Warrior Trading Blog

Ross’ Trade Recap: Max Loss, Max Frustration -$5,700

max loss

What’s up, everyone? All right, so here we are, Wednesday morning, third day of the week, and I’m finishing in the red. Max loss, max frustration, down 5700 bucks. Today’s a day where I took two trades and I lost on both of them.

 

Only two trades, but boom, boom, two red trades, and I’m done in the first 10 minutes. Sometimes that’s the way it is. It’s a first round knockout, and it’s frustrating. That’s just part of the deal with trading. It doesn’t always go your way.

What’s annoying for me is that yesterday I hesitated on the leading gapper, ASTC. I didn’t get in at $6.94, and it popped up to $7.50 without me. Now, the reason I hesitated was because on Monday, when I jumped right into the leading gapper, I lost. I hesitated on Tuesday.

Wednesday, I jumped right in and lost, so it’s like ugh! It’s just one of those days where it feels like you can’t win, because if I’d done this yesterday, I would’ve had a great trade, and I do it today, and then it doesn’t work and whatever. It’s just frustrating. That’s part of the deal.

The second trade that I took, good quality setup. It made sense. I got in at $6.50, dropped to $6.20, then down to $5.80; 20 minutes later it squeezes up to 10 bucks without me. How frustrating is that? I had the right idea, but my timing wasn’t quite right, and so I lost on that one. For me, after that big loss that I had at the very beginning of the month, I reinstated a max loss on my account. I called my broker.

I haven’t had it on the account in actually a year, and I finally was like, “Look. A $16,000 loss is just too much, because on that day, I was down $12,000, and then I kept trading. That’s how I went from down 12K to down 16K, which is just stupid. It was, that extra $4000, totally unnecessary. It was emotional. It was impulsive. I’m better than that, but I fell into that old habit that a lot of traders fall into. I gave in to FOMO. I gave into the emotions.

After that, I was like $5000 max loss on the account. If I’m down more than five grand, I’m done for the day. I’m cut off. Don’t let me take new trades, and it’s alive. It’s active on my account. That means, right now, since I’m down $5700, I cannot initiate a new trade, without calling my broker and asking them to lift this max loss on my account, so for me it’s like … After the second loss, I was very frustrated.

$5000 is not a lot of money to lose, for me, relative to where I’m at right now, but I was frustrated because I had two losses in a row. I wasn’t doing anything differently from what I would do on any other day. It’s just things didn’t work, and that’s annoying.

If I had gone back in for the second trade when that one started to crawl back up, on the one hand, yeah, from $6 to $10, $11, I could’ve made back all my money, but if it had done a second false breakout, and I jump in at $7 and it tanks to $6, then I lose another $4000; I’m down $9000. It’s just, at a certain point, you’ve got to draw the line, so I’ve drawn the line at $5000. Below that, I don’t take new trades.

That means, hopefully, the deepest red day I’ll have is in the $5000 range. Granted, if I take a trade and I’m down $25,000, I can … They don’t close my trades for me, so I can hold a stock deep into the red. I’ve got to still press the sell button, but if I’m below $5000, I can’t take any new trades.

Today it feels like maybe that hindered me a little bit, but that’s, again, that’s the FOMO talking, because the rational part of my mind says, “Ross, the very fact that you were down $5000 says that it wasn’t a very good day for you. You weren’t on your mark. Trading maybe wasn’t quite right, and you’ve got to draw the line somewhere. You drew it, and you followed it, and that’s what’s important.” We’ll break it down in today’s midday market recap, and you can see my two trades from today that led to a $5700 red day.

All right, everyone, so we’re going to break down the trades from today. It’s a red day recap, first red day recap in over a week. It’s frustrating. Now, we’ll go over the trades from today. I’ll just pull up my broker’s screen, so you can just see what we’re looking at here, sitting at down $5700, so a pretty decent-sized red day, which is disappointing.

