Did I follow the 6 Rules of Trader Rehab? transcript

what's up everyone all right so we've got a lot to go over today this was day one of Trader rehab if you watched my recap yesterday it was a doozy of a red day uh went down $20,000 so biggest red day for me in over a year and that followed a red day on Monday so two Max loss days back to back all right so if you recall in the recap for those of you guys that watched it uh I set out a game plan for today and I talked about the process of recovering from this type of spiral now the most important thing after you have a big loss number one especially when it's like two two or three red days in a row is you have to stop the bleeding you cannot continue to have these big red days now I think my record right now is six consecutive red days which was brutal and they weren't all Max lost days but they weren't great either so I didn't want to break that record uh this year uh and I hope I won't so first things first you got to stop the bleeding so there's different ways to stop the bleeding number one is you just stop trading entirely but you can only do that for so long it's okay to take a day off or a week off if you really need to just to get reentered because you always come back you know a little bit refreshed kind of in a commer state of mind but I don't like to do that when I fall off the horse I like to get right back on and sure I'm still a little jittery from the fall but I got to get right back on because if I don't then I start psyching myself out and and it just becomes bigger and bigger of a problem so I got to get back on the horse but I got to put the training wheels back on so that's what I did I put the training wheels on my account uh so step one for the game plan following a spiral is to acknowledge that I'm in a uh heightened emotional state all right so in a heightened emotional state got it check um step two is to apply restrictions to my account so I did a good job with that uh put a Max share size on my account of 5,000 shares now that for me is less than it's like a quarter of kind of my full size right now full size right now is like 20,000 shares occasionally I'll go higher but 15 to 20 is pretty good size so bring it all the way down to 5,000 shares what that means is that yes was it possible that I was going to come in today and have a loss certainly that was possible but with smaller share size the loss would be more manageable and then therefore the emotions that come following that loss would be smaller and not as likely to trigger another lapse of judgment where I became emotionally hijacked emotional hijack is the um the phrase for when you have a big loss and then you start you all your judgment goes out the window and you start Revenge trading you get really aggressive and you do some really stupid things and you can blow up your account one day now you can have a period of emotional hijack and lose 5,000 you can also have a period of emotional hijack and even make money but it doesn't mean that it was a good thing so number one stop the bleeding did that by applying a restriction to my account um well step one was acknowledge I'm in heighten emotional state step two restrictions step three I need to practice mindfulness and meditation to reconnect with discipline um so you might notice I'm wearing a red shirt you don't see this often in fact I usually only wear a red shirt following a big red day and I am a little superstitious and I I'll say this over the weekend my son um who's 3 years old opened an umbrella in the house and I walked away I said I can't be part of this you know you're going to make mistakes but I can't be part of this bad uh luck I can't afford it now then what happens on Monday and Tuesday big red days is that related most definitely so I get a little superstitious as do a lot of people who have a career that depends on a combination of skill and you know a little bit of good luck you know today I was lucky in the sense that we had a stock that went up 130% some days we won't have that and there's nothing I can do you know like that'll happen and or won't happen so there's a bit of that kind of good fortune that comes that's to just a degree of your success that feels totally out of your control so I wear the red as a reminder of this loss that I just experienced and it helps me be mindful that today is a different day for me it's a different day in the respect that I can't trade the way I would normally trade today I have to be very thoughtful I have to be very careful I want to slowly rebuild I cannot experience a big loss because if I do I go right back to the heightened emotional state of yesterday my fuse is short and it won't take much to you know set me off uh so what I decided to do last night uh for mindfulness and meditation I did a 15minute guided meditation you know on YouTube and then I went outside to check my the fire cuz I'm making maple syrup this time of year we've got all these maple trees and so this time of year I like to make maple syrup so I collect the sap during the day I run the fire at night and so on so forth so I was sitting out there I did a medit a meditation in front of the fire and then I said what I really need to focus on you know if I look at the root of the problem yesterday um I I would say there well maybe there's a couple of different things but um on Monday I got very very stubborn about the fact that I was red and I did not want to finish the day red I didn't want to break this