Small Acct Day 4: We had a 1,500% Short Squeeze Today!! transcript

What's up everyone? All right, so today is day four of my brand new small account challenge and I'm locking up another green day. This is solid progress. This is the leg of the challenge where I'm not using leverage. So although the growth is a little bit slower, my goal is still to maintain high accuracy, consistency, and if possible, you know, to avoid red days. Now losses will happen, and I did take my first loss today.

So, as of right now, I've got nine trades into this leg of the challenge, and I've got eight winners. So, I'm sitting just under 90% accuracy. Now, some of you guys will say, "Ross, it's no surprise you had a loss today. You're not wearing your lucky bumblebee striped sweatshirt." And you're right, but I learned a trick over the weekend. You know how I was getting all that good luck from wearing that lucky sweatshirt and how I actually have two of them.

So, if you wear two of them, you get double the luck. Well, I realized if you wear two of anything, you get double the luck. So now I'm wearing my Lucky Elephant sweater, but what's underneath? Are you ready for it? Are you ready? Here we go. Lucky elephant t-shirt. I'm doubling up on the elephant. Doubling up on the luck. Guys, this is not rocket science. All right, so now that we know that I was doubled up on the luck again today, it's no surprise that it's another green day.

So, let's go ahead and jump on the screen share and start breaking it down. So, this is my progress here since day one. Funded the account with just under 2,000 bucks. I'm now sitting at $1,61.95, which gives of profit, which gives me a total balance of just over $3,000. About 54% return so far. Nine trades in, eight winners, 89% accuracy, $117.99 per trade average, and that's a gain. So, day one, locked up 23%. This was solid.

This is when I had $1,900 in the account. So, really good growth for day one. 23%. Was really happy with that. Then we come into day two. And day two is a smaller green day. I'm up $61. All right. We didn't have as much momentum. And as I mentioned actually in my uh last episode which was recapping days two and three, we kind of went into a cooler market uh right at the beginning of this challenge which was unfortunate.

So anyways, day three accounts up 15% and here we are day four account is up 7%. $2440. So now let's look at the two trades from today and then we're also going to discuss something really important because today we had a stock that made a big move up over 400%. And I didn't trade it. And so what I want to teach you is that skill of being able to wait patiently on the sidelines without capitulating to the fear of missing out and then buying the very top of the move only to watch it drop because I have done that so many times.

So, I'm going to share with you some tips and tricks to help you avoid that rookie mistake. All right. So, the first trade that I took today was on LIITM. LIITM is a stock that has a 7.7 million share float. Was one of the leading gainers this morning squeezing up. And what I liked about it was that we had had this rally, this pullback, this second leg up, this pullback, and when it curled up right here, it dipped down.

It popped up right here. It dipped down. and I bought this dip right here. So this was at about 7:23 in the morning. This at the moment felt like the most obvious stock to trade. And so what I did was I bought this micro pullback right there. So if we get zoomed in on that, this little pullback was where I was a buyer. Now what ended up happening is it popped here up to 30, but it was unable to break through this resistance line.

Now why would I buy right below resistance? I bought right below resistance because this surge of volume here made me think that it was going to break through resistance. And then if we're above it, then we had a lot of room for a move higher up towards $7 a share. Unfortunately, what ended up happening was it stalled out right at this level. It was unable to break. It dropped down and I had to cut the loss. So, I stopped out right about here.

Got out and lost 80 bucks on that first trade. Okay, so that's the first loss in this leg of the challenge. Not thrilled to have that happen, but $80 is certainly a manageable loss. So then I move on. I'm sitting. I'm patiently waiting, and all of a sudden, APDN pops up at 8 a.m. Right here, it's 8 a.m. We've got the breaking news flame on it. I pull it up. I see that they're doing a symbol change, and the stock is ripping up.

It went from 440 to 450 to 475 to 5 pops through five goes to 525 550 and right here gives a micro pullback. I bought that dip at 548. It squeezes up to 620 and I'm out at $610. So what I did on this one was I jumped in right at the half dollar or whole dollar, which is one of the setups I really like trading. As it broke through that level, it squeezed right up to $5.80. At $5.80, there was a seller on the ask. Now, I was already up 30.