This has just been a very difficult month for me. It’s funny how the tide can change in the market. January, I made $117,000, best month of my trading career. In February, I lost $10,000. For the whole month, I lost 10 grand, so it’s like … That’s the crazy thing is the market can go from being hot to being cold pretty fast, but then bounced right back in March, at $40,000-$50,000. March-April was great, May $75,000, and then here in June, I’m right now down … I was down only $2000 on the month, as of yesterday, and now I’m back to down $8000.

It feels like this is a month like February, just not seeing a lot of clean action. I keep getting caught in false breakouts, really frustrating, and the last few days have been particularly frustrating. Even though I made $7700 on Monday, that’s was nice, it was frustrating that I lost money on GEVO. The last three days, I’ve actually lost money on three of the biggest movers.

On Monday, we had GEVO, and I lost money on it. GEVO was our big gapper on Monday, and I ended up losing money because, right out of the gates, it did this … I got in for the break at the pre-market high, right here, break at pre-market high, and it dropped.

Then yesterday, on ASTC, I was a little bit nervous, and I was like, “You know what? I don’t know if I’m going to take the break at the pre-market high.” Guess what? I hesitated on it, break at pre-market high of $7. Boom, it squeezes up to $7.78, would’ve been a great trade. Then I get in on a pullback right here, and I get stopped out, as it comes back down. I lose $3000. On this one, if I had followed my go-to strategy of buying at pre-market high, boom, would’ve been a big winner.

Today on CLBS, big gapper, I jump in for the break at the pre-market high, and what happens? Well, you can see. It’s all red. I jump in and, on this one I took 4500 shares, so I got in really pretty fast. I jumped in at 32, 38, and 43, anticipating the break at the half dollar would then lead to a re test of the pre-market highs. So, my target was break of 73. I squeeze over 12, and then, you know, continuation.

It hits $11.45, and then drops 75 cents to $10.75. I held through the drop. It drops down to $10.60. I’m still holding. It then curls back up, squeezes to $11.65 and I’m like, “All right. That’s what I’m talking about.” Then, drops to $9.85.

Oh man, I don’t know. I don’t know what I should have done differently on this one. This was a red to green move set up. I held through the pullback, in the red. Waited for the red to green move. It happened. As it squeezed up to 66 I still had my eye on that $11.73 mark, which was the pre-market highs. You know, next thing you know, it’s breaking $11.

So, on this one, I was like, “Well, I’m going to have my stop at $11. You know, I got to keep a relative … I can’t let it go back all the way to $10.60. So, let’s just look at this chart for a second.

All right, so this is what it does. It squeezes up to a high of $11.65. Then, right here is doing a little bit of a micro pullback. So, I’m like, “All right. I’ll give it a chance to crawl back up.” Then, in this … this is 20 seconds. It drops to $10.75. I sell and, I get filled at $10.84. Then, it drops and I have to sell the rest on the bid at $10.28.

So, I just got slippage on these candles. Then, it’s a good thing I sold because it just really continued to go lower. I mean, it popped up for a second but, it’s just continued to go lower and lower. On this one, you know, the go to strategy didn’t work. And, this all speaks to … it kind of comes back to statistics because you could say, “Well Ross, why are you buying the break of these pre-market highs if, you know, obviously you lost money doing it on today, on Wednesday and you lost money on it on Monday.”

GEVO on Monday. I mean, it’s not really price range related. GEVO was in the price range on Monday. It just, you know, for whatever reason didn’t work. Ended up doing red to green move. ASTC yesterday worked out well enough for that break out. Good win there but, I missed it because I was being … I was hesitating.

Then, today I pulled a trigger and I got knocked down. So, that’s where it can be kind of frustrating and when you’re not consistent to your strategy, you know when you hesitate, then you end up missing winners. That certainly doesn’t help.

But, one of the things that I always do after a red day … so, today’s a red day. What do I like to do? I like to pull up my metrics just to kind of take a look at where I’m at. Big picture stuff. So, the last 90 days have certainly been a little choppy. I mean, the last 90 days I’ve made I guess about $170/$180,000. Was a little bit red. Came up into the green. Couple pullbacks. Another pullback. Last three weeks, four weeks, have been kind of choppy.

