Day Trading A Stock Up 260% in 1 Day... transcript

What's up everyone? Welcome to day 34 of my small account challenge of growing a $2,000 account using Charles Schwab as my broker. Day 33 was a red day recap, the third red day so far during this challenge. And so I'm happy to report that today, day 34, is a green day. Grateful for that. And I was able to make back all of the loss from day 33 and send the account now to up over $70,000, which is phenomenal. Now, I'll say that the red day on day 33, well, it was somewhat avoidable.

Um, I I took that that second trade that I took. I took a big position. I didn't cut it quite as quickly as I probably should have, not because I couldn't have easily just pressed the sell button, but I got a bit emotionally compromised. I got a bit attached to the position. Now, it's important to recognize that you're more likely to have that happen as you increase your share size. So, as you increase share size from, you know, 1,000 shares, let's just say, up to like 100,000 shares, you know, a huge position, your likelihood to become emotionally compromised is like it's the it's the same chart.

You you've got well, maybe it's a little bit it's drags a little bit behind. you probably have a fairly low likelihood of becoming emotionally compromised and then your likelihood of compromise increases uh really quickly. And the issue here is that when you're trading, you know, 30 40 50,000 shares, you're let's just say you're in the middle here with a 50,000 share position, it's not easy just to press the button control Z and bail out of the whole thing because you know you're going to get what?

You're going to get slippage. And so at a certain point as you increase your share size, the slippage also becomes greater. And that's what often ends up keeping me in a bad trade. I think, boy, well, I just got into this with a big position. I got some slippage on the entry. If I turn around and exit right now, I'm going to get slippage on the exit. So, I'm going to hold it and give it a chance because just the cost of taking the trade is greater due to slippage.

Now, one of the nice things about trading in a small account, and the account's not as small right now at 68, $70,000, but we're trading in a very small account, $2,000, $3,000, you can jump in and jump out. You get very little slippage. And so, it's very easy to trade based just on the setup and not get caught up in this sort of extra layer of, you know, decision making based on how much more you're going to lose because you took bigger size.

But on Friday, I had I think it was eight or 10,000 share position on that Israeli stock that was squeezing up and it popped up. I was in a good spot for a second and it flushed back down. I didn't want to get out and then have it go right back up. So, I held it longer than I should have. Ended up taking a big loss. But, you know what also happened was in my big account, I was read on Friday over $60,000 because I got stubborn on that same trade, which I had with even bigger size in my main account.

So, I held that until it completely got wrecked. And you know what was interesting? When I looked back at my orders, I had my first order to sell at I think it was 750, right around $7.50. And of a 50,000 share order or something like that, I only filled about 300 shares. And unfortunately, what happens is that when a market maker sees a big order like that coming in, they can see your hand and now they can take advantage of you.

They pull the bid and you get slippage on that order. So, essentially what they do is they frontr run your order. They cut in front. They short right ahead of you. Your order sells at the very bottom and they're profiting off of the difference. Now, this is a highfrequency trading algorithm tactic that is legal because they don't have a fiduciary obligation to us, their competitors in the market trying to make their own money.

What feels unfair about these algorithms is that they have access to data in tools that we will never get which is exclusive to uh brokers and prop desks and you know actual in institutional trading firms. So the ability to execute trades at that level inherently does give them an advantage that you and I will never have. That doesn't really matter when you're trading with small size which is why the small account you can just get in get out.

There's no pattern day trader rule anymore. So there's no reason to get attached to a setup that's not working. But once you start trading with bigger size and you know those algos are hunting for you because they want to take advantage of bigger traders in the market, all of a sudden you make a wrong move. You jump out. You could have a setup for instance where you have a stock that's squeezing up like this. You've got a nice move.

It's looking good. You get a little pullback just for a moment. You get a little dip right here. You jump in right here and it it does like a a big topping tail and now it drops back down like this and then a minute later rips back up and goes right through the high. Right? So if you got in here with 50,000 shares and then you sold down here, you know, 50,000 share position, you're probably losing, you know, let's just say at least 10 cents just on slippage on the entry and exit.