So, I paused. I watched the level two, and I saw that seller go from 20,000 shares to 18, 17, 16, 15, 14, 13, 12, 10, 9, 8765 321. And then boom, we popped up to $6. So, that seller was a little wall, little bit of resistance there. And when it broke, we got this nice 40 cout up to 620. It broke over six. At that point, I was up 50 cents a share. I took the profit off the table. Now, I could have taken the profit off the table right as we came into that seller uh at 580.

I could have sold at 570 or 575 and I held. The reason I held there was because I already had such a good cushion that I knew that I could give it a second. I didn't have to sort of panic out of it. I could give it a moment because if it didn't break, I could still sell as it dropped and still lock up a profit on the trade. Now, my average winners, as uh I've mentioned uh several times when we've been talking about metrics, are about 18 cents per share.

So, 18 cents per share, average winner, average loser, 14 cents per share. So, on my first trade uh this morning that was a loser, I had 400 uh shares. So, I actually lost a little over 20 cents a share. If we pull this up, we can see uh my entry which was at uh 627 and then my exit which was at 608. So I lost 19 cents a share. Uh so you know a little bit bigger than the typical loss. And then the winner here I was in at 648 and it ended up going all the way up to 610.

So I ended up getting 62 cents a share on that win which gives me a positive profit loss ratio. And I think this is one of the most important things to strive for. you look, you're going to have losers, but as long as your winners are bigger than losers, then you will survive. And well, there's really two components. There's your profit to loss ratio, your average winners versus your average losers, and your accuracy.

So, obviously, if your accuracy is only 5%, it's going to be almost impossible to be profitable. But as long as you can maintain accuracy greater than 50%. And your winners are bigger than your losers, you'll make some money. Now, one of the things I think about when it comes to the small account growth strategy is that you're never going to catch every single move and you're not going to be perfectly like fine-tuned in the way you're trading, especially as a beginner trader.

So, that's okay. You want to sort of adjust expectations. I kind of think about this as trying to get an old lawn mower started. So, you got an old lawn mower started and you, you know, you yank on the the cord and it kind of starts. So, okay, number one, the engine's not seized up. It's It's starting to turn over and you know, you pull the choke and you maybe add a little starter fluid. You get it to to turn over and to fire, but it's running really rough.

Okay, so it's probably smoking a little bit. You're burning more fuel. It's not fine-tuned, but the thing is running. And to me, being a break even trader or a trader that's just kind of keeping their head above water, you're like a lawn mower running a little rich, running a little rough. You're not efficient, but man, you're running. And that by itself is half the battle. So now it's just about to throw in another analogy, keeping your head above water.

Survive till you thrive. And so if you could do that, then that's going to bode really well for your long-term ability to stay in the market. So for the small account strategy, everything today that I traded fell within uh both the time frame that I've allocated myself to trade between 7 a.m. and 10:00 a.m. using 10% risk on the account with a 10% reward potential. The reward came up a little bit shy, but that's okay.

Target accuracy 75%, still at about 90%, which is good. Target growth for the week right now, day one of the week, we're at 7%. So, you know, it's fine. We've we've got room. And trading stocks that meet all five pillars of stock selection. But now, let's talk about this stock that made a big move without me. It was SPB. Okay, so this stock pops up uh right here at about 8 a.m. Happens to pop up at the same moment as APDN.

And when it first pops up is kind of unbelievable. Let's look at a 10-second chart on this. So, this thing squeezes up and it ends up going from $10 all the way up to a high of $18 a share right here and then back to 12. Yikes. So imagine you press the buy button up here and the next thing you know you're down $6 a share on 5,000 shares. It's a $30,000 loss. It could happen in seconds. And this could happen if let's say I felt really frustrated that I had had that loss on LIITM.

And let's say I was read on APDN as well. And then this stock pops up and all of a sudden my fuse has gotten shorter and shorter and shorter with every loss I've incurred. I'm feeling frustrated. I don't have a lot of patience. I see this thing popping up and I say, "Screw it. I'm going in." I slam that buy button and all of a sudden, boom, it flushes down. You know, it's really common is that your losses will be back to back getting increasingly bigger.

This is a habit that I found in my own trading and it's like I've seen it in so many other traders as well. You take the first loss and how do you feel? Let's say minus 80 bucks and the emotion that comes out is sadness and a little bit of oops, I gave myself three eyes. Little bit of frustration, right? You're a little angry. You're like, "Are you kidding me?" So, and then, by the way, I followed that up with glass of water.

