Warrior Trading Blog

With Every Loss Comes a Lesson -$5.8K | Ross’ Trade Recap


Hey, everyone. All right, so sitting here, third consecutive red day. Not the type of streak that I look to set. Three red days in a row is not ideal. I had three red days in a row at the end of February, going into the first day of March. It’s not the first time it’s happened this year, might not be the last time it happens.

With every loss, comes a lesson. We’re going to talk about that tomorrow during my workshop that I’m going to host at 1:00 PM Eastern. The link to register is right below. I really encourage you guys to register. I’ll give you a free copy of my best-selling book, How to Day Trade. We’re going to talk about that process of bouncing back after a red day because from $583 up to a million bucks, I had a fair number of red days.

I had a few that were pretty big and that other traders, potentially, they could have been career ending red days, not because the loss was so big, but because it got them so shaken that they got off their game, and then they just start unraveling. Getting more stressed out, getting more reactive, getting more aggressive at the wrong times, and it just starts a downward spiral.

I’m going to talk about how to cut that downward spiral real quick so you can have a couple of red days, which is part of trading, and bounce off them, and then surge back to new heights. That’s going to come up tomorrow, 1:00 PM Eastern, hope to see you guys there. As always, questions, comments on today’s recap, leave them below and I’ll come back through and answer them this afternoon.

All right, everyone. We’re going to go over the trades from today. Today is going to be my third consecutive red day, which is awful. I don’t like having three consecutive red days, but as I said yesterday, it’s not uncommon for red days to get clustered together. I don’t remember the last time I had a three day red stretch. I might have had one … Well, March ended up actually being a red month, but it wasn’t from a consecutive red day losing streak, it was just individual red days scattered throughout.

This might actually be … No. I had a three-day red streak at the end of February that carried into the first day of March. That was the last three-day red streak I had. It’s obviously not the type of record you want to be setting, most consecutive losing days in a row, although it’s one that I’ve come close to having pretty long stretches of throughout my career as a trader.

Today, what we’ll do, we’ll look at the gap scanner, we’ll look at how I traded, what I was looking at, where things went wrong. Then, we’ll talk about the big concepts that with each loss comes a lesson. I’m down 2900 here in my main account, which is my regular trading account, and I’m down 5800 in my IRA account.

Combined, what is that? 9000, $8700 in the red? That’s a good-sized red day, really could have done without it, but it’s part of the deal. This all does, at the end of the day, come down to averages. Even last year, making half a million dollars, it wasn’t without a few big red days. Of course, I had some big green days, and at the end of the month, the end of the year, everything averages out.

As long as you’re generally making more than you’re losing, and you’re generally winning more often than you’re losing, you will do okay. But it’s just impossible to avoid red days. It would be like trying to be a boxer and never take a hit. You’re going to take hits, it’s part of the deal. It’s something that some traders certainly struggle with.

I’ve struggled with it more so at the beginning of my career than now, when I was tighter on money, when the difference between success and failure, the stakes were higher, the pressure was higher. It was scarier, thinking, “Well, maybe my strategy is broken, it doesn’t work anymore.” Now that I’ve had all this time of the ups and the downs, and the ups and the downs, I no longer have those fears.

The fear or the emotion that I have at this point is just, man, that’s frustrating. The market’s difficult, and not really … The setups are not responding the way I would expect them to respond. We’re seeing poor follow through, and so it creates a sense of frustration and annoyance, but not anything too serious beyond that.

This morning our leading gapper was MLNT. Now, MLNT, I knew was very risky. I did not trade it right out of the gate. I waited for a red to green setup on it. MLNT was gapping up about 129%, and it was priced at $4.54 coming into the open. This one, I said right away that it was not A quality because the float and the volume were both a little too high pre-market. Of course, the float doesn’t change pre-market or after hours or whatever, but the float at 8 million shares was a little higher than what we’ve seen for the setups that gave us really home run momentum, and 4.8 million shares of volume pre-market tells us that we already missed the beginning of the move.