It could be more, but let's just say 10 cents. So you're losing five grand of slippage. So, you're thinking, well, the cost of this trade, you know, I already was risking 15 cents from my entry to my max loss, but then I've got to add an extra 10 cents for slippage. So, now you're risking more on the trade. You get stopped out only to watch it run. What do you do? You get back in right here and then potentially risk the same exact loss happening twice in a row.

And I've done that and it's infuriating. And you think, well, I shouldn't have sold here because now it's going. And all of that is the emotion that you have to deal with when you start scaling up to bigger share size. So, this is sort of a different um a little bit of a a different uh part of the journey of trading in a small account from you know when it's 2 $3,000 but once you get up to 25,000 30,000 50,000 75,000 100,000 now you're having this sort of challenge of I want to scale up but I know that there's an inherent risk in doing so. the the wins will be bigger, sure, but the losses will also be bigger.

Slippage becomes a bigger factor and then my emotion, my mindset will shift because more money's on the line. And so what often happens for traders is that they end up taking bigger sh I mean look, anyone can just punch the order for 50,000 shares. So this is like in order to trade this level, you don't need just the capital in your account. You need to have built the emotional stamina to tolerate these big swings and to make good decisions even in the spite of uh or even in the moment when potentially you're um you know going in the red and the right decision is to cut it and you're thinking oh well maybe I should just hold it because it goes up later.

So, you know, I share all that because um as the account is growing, I'm now facing some different challenges. And so, yes, the loss on Friday was much bigger than it should have been because even with just 8,000 shares, I got a bit stubborn. And part of that was, of course, also because I was in the same position with my big account with 50 plus,000 shares. So, I just got attached to the whole trade. I became emotionally compromised and then I ended up losing like 50 70 cents a share, whatever it ended up being.

So today uh you know I came in and when I first sat down this morning we did have a lead and gainer that was obvious and that's the stock I ended up trading. Now as an update to our fundraising challenge as you know all the profit from these challenges gets donated to charity. But every time you guys hit the thumbs up you add an extra dollar to how much we donate. So even if I lose money during the entire challenge in my trading I will still make donations uh because you guys are hitting the thumbs up.

So thank you guys for helping with that. you made up for the fact that on Friday I was red, but we were green in terms of thumbs up. So, have donated $450,000 with a goal of donating to uh 50 children's hospitals across the United States. We are at 45 now with five more to go. So, today for day 34, our leading gainer was IPST. Second leading gainer IVF, third leading gainer, uh TRUG. Uh now what was interesting today was that as I looked at these two leading gainers neither of them wereun Chinese which is confusing because last week and for the last several weeks most of our big moves have been on Chinese small cap stocks.

So you know I was like all right it's a US company but is it really? So I uh just checked the the company. I checked the address and I'm like yeah no it's it really is a US company. Hm. the first NASDAQ listed company to hold data tokens, formerly IP, as a primary treasury reserve asset. So, I don't usually like these asset treasury strategies where they buy an asset, just park it on the balance sheet, and then the value of the company's essentially the value of this a derivative at this point.

Um, so I feel, you know, I, so I look at it, I feel like it's not Chinese. It has no news. It's a US company and it's in this treasury strategy arena. I don't know. Feels kind of risky. IVF is the second leading gapper. Fertility Inc., US company, healthcare. No news as well. And I'm thinking, I just don't know about that. So this ends up going from a dollar up to $3. IPST ends up going from what was it? Um $3 up to 8, but then sold off.

So coming into the 7 a.m. sort of opening for traders on Schwab. You can't trade before 7 a.m. I was not really sure we were going to get I I didn't know what we were going to do. I knew that obviously IPST was the leading gainer. And so for that reason alone, it was fairly obvious. And so I did my analysis of the five pillars of stock selection on the stock. So number one, demand. It's got to be up at least 10%. It was up 175% when I took my first trade on it.