Turned it over. I spilled a glass of water today. So, now I am just really mad. I'm got these eyebrows. We'll do the eyebrows kind of like that. I'm livid. So, I should actually probably factor this in because I spilled this over my keyboard. Now, the good thing is I have three extra keyboards I keep right next to my desk. I wish I could say this is the first time I've knocked over a full cup of coffee or water on my keyboard.

It's not. And so, I came prepared. So, actually today, uh, my gain should probably be minus about 40 bucks for a new keyboard. But, nonetheless, anyways, you've got your first loss, then you're frustrated. So, what ends up happening typically is you take trade number two, you end up losing again, but this time you said, "Well, I had 400 shares on the first trade. I need to make make back that 80 bucks. I'm going to take 800 shares on the second trade.

You lose again. Now you're down 160. Right? The losses are getting bigger. Then you go into trade number three and you figure, all right, I got to double up again. 1,600 shares. You lose again 320 bucks. And now you're adding these losers. You're down 5600 bucks. So now here we go. Last trade, 5,000 shares. You're like, this is a Hail Mary. It either either works or it doesn't. Of course it doesn't because now you're emotionally compromised. you lose a,000 bucks on that and suddenly you went from being down $80 on the day to down 1,500 bucks, right?

And that is what we call the downward spiral. So, how do we cut this right here at the very beginning? So, part of it is by at the very beginning, even before you take your first trade, this is trade number one. Even before that, you say, what's my max share size today? So, max share size. And what you can actually do, and I do this with uh my accounts, is I actually set that with my broker. So I call my broker and I say, "My max position size is a,000 shares." So now I I really can't spiral in that same way because I've already got the cap on my account.

Now, most good brokers will put those restrictions on your account because they know that you're doing this to try to preserve, you know, your account and like therefore preserve your career and your ability to keep trading. And a good customer with a broker is one who's going to be around for years and years. So, they want to help you stay around. So, you set your max share size. And typically what I do on my first trade is I'm trading with one quarter to maybe 1/ half of my full size.

So, I am giving myself a little bit of room to increase, but I'm also doing that because sometimes the first trade is a loser. I'd rather have that loser be smaller. So, for me, losing 80 bucks is not really that big of a deal. Especially when we look at the fact that my average winners during the course of this challenge have been closer to $117. So, and my winner here, uh, $284. So, from a profit loss ratio, losing 80 bucks is not a big deal.

So, the loss is smaller because the loss is smaller because a proper share size at the at the beginning, my reaction is is more of like nah, I'm even a little bit extreme because the way the eyes are sort of set. So, we're just going to do regular eyes and just kind of like like kind of like not sad, not happy, just sort of like, nah, it is what it is. I I kind of like don't care. I'm sort of indifferent. This is this is indifferent.

So then going into trade two, I'm still sticking with the plan 400 shares. So on the second trade, I took the same position. It ends up being a winner. And then that's great. So now, yeah, 284 minus 80, still at 204 on the day. That's a solid green day. So then this next stock pops up um SPB and there's definitely the temptation to jump in it on the one hand because it's showing big rate of change but on the other hand as soon as I pulled it up and I looked at the spreads there was no way there was no way I could take this trade. the spread between the bid and the ask were too big.

Even right now, it's a 25 cent spread and it's got 19 million shares of volume, but look at how quick that spread opens up to 50 cents, right? It's I mean, these spreads are jumping around 70 cent, 50 cent. So, that was the problem this morning as well. So, it ends up popping up, dropping down, and as it curled back up right here, oops, we'll back this up. It curled back up right here, I was watching it, and I saw this rejection right there.

I had noted this large topping tail right here. It goes a little bit further forward. We come back up to 15. Another rejection right here. Higher volume selling. And I just thought to myself, you know, this is just not a stock that's going to give me good risk-to-reward in the small account. Because here's the deal. This is the type of stock that I'm not going to probably get away with risking anything less than 50 cents a share on it.

And the problem with coming to the table with minus50 cents as your as your risk is that now how much do you have to make in order to get a a positive profit loss ratio. So if we do minus50 stop, you've got to make $1 a share for your profit target in order to be at um two to one for the risk-to-reward ratio. So for me a dollar a share well we I already showed you my average winners are 18 cents. So all of a sudden saying I need to make a dollar a share is an unrealistic expectation.

