Warrior Trading Blog

Being a Rollercoaster Trader – Behind the Trades | Ep. #6

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Being a Rollercoaster Trader – Behind the Trades | Ep. #6

Alright guys, so, time for episode six of Behind the Trades. I know you guys have been eagerly awaiting this episode. We’re going to jump in here, and the topic of the day today is being a roller coaster trader. Now, this is going to be a bit of a biographical discussion of my trades for just last month. I finished the month with $28,000, which is not bad, but I had some pretty big swings in the P&L to get there. That’s what we would call the roller coaster ride. My goal, as a trader, is sort of two things. One is to find the best opportunities each day, but then secondly, to manage my risk in a responsible way so that if I do have setbacks, that they’re not giant drawdowns. Unfortunately, I was not really good at doing that in the last month.

Today, we’re going to talk about the roller coaster trader. What it’s like to be one, and what you can do to try to smooth out some of those big ups and big downs. Then what we’re going to do is do some Q&A were you guys can ask me questions. We’ll have a ask the warrior section at the very end of this episode. All right, now, let’s see. Before we jump in, of course, we’re also going to review my weekly stats for this week. That’s one of the things I like to do for you guys. You get a sense of where I ended the week. We’ll go over the big picture, and then also the best and worst trades for this week.

All right, so my starting balance on January 1 was $583.15. You guys probably know that already. I started this week with $105,242, and I made 12,630 bucks. Ending the week just under $118,000. Overall, this is a pretty fantastic week. Actually one of the better weeks I’ve had in a couple of weeks. Last week I only made like 4800, and the week before that was 9700, the week before that I lost 7200, and then the week before that I made 17,000. That is a highlight or preview of some of the big ups and downs I’ve had in the last few weeks.

Interestingly, my accuracy this week was really on point. 78%, which I’m really happy with. My profit loss ratio was just slightly negative. $0.15 average winners with $0.17 average losers. That gave me a 1 to 1.13 profit loss ratio. Now, as we know, with profit loss ratios, if you trade with one to one, meaning you make 100 on average, and you lose 100 on average. You have to be right 50% of the time in order to break even.

This is our risk reward ratio. If you risk 100 to make 200, right down here, you only have to be right 33% of the time in order to break even. You’re setting the bar so low it makes it easier for you to be successful. On the other hand, if you risk 200 to make only 100, you have a negative profit loss ratio, you need to be right 66% of the time to break even. There are traders who can trade with 78% success and still lose money if there profit loss ratio is 1 to 3. Meaning they lose 300 on average, and they make only 100. That requires 75% to breakeven, not including commissions. Just purely by looking at metrics, you could look at the metrics of a trader and understand whether or not they should be profitable.

Now, doesn’t account for the fact that on your one winning trade, you may have taken 25,000 shares and it blows all the losers out of the water, or that on your one losing trade, you might have taken 25,000 shares and it blows all the winners out of the water. There are certainly variables, but when you look at these metrics on the surface, 78% accuracy with a 1 to 1.13 profit loss ratio, is that a profitable statistic? Are these metrics profitable? The answer is yes, they are. I’m up here in success, and right around here in profit loss ratio. This is anywhere up in here with that profit loss ratio, and that accuracy is going to be profitable. Now, when we review the metrics, we’ll go through the metrics for last month, which we’ll be good to see and compare them to what I did this week.

This week, for me, I was really disappointed with myself for losing 5000 last Friday. I was disappointed with myself, not because I lost money, losing money happens as a trader. I had trades today where I lost money. I was disappointed with myself because I pushed it way too hard for Friday, and I chased a really bad set up. I knew, before the bell even rang, that I needed to not chase.

I needed to trade smart, and then for some reason I got impulsive and just jumped in, and was instantly down a point. I was frustrated with myself. I said, “Coming into next week, I need to be disciplined. A quality set ups only. Only trade pullbacks.” If you can’t print out the chart and look at it and say, “Yeah, that was a pullback entry.” Then you shouldn’t be taking the trade. This week really reflects that extra push to be really disciplined.

The accuracy shows, trading better quality set ups is better profit, the profit loss ratio is not always the best reflection of that discipline because what it shows to me is that my winners were smaller, which means I took profit a little bit sooner. When you take profit sooner, it does increase your accuracy because if you get into a stock at the apex point, there’s a good chance it’ll break by $0.20 or $0.30. $0.15 average winner says that you got in, and most of the stocks went up because you were in at the right place. Getting the 30, 40 cent winner, that’s a little bit more challenging. In order to get a 30, 40 cent average, you’re going to have to hold longer, which means that sometimes you’ll be up $0.15, and it goes red. As a result, your accuracy goes down, but the profit loss ratio goes up. Those two really are, they go hand in hand.

