Warrior Trading Blog

Rebound Day! +$1,728.40 Trading LONG and SHORT

rebound day

Rebound Day! +$1,728.40 Trading LONG and SHORT




All right, guys. Time for our mid-day market recap. We’re going to go over the trades from today. Overall, pretty decent day. We only had one stock that was really in play, for me, on the under ten dollar price range, with news and all that stuff. I took a total of … let’s see, two, four, five trades on it. I traded three times to the long side and twice to the short side, making a total of $1,803 on the name. Really solid momentum on it.

I could have been a little bit more aggressive. I was quick to take profits, though. When I was trading both directions, I wanted to make sure that I didn’t let it go too far the wrong way when I was trading to the short side. It ended up being really quite strong. We’ll go over that in a minute. The second trade was on MBRX. Only lost $75 on it. I got in looking for the opportunity to try to ride that momentum; didn’t end up working out. I stopped out quickly.

Today’s a day where I made back what I lost yesterday, and then some. That’s kind of part of the deal. Sometimes you take one step back. What’s nice is when it’s just one day back, versus taking three, four, five days worth of profit backwards. When you take five days or ten days back, that feels like a bigger … It becomes a bigger chore to try to get yourself out of the hole, because you’re lost 8,000, or whatever it might be.

For me, I’m still working my way out of the self-imposed hole from losing $8,000. A total newbie two weeks ago. I just got too aggressive on it on the wrong trade, and lost seven grand on it. Put myself down 8,000 on the day. I traded all of last week. All of last week, I only made about 4600 bucks. Even though last week was a good week, it didn’t totally recover me from that loss.

The week where I lost eight grand, I finished the week down four grand. That would have been a 4,000 week if I hadn’t taken that one totally unnecessary trade. Last week and the week before basically canceled each other out. This week, I’m … Yesterday and today cancel each other out. Trying to get back towards upward momentum and start making a little bit more progress. Like I say, I’ve said a thousand times, this is part of the deal with trading. You’ve got ups and you’ve got downs. Today’s a day where account’s moving back up, which is good. Today is the one 136th trading day of the year. I’m up $1,728.40.

All things considered, not a bad day. Didn’t trade a lot. Stayed pretty focused on just these two names. Even though we had a couple higher priced names in play, STX and [CAT 00:03:14], these are really in Mike’s wheelhouse. Let him focus on those. Let him take those trades. I focus on the lower priced stocks.

First trade of the day was FLKS. Now, this one was interesting because it was gapping up. Pre-market was 453. This one was moving up. Pre-market it had a catalyst. It was strong, looking good, near the top of our gap scanner. The float around ten million shares. It had pretty much everything we look for. A couple of issues with this stock. Number one, 200 moving average at 520; which you can see right here on the chart. 520, that was a little bit of an issue.

The 200 moving average. For those of you watching on Facebook, there’s my P&L for the day right over here. The 520 issue, or the 200 moving average issue at 520, a little bit concerned about that. Also, an issue we had on this one was that the spreads were a little on the big side. When I first jumped in, I got in with 5,000 shares. Basically, as soon as the bell rang, I jumped in because I saw some other buyers pulling the trigger.

I was like, “Okay, this looks good, looks strong. I think it’s going to squeeze up right out of the gates. Might go up towards $5.” Now, when I get aggressive and take trades right out of the gates, I’m thinking about stocks like TEAR, or TEAR, T-E-A-R. The other day, this is one that went from … I mean literally right out of the gates, it squeezes from a $1.80 right up to $3.50 and it doesn’t look back. Knowing that strong stocks will squeeze and not look back, I try to get in them as early as possible. In the case of FLKS, the bell rings and I jump in at 65. I’ve got 5,000 shares at 465. It pops up to a high of 480.

I was like, “Okay, I’m up 15 cents. That’s 750 bucks,” but here’s the problem. We had big spreads. It was 75 on the bid and 80 on the ask. All of a sudden, it was 65 on the bid and 80 on the ask. If I sell on the bid, I’m break even. If I sell on the ask, I’m up 750 bucks. That’s challenging. That’s a hard spread to deal with. Obviously I want to sell on the ask, if I can; but you can’t always do that. The next candle has a high of 485. I was a little worried because it was a red candle. As this candle pops up to 497, I start selling.

I’m like, “I got to book my profit on this.” I start selling and then I’m thinking, “You know what? If this does a false breakout, it pops up and then it starts to turn around, then I’m also going to flip short,” because this right now with the big spreads, it feels like it might be just too extended and it’s going to roll over. It pops up to a high of 497. I sell my position from the 465 entry. Now, I was scaling out in 80s. I think I sold around 485 average. I sold 485 average.

That gave me a thousand dollars profit. I shorted at 475. Now here’s the problem, I’m not even shorting it high of day. I’m shorting 20 cents below high of day because of the spreads. I’m not shorting on the ask. I’m shorting on the bid. I sold my position and then I shorted on the bid. We dropped down to a low of 45. We consolidate here. Then we start to curl up.