Uh, another characteristic of demand, it needs relative volume of at least 5x. It was actually 180,000 times higher volume today than a typical day. That's crazy. Number three for demand catalyst, it should it should have a news catalyst. Uh, and this one did not. The price should be between 2 and 20. It was the float under 20 million shares. It was less than 700,000. However, this one did have a shelf registration. And so with a shelf registration, we don't really know the exact float because these companies can sell shares from time to time.

So the true float is a bit unknown until we get the next filing. But for right now, it appears that we have a low float. And certainly we had some big momentum. So we had a couple of patterns that formed here at about the same time. This is a big inverted head and shoulders pattern. So you kind of have to sit back from the chart a little bit to see it. This is the top of the shoulder right there. Then that's the head right here.

That's the other side of the shoulder. And then that is as it squeezes up. So the head and shoulders pattern basically looks like this. And typically has this sort of upside down look. So this is the smiley face here. He's upside down the man. So or the woman, it doesn't matter. Or the whoever it doesn't matter. Doesn't matter. It doesn't matter. So the the person uh of the head and shoulders pattern is inverted in this position and this is uh bullish.

If the pattern is uh the other way around where it's the side, the head and then the side, it's bearish to go back down. So that's an important distinction. So I like an inverted head and shoulders pattern, not the traditional head and shoulders. Uh however on this chart we also had descending resistance as you can see right here connecting from approximately the high there to this candle here. Now I could have drawn it to right about here and that would have been just fine.

Um so I took a couple trades on this. My first trade um in my big account I took right here and I was trying to anticipate that the break over volume weight average price would send us back through the high of this level here 685ish and then we would squeeze up to seven and break through the pre-market high. It rejected and I was red on that first trade. And again with a bigger share size it wasn't easy just to jump in and jump out.

I had to you know actually uh you know well I got slippage so I ended up having to take a bigger loss on it. So, I was down $12,000 in my big account on that trade right there. No trades in the small account, whatever. Then it comes back up right here and I take another stab at it. So, very similar is what I was sort of explaining. I get in and I get out. I take a loss. And, you know, because slippage, the loss was $12,000, bigger than I probably would have liked it to have been.

And so, then when I get back in here, I know that I'm risking the same thing happening again. And now I'm going to be down um, you know, whatever, $25,000. Then it comes back up right here, breaks through 640, which is what I wanted it to do in the first place. And this is where we had the break of this descending resistance level. And so I added on this trade here. And then uh after it was working, I added in the small account as well.

So my small account trade was after my big account. Uh which is fine. I mean, it wasn't as good of an entry, but it still worked. We got the breakthrough seven right here and a squeeze up to eight and then a little push up to 840 and I was in and I was out. Uh, I actually had two trades during this little um five minute window right here. Then it pulls back. It comes back up and I got one more trade on it right through here looking for a squeeze through the high and we had another topping tail.

And now at this point you can see these topping tails. So it's not really working unfortunately. Um, but nonetheless uh was able to jump in, jump out, got a couple trades on it and that was enough to lock up a green day. So, I'm up $2,8375 on the day, which now brings my um overall profit year to date up to about 68,000 versus the $2,000 starting balance. I'm at about $70,000 in the account. Now, you'll see that it shows my intraday buying power is 7* 4.

However, in reality, most of these stocks you cannot use any borrowed money or leverage on. They won't allow it because they're too cheap and they're too risky. So, even though technically I have leverage, I am I'm not able to use it on 95% of these trades. I think only on one or maybe two trades during this challenge have I been able to use leverage. So, that's fine. Um, I'm not using a buying a hotkey based on the percentage of my buying power the way I was at the beginning of the challenge.

Now, I'm just buying using a hotkey for 2,000 4,000 6,000 shares, which uh works just fine. So, that's where I sit here at the end of oops, not day 33, but correction day 34. So, a nice green day. Um, continuing to make progress. And for those of you guys that want to keep watching over my shoulder as I grow this account, make sure you check out the twoe trial link is pinned at the top of the comments and in the description.

And I'll see you guys back at it. I'll be streaming bright and early tomorrow morning. The next goal in this small account challenge, $75,000. Let's see if we can do it this week. Thank you guys as always for tuning in. And reminder, trading is risky. 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 always practice in a simulator before putting real money on the line.