A Bloody Valentine… -$6k in Day Trades

What’s up everyone? Finishing the first day here in Boston in the red, which is obviously not how I wanted to start the week. This has been without a doubt a frustrating month, and it’s reminding me of April of last year where I had an incredibly strong two-, three-month streak and then all of a sudden the momentum shifted. The tide changed, things slowed down, and I had to adjust. And today giving back some of Friday’s profits. The $13,000 on Friday was awesome but I’m not keeping all of it in my pocket, unfortunately pushing it a little bit too hard, so I’m hoping that things start to turn around a little bit more either later this week or early next week, but right now it feels like I need to just grind on small numbers and be happy with $500 a day if that’s all I can do and stop trying to swing for $5,000 days. That’s it for me. We’ll break it all down in today’s midday market recap.

Alright, everyone. We’re going to break down the trades from today. Definitely in a little bit of a grind here. It’s frustrating. I’ll be the first to admit. This is the crazy thing with trading. The job itself is easy. Trading is extremely easy. The hard part is dealing with the emotions, because right now having some losses, it’s just par for the course. There’s nothing really that concerning about having a slow period. You guys can see my P&L right here. Obviously losing $6,200 is disappointing. Making $13,000 on Friday though was really great, so it’s two steps forward, one step back. It’s not a big deal to have losses. It’s just the way it takes this toll on you emotionally. Right now I’m up, whatever, $110,000 on the year and if you said, “Ross, you can choose. You either make a nice and steady $20,000 a week or you have one week where you’ll make $60,000 and the next week you lose money, which would you prefer?” And obviously everyone would prefer just slow and steady gains.

Same with the overall market. What would you prefer? That you put your money into mutual funds and it just slowly and steadily goes up year after year? You’d obviously prefer that, but the reality is you have these drops like we have right here, and you have it as an individual trader also. You have these slow, steady grinds up but then you have pullbacks. You have a dip here. You have a dip here. You have a dip here. And it’s how you handle the emotions of it that ultimately determines whether or not you’ll be a trader for the long haul or whether you’re going to end up getting impulsive, revenge trading, and just blowing up your account.

So for me here, being down $6,200 on the day is for sure obviously not how I wanted to start the week. It’s disappointing. It’s frustrating. I think the hardest part is dealing with the transition from having really big winners almost everyday. For the last three months, November, December, and January, I was routinely having $10,000 winners. I made $13,000 on Friday. But the fact that it was happening almost every single day and then to have this switch.

Something that was really hard for me last year was this transition. Transitioning from having incredible days in 2015, 2016 and ’17 to all of a sudden April of 2017 things started to slow down for me and I ended up closing the month in the red. The hardest part was dealing with the transition from making $5,000 a day to making maybe only $1,000 and not being happy with it and continuing to push. Continuing to be aggressive to the point where I would give back the $1,000 I had and end up turning it into a loss, and that’s kind of what happened today. I was up $1,500 on my very first trade on DARE this morning, so let’s look at DARE. D-A-R-E.

I jumped in this with 10,000 shares at $3.35 and $3.40 and I sold, started scaling out at $3.48, $3.57, $3.58, and $3.55, which overall was a great trade right out of the gates. $1,500. That was a solid winner, and I was like, “Alright, looking good. I’m not done with it yet. I’m going to go in for the next trade.” So that was that first candle. That squeeze out of the gates. It pulled back. I got back in on this red candle. At the time it was green. As it was squeezing up I got in at $.37 and $.40. It popped up to a high of $.45. I was looking for it to break back over the half dollar and sell it at $3.50, $3.55. I was thinking about maybe adding at $3.50, so going back to 10,000 shares, but I didn’t and I ended up stopping out at $3.26 for a $700 loss. So now I was up only $880 on the day and I was like, “Alright, $880. That’s still a good day. Still a good day.”

Then we have ADMA hit the scanners. ADMA hits the scanners, and you can see this is what the chart looks like. It’s not very pretty. This hits the scanners. It pops up to a high of $3.58 and then it drops down, and what I usually say is, “Okay, let it drop down. We’ll buy the first pullback.” And so as it dropped down and started to curl back up, I tried to get in right here, and I pressed my hotkey and, you know, this is one of those things where it spiked up so fast. I thought I was getting filled right around $4.70. I got filled at $4.88 and $4.95. I literally bought this at high of day.