So, you know, this is kind of what I’m looking at. Had a couple really big green days, which were awesome but, I’ve had some bigger red days as well. Today is going to be one that’s kind of a $5000 loss, right around there. So, that’s high level. A little more detailed, looking at the metrics.

This is … let’s see. Let me just look at year to date for instance. We’ll just do 2000 … well, whatever. I mean, it’s fine. This is big picture. This is like two years of trading or something like that. One, one, 2017. We’ll start there.

So, since one, one, 2017 accuracy is 70%. You know, this is where I say, “All right, look. Today is a red day. Today is a day where, yes, I did lose on two trades but, over the course of $15000 trades, my accuracy is 70%. That’s a pretty strong metric to base it on. If I go back even further to 2016, when I started using Trader View, you can see here we’ve got 2,269 trades and accuracy is the same. We just added 1200 more trades, accuracy is the same.

So, I can tell you over a long period of time I’m right 70% of the time. All right, so, yeah. What’s going to happen is the losers sometimes get clustered together. You have two, three, four days that are really tough. Then, the winners get clustered together on the other side where you have back to back winners.

Of course, the thing is when you see these big red days, like $12000 loss, that’s what’s always tough to see. So, I think today … you know, the thing that makes me frustrated is number one, CLBS, this just really, really bad false break out. Ugh, it was just so bad. It was … now, I’ll say that this ends up being a triple tap, triple top, one, two, three. Basically three tops there. That $11.73 spot, that was a heavy level of resistance. It couldn’t break through it. We got a big rejection there.

So, you know, I’m going to eat the $3700 loss on that one, disappointing. Then, NAKD, that one’s just frustrating. So NAKD, was watching it. Pre-market high was $8. It had dipped down. Then, as it started to surge up right here it was on our scanners, hit the high of day MOMO scanner. I jump in at $6.50.

I jump in it at $6.50 because I’m like, “All right. This thing looks interesting. Looks like it’s moving up. Maybe it’ll get a move to $8.” It kind of had this funny headline overnight. So, I get in at $6.50. It goes sideways. I end up having to stop out around $6.15. I take a $2000 loss on it. All right, so I stop out.

It ends up dropping all the way down to a low of $5.11! Look at that. $5.11, that is awful. So, I’m like, “Man, this is just really a tough market right now.” Goes sideways, goes sideways. Then, here it does a red to green move. Kind of like CLBS, expect this one actually worked. It breaks $6. It goes up to $7, and it gets halted right here. Five minute circuit breaker halt, or 10 minute at $8.20.

This is that moment where it’s like … by this point, I was just feeling like … I was feeling really maxed on frustration this morning because in the last … last week I only made $2000. Last week was one of the worst weeks of trading I’ve had in months. I mean, making only $2000 for me is just … is very frustrating.

$300 a day, $400 a day, $500 a day. That is very slow trading for me. So, I was feeling frustrated. Monday had a nice green trade, $7600 and I felt like I needed it. Finally, I was getting a nice big win, getting a move higher. You know, I felt like that was a little bit of redemption. Then, Tuesday $1000, and now today, I feel like I gave back so much of that profit.

It’s just a little bit frustrating. To finally get a nice big win, and then to give it back two days later, that’s just irritating, and to see CLBS not work out. That’s frustrating. NAKD, frustrating. So, I was frustrated. I was just like, “Ugh, that’s enough.”

And, here’s the thing, I set at a $5000 max loss on my account. That means that today, I can not take a new trade. If I tried to take a new trade I’m going to get rejected on the trade. So, I’m just going to show you as an example. I’ll just try to buy one share, and it’s going to say, “Nope. Can not place any long opening new position orders.” So, it will not let me place the orders. I can press it again, and again, and again, and again. It’s going to say, “nope. Sorry. Can’t place any new trades because you’re down more than $5000.”

That meant it was just like I’m done. 10 minutes into the day I’m done and I’m not going to be able to take any more trades. So, that just makes me even more frustrated, and today it meant that I missed NAKD. However, what I would say is that if I had taken this trade I probably would have been inclined to take big size. I would have been inclined to take big size because I’m down $5000. So, the quickest way to make that back is to take 10, maybe 15000 shares. Right?