Now, my trades this week, the best trade of the week was on Monday morning on PRAN, P-R-A-N. Now, I was aggressive on this trade because I had made really good money on it last week, and it was hitting the scanner being a former runner, a low float, a great daily chart, volume spiking. It had everything that I look for in a set up, so I bought a one minute micro pullback underneath of the half-dollar of 350. My entry was right here at 344, and then adding at 350, and this went up $0.60 per share. It was awesome. A super just easy trade. Picture-perfect, it squeezed up, it was halted, it opened it just a little lower, popped up to 410, and then it rolled over. Just a nice easy, 20% squeeze for my entry.

Now, this is something that we also saw quite a bit today. We saw it on CLNT, CHNR, SSKN, CETC. We’ve seen stocks this week getting that extra squeeze, that extra momentum, squeezing into a circuit breaker halt, opening higher, etc. When we have that type of market, I definitely am encouraged to be a little bit more aggressive, to try to capitalize on those opportunities. Because we’ll also have periods where we don’t have circuit breaker halts, where we don’t have stocks squeezing up 10%, and we just have to make do with smaller gains.

Now, my worst trade of the week was on the seventh, and that was LPTH. Now, this one was actually not a big loss for me, and so worst trade of the week. I actually don’t have a trade this week that I would say I was disappointed in myself that I took it. I really don’t. This week was fine with those types of trades, but this was just a really big rejection. I got in at 295, anticipating the first win with the candle to make a new high on a micro pullback. We popped up to three dollars, and then we immediately got a rejection, and it dropped down almost $0.50 to 63, or something like that.

Now, I kept a tight stop on this. As soon as it broke below 290, I bailed out, but I got slippage down to 285, and so that cost me about 250 bucks with 2500 shares. Now, this is the type of stock that, although it wasn’t a good trade, and obviously it was a loser, it showed restraint.

Because sometimes when I see a big seller sitting at a level like three dollars, I’ll think, “You know what? If this guy moves out of the way, there’s a good chance the stock will pop.” I’ll watch him, I’ll keep waiting, I’ll let it pullback, I’ll let it come back up again, and sometimes I’ll even add to my position to buy some of the shares that he’s selling. The problem is, if he is a hidden seller showing 10,000 shares, but he’s really selling hundred thousand, just because I buy 2500 more shares, it’s not going to move. He’s just sitting there holding strong, and now I have a bigger position.

When it goes and does this rejection, this is the type of place where, in the past, with 10,000 shares, I could lose $1000 on every $0.10. From 95 to 85 is down a thousand. 85 to 75 is down 2000, 75 to 65 3000. That could have been a $3000 loss in that one candle. Yes, it popped back up, but I think this was a good example of me showing some restraint, and not being too aggressive.

This was the day where the market wasn’t as strong, and so I really was able to taper and throttle my risk this week based on the type of market conditions that we were seeing. On Monday, I was aggressive.

Now, I may have been aggressive in part because I was trying to get back up on the horse after getting knocked down on Friday. There is a natural instinct to do that. I saw an A quality set up on PRAN that I was able to do that on. I jumped in and made 6400 bucks. On Tuesday, market was a little slow, I only made 1200. I say only because it felt like a pretty slow day.

My daily goal’s $1000 a day. $1000 a day is $250,000 a year, and I finished last year with 222,000. I thousand a day keeps me on track. Obviously, we’re at day 66 right now, yeah, today’s day 66 of the 100 K challenge that started at $583, build it up to 100 K. Right now, this account is at $118,000. That’s $2000 a day average, versus $1000. I’m trending well above that, but any day where I’m coming in with only 800, or only a thousand at this point does feel like a small day.

Going back to the ability to throttle risk, I throttled down on Tuesday and Wednesday. Tuesday I made 1200, Wednesday I made 1200, Thursday I made only 750. Now, last week I had a similar experience. Last week I had two days, on Wednesday I made only, I think it was only 400 bucks, which felt like basically nothing, and then on Thursday I made like 114 bucks, which again, was basically nothing. Instead of having the presence of mind to say, “The market is slow, I need to taper back my risk, especially on Friday, statistically the day of the week that I do the worst.” Instead, I just came out of the gate swinging. That’s like coming out of the gate swinging, and you’re blindfolded. It’s just like, what are you doing? You’ve got no focus. You’re just gung ho to be aggressive, and there’s nothing to be aggressive on, and you know what? The market is always stronger. The market showed me on Friday that I need to scale back. I lost five grand.

This week, I was really pleased that I was able to experience three slow days, and not allow that to … Well, that I was able to experience those three days, and then on Friday I was able to come in and say, “Look, the last few days have been slow, I’m going to start off easy today.” That’s why I started with smaller size. And then once I had a question on the day, I was able to build up a little bit, but I never took 10,000 shares today. I never took 10,000 shares today, I didn’t go crazy, super aggressive, I was just more moderate, and then those gains stacked up, so I finished in a day with $3000. All right, now the topic of the day today for episode six of Behind the Trades is a month of big ups and big downs, a roller coaster trader. That’s what I was last month.