I was like, “Okay, well, this could be good, but I’m just going to lock this up.” I covered it at 465. I made 500 bucks on that. That put me up 1500 dollars on the name.

Then from that point, I was like, “Okay, well, you know, I’m going to wait for it to consolidate a little bit longer. I’m not sure where I’m going to see the next entry. This thing is kind of choppy. It popped back up to 88, dropped back down to 50; so sort of all over the place.”

I said, “I think I just need to let this shake out a little bit, let it form a five minute set-up.” It starts to consolidate right through here. As you can see, I drew this trend line. As I drew this trend line, I said, “Okay, I’m going to be watching for the first five minute candle to make a new high.” Right here. High of day was 97. That candle was 84, so I jumped in at 484. Now on this one, I wasn’t as aggressive on my share size because I wasn’t … I was a little bit nervous about it. I wasn’t sure it was going to work out. You can see here, it pops up to a high of 515, and then it drops back down. I sold into that squeeze up to 515, and then I flipped short again at five. On this one, I was thinking that we were going to have a false break because at that point, 515 was basically tapping that 200 moving average.

I was like, “Okay, now we’re tapping resistance. Now I’m going to short.” Now usually I don’t short these at all. I usually don’t have shares available to borrow. I happened to have shares available to borrow on this one, so I was like, “All right, well, I’ll trade both sides, see how I do.” Anyways, I short this at five and I cover right here at 505 as it starts to pop back up. This one I lost money on. I gave back 200 bucks on it, or whatever. It pops up through 539. It pulls back for a second. I got back in this at 528 looking for that move over 540, thinking we would break 550, the half dollar. That didn’t happen. I stopped out at 525.

In total, between five trades to the long side and the short side, I was able to wrack up $1,800; which is not bad. Overall, that’s pretty decent. I could have been a little more aggressive. One of our students in the room mentioned that he made $6,000 on this trade today, which was absolutely fantastic. I think he took for sure bigger size, probably 10,000 shares, around the 460 level and held for the move through five dollars, and then the move all the way up through 539. He probably doubled and had 15,000 shares. To make $6,000 on a one dollar move, you never capture the entire move. If you capture half of it, that’s 50 cents. 10,000 shares would be 5,000, so probably 10 to 12,000 shares or so.

That’s awesome. I love seeing students out-trade me, do better than me, because it shows me that you guys understand the strategy and that you can do this with or without me. You’re becoming independent successful traders. That’s what makes this such an awesome community. So many of you guys are able to find your entries, find your exits, make your way in and out of these trades, because you’ve learned the strategy. I’m really happy to see that.

Yeah, so those were the trades on FLKS. Then I also traded MBRX. This one kind of a classic false breakout. I got in at 220 right here for the break over high of day. Sorry, sorry, sorry. It wasn’t there. It was right here for the break over high of day, which was 219. It taps 220 and then pulls back, drops down to 207. False breakout there. Only took 2500 shares, lost three cents on it. Kept that loss pretty tight. I have a three cent loss on MBRX and a five cent loss on FLKS. Keeping those losses tight, better than my loss yesterday on DRYS, which was a 20 cent loss. Of course, DRYS is one that is pretty volatile and drops pretty quickly.

In total today, I took six trades. Adding up the percentage gains of those six trades, I made nine percent. I lost 2.2 percent on my two losers, so that gives me a net of 6.93 percent. I was able to pull 6.93 percent out of the market on the trades that I took.

Now, since my account’s at 63 thousand, 400, 500 bucks, 1700 dollars is … Let’s see, two and a half percent. So small account growth today, not a day where I’m seeing huge account growth, but slow and steady gains are good. I suppose right now I’m leaving more money in my account than I need. My biggest dollar position today was … looks like $23,000, $24,000. I’m only using ten percent of my buying power. My buying power is at 250,000.

I could take money out of here, but for right now, I’ll just let it be here and gives me the buying power in case I decide to be aggressive on some trade, or I see a really good opportunity. I’ll probably take money out of this at some point soon, but for right now, I’m just letting it build up a little bit. That is kind of a nice feeling to watch the account growing. Yeah, so for right now, we’ll leave it at that.

Okay, so let’s see. Any questions on today’s trades, those of you who are watching on … Facebook, you guys can put questions down in the comments section. I’ll come back through and answer them later if I don’t answer them during this live session. Those of you guys in the chat room, I saw a couple questions which I think I answered already. Let’s see. I can see right here whether or not there’s an ‘L,’ which means I have to locate to borrow the shares, or ‘E’ which means ‘easy.’ You can short it right away. If it’s easy, I can short it no problem. It’s very rare that I see that on a small cap.