You can see that very clearly. It was already up quite a bit by the time the bell rang. The bell rings and I said I’m not going to watch this for a gap and go trade because the gap and go setups haven’t really been working super well. I’m going to wait for the first pullback, and then a red to green setup. We got the first pullback right here, we get the red to green setup right here. I get in, anticipating the break over the half dollar. I bought at 440.

Now, the first candle to make a new high would have been really hard to buy because the high of this candle was 417, and the close of this candle was 414. The open of this candle was 416, so it opened right at that point, which is very hard to feel confident in pressing the buy button, and then it surged up. I was looking at this little trigger here at 39, and thinking that if it broke that level, we should break over the half dollar. If we broke over the half dollar, we should re-test high today and get a quick squeeze right up to $5.

That’s what I was looking at, that was my back of mind target. Well, popped up to 48, and then dropped all the way back down to 388. Total fail. Now, this is tricky because I got in with 9000 shares at 440. I added, thinking it was going to break the half dollar, it didn’t. Well, I added up to full size of 9000 shares. It didn’t break over 440, it drops down, and instantly … I mean, almost instantly, I was down 30 cents.

I just was like, “Oh, my God. You’ve got to be kidding me.” Let’s just give it a second, let’s see if it pops back up like this. If it pulled back here and was red, but did not break the low here, I could maybe give it a second, but it just kept going lower and I had to sell. Lost 40 cents or so on 9000 shares, $3500 loss. Disappointing.

[SPECS 00:07:54] was a trade I took off the high day MOMO scanner, only made 500 bucks on it. That one I bought for the break of three. It ended up hitting a high of like 320. I’ll show you that one in a second. Anyways, this goes lower, it goes lower, and then look at this. It breaks over 450 and it squeezes all the way up to 465, 565. I 100% had the right idea, my timing was wrong. I got in for a little early before confirmation, and then we got the break.

What’s so frustrating is that I missed this trade. I missed it because, at this point, I was just like, “You know what? I’m frustrated. I’m already at my max loss.” I switched to ML. I switched to my IRA account. I ended up taking one trade coming out of the circuit breaker halt here, just a small scalp, $637, whatever, nothing to be that excited about. It squeezed up to a high of 590 which I thought would give us a break of 6, did not.

Dropped all the way back down to 493, so a good thing I didn’t add up there, and since then has just been dipping back down. It’s coming up a little bit here but not really much. That’s really disappointing, because, of course, if I had this … if that this had happened right here, my day would have been completely different because this 9000 share position would have been a 3500, $4500-plus winner. If I’d been able to jump in right here, if I’ve gotten back even with 6000 shares, it certainly would have recouped that loss, but I missed that opportunity.

I missed it because I was focusing on ETSL, which is … No. That’s not the symbol. Hang on. ESTR. ESTR, this one I even waited for the first five-minute candle to make a new high. I didn’t just jump into it as it was squeezing up. This one got me good a couple of months ago back in March. It’s actually the stock I’ve lost the most on in my career. But I was like I have a bias on it. I’m not going to trade it, and then it goes from $1.50 to $3, and I was like, “Okay. Well, maybe I shouldn’t have a bias.”

Let’s keep an open mind. It’s clearly showing it can move. 200 moving averages here at 341. If it breaks that level, room up to four maybe higher. I was like, “All right. I’ll take the first five-minute candle to make a new high. I’m going to give it a chance, five-minute candle to make a new high.” That happens right here and it makes a new high by two cents per share, and then drops all the way back down to $2.

On this one, I just … I bought the break of 250, and then I added. I saw the green on the time in sales. I added. I was like, “Yeah. This looks good. Looks like it’s going to break 250, 275. Next thing you know we’re going to be at $3. This thing is going to potentially squeeze up, get halt, to the halt level it was showing at like 389 or 189.” I was thinking, “Yeah. This thing is going to squeeze up first five-minute candle make a new high. We’ll test to 200.”