After four red days, I have lost $15,000. That was my longest red streak. I don’t know the last time I had four consecutive red days. That really was pretty bad accuracy. Four red days in a row cost me $15,000, and that I made back 25,000. I surged back up, and then I had another setback losing 5000.

What we’re going to do is we’re going to break down the metrics and the statistics for the month of March, and so you can see all the trades that I took, and you can really get a sense of the details underneath these broad brush strokes stats. Before we do that, I want to show you a course that, this is my broker statement for the month of March. I finished the month with $28,588.17, which, in this SpeedTrader account, put me up $63,411.

Now, I traded for the first part of the year, I’m going to move this up here, I traded for the first part of the year in Sure Trader, because Sure Trader only has a $500 minimum today trade. I put in $583, and I traded with Sure Trader until I hit $42,930. These are my statements from Sure Trader.

That was on February 6, I transferred the money out, February 7 was the first day in SpeedTrader, I started at 41,000, minus the wiring fees and stuff like that, and from that point forward I been building up the account. That’s why the 63,000, plus the 40,000 put me at 100,000. That’s why I’m not at 100 yet in my SpeedTrader account. Its combined profits. The total equity, at the end of the month, was $105,242, which was, of course, my starting balance here at the beginning of the week.

Now, we’ll go over the trader view stats in one second, but I just want to show you, this is something that’s very rare. A lot of traders, and for those of you on the Facebook, I’ll show you my statements here, a lot of traders don’t do this kind of thing. They don’t show you their statements. That’s fine. I don’t have any real strong opinion on it, but here’s the deal.

When I make a claim like I took $583 and I turned it into 100 K, there are people who are going to be a little skeptical about that. You can understand that, because it’s a pretty outrageous claim. I’m going to back that up with my broker statements. That’s important for me to do for liability. If a regulator wants to come and look at the website, which is fine, and they see, this guy says he took $583 and turned it into 100 K. Well, all they really have to do to figure out if that’s true is click where I say, “Performance disclosure.” They’ll see, here’s my broker statement. It’s like, “Okay, yeah, it’s real. He’s just a good trader.”

That’s important for me to be transparent, and to show you that these are real gains. This is all the result of the strategy that I’m trading every single day, and that I’m teaching to all of our students in the classes. It all comes back to being able to manage risk, trade the right stocks, and find the intraday patterns. Okay, so anyways, I just wanted to show you guys my statement there. $28,588 in gains.

Now, the big picture, oops, the big picture here is my trader view steps. These are always off by like a dollar or two because of the transaction fees that are credited or debited at the end of the month, and are not part of the dash trader export into Trade Review. All right, so big picture here, $28,556, but basically the same. Average winning trades for the month, $1386. Average losing trades for the month, $1169. This tells you that my average profit loss ratio is positive, I make more on my winners than I lose on my losers, but not by a lot.

Average percentage of success, 63%, which is a little on the low side. Total number of trades was 63. Let’s see, probably 22 trading days in the month, or something like that. Let me just check back here and I’ll know for sure. Let’s see, we had five, 10, 15, 20, 23 trading days in the month. I don’t think I took any days off in March. Looks like a full 23 days. An average of about three trades a day, which is pretty much what I tend to figure I do. Three trades a day. Some days might only be two, other days might be four or five. Average hold time, 13 minutes on winners, 14 minutes on losers. Holding those losers may be a little too long, but that’s okay. Total fees, $3200, and ECN fees, total commissions, 1000 bucks. That’s my total gain, 2800 after commissions.

Total gain before commissions and fees, I guess, would be like 33,000 or so. I guess my fees and commissions amounted to roughly 10% of my profits. It’s just the per trade transaction fee, and then those ECN fees that add up. Largest single trade gain, $6330.69. Not bad. Largest single trade loss, $5592.75. I remember it. That’s a big loss. Let’s be honest, that’s a pretty big loss. On that trade, I think I had 12,000 shares, or 15, and I lost about $0.30. $0.35.

Not only did I lose $0.30, or $0.35, which is a pretty big loss in terms of cents per share, I had massive size. When that happens, you just get smacked in the face by the market. This is the one level beneath the surface of the $28,000 total gains. My profit loss ratio and my percentage of success. Let’s continue to look a little bit deeper. I import all of my trades to Trade Review.

Now, our students, I of course encourage you guys to do this as well, students that are part of our warrior pro class that do this can make me their mentor, and I can go and I can actually login and look at your metrics. For students that are in the classes though, you also have the fancy stock trading simulator. That means, if you’re trading in the simulator, you will show up on our leaderboard. Let me just take a look here at the simulator today.

Let’s see. Today you can see, Ken, my boy Kenneth, he’s up $48,000 today. I’m not sure how he did it. He absolutely destroyed CHNR. Good job on that one. He’s having a good day in the simulator. Obviously, I encourage you guys to trade the simulator as though it’s real money, so if you’re buying massive size, that may not be realistic to what you would trade when you go live.