consecutive green streak that I had going and well you know you see what happens I ended up losing 10 grand because I didn't want to be down 900 so this was very silly and I thought that uh what I ended up starting to do was I started to Chase stocks I started to get into a place of desperation and so I wanted to remind myself to be patient that it's okay to be red it's okay to wait for the next Green trade even if that means waiting a whole day to sit in the red 900 and just be patient and wait so after I did the meditation I sat outside um and was looking up at the stars and I said I'm going to sit out here until I see a shooting star I'm going to exercise some patience here and so I sat it been 5 minutes and was like 10 minutes and 15 minutes and I was like all right you know what this isn't happening so I went inside but the thought was there uh and you know for whatever reason I don't know maybe it was too cloudy I don't know but I thought I'm just going to try to throughout my day today I'm going to stop for a second and count to five and just say focus on being patient so this morning when I was kind of rushing to get over to my office I said no I'm just going to stop I'm going to count to five and be patient and I've done that like 10 times throughout the day so that was my mantra today to be patient to wait for something that looked good and so then step four is building a cushion um now I'm going to pull up the case study of today's trades so today we had a stock um GX that ended up going up over 100% And like I said this was a bit of good fortune because at 7 when I sat down down the scanner didn't look good at 7:00 a.m. we had um ncna up 57% but a 60 Cent stock no good we had VRI but 27 million share float no good rgc no volume I don't know I don't know what the deal was with that one um I didn't look at it earlier lsf um too cheap probably only up 30% you know skin these ones there was just nothing so I was sitting down here here at 7 no news 7:30 no news 8 no news and I started thinking oh shoot you know I was really excited to sit down today I was excited for day one to trade a rehab because I was excited to have hopefully a small green day and just put a little space between me and earlier in the week and so I knew that I was eager to take a trade but I had to remind myself to be patient just wait just wait and so I sat and I waited and someone reminded me about my pre-trading checklist which I often do um I and I did this a lot uh over the years I said I'll say did you eat well did you sleep well and if you did do you have a couple stocks on watch that you like and if you do what's the condition of the overall market so that's your kind of pre-trading checklist now I ate well I ate an apple this morning which is fine for me I I've been doing intermittent fasting but um because I'm sick right now I don't want to put myself under that extra stress so um so I ate an apple and uh I didn't sleep well though because I been under the weather so I was like I didn't sleep so well and do I have any stocks on watch I like I got nothing what's the condition of the overall Market Monday and Tuesday we didn't have a lot wasn't great so I said all right probably the best thing for me today is is to uh take it kind of slow so but then all of a sudden GX pops up on my scanner and this was at 8:30 just a just a little after 8:30 it pops up on my high day momentum scanner at and I see that there's news that had just come out uh at 8:30 now there's a couple things that I noticed about this stock pretty much immediately number one I notic the float I see the float is less than a million shares so it's a very low float stock I also noticed that it was a somewhat recent reverse split I see that by looking at the daily the reverse split so I check Oh I thought I put a daily chart on here but maybe I um maybe I forgot to so I'll show you let me pull it I have the daily chart on another monitor um so daily chart on GX aai I'll pull this up here all right so this is the daily chart all right so this is what we were looking so you see today's a red candle but that it doesn't matter it's still up over 100% on the day so recent reverse split I see it on the chart right there and I did recognize yeah I'm familiar with the stock it had this day here where it went big in February and then it sold off it did bounce a couple times and then sold off but these are also type of stocks that given that it's a former momentum stock they can um they can give us some nice moves so when I saw it pop up immediately I was interested and at that point I um started getting dialed in on the shorter time frames like the 10-second chart I saw this pullback right here and I decided on this one as I had mentioned yesterday that I was going to focus on my small account so I said you know I'm just going to break the ice on this with my small account Stakes are low a little lower maybe and I don't I can't take that much size in a small account anyways so I bought it about $6.50 on this little dip right here uh it ends up popping up to 750 which is great so instantly I'm up a dollar a share I take a little profit it goes up to eight I take a little more profit and at that point I was like this is a stock worth considering for my big account so I jumped in on my with my big account right here at $8 it then goes up to $850 it goes up to 9 it consolidates and each one of these consolidations gave us micro pullbacks to add for a move higher adding for a move higher