been getting those home run trades. And unfortunately, this month I’ve had a few big losses, the same as I did in April. I had a $5,600 loss earlier this month, had a $1,400 loss earlier this month, and $2,800 today, and I’m not seeing the big winners to really compensate for it.

So after commissions are all said and done, I’m down like $2,000 on the month right now with seven days to go. What’s my goal for the month? I’d like to finish the month up $10,000. Realistically that’s my minimum target, $10,000 a month. I mean, really I’d like to be up $20,000, but I’ll take $10,000. On a month like this I might have to just settle for zero. The fact is, coming into the market every single day, looking for setups, taking trades, and treading water is a bit taxing emotionally. I think this is a time where, if I wasn’t the head of this community, I would probably just take a couple weeks off. I would just wait until someone says, “Hey, we’re having some really good momentum. You should come back.” Because the reality is I’m up $150,000 this year so far, and I really don’t need to be grinding out during slow trading. I wish that maybe I was a little bit more adapted to different market conditions, and that I could be extremely profitable in all markets. I’m sure everyone wishes that. Probably every trader in the world. That may not be realistic. Even the best traders, even the Bill Ackman’s, have red months — or even red years in the case of his hedge fund. I mean, it’s not unheard of, but as a day trader I certainly don’t like it.

And so, you know, yeah, that’s a thing, JP. Yeah I took $500 and turned it into $100,000 in 45 days, but in day trading you’re only as good as your last trade. So no one cares about that anymore, it’s, “What can you do today? What did you do yesterday and what are you gonna do tomorrow?” So there’s always that pressure to keep delivering, and I think that right now we’re in a difficult market to keep delivering, to keep getting home run trades. We’re just not seeing a lot of them. I know Mike is doing pretty well on some of the higher priced names. He did really well on Tesla, traded, I think, Adobe and Red Hat today. I was watching these ones.

But my concern is that if I’m thinking about starting to trade penny stocks, or starting to trade $150 stocks, that the fact that I’m thinking about that is an indicator to take my hands off the keyboard, because that’s not my go-to strategy. That’s not what I built my career on, that’s not what I’ve made $450,000 in the last few years trading. This is going to be a quarter, the second quarter of 2017, where I simply don’t make a lot of progress. First quarter I went from $500 to $145,000 or something like that, and right now for this second quarter, lost $4,000 in April, made $18,000 in May — so that’s a net of $14,000 — and right now I’m down $2,000 on the month, so $12,000. Granted, that’s still $4,000 a month, which is still on par with the average income in State of Vermont, $52,000 a year. But of course it’s not what I would expect of myself, it’s not where I want to be.

I can’t force it though. I can’t force the market to be better, I can’t force amazing setups, I can’t … I can’t. You know, I just have to sit tight and wait. It’s hard to do that though, when you’re coming into the market every single day after a certain period of time you just … it’s easy to let that frustration get the best of you. And so I know some of you guys are probably like, “Well, you know, you’ve been doing this for a long time, and if you can’t make a couple thousand dollars in a month, what are the odds that I’m gonna be able to make that?” And I think that it comes down to, right now, the different approaches.

There are students … I know John as one of them, he’s certainly, he’s green on the month; might be up $5,000 or $10,000. I know he’s not having a record month, but he’s doing well; he’s green. He’s probably — on a stock like DRAM — taking his five cents and getting out, and I’m still grind- … I’m still a little bit more in that swing-for-the-fences mentality, and it may be because I’m not as dependent on the money that I make trading. You know, I’ve got long term investments and, of course, as the owner of the largest trading community, I’m focused on the business and stuff like that. So I can afford, I suppose, to hold some of these trades and look for a $5,000 or $10,000 winner and if it doesn’t happen, it doesn’t really matter as much for me. The money that I make in my trading account I’m just putting away for long term retirement anyways, so that may be a factor in the way I trade.

These are personal factors that any one of us might have for different reasons. Justin, who’s got his real estate business and things like that, he may be thinking, “Well, you know, I can hold these things and be a little bit more speculative. Give it room to make that big move.” Next thing you know it goes back to break even. When you’re counting on that $300 or $400 a day to pay your bills, you definitely are more aggressive with taking a profit off the table. And I think I’ve gotten, I’ve moved away from that a little bit since my account has gotten larger. I mean, when I was in the $500 price range, $1,000, $2,000, $3,000, I was certainly very quick about taking the profit off the table because I was so focused on the small account. Now my account’s bigger, and the money in it just sort of sits there. I’m not really doing anything with it other than trading it, and stuff like that, and I think maybe the … you know, that’s affected me a little bit.

I could cut the account size down. I was planning on doing it once I got over like $55,000, $60,000, and maybe that would help, I’m not sure. But right now the reality is, we’re not in a really strong market, and if we were in a strong market I probably would have made $5,000 or $6,000 on DRAM, and I probably would have made $8,000 or $10,000 two weeks ago on that stock that I lost $5,000 on. And a lot of the trades that have been just sort of break even or small winners, would have been big winners. That’s what it was like in February, when I made $70,000 in the best month that I’ve ever had. Everything was working. We were just in an incredibly strong market. So that attitude of “hold it and let it ride” certainly worked very, very well during the stronger market. In a slower market, the way we’re in right now, you have to be faster about taking the money off the table.