The thing is, even if you figure, I am going to trade with 5000 shares when I go live, if you have a week of doing that, and your first week is a little bit of a tough week, and you lose on four out of five days, you’re going to be down like 3000, 4000, $5000 in your first week of live trading. You always want to trade in the simulator with smaller size, and then when you go into trade with your own money, you start with smaller size and you scale up.

It’s better to build your confidence like that, and then increase share size as confidence and experience is going up. In any case, we’ve got 261 traders in the simulator today who are green out of 495. About 500 traders in the simulator, and we can look at some of the trades. CLNT, yep, that was the big mover today. You can see here from 560 all the way up to $10 a share.

Jake, let’s see, he traded CLNT. He actually lost money on CLNT and made money on AKTX, which is interesting. I wonder if he was holding this short. Long, long, short, and then cut. Yeah, that’s kind of interesting. I think this exemplifies the challenge with some of these really volatile stocks. AKTX, another one there with Aaron. Rue, CLNT, nice. You’ll see on days like this where a lot of the traders who have made money are trading CLNT, CHNR, CETC, SSKN. These are the stocks I traded today as well.

This is one of those days where you’ve got a lot of people in the simulator who are up a lot. Some of the days earlier this week, and I noticed this especially last week when I had a day where I only made $114, I logged into the simulator, and I realized that, I think, the biggest winner of the day was like a $2000 winner of everyone in the simulator. Only 20%, or 25% of the traders in the simulator were green, and the rest were red. It’s like, take a hint.

If the market is choppy, you have to scale back. That can mean, when you’re down two hundred bucks, you call it a day and you don’t push it. Or you’re up 100 and you say, “Look, this is not an easy day, but …” That can be difficult for beginner traders to recognize and have that presence of mind to be able to throttle back risk based on external conditions, like what the overall market is doing, or what the small cap market is doing.

Today we had strength in the Chinese stocks, which gave us some good opportunities. In any case, the students that are in the fancy stock trading platform, your results will show up here on the leaderboard’s. You can click on your name, and then we can pull up your metrics, which is pretty cool. It allows you to see all of the same stuff that I’m seeing with real money.

These are my real money reports over in Trade Review, but these reports are really similar for those of you trading the simulator. Percentage of success for this student is 50%, average profit per trade is only one cent. His average winners are $921, average losers, 750. That’s actually not a bad profit loss ratio. 1.22 to 1. Largest gain, $20,000, largest loss, 15,000. He can start to get a sense of his metrics.

What days of the week does he do better or worse? Etc. He does badly on Mondays and badly on Fridays for whatever reason. Price range, where he does the best for this student is under $20. Definitely above 20 is where he is losing money. I can review those same types of metrics for my own trading, and it really gives you some insight.

If, at the end of the month, you look at your trades and you see this, what type of changes would you make? You’d probably say, “I should ease up on my trades on Mondays and Fridays. I should probably ease up on trading stocks over $50, or at least be more cautious and use smaller size if I’m going to do it.” Then time a day, he makes the most money between 9:30 and 10:30, and then the rest of the day is so so.

Gains in general, except for between 1:30 and 2:30. That may have just been one big loss for all I know. In any case, I just, again, emphasizing the importance of these metrics. These are the metrics for me with real money, and you can see how, since I started at the very beginning of the year, my first green day was $156. Second day was 200 bucks. I was grinding on really small profits until I finally had a big day where I made $1900. That was the biggest day.

Finally, on 12 January, I had a big day. Then I had a $900 day, and then I had a $2500 day. These three days were huge in my growth of the small account. Had a couple slow days, couple slow days, and then boom, back to good days. 2100 bucks. 2400 bucks. And then a $7600 winning day. This was a massive day, and it was followed by losing 5500 the next day. Which was the first red day I’d had, and it was a big red day.

That’s the roller coaster, way up, and way back down. Then way back up, up 4000, and then up $15,000, which was crazy. Right in here’s where I crossed over 22,000, and I broke 25, and then I went straight to $40,000. Pulled back a little bit on just some slower days, and then another $10,000 day, and then two back to back red days where I lost, between these two, about $9000.

Again, this roller coaster, these big moves up, and then the big drawdown, and you can see, in all the red days I’ve had this year, and there’s been … This was up through the end of March, there were one, two, three, four, five, six, seven, eight, nine. I think we’ve got 10 or 11. There’s five. I think we’ve got 11 red days here. All of them, almost all of them are like a four or $5000 loss. These red days are really pretty ugly.

You can see on my equity curve how I moving up, and then a pullback. Moving up, and then a pullback. Moving up, and then this was the pullback that I experienced in March where I had four back-to-back red days. Four back-to-back days where I lost between two and $4000 each day. That set me back from, let’s see, I hit a high of 100 and … Oh, this is gross.

Let’s switch to net. I set a high of, I think it was $101,000, and then I had a pullback down to about 87,000. It was really a sharp pullback, and I was like, “Dang it. I just hit $100,000, my goal, and now I’ve dropped 15,000. This is ridiculous.” Slowly, I was able to rebuild, and took about two weeks for me to get back to 101,000. Because the next five days were all small days.