Since I saw on both GNCA and FLKS, I figured, “Okay, I can trade both of those both directions.” Billy, if I scaled up my bid size or my trade size proportionately with my capital, I would be also increasing my risk. I don’t really want to increase my risk, number one. Number two, some of these stocks, like FLKS today, at some points, had ten cent spreads, 15 cent spreads. If I’m trading with 5,000 shares, I’ve got $500 in the spread.

If I’m trading with 10,000, I’ve got a thousand dollars in the spread. At a certain point, these can be difficult to scale into and scale out of due to slippage because of the spreads. This one on FLKS was particularly difficult today, to the point where taking 20,000 shares would have been difficult because if I was wrong on it I would have almost definitely lost four to five thousand dollars. Then if I was right on it, I would have had to be able to sell on the ask to capture the most profit, which is a little bit more difficult with some of these.

DCIS, right. I didn’t trade that one because it’s a penny stock. It’s below a dollar. I said if it breaks over a dollar, I’ll be interested. That never happened, didn’t trigger, didn’t give me an entry, no trades on it.

Steven, the basis for my strategy is that I know every single day there’s a stock that’s going to move 20 to 30 percent. My job is to find that stock; but I don’t want to find it when it’s already up 20, 30 percent. Ideally, I want to find it when it’s up just five to ten percent, then get in it, and ride that momentum until it’s up 20 to 30 percent.

That requires me to find each of the stocks each more that are gapping up between five and ten percent and that have news, that have a reason to be moving higher. Then I ask myself does this have the potential to go 20 or 30 percent? Can I capture some of that move? Statistically, I’m right on that judgment call 68 to 70 percent of the time. I have pretty decent accuracy.

Yeah, so inside candles I usually will avoid. Inside candles, when the candle’s inside the previous day. A stock like TEAR, I’m always going to be a little more cautious on when you have an inside candle, which is what yesterday was. Now it turned out that I was able to trade it and do okay on it, but yesterday’s daily candle was completely inside the previous day; and so was today’s candle. When that keeps happening, we’re just in range bound, and so that limits usually our profit potential. We prefer to trade stocks that are breaking out of their ranges.

Gap and go entry price is always going to be … Well, there’s five different set-ups for the gap and go trade. One of them is the pre-market high. … No Jason, I mean I don’t think so. It’s rare, like I said, that I have shares available to borrow. You can trade both directions on these stocks. When you see them coming up to critical levels, like the 200 moving average, or half dollars or whole dollars, you know that some people are going to short around those levels. At the same time, you’ve got to keep your stops tight because they can also squeeze right through, all of a sudden hit a circuit breaker halt and go up 30, 40 percent. If you trade to the short side, there is more risk.

On FLKS, I just figured, “Well, I’ve got the opportunity. This is a stock that has a lot of range. If I can sort of buy the dips and sell into the highs, and then short the highs and cover them on the way back down, I can profit on both sides of that range.” That’s what I was trying to do. I wouldn’t do that on a stock that didn’t have a lot of range. FLKS has particularly high amount of range and surprisingly was easy to borrow shares to short. That’s not a typical combination. It’s very rare. That’s the reason that was a first time I was short a stock in let’s see … like six weeks, seven weeks. That gives you a sense of how often I will trade to the short side.

All right, so let’s see … Chris, the answer’s ‘no.’ It’s all business from the waist up. Let’s see. Got to get the support link. [Omnovia 00:19:22]. … Merrill Edge platform, that I’m not super familiar with. … I personally use one minute candles. I don’t use two minutes. I know some traders use two minute candles, but I’ve used them a couple times; but generally I just use one minute candles. I think they’re more well respected. …

Skylar, with the taxes, you get 1099 forms from your broker that you can give to an accountant. That’s what I do, and they do the taxes for me. … You can switch long to short, usually in one ticket. It depends on your broker. Some will let you and some won’t. If you’re long 5,000 shares and you sell 10,000, you flip short. … Some brokers, like with eTrade, possibly, they don’t let you sell based on percentage of your position. You can’t sell 25 percent, you can only sell based on the whole thing. Dave, yes you can pause a portion of your subscription. Just email [email protected] and we can set that up for you. …

No, not a strong relationship, Robin, between the DOW, the SPY, and whether gap and goes work well. They generally have a standalone catalyst. As long as they have that stand [along 00:22:18] catalyst, then it should be fine.

All right, so with that, I’ll let you guys grab some lunch. I’m going to be back at 3:00 p.m. Eastern for our beginner warrior pro mentor sessions. That will be in the warrior pro chatroom for warrior pro students. That’s at 3:00 p.m. Eastern, but until then, let you guys grab some lunch, and relax for a little bit. Review some of your trades from this morning, and we’ll be back a little later this afternoon. All right, thanks guys.

Oh hey, I didn’t see you there. Well, 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 any time I go live or upload new videos. Until then, happy surfing.