It's, you know, it's just not worth it. And so for me, I just said, "No, I can't trust this." So it ends up squeezing up higher and higher. It pulls back right here, then it punches up to 20. And you know, this the stock ends up making a huge move. So the net result was that uh this ended up making this really big move, and I never felt comfortable trading it in the small account. And you know, the could have, would have, should have started to kick in as it went from 18 and squeezed up to 24, 25, pulls back and pushes all the way up to $38 a share.

You know, that ends up being a huge move, but the whole time I was watching it, I just thought to myself, I can't afford the risk of this trade. And so, you know, on the one hand, I could say that I missed out on a big win. And on the other hand, what I should rightly say is that I didn't miss out on anything. I watched this and the whole time I made a riskmanagement decision that I couldn't afford the risk involved with trading the stock.

It was too expensive, the spreads were too big and it just wasn't suitable for a small account. Now, as it turns out, I did trade it in my big account. My criteria for my big account is a little bit different and I can take a little bit more risk. So, I did make money on this in my big account, which is not the focus of the small account challenge. So, I did end up getting some trades on it, but nonetheless, for the small account, the risk just didn't line up with the reward potential.

I was willing to take that risk in the big account, but in the small account, when your back is up against the ropes, you can't afford to make a big mistake. And and then we had this sort of additional factor, which is that at $18, $20 a share, I just couldn't afford very many shares. So, it was sort of like, am I going to spend my time focusing on this to make 18 cents a share with a 100 shares? it's 18 bucks, you know, and that's not going to even even close to cover what was the risk involved with the trade, or should I wait for something else that fits within my price range?

And so instead, I stayed focused on waiting for the small account for something else that fit within my price range. And then next thing you know, we got closer and closer to the open. We ended up having this big breakout right at like 9:00 a.m. and nothing else really set up for the small account. So, on the one hand, I'm a little disappointed that I didn't get more trades, but on the other hand, I'm grateful that I didn't give in to that emotion by just jumping in at the top.

So, one of the things I remind myself is that there's always another trade around the corner. Today is not the last day of the market. It's not the last day of the year, the last day of the month. It's not the last day of anything. It's just a day. And today will not have my biggest winner and it won't have my biggest loser. So, today is an unmemorable day from the perspective of trading. So, there's really no point in getting that worked up about it.

There will definitely be another setup probably tomorrow. I mean, there could have even been one later today. So, it's not worth chasing a setup if you can't get dialed in on your entry. It's much better to study the pattern. Just use it as an opportunity to learn a lesson from it and apply that to the next stock moving forward. And also, if you're starting to feel that emotion, there's nothing wrong with getting up and walking away, saying, you know what, I don't want to keep watching this.

Watching this keep moving higher without me is not making me feel good. It's not doing me any just. It's not doing anything to help me right now. So, I'm just gonna say, you know what? Maybe I'll come back and look at this at the end of the day. But for now, I'm just going to get up, walk away. Because the thing is, I could have very easily lost gratitude for the $200 that I made today. And then next thing you know, I jump back in this at $40 a share.

It halts down and I lose 800 bucks on it. And it's like, unbelievable. How did I just lose $8 a share? But it could happen in an instant. I mean, we could see the way this was trading at the open. You got halts going down, halts going up, halts going down, going down. This was very risky. So, this was not really a good stock for most beginner traders in the small account. Yeah, it's awesome. It made a big move, but it really spent very little time below $10 today.

So, pretty much from the very beginning of the day, it was it was too expensive. So, held my patience, stay disciplined, and one of the things that I'm also a big advocate of doing, if you're feeling yourself getting emotionally activated right here on YouTube, there are tons of guided meditations for anger and frustration, you do a 5-minute guided meditation just to help bring it down because the traders who perform the best are traders who are coming to the table every day at 100%.

And so once you start getting frustrated, angry, you're emotionally compromised, that's going to affect your decision-making process. It's going to make you more apt to make an impulsive trade, which is usually going to end up being a mistake. So, take it slow, pump the brakes, and don't worry, tomorrow is another day. So, I'll be back at it streaming tomorrow morning. And by the way, if you haven't already started a twoe trial here at Warrior Trading, the twoe trial is two weeks for 20 bucks.

It gives you access to my live broadcast, so you can watch me as I'm growing this small account. And remember, all the profits from this small account challenge will be donated to charity. So, I want to thank you guys as always for tuning in. And reminder, trading is risky and my results aren't typical. So, please take it slow, manage your risk, and always practice in a simulator before putting real money on the line.

I'll see you guys back at it first thing tomorrow morning.