I didn’t have a single day where I made more than $3000. It was like 2000, a thousand, 1500, 900. Slowly making my way back up, and then I had three really good days. I had a $4000 day, a second $4000 day, and a $4200 day. Three back-to-back days where I made like 15,000, and so over the course of this push I made close to 25,000 from 87 up to 97, and then up to 110, and then I dropped down, on the last day of the month, $5000, back to 105.

From March 8, day 44, until March 31, which was day 61, I only made $5000. Because I was on the roller coaster. I was going up, and then down, and then back up. I think about the stress of all that. You’d say it’s not stressful to make a lot of money, but it does take a bit of a toll because you have a huge win, then you feel excited, you get an extra sense of confidence, which then leads you into the drawdown, and then you’re overconfident, you’re complacent, and then you have the drawdown.

Having these big red days is definitely stressful, especially for me because everyone’s watching me, and people are like, “You lost four days in a row. You’re pathetic. That should be embarrassing.” I have that added pressure, which is probably why the last day was the biggest red day, because I was just getting more and more frustrated.

Then finally started turning around. Wouldn’t it be nicer if I could go from $583 to 100 K just making 1000 a day? Sure, maybe it takes a little longer, but it’s just slow and steady. The slow, steady equity curve sure would be nice, but that’s not how the world works. That’s not how the market works. Every single trader goes up and down, up and down. Minimizing the down and learning how to control the drawdown is really what separates traders who will be successful long term.

You could say that, yes, I have controlled the drawdown, because these days are not more than $5000, which is good. Relatively speaking. Doesn’t mean those are good days, but they’re fairly consistent if anything, they’re consistent red days, and I consistently bounce back from them. I consistently make more on the next leg up than I lost on the drawdown. That’s, obviously, what we look for.

Let’s dig a little deeper here into the trades from my roller coaster month. I’m going to filter this down to just the month of March. Here’s the P&L for March. We went up to 24,000 on the month, and then down to being up only 10,000 on the month, which was not good, considering we were in the middle of the month, and then sideways, sideways, finally back up, back up, and then a little bit down.

You can see, I had five red days in the month of March, and all five of them were pretty significant red days. Look at the details here. We’ve got the details, which is the total gain, profit loss ratio, my percentage of success, now let’s look at my performance by day of the week. Monday’s was the best day, and Fridays I only made $1300 total for the entire month. Friday was really not a good day for me. Let’s look at the price of the stocks I traded.

Performance by price, I made the most money, almost all of my gains on stocks between $2, and $9.99. Below $2, I only made 257 bucks, above $10 I only made, looks like, maybe $400, or $500. Not much. Performance by price shows that my gains are predominantly on stocks between two dollars and $10. Performance by volume traded, obviously on stocks where I was more aggressive. I made more consistently because of share size, larger positions generated bigger returns.

Now, this is the total number of shares, even if I got in, got out, and got back in. I don’t think I had any trades in the month where I had more than 20,001 position. I think the biggest was 15, maybe 17,000. When I would add, and take them back, and then add back it would give me that type of stat. Instrument, so this is interesting. These are the stocks I did the best on and did the worst on.

Now, I had more stocks in general that I did well on, just because I finished the month green. What’s really interesting is my performance by the instrument’s volume. I always talk about the importance of trading stocks with high relative volume. High relative volume is an indicator of some type of catalyst. It’s definitely indicative of high interest by retail traders. As retail traders, we’re buying stocks, and so the stocks that we’re trading, today for instance, CLNT. Look at how high the volume is on the daily chart, versus what’s average. Super, super high above average. CETC, this is super, super high above average. It’s probably 1000% higher than average. CHNR, same thing. These are the type of stocks that I trade, and my metrics show exactly that. That’s down here in performance by instrument’s relative volume.

Stocks with a relative volume of 150% and higher is where I make money. I did the best on stocks with relative volume of 300% and higher. Although some of those stocks had lighter volume at the time I got in, the stocks that have less than a million shares of volume I actually lost $8000 on. I did not make money on those stocks. The stocks that closed the day with one to two and a half or more in volume, two and a half million, are the ones I did the best on.

I do better on stocks that are going to have higher volume, and what brings in that volume? What brings in that volume is typically a catalyst. Some type of breaking news, whether it’s earnings, it’s FDA announcements, it’s clinical trials. It could be any one of those things that brings the volume into the stock. The majority of my gains were on stocks that were experiencing high relative volume, which is exactly what I teach in the classes, and exactly what we emphasize every single day.

Let’s see, prior days relative to volume, for a lot of these stocks, was very low, because suddenly they came up on the scanner as a gap and go set up. Yesterday, they were not in play, like CHNR for instance. Yesterday, relative volume was zero, but then today, this thing jumped up and was in play. Same with CLNT, two days ago relative volume was nothing, and then suddenly there’s a catalyst, and it starts to make a move.