Now, yesterday on CLBS, just for reference, we had the stock do this kind of thing where it rejected … it did a false break out on the first move, and came down. It then comes back up again, and this is the spot where maybe I would have been tempted. I’m going to go for it. It’s going to break the pre-market highs. I’m going to do it. I’m going to take a big trade on this. Then, what happens? You end up getting stopped out.

That’s how you go from being down $5000 on the day to being down $7000, being down $8000, being down $10,000. Now, as it turns out this one ended up working but, this … this would have stopped you out based on following your rules on max loss.

So, on NAKD, God forbid, I’d … let’s just say, jump back in it at $7. Then, it does this again and, sometimes when it does it again it does it even more dramatically, and it goes down to $5. It stops out anyone who is holding through here. You know, then that’s how you go from being down $5000 on the day to being down $10,000, being down $17,000. You know, whatever it is. I just have to draw a line in the sand.

The June 1st, was the worst day I’ve had trading. It was the second worst red day in my trading career on June 1st, down $16,000. It’s easy to rationalize and say, “Well, you know, I’ve made so much money that whatever. I could hold it a little longer, hold it a little longer,” which is what I did. That’s how in three trades I went down that much.

I was red on three names and you know, there goes $16,000. You have to draw the line somewhere. If you don’t draw it at … see, I was down $12,000 on this day, on these two trades right here. I was already down $12,000 and I took a FOMO trade on this one. I jumped in emotionally, and lost another $4500. Stupid, bad trade. Bad mistake.

If I’m down $12,000 and that wasn’t enough for me to draw the line and say, “I’m done.” You know, what happens when I’m down $16,000? Am I going to go ahead and take that fifth trade, because what I’m noticing is that as my gains have gotten bigger, and bigger, so have the losses. Right? See, the losses get bigger. The gains have gotten bigger, but the losses are getting bigger also. What I want to do is I want to have the losses stay fixed where I’m not letting them get bigger. Let the gains grow but, continue to respect your max loss.

So, I’ve kind of been operating without a max loss for about a year, and was just sort of like, “Well, obviously I’m making money. I don’t really need to follow that rule.” But, I think the problem is that I’ve, as a result, let these draw downs get bigger and bigger. This shows my max cumulative draw down.

In 2016, my max draw down like $5000. I mean, I was only going down $5000 before bouncing back up. I made $200,000 that year, $220,000. But then, come here in 2017, I had a $20,000 draw down. So, that was a really bad three … two, three weeks of trading, I lost 20 grand. That was after having taken $583 and turning it into 100 grand. So, I made some really good money, and then, I let myself just kind of let too much of it go.

Then, you can see a couple other big draw downs here, here, and then, here. This was on … whatever this is. June 1st, losing $16,000 in one day. The day before I had lost three grand. So, down $19,000 in two days. I don’t want this to just keep going like this where I have the next draw down I lose 25 grand. Then, I’m losing 30 grand, and 40 grand. I don’t want to do that.

Yes, obviously, I want the winners to keep going up and when you have exponential growth like this in my account. You know, this is the growth in my account in the last two years. This has grown really quickly, and obviously to take the amount of risk to generate this type of return, there will be draw down but I have to draw the line somewhere. That’s what I’m trying to say.

So, I’m drawing the line at $5000. Could I have made back some money on NAKD? Sure. I probably could have made back some money on it. However, if it had gone the wrong way and given this one had pretty big spreads, and the volatility was pretty crazy, I could have easily been looking at a $10,000 loss. If I really was being emotional and aggressive. Then, boom, that’s how I get right back to down here.

So, I just can’t do that. I got to draw the line somewhere and keep the hole small. I got to dig out of $5000 hole, but I can do that in one day. I can dig out of a $5000 hole in one day. Digging out of $16,000 hole in one day … well, it’s possible but, that’s a little more difficult. My whole trading career, best day was $40,000. Second best was 30. Third best, 29, 29, 22. Those are my five best days of all time.