That’s the downside of using hotkeys, because when you press the hotkey, it sends an order to buy. You’re not typing in the price you’re willing to pay. It’s just based on the current price, and so I ended up buying at a decent amount higher than I thought. In any case, even with an entry at $3.70, I was expecting it to break over $5, and that’s what happened. It dropped down. So I stopped out at $2.21, and that was a $3,500 loss. So just like that I went from having been up $1,500 on the day to being down $2,500 or so. I was disappointed by that because I had just been in the green and now I’m in the red, so a little bit frustrated and looking for the next trade. The next trade was DARE. D-A-R-E.

On DARE I was looking for the first 5-minute candle to make a new high, which was right here. I thought that the first 5-minute candle to make a new high would be over $3.09. Well, I knew it would be over $3.09, and I thought I would get in at $3 to get in a little earlier. So I got in at $3 as you can see here with 15,000 shares, being a little bit more aggressive, however it’s a good 5-minute setup. First 5-minute to make a new high, break over the VWAP. Target would be at least $3.25 and if it holds up, possibly back to high of day. And you can see what happened. It dropped. Let’s back this up here.

This is the moment where frustration starts to set in, because you get in. It pops up. You see the green volume. And then it slams back down. It reverses hard. From $3.10 all the way back down to $2.72, and I had to throw in the towel. I stopped out. $2.75, $2.76, $2.74, so gave back another $3,500 there, so that’s it. Three losses and I’m done for the day. That’s kind of my rule of thumb, because at that point it’s just starting to get frustrated. And if I keep trading I’m just going to get myself more frustrated.

Right now we are in a very interesting market. February has been the hardest month for me since September and it feels kind of the way things felt in April of last year, because in April I had just come off a really great hot streak. A five-, six-month hot streak and then I finished the month of April down $4,000 so it was like, what’s going on? This is crazy. How do you go from making $100,000 one month or $80,000 one month to losing $4,000 the next month? This is nuts. And it wasn’t just like I had one huge loss that wiped me out. It was just lots of small losses like today. In fact today is my … Let’s see. One, two, three, four. This is my fifth red day of the month. It’s getting a little bit ridiculous. Five out of eight days have been red, which is way above my target. I had two red days in January, which was good. Oh no, actually. Sorry, I had three red days in January. Three red days in January. Not a single red day in October. I don’t remember November or December that well, but in any case having five red days and we’re only in the eight trading day of the month is obviously not impressive.

So what’s happening is I’m having a hard time adapting. I’m having a hard time bringing down my risk. I’m having a hard time not jumping on things when I start to see them moving because in the past in the last few months when we start to see something squeeze like ADMA, it goes. It goes from $4 to $5 to $5.50 to $6, and yeah, I would buy at high perhaps at $4.70 or $4.90, but it wouldn’t really matter because it would just keep going. And right now we’re seeing not as much follow through, and again, it’s kind of the ebb and flow.

Traders start to see a little bit more of this choppiness. They get a little more cautious. What do they do? They either trade less, they trade a smaller size, or they take profit sooner. And when you multiply those behaviors times a million traders out there, it obviously changes the way the market behaves and so it almost becomes a self-fulfilling prophecy. You’re nervous, you’re hesitant, and other traders are as well because you’re reacting to the market and now you’ve got a million traders who are nervous and hesitant. Then on the flip side when things are hot, traders get a little greedy. They get really aggressive. They’re getting big winners and they’re trading with bigger size and they’re holding longer and they’re waiting for the bigger move, and you multiply that by a million traders and you get these really extended moves where stocks are squeezing up 50, 60, 70% on a bull flag breakout.

Those are the two extremes, and right now we have transitioned. We transitioned I guess … I don’t know. The transition day I suppose would’ve been the 31st of January. Not for any particular reason why that was the day, but that was a red day for me and then it was also a red day on Thursday, the 1st of February. So two back-to-back red days, and since then we really haven’t bounced back. Friday was a great day with $13,000 in profit, but other than that it really hasn’t picked back up.

So we had the transition, and now we’re kind of in this little bit of a lull, and generally when you have a lull it’ll be this way until you have a stock that surprises everyone. A stock that suddenly goes from $2 to $8 in one morning and all of a sudden traders are like, “Holy cow. This momentum is back.” And the next stock that starts to pop up traders jump on, and it compounds and the new cycle has begun. But between now and the next cycle beginning, we have to be able to, and I say this mostly to myself, adapt the strategy to try to reduce risk. It’s not as good of an environment to trade with really big size.