These are the types of things that are interesting to see. For me to see that I’m really red on stocks that have lower volume tells me that I need to be more cautious on how I trade them. Maybe trade with smaller size. It’s the lower volume stocks that don’t have as much liquidity, and then if I end up with a really big position and I want to stop out, I’m going to have a bigger loss because of slippage.

Now, I can also look at mark of behavior, and see if there is any indicator there. It shows that performance by the SPY movement, that I did better on days when the market was down slightly. I know that that is generally true that on days when the market’s up quite a lot I don’t do as well, but if we looked at the overall market for the month of March, We’ll see that there were quite a few red days.

It may be just a coincidence on that type of short timeframe that I made more money on those red days. Now, I want to look at my win loss days here for a second, because this is kind of interesting. This shows you my total winning days, which were $48,000 in profit. I made $48,000 last month. The problem is I turned around and lost 19 of it, 19,000 was down the drain in stupid, unnecessary losses. I finished with only 28,000.

The average daily loss on my losing days was 3800 bucks. That’s pretty bad loss, especially when you compare the fact that my average daily gain on a green day was only 2800. When I’m losing, I’m losing more on average than I make on a green day. The good news, and the only thing holding me together, in terms of my training account, is the fact that I’m right more than I’m wrong. I only had 22% of the days that were red.

I’ve got that going for me, but if I was looking at these metrics, and these were the metrics of another student, I would say, “Look, we need to tighten up the red days. These red days are just too much of a drawdown, and you’re giving up too much profit. You’re taking, essentially, two steps forward in profit, and one full step back, you’re giving back 50% of your gains.”

That’s almost what happened this month. Not quite, but close. You can look at the stats of the average hold time on winners and losers, winners and losers etc. but the biggest take away is that, on my losing days, I’m only right 23% of the time on that day. Versus 78% success on my green days. Remember, this week I had five green days in a row. What’d I say my accuracy was this week? 78%.

Five green days, really solid, 78% accuracy. Here, on my red days, when I have red days, my accuracy is just really bad. If I have a day where my first two trades are red, what should I think about that? I should consider that a red flag. I should consider that a warning, because I typically only take three trades a day. If I take three or four more trades, and even if they’re all green, I’m still going to have pretty bad accuracy, I’m not going to have 78% accuracy unless I take 10 more trades and all of the next ones are green.

If I have a day where I lose money in the first 15 minutes, I need to be much more inclined to say, “That’s it, I’m throwing in the towel.” One of the things I did this year is, for the first time in three years or more, I increased my max daily loss to $5000. Now, I increased that with my broker so that if I was down more than $5000, I wouldn’t be able to initiate a new trade.

It doesn’t mean I couldn’t continue holding a position that was down five, six, seven, eight, or 10,000, it just meant I couldn’t take a new trade. In the past, I had always had that level set at -1000. If I dropped down 1100 on the day, I couldn’t keep trading. I found, earlier in the year, that there were days that I was down 1100 in the first five minutes because I was trading with really large size, $0.20 on 5000 shares, you’re down a thousand bucks like that. That doesn’t mean you can’t bounce right back if there’s a good quality set up.

The question is, the fact that you lost right out of the gates, is that enough of an indicator, regardless of the fact that being down 1000 isn’t that big of a deal, should that just be enough to say, “Look, I’m not having a good start to the day, I just tripped out of the gates, maybe I should throw in the towel completely.” There are times where you’ll do that, and then, an hour later, a stock pops up, like CHNR for instance, and gives you, what could be, an A quality set up.

I guess the question is, this, to me, is an A quality set up, but is it not an A quality set up if you are already down $1000? Is there no such thing as an A quality set up when you’re down that much because you’re going to be more impulsive, or because your judgment is going to be clouded by the fact that you had a bad start to the day? I don’t know.

To me, I have been trying to get better at trading out of the red. If I’m down 500, thousand, or $2000, I can keep trading and get out of it. I have been able to do that on some days to the point where I got myself back up to green. To the fact that I held some of these losing trades on my winning days for 21 minutes on average is because some of them, I really thought, had the potential to go back up.

Now, obviously, if they had gone back up to become a winner, they wouldn’t be in the losing trade column, they’d be in the winner column. That’s probably also why my winners are a little bit longer. It’s because some of them I did hold through the red, and then they finally came back up. Just something to be a little bit mindful of there.

One last thing here, we can look at the days and times, and see that my biggest drawdowns were on Fridays. Fridays were the days that I lost the most money. It really, for me, has to become a priority to have the presence of mind every Friday morning that, okay, it’s Friday morning, I need to scale back a little bit, I don’t need to try to swing for the fences. If I can hit 500 bucks, if I can hit a thousand, that’s great, but if I can’t, that’s okay too, and I could just step back and know that the next time I have an A quality set up, I’ll be aggressive.