So just because I haven’t been particularly successful this month, doesn’t mean that you following the same strategy that I trade, wouldn’t have done better because of those personal motivators; the reason why you’re taking the profit, the account size you’re trading with, the purpose of your trading account, and stuff like that. For those of us that aren’t depending on the income from trading, we may be a little bit more speculative. And that may mean during a hot market we make a little bit more because we hold the winners a little bit longer, but during a weak market we kind of break even because those swings for the fences don’t really materialize, and, I don’t know, that might be a factor.

So, something to think about there. But I don’t want any of you guys to be discouraged because the reality is, I will bounce back. And I’ve had, so far, a fantastic year, despite the fact that these last couple of weeks or months have been slow. And this has been … you know I’ve spent some time in the last couple weeks looking at more … thinking more about some of the real estate that I own, getting … building that out a little more, whether I want to continue doing that or not. So those things have been on my mind for sure. That might be distracting me from trading, I’m not sure. At the moment, we’re in a little bit of a slow market unfortunately. My long term investments have been doing well, since we’re at all time highs on the SPY. And, you know, collecting the monthly rent from the properties that I have. So that’s all good. Trading, it’ll bounce back. Right now we’re just in a little bit of a grind, and my tendency to swing for the fence has not been especially good for this market.

You know, that’s just kind of where I’m at right now, and some of the thoughts that are on my mind. I know it will be interesting to see John’s blog post at the end of this month, for the month of June. I think in one of the months earlier this year, when he did his blog post, he was talking about, I think he made … I don’t know, $40-$50,000 trading, and he had made another $40-$50,000 on his other businesses, and that definitely changed his mindset. The ability to diversify your income, it’s something that I really encourage you guys all to think about in one way or another. Because of the fact that when you diversify your streams of income you’re no longer 100% dependent on any one of them, and that makes you less stressed out. Right? You know, if I was 100% dependent on rental income and all of a sudden a boiler goes out and I have to put $5,000 into a new furnace, or I’ve gotta fix a roof and it costs $3,000 or $4,000, suddenly it becomes a major issue and you get a lot of stress.

Same with trading. If 100% of your income is dependent on trading, you have a bad month and it’s like, “Oh my gosh, this is crazy.” But when you start to diversify, you become less stressed on any one single avenue, and because you’re less stressed, you perform better. Stress doesn’t help you perform better. Now today, I was getting a little stressed out, and I think part of that is because I’m have a lot of people watching me over my shoulder and so when I trade badly or I’m not trading at the level that I would like to be trading, it frustrates me and adds pressure.

For you guys, who aren’t in that situation, I really encourage you to do what you can to diversify your income. That way you’re just going to be less stressed out and that means you’re more likely to be performing better, and as a result you’ll do better. I mean, it’s just this kind of domino effect; it’s a spiral. And it can either be a positive spiral or it can be a negative spiral. The negative spiral is when you get frustrated, and so you start forcing things and then you lose more money, and you get more frustrated and you force more things, and you’re spiraling down. You don’t want that. You want to spiral up, where you’re increasing confidence. You’ve got multiple streams of revenue that are doing well, you can work on a little bit of this, you can work on a little bit of that, and that’s how you really create the ultimate financial freedom. I think that’s really the key.

A lot of the students that are in our Warrior Pro course are already small business owners. They own their own businesses. Justin was a good example, John of course, is a good example. Many of our students are in this same situation, where they have their own business and they decide to add trading as a second source of revenue. They’re like, “Well I could trade for a couple of hours a day. Why not?” Like how many of you guys right now … We’ve got 600 still in the room, it’s after noon. I’ll just do a quick survey, or instant poll here. How many of you are small business owners or are working on second or third sources of revenue? Yes and no. I’ll just put up a poll here.

So, again, this might not be the best time to do a poll because of the fact that it’s 1:30 in the afternoon, and more than half of all of our members have already checked out for the day. Probably some of them because they have to go work on one of their other businesses. But, you know, in any case … Right now, looks like we’ve got 67% working on that second, third source of revenue, which is fantastic. That’s really good. Now, owning your own business can have a lot of headaches, regardless of what the business is, so it’s not always … whether it’s real estate, or … I mean, it doesn’t matter what it is. There’s headaches in that business. But that’s why it’s nice to have diversification, so those headaches — because it’s not your only source of revenue — doesn’t become as big of a deal and you can have a little bit more of … just step back from it a little bit and not let it bother you quite as much.

All right. So that’s an interesting poll there, but not surprising. And of course, trading is something that is all about being independent, and that is right in line with owning your own business. Of course, I suppose trading is your own business in a lot of ways. But in any case, that’s my recap for today, and some food for thought. Hopefully that inspires some of you guys to start thinking about how you can generate some additional revenue streams if you haven’t already. At least get that thought going in your mind. Okay? So I hope you guys have a good afternoon, and we will pick back up first thing tomorrow morning. At 4 p.m. today we’ll have our Warrior Pro session, which I’m hosting, so I’ll see you guys — students — at 4 p.m.

All right, that’s it for now. I’ll talk to you guys soon.

Oh, hey. I didn’t see you there. I was just working on the dream board for my next home run trade. Hopefully it comes soon. Until then, make sure you subscribe to get email alerts anytime I go live or upload new videos. Until then, happy surfing!