I’ve only had five days in my entire trading career where I made more than $20,000 in one day. So, to make back $16,000 or $20,000 in one day I’d have to have like my best day of all time. That’s one of the top five. That’s just not logical. However, how many days have I had where I’ve made more than $5000? Well, that … I’ve had more days than I can even count.

Keep the hole small, I can dig out of it quickly. Then, I get right back to green. And, the day for me to be really aggressive, you know the day that I made $40,000, the day I made $30,000, those weren’t days that I was down five grand and then, miraculously got myself to up 30, those were days where the first two trades were really big winners. Then, I felt confident to take trade three, four, or five with even more size and, boom, I kept going up.

I’ve never had the biggest day of my career start by being down $3000. So, yes, I’ve had some days where I’ve been able to re coop the loss. In fact, on Monday I was down I think $2000 before I finished the day up $7500.

That can happen, but from down $5000 to up, no. That really doesn’t happen. Down $1500 maybe, down $2000 maybe, down $2500 maybe. $3000 starting to get unlikely. If I go down further than that the odds of me finishing the day in the green are very unlikely.

So, I called Light Speed and ask them to set this max loss to my account. They set it on my account and now, it’s live. Now, I could have taken a trade in my IRA today. I could have switched and said, “Oh, I’m going to trade in the IRA.” But, here’s the thing; I knew doing that would be just emotional, and the thing is as NAKD was surging up I had stepped away from my computer. I was like, “I just need … I’m annoyed. I just got to walk away.” I can’t just sit here and watch these things happen. I’m just not going to … that’s just going to annoy me. I’m not going to sit here and watch the market when I’m at my max loss.

So, I step away. I come back. I see it’s halted and I’m like, you know, annoyed and just figure well, whatever. I’m not going to trade it coming out of the first halt in my IRA. There’s just way too much risk there. So, I’ll just come back at it tomorrow.

Again, that feels like that’s also kind of breaking rules because if I’m down $5000 on the day trading in the IRA just doesn’t feel like the right day to do it. So, it is what it is. It’s my fourth red day of the month. Lost $16,000 on the first day of June. Lost $14 on June sixth. Lost $480 on June 11th, and then here today I’m down $5700.

We’ve got seven days left in the month. I’m still down $8000 on the month. My goal really is to try to close the month in the green. So, got to make $1000 a day pretty much. I don’t know, it seems like the market is very interesting right now. We’re seeing a lot of big moves pre-market. CLBS, you know, the bulk of the move was pre-market. The bell rings and it sells off. So, that doesn’t really work with my strategy. ASTC was the same thing, bulk of the move was pre-market. The bell rings and it is selling off.

I do better with stocks that move during regular market hours. NAKD, I guess, counts as that even though it did this ugly kind of move but, hopefully we’ll just continue to see more opportunities off the scanners. We’ll, you know, get some redemption.

I don’t think this is a market where it’s safe for me to swing for the fences, and I didn’t swing for the fences today. I wasn’t taking huge size. This is not a blow out day. I mean, you guys have been following me for a while know that it’s a red day but it’s not a blow out. I’m not going to … it really makes no difference. It doesn’t change anything with my account. I did take out $20,000 yesterday so I could pay some bills. So, I’m at $79,000 this morning, which I was okay with doing because I don’t really need this much money in my account these days given that the market is slow.

Tomorrow we’ll be at $74,000 or whatever, $73,000 and just keep growing the account. Get it back up to the 80s, the 90s. Take some money out, get it back up and you know, it’s just that grind. Two steps forward, one step back. Two steps forward, one step back. As long as the big picture is still green, you know, that’s what counts and it certainly is.

Don’t feel bad for me today. It’s not a big deal. I’ll be back at it tomorrow, and hopefully we’ll see some better opportunities.

All right, guys that’s it for me. I’ll see you all back here in the chat room first thing tomorrow morning, pre-market analysis and we’ll see if we can bounce back and finish the week strong.

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