MAX LOSS

What's up everyone? Today's day 44 of my
small account challenge of growing a
$2,000 account using Charles Schwab as
my broker. And it's my second red day in
a row. I was red on day 43 down $8,000,
which was a bigger loss than I would
have liked to have taken. And today for
day 44, I am red again. So, two red days
back to back. The market has really
cooled off quite a bit here. And just
like on day 43, today I'm red both in my
main account and my small account. So,
same stock, same trade, didn't work, got
smoked. And today, I'm at max loss in my
main account, which is really
discouraging. So, let's go ahead and
jump on the screen share and start
breaking it down. As a reminder, as
always, the profits from these small
account challenges do get donated to
charity. But, as you can see right here,
my equity curve has been a little rocky
with a bigger loss. loss. It was like a
$20,000 loss back there around day 36. A
quick recovery and then the $8,000 loss
and another loss here today. But you
know what has been steady have been you
guys hitting the thumbs up on the
episodes in this series. Every time you
hit the thumbs up, it adds an extra
dollar to how much I'm donating charity.
So, I appreciate you guys doing that.
And we've now raised uh $493,000.
And I'm kind of bringing up the rear
here because I keep, you know, well,
having these losses, which was, you
know, day 43 and day 44. So big picture,
we're still moving in the right
direction, but these last couple days
have been a bit of a setback. So day 44
this morning, as you could see, our
scanner, um, compared to some of the
earlier days in the challenge, our
leading gainer was only up 49%, which is
a relatively small gain. The ticker was
TN. That's the stock I traded. That's
the stock I lost on.
uh it's a 20 million uh shares of volume
at the time that I took the trade
roughly a float of less than a million
shares relative volume 27 times above
average. So based on my five pillars of
stock selection, it met all of them
except for breaking news. However, this
is a stock that it's important to
realize was on day three of
continuation. So, while we had this
pre-market chart where we had a rally in
early pre-market, a sell-off, a rally
back up, and a rejection at 7 a.m., I
didn't trade that. We got this curl back
up. The big picture was that over the
course of the last few days, we had a
move, then it sold off, finished that
day red, then it had a recovery, and
yesterday sort of rallied through the
day into pre-market here where it
continued. And so, I was looking at this
820 level. And the reason was because
that was a gap on the daily chart going
back to this day in August. And if we
broke over about 819, we had room on the
daily chart up to 989 and then we had
room up to about 17. So I was looking at
that daily gap and as we started to
squeeze up right here, I didn't take
this trade at 7 a.m. It pops up, it
rejects, it then curls back up and it
starts consolidating here. And then
right here as it starts to pop, I jumped
in and we got this squeeze from 820 all
the way to 920. But look at that topping
tail and it reverses back down and I
take the loss and I took the same trade
in my big account. And in my big
account, I got smoked. I'm down $44,000
in my big account. And in my small
account, well, you know, it's tolerable.
I'm down $3,000. It shouldn't surprise
you that in my big account I I generally
trade like 10 times as much size. So the
losses generally are bigger when I lose
and the winners are also much bigger
when I win. And so you know the big
accounts up millions of dollars this
year. It's done really well. The small
account has, you know, everything's been
on a smaller scale and that's fine. But
today's a day where I'm red on both in
both accounts. I'm feeling really
discouraged. And uh this is right now
the very hardest part of being a trader.
The hardest part is tolerating the loss.
It's not hard to tolerate winning days.
It's hard to tolerate the losing days.
So, tolerating the losing days and
having the emotional stamina to keep
showing up every day in spite of the
market being cold and and still having
the restraint to not be too aggressive.
Now, that's exactly where I made my
mistake today. So, in my big account, as
this started to pull away right here, I
was like, "Okay, it's game time. I
haven't taken very many trades this
week. I've been sitting on the sidelines
for most of the week and now finally
we've got a stock that's looking good
and I punched it. 15,000 shares starter
doubling to 30 going up to 45,000 shares
adding to 60,000 shares as it squeezes
higher. And so I'm adding boom boom boom
boom as it moves higher. And then when
it flushes back down, well my average is
way up here cuz I kept adding. Now, in a
hot market when these continue higher,
you know, that high average is fine
because I get another dollar or $2 a
share and I'm up 50 60 $70,000 in one
trade. But in a day like today,
this reversed. So, why did I think it
had the potential to keep going and not
do a rejection like this? I felt like in
the moment, this was the most obvious
stock in the market. And that's
typically where I find the most success
is trading the number one leading gainer
that's got the volume that's moving
quickly. We had that nice gap on the
daily chart which meant we didn't have
any resistance to 989. So we had this
nice window and then above that we had
even more room. So I felt like this
might be the tipping point where we get
capitulation which means anyone who's
been holding this to the short side
finally gives up. More long traders jump
in as we see this surge of buying. and I
was wrong. We didn't get that tipping
point. Now, is it because the company
itself is selling shares? That's
possible. Now, this was a risk that I
knew with this stock that they have
filed a prospectus just not that long
ago at all, giving them the right to
sell an additional 1.8 million shares.