Again, Friday was a great day and I traded with big size, but we’re not seeing big days like that back to back to back to back. I need to be more content with smaller size, and even on DARE or on ADMA or any of these trades, taking $.10, $.15 of profit when I have it instead of just holding it for this bigger move, and being more careful about buying stocks that are a little bit more extended. I always have a hard time transitioning between hot periods and cold periods and I get stubborn and kind of frustrated. I don’t want to give in to trading with small size. Part of me just feels like it’s not even worth it. What’s the point? I could make $100,000 in a good month. What’s the point in coming in every single day to only make $4,000 in the month? I might as well just not even trade, wait til the hot streak comes back, and then trade.

That’s the feeling, so it’s like, why even bother if we’re not seeing good momentum? But you don’t know when the hot streak is going to pick back up. You don’t know whether it’s going to be today or tomorrow or the next day, so you just keep coming in everyday. You keep trading and looking for momentum, and when you do see something like DARE that’s up 60% pre-market you think, “Well, maybe this is going to be the one.” Like I said last week, if you really do a good job of transitioning you’ll usually miss the first stock that really takes off, because you’re being conservative, but once you see the temperature is changing and things are picking back up you can be quick to start to be aggressive on trade setup two, three, four and five or whatever.

So I don’t know what my goal is for tomorrow or for this week. Actually I have not yet had a red week on the year. Every week so far I’ve been green. Last week was a close one but then I got redemption on Friday with $13,000 profit. So here I am down $6,000 on the first day of the week. I guess my goal would just be to try to finish the week green. If I can make $1,000 for the next four days and maybe I do end up getting one nice winner, get myself back to breakeven on the week and again, I want to try to close the month in the green. I think $10-, $15,000 is my target right now but we’ll just have to see how things look. Today the best trade was the first trade right out of the gates, and the rest of them were really choppy for me so I don’t know, maybe tomorrow just go for that first trade and then slow down a little bit.

But if you guys look back on the midday recaps, I did midday recaps every single day through 2017 and you saw there were these same ebbs and flows from things being really great in the winter, January, February, March, to slowing down in April and then this long period of grinding and then picking back up in October, November, and December. You guys will see that if you go back and look at those, and just recognize that this is part of the market. You have ebbs and flows, and certainly you feel like Tom Brady who missed an easy pass in the Super Bowl. It’s like, this is crazy, but you come back and get back at it, whatever. It’s just the way it is. You can’t win them all.

You have these ups and downs. The hardest part like I said is dealing with the emotions of the ups and downs. Unless you’re dependent on every penny you make trading, but I’m not and so right now yeah, I paid myself $100,000 for January and I can live off that for quite a while, and I don’t need to draw money out of this account. I don’t like seeing it going sideways or dipping down, but I’ll just grind through this slow patch and know that things will be hot on the other side. I just have to try not to dig the hole too deep. Right now my draw down I think from high of year to the low of last week was like $15- or $16,000 and right now I’m kind of halfway in between, so I want you guys not to feel discouraged or disappointed.

Because in a lot of ways right now for beginner traders this is a great opportunity to study, go back and watch those old recaps of hot markets, because when the markets do pick back up again I want you guys to be able to capitalize on it. When traders join the classes because the markets are hot, it’s like, that’s awesome. You’re inspired. You’re excited. But, you’re not going to be able to really take advantage of the hot market because you’re going to spend your first three months trading. Unless the market is really hot for a full three months.

Usually it’s six weeks on, eight weeks on and then it slows down for a month or whatever and then picks back up. That’s more common, so those of you right now who are studying, take this as an opportunity to really focus, practice discipline, exercise that concept of one and done. Take one big trade, one winner everyday and be done. Three trades a day at most. There aren’t going to be five, seven, eight A quality setups every single day. That’s very rare. If you can find one or two a day you’re doing good and you can make good money on those.

Anyways, that’s it for me. Day one in Boston, not the way I want to start the week, but that’s okay. We’ll be back at it first thing tomorrow morning and hopefully start to turn things around and get myself out of this little rut, and hopefully we see a little bit of better follow through in the market. But until then, take the profit when you have it so you got money in your pocket. It’s unrealized. You want to sell it and lock it up. That’s what I’ve not been as good about, and it’s hard to do that with 15,000 shares because obviously 15,000 shares is a really big position. Anyways, HTGM. A little bit of action there. Maybe you guys will check it out, but I think that’s it for me and I’ll be back at it first thing tomorrow morning. Alright, I’ll see you guys then.

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