That’s really what I did today on this Friday, and that’s really the approach that I’ve had all week was to focus on A quality set ups. I got one awesome trade in the beginning of the week that gave me $6000, and then because of that, I had the confidence to say, “You know what? I can hang my hat on that $6000 winner, and now just trade smaller size.”

All those smaller size trades added up to an additional $6000 in profit, which is why I’m finishing the week up just under 13,000. I want to try to carry this attitude into next week, and through the month of April, and I think that if I’m able to do that, I will see my accuracy, through the month, come in quite a bit higher than I had for the month of March. The month of March was 63% accuracy, and it will be interesting to see what I can do here for the month of April to try to learn a lesson from the previous month. I think that’s what we should all do as traders, look at our previous months statistics, and try to draw some good conclusions from that. I know a couple things, right away, that I can do is trade less on Fridays, number one.

Number two is try to keep tighter stops so I don’t have $5000 losing days. Number three is if I start the day in the red, maybe take that as an indicator that I should stop trading completely, or cut my size down drastically so I don’t have that $5000 drawdown. Then I guess lastly, continue to focus on A quality set ups, because when I hit one solid trade, I really only need one solid trade a week to make $5000 a week.

If I get two solid trades each week, that can be $10,000 a week, and then in between those really solid A quality set ups, I can just let the small gains stack up. All right, so I think that wraps up my review of my metrics for the month of March, and it definitely shows you that I was a bit of a roller coaster trader. A lot of ups and a lot of downs.

I want to try to smooth that out for the month of April. I don’t want to have myself going up to being up 25,000, and then losing half of it. That’s not a good way to trade. It’s stressful, and it’s really not fun. If we look right now at the very early metrics for the month of April here, I’ve only got four days of metrics, because I don’t have today imported yet, but I’ve got Monday, Tuesday, Wednesday, and Thursday. Nice, slow and steady. That’s the goal. The accuracy is going to be, actually, this shows you that it’s even higher, which is interesting. This shows 91%. I wonder why I was showing it as 78%.

In any case. Oh, it’s because of my losses today. Because I had a couple losses. 78%, but 91% for Monday through Thursday, which is awesome. Average winners, $931. Average losses, 250. Average hold times for losing trades was only one minute. Talk about bailing out quick. Breakout or bailout. Average hold time for trades that work was 12 minutes. All right, so this is something that I would like to see continue over the next few weeks.

This could be a real game changer for my metrics for the month of April. It will also come back to whether or not we have good, A quality set ups. I could maintain these metrics for a whole month, potentially, and only make 15 or 20,000 on the entire month if we don’t have really big winners. If I don’t have them, then I’m not going to have a 50, $60,000 month. If I can maintain these types of metrics, and have the good fortune of A quality set ups, 3 to 4 times a week, then I think I could really crush it.

Anyways, that’s it for the metrics. Let’s jump back in here and we’ll do a little bit of Q&A, and you guys can tell me a little bit about how you did this week, what are some of the things that you were struggling with? And your best or worst trade of the week. All right, guys. Let’s see. I’m just going to look at questions here. Some questions on Facebook. Looks like not too many questions on Facebook, mostly just comments.

I’ll let you guys ask questions if you have any. Those of you in chat, let’s see, so, a manual, brokers, yes, you can import your trades from Sure Trader into Trade Review. You absolutely can. That’s an option if you want to. Sure Trader doesn’t have these types of reports. You would have to, basically, use Trade Review. This is third-party software that, I guess, has an API directly through, or directly to the broker. Right here, you can go, you can select any one of these brokers.

Now, fancy stock traders, as a simulator, is on here. You can import your trades if you preferred, for whatever reason, to use Trade review instead of the student leaderboard. I don’t know why you would, because this is free for students, but you could if you wanted to. Yeah, you can just go and you can import Lightspeed, Merrill, InteractiveBrokers, Options House.

You can really import trades from almost anywhere, which is awesome. You get them imported, and then you go to your reports view, and then you can start breaking down your stats. If you’re not already doing this, if you’re trading with real money and you don’t know these stats, it’s 100 bucks a month. I don’t get anything for telling you about this. I think it’s a great tool.

If you want to know your metrics, I would encourage you to check it out, because it’s one of those things. If you don’t know your profit loss ratio, you don’t know your percent of success, you’re trading blind. How do you make decisions about how to improve your trading if you don’t have valid data to base those decisions on? We talked about this last week.

When Starbucks goes and puts in a new coffee shop around the corner, they don’t just do it because there’s a vacant space, they do it because they did some extensive research on, what’s the foot traffic? What’s the driving traffic? Where’s the parking situation? It has to be a really detailed analysis that then the decision is based on data. You can make really confident decisions when you have something strong to base it on. Elvin, the difference between a stop loss and a trailing stop.

A stop loss is when you put out an order, which is your max loss on the stocks. Let’s say CLNT. I’ll get in here with hotkeys, I’m in with 1000 shares, and with ctrl T, I place a stop order, and that stop order is down about $0.10. What I can do is I can go to stop, and I press the stop price. Let’s say I want to get out of this at 850, and I press sell. Now I have a stop at 850. Now, a trailing stop will, if you use a $0.10 trailing stop, as soon as the stock moves up, it’ll stop you out $0.10 below high of day.