On the other hand, with the volume
yesterday on this one, which I'll just
pull up the chart here just to double
check the volume. So yesterday this
traded over a 100 million shares of
volume. You know I kind of felt like
realistically a 1.8 million share
offering uh isn't that substantial
compared to the amount of liquidity that
the stock has had. There are some
warrants that are out there. There are
some tra institutional traders who you
know could exercise them but those still
were relatively negligible compared to
the amount of volume. So you know I
thought this was going to be the one. I
thought it was going to pull away and we
got that big rejection. Then it comes up
again and does another rejection right
here and another one right here. So now
this stock, you know, this has kind of
it's become its personality at least for
today. So I shouldn't have taken so much
size. Uh on the other hand, I've been
sitting on the sidelines for quite a
while. I've been patient and then I
finally felt like I had one clear shot
and I took it. And you know, this wasn't
the market to take that kind of risk in.
And that was something that was hard for
me to kind of restrain and hold myself
back from. And I've talked about this in
other episodes that my biggest struggle
is when the market cools off, taking my
foot off the gas. So, while I've had my
foot off the gas for the last few days,
when I saw this opportunity, I took a
big swing and it was a a big strikeout
and I had a big miss. So, now, you know,
$44,000 red day in my big account,
that's discouraging for sure. The $3,000
red day in the small account, well,
that's also discouraging. you know, my
small account peaked at right around
$100,000
and now I'm, you know, have dipped back
down to 88,000. So, I'm down like 12% or
so off the high. And um while that's
tolerable, I I'd really like to start
moving back in the right direction. But
I am limited in my ability to do that by
opportunities in the market, and those
are out of my control. We will either
have great opportunities or or we won't.
And if we don't, it's very hard for me
to recover uh those losses or produce
meaningful profit. And so I have to be I
have to continue to be selective about
what I'm willing to trade, but also
recognize that until I see a little bit
more success from the attempts that I
make, I also have to hold back my share
size so I don't continue to kind of just
give back profit during an environment
where even stocks that look good don't
perform as well because the overall
sentiment is much more bearish than it
was a few weeks ago. And so these are
one of the things that I've noticed in
my trading is that when it's hot, I size
up. I do extra extra good. I have a
great stretch, make a lot, and then when
it's cool, if I don't size down, I start
losing a lot because even an aquality
setup in a really bearish market will
never perform as well as that same exact
setup in a hot market. And that's
confusing because the five pillars are
the same and the six sort of you know
not quite as tangible pillar is what is
the sentiment in the market today and
it's more it is more difficult to
measure that it requires more intuition
and you could gauge it a little bit
based on the recent big percentage
gainers and things like that but I
haven't fully been able to quantify the
best way to measure it. So, while today
uh we did have something that felt
obvious because of overall sentiment
being poor, um that setup did not work
very well and I probably lost uh quite a
bit more than I needed to. So, that's
day 44 in the books, but I'll be back at
it as always for day 45. And for those
of you guys that want to watch over my
shoulder, learning to trade in a cold
market is a good opportunity to teach
and learn discipline. This is the time
to be more patient. I'm not overtrading
and I'm not spiraling, but I am finding
that accuracy is lower right now. I also
think it makes a lot of sense to
practice when the market is colder
because when the market does heat back
up, you will be able to better
capitalize on it versus someone that
starts when the market is hot. If you
start when the market's hot, you're just
not able to fully capitalize because
you're still new. So, it's better to
learn while it's cold. Be in the
trenches. Pick up as many skills as you
can so when we get that next hot cycle,
you'll be in a better position to
capitalize. With that, I'll remind you
as always that trading is risky and my
results are not typical. And there's no
guarantee you'll find success whether
you trade with me or you learn on your
own. So, please manage your risk and
practice in a simulator before putting
real money on the line. With that, I'll
see you guys back at it for day 45 at 7
a.m. streaming bright and early.