Well, I was wrong, obviously, and stopped out, took the loss, and that was it. At that point, I was just like, “I’m done for the day.” Again, this is part of the deal. On a stronger day, this might have worked. I think MTSL or, sorry, MLNT … I’m getting confused with the symbols. MLNT, I think this was taking most of the attention from traders. Look at the high here of 525.

It’d be interesting to see what it does if it breaks 525 and 550 if we do get another surge and it squeeze up through 6. But, of course, by now, I’m already down below max loss. I can’t keep trading. I tighten the max loss to $2000, which means if I’m down more than 2000, I can’t take a new trade. I have my two accounts and the benefit of the two accounts is that it does make the green days … it can amplify the green days.

It can also kind of soften the blow of the red days. I’m trading across two accounts here so, yeah, I’m down three grand in this account and that’s not the end of the world. Yeah, I’m down 5800 in this account. That’s also not really the end of the world. If I was down 8801 that maybe would feel a little bit worse. But, of course, if all of this was in one account it would be a $300,000 account.

I just, again, would emphasize that the way that I’m trading right now is with larger size and I am taking a bit more risk and this month is kind of disappointing because we got off to such a strong start in the first two weeks, and I made $50,000. Now, this week I’m down like 18,000, and so I’m back to up only about 31, 32,000 on the month, which is a little bit disappointing. But, of course, I do these recaps every single day, green day or red day, because that’s part of my commitment to be transparent with you guys.

At the end of each month, I upload my broker statements to the website right down here. You can see it down at the footer, the link for verified broker statements. The May statements are up here, $86,000 of profit, April, March. March was a red month and disappointing as it was to finish a month down 21 grand. Did the recaps every day, posted the P&L, posted the broker statements because this is just part of the deal.

Last year I had definitely one red month. I think it was just one red month last year. I can check my stats here real quick. But red months are going to happen, and for a beginner trader, they’re a little bit more stressful because you’re not totally sure, “Am I red because my strategy stopped working or am I red because I just happen to have a little bit of a bad streak, the market is a little tough right now and I just need to take it a little easier.”

Let’s see. Let’s filter this for 2018. Detailed, yeah, I had a red month in February last year. Of course, January … Well, this is gross profit. But, in any case, that was a red month. August and September we’re basically breakeven months in 2018. But June and July, June I did 43,000. I’ll see if I can top June of last year, which means I need to make another $11,000 between now and the end of the month.

July I did 60,000. Well, new month right around the corner. New month, new you, new goal so try to do, beat 60,000, and then August and September, the bar is set super low. If I can make even 20,000 each of those months, I’ll be in great shape. But, of course, I’ll keep my $40,000 monthly goal.

The cumulative profit of all this is $500,000. But it doesn’t come at $500,000 divided by 250 trading days. That would just be averaging … Well, that’s not right. That would just be averaging a steady [inaudible 00:15:46] $2000 a day, right? The reality is you’re going to have 8, 10, 15, 20, $30,000 days when you’re at this level that I’m at.

Then, you’re going to have days where you’re down 5, 8, $10,000 and you can’t let it shake you. You can’t get rattled. We’ve all seen those sports games where you have a team that’s in the lead going into the fourth quarter, and then all of a sudden the lead gets smaller and smaller and smaller and they start getting shaken and rattled and nervous and they start screwing up, making silly mistakes, and the next thing you know, the momentum of that other team just pushes right through and it’s that psychological, that mental battle more than anything to keep focused, to stick with what you know, to not let yourself get thrown off balance because you’ve gotten yourself all worked up.

Yeah. It’s today a red day? Obviously, third red day in a row is disappointing. In terms of following rules MLNT, the setups that I traded were both fine. I just missed a really good set up, specs, off the gap, off the high day MOMO scanner, that was fine for a break of $3. It didn’t really hold up. This one you see, I had this pre-market high. The bell rings, it starts to surge up, but really gave back those gains.