If a stock is just running up, but it won’t stop you out until it drops $0.10 off high of day, and then you get taken out. That’s a great way to stay in a position longer, potentially, the only thing is that when stocks make those pullbacks, often, they’re hard and quick selloffs, and you’ll get slippage to the downside. You may end up actually getting stopped out $0.20 or more. Depending on the type of stock. The loss could be a little bit bigger.

All right, I’m going to delete that. Cancel order. Close it out. Let’s see. Russell, I don’t have a metric on how often I buy in anticipation of the breakout, but I know that I do it a lot. The reason I do it is because, when I look at a stock like this, CHNR, I look at this and I see that there is a apex point. The apex point of this bull flag is the first five-minute candle to make a new high.

That’s a 58. If I see lots of volume coming in at 54 and 55, I might buy in anticipation of the first five-minute candle to make a new high. I’d rather buy early then miss the breakout. Of course, if it ends up being a false breakout, like exactly what we saw in CLNT today, if I’m in just a hair early, then the loss won’t be quite as bad. I can see it starting to fake out, I get out, and because I’m in early and I stop out quick, the loss will be a little bit smaller. Let’s see, let me look at some of the questions here.

How do I control selling on the ask, versus selling on the bid? That’s a good question. If a stock is moving up, I always try to sell on the ask, because I get the best price. You can sell on the ask, or you can sell on the bid. When you sell on the ask, you’re getting the best price, but you have to wait for a buyer to come by those shares from you. When a stock is strong, I sell on the ask, if the stock is weak, there is no buyers to buy my shares on the ask, so in that case, I have to sell to someone on the bid just to bail out. Selling on the bid is when the bid is bad, and the ask is amazing. There you go. Think of it like that. Sell on the ask because it’s amazing. Sell on the bid because it’s bad.

Again, if the stock is going up, you’re selling on the ask. If the stock is going down, usually I’m selling on the bid. I never buy the bid, because the problem is, if I want to get into a stock at the apex point, buying at the bid is below the apex point. If there’s really a rush of buyers coming in to buy that apex point, I’m not going to be able to get filled at the bid price.

If a stock immediately drops a lot, like all of a sudden drops $0.50, I mean, obviously I try to avoid being in that position, or having a large position when a stock could, potentially, have a big pullback like that. If it happens, I usually try to get out by waiting for the first pop, but sometimes I hit my max loss before I can wait, or before I can do that, and then I’m out. Someone mentioned CETC is halted. I didn’t see that. The risk is certainly, when you have a stock, let’s see, how much is this one up? This is up 101% halted right now.

When you have a stock that’s up 100% or more, and there’s no material news, then the exchange can ask the company to respond to why their stock is trading up 100%. That’s what happened with DRYS, and it obviously opened a lot lower. It’s interesting that CETC is halted, but CHNR, let’s see, how much is this one up? CHNR is up only 30% right now, so that one’s not as bad. CLNT is up 26%, which isn’t as bad. CCC, let’s see, there is a couple other ones. CCCL is up 9%, CCCR is up 80%.

Yeah, I guess CETC was the one that was up the most. Only made 60 bucks on it though. That is a thing to remember that, the longer you’re holding a position, the more your exposure risk goes up. The stock could get halted, and then you’re stuck holding it until it resumes trading. If you’re in the short position, it’ll probably work out well unless the company puts out news or something.

This is one of those reasons why, for me, I am aggressive on my sheer size, but then I mitigate that risk by trading for short periods of time. I wouldn’t feel comfortable holding 10,000 shares or 20,000 shares for two or three hours. There’s just too much risk in all that time. I’d rather go in, be aggressive, and get out. Like that spearfishing analogy where we’re just looking for that perfect set up, and then striking.

That’s going to continue to be my plan for the month of April, to be aggressive on A quality set ups, try to book those profits, and in between the A quality set ups, I’ll just sit tight, I won’t push it, I’ll let the market come to me, and I think it’s really carried me well through this week with five consecutive green days, and nearly $13,000 in gain. I don’t see any reason not to keep it up going into next week.

This is a good week to set as a benchmark of what I would like to achieve consecutively. Of course, if I did $12,000 a week, I’d be making over half $1 million a year trading. It’s also not bad, from a dollar standpoint, but more than just that, the consistency, and the low stress, that’s what I would really strive for. Maybe that will go hand in hand with bigger green days, and I guess we’ll just find out. Okay? So that’s it for today.

I hope you guys all have a great weekend, and you enjoyed this episode of Behind the Trades. All right, I’ll see you all first thing on Monday morning. Thanks, guys. Let’s be honest, if you made it this far, you must have really enjoyed that video. What’s stopping you? Subscribe right here and get email alerts anytime I upload new content. Until then, happy surfing.