In any case, it was fine to take a trade on it off the scanners. ESTR, it was good that it didn’t market into it as it was surging up because that’s what I did last time, and that cost me a lot more. I waited for the first candle to make a new high. On this particular stock, for whatever reason, we did not get resolution on that five-minute setup, but it was still a fairly valid five-minute setup.

Yes, you had the red flag. I suppose of the highest volume being a red candle, but lighter volume on the pullback candle, I don’t know. I don’t think there was really a significant rule breaking today. It was just a day where most of the focus in the market was on MLNT, and so SPECS and ESTR didn’t get a lot of follow-through because traders weren’t really watching them. This has almost 40 million shares of volume. This is what people are focusing on today.

Be mindful of that crowd mentality of the market that what the market’s focusing on, what the collective trading community is focusing on is often … Well, you should probably be watching as well, because it’s going to have the most, the fiercest breakouts when they do happen, and maybe you got to sit tight and the first one is a false breakout, but the second one rips and that’s why you got to stick with it for the stocks that are really in play.

It was the same on VPTH. If we go back on VPTH to that day that it made the big move up to $70 a share. It tried and failed, tried and failed, and I lost on the first two tries. Then, on the third breakout, it squeezed from $28 to $72 per share. It absolutely exploded, and if you’ve been the one that lost your focus, looked away and traded an ESTR on that day, you would have … and then miss that big move, that’s when you start to get frustrated.

In any case, we’re coming up here towards the end of the week, Thursday, Friday. I’m going to bring share size down a little bit more to 6000 shares for tomorrow. Just trade smaller size for me until I’m seeing more predictable momentum, and I’m seeing better performance on my own side. I mean, yes, I see EMTSL, and I see … or MLNT and a couple of others showing strength but until … I’m starting to put in a couple of bigger green days. I’m going to keep my share size a little bit smaller. Try to just finish up this week.

I’m not going to try to make back every penny that I lost in these last three days. I’m going to start by rebuilding one green day at a time. Tomorrow 1:00 PM Eastern, I’m going to host a free workshop. We’ll be talking about the fact that in every loss is a lesson. I’ll talk about some of the lessons that I’ve learned through some of the bigger losses that I’ve had over the years. Of course, the biggest one ever was just March of this year.

It takes a certain mental focus to be able to get knocked down so hard and be able to get right back up the next day. To be able to lose 30 grand and come back the next day and just keep trading. I’ve gone through all of that. For those of you guys that are at the very beginning of your journey, you’ve had a red day, you’ve gotten shaken, you’re having a hard time bouncing back from it. We’ll certainly talk about that during the workshop, and I’ll encourage you guys who register to consider it your first step in really pursuing your education as a trader.

That’s coming up tomorrow 1:00 PM Eastern. I will record the workshop and we’ll send out a replay for those that can’t attend during that time, and those two guys who are already Warrior Pro students or you’re in the Warrior Starter Class, I’m not going to be talking about anything that we don’t already cover in the classes, so you’re welcome to hang out if you’d like to, but you also don’t have to feel like your, need to register because you’re going to miss something because you’re not going to miss anything.

All right, so that’s it for me. I will see you guys first thing tomorrow morning, 9:15. Hopefully, we have a good gap scan. Hopefully, we get a couple of good opportunities, but if this week just kind of fades out, and isn’t one for the record books, that’s okay too. We’ll live to trade another day. Just try to keep my head above water and this is one of those times where I start to think, “I got a little too much … I might have a little too much money in these accounts.” Having $300,000 in these two accounts combined is a lot of buying power.

It can allow me to be a little sloppy, but at the same time, I just had the best month of the year last month with almost $90,000 so, yeah, maybe no reason to change what generally seems to be working just because of a bad couple days. We’ll leave it as what it is right now and be back out first thing tomorrow.

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