it went here from 8 to 10 and on this move right here in my big account I made $4,000 now on my first trade limited with small size I bought uh 1,700 shares so small position on my first trade I made about $700 so is it home run is a huge win no but green nonetheless so I was happy with that um you know just to just to put myself on the leaderboard and get myself into the green I noticed my video is lagging just a smidge on the recording here um oh I think I had um too many browsers open I'll just close them so anyways um so made about 700 on the first trade and then that was it from 8 up to you know about 9 and then added back in this area and got myself up you know 2,000 and then 2500 and then up to 4,000 on the day so I was like good this is shoot really good super impressive now the small account did well on that one too really well I'll recap that in a separate episode not today but in the next small account update so uh it ends up going up here um had some resistance at $10 and you'll notice it hit 10 here flat top couldn't break couldn't break uh but it came up here pulled back and I took this trade right here and again I bought, 1500 shares and the thing goes from five I sorry to 10 from 10 to 11 made 1,000 bucks boom now I'm up 5,000 on the day I was like shoot that was good but here's the thing it was at 11 for like a second and came right back down it couldn't even hold over 1050 so it pulled back down and on the 5 minute I became a little concerned with this volume profile you know big green candle but then look at these high volume red candles so I was like I don't know that you you know this might be I don't know if we're going to get more but it started to kind of pull away here and I knew the previous high was 11 so then I said well if it could break over 11 I'm interested and it broke I got a little scalp here and on this one uh I actually bought on a dip excuse me and I made about $1,000 so now I'm up six grand on the day and as it squeezed into the open I got a couple more trades and I finished day up $88,000 so the biggest winners um the biggest winner was actually the second trade from 700 uh you know up well kind of that second little window getting in getting out but getting myself up to 4,000 and then the next four trades uh were each about $1,000 winners and so this ended up being a really solid uh recovery day you know first day of Trader rehab u i just impressed I I really didn't uh expect that so I'm grateful for that now I will say that had I not been in Trader rehab I probably would have taken that first position at 650 in my main account and I might have bought five I probably well I wouldn't have bought 5,000 shares because I don't use that increment um I probably would have bought 6,000 and maybe added to 9,000 maybe 10 so I I probably it would be probably safe to say that I made half maybe even less of what I would have made had I been uh had I not been in you know this state of trade or rehab and this is the problem with having a big loss there's then the opportunity cost of the additional days where now you're restricted so my goal is to be in this restricted state for as little time as possible so what I had said yesterday was that all right you know made about $150,000 and a few weeks here gave back 30 off the top so came down to about here and obviously what I don't want to do is have a small green day and then another red day and a small green day and another red day that is stair stepping down that's not acceptable so instead what I need to do is have you know probably a small what I was thinking it be a small green day today hopefully a small green day tomorrow maybe a small red day but small red days and then just kind of hopefully make some steady progress until I've made back about half of the loss now I'm down thir 30,000 so half the loss is 15 all right so I still have um you know today was much better than expected but you know so now I'm I basically made back eight in one day all right so that's great but I've still got to make back another eight or so to get myself to sort of this point and then once I'm at this point here that's when I start taking the restrictions off because I'll feel like I have confidence to to make the move higher now today was obviously a great day uh you you could argue look Ross um take the restrictions back off right now like you just had a great day and in fact the restrictions hurt you they did but the restrictions were designed to prevent snowball prevent me from having a loss where I took 10,000 shares on the first trade and then lost another 10 grand and now the emotions are just getting bigger and bigger and bigger I had to stop the bleeding so once I had my first couple trades and I got myself into green I had the thought of like should I scale up share size here I just made 4,000 and I said no because right now it's so important that today is a green day if I am up 8,000 and then I scale up and then lose 10 now well I'm back to stairs stepping down it's a second red day a third red day in a row I can't let that happen so I need to be very cautious very disciplined and just continue to reduce size as the day goes on which I did and that's what allowed me to continue to make a little bit more but without risking giving it all back cuz today was important for self-confidence and just clearing the Slate so now tomorrow if I'm able to build my cushion in the first couple trades with smaller share size could I start to increase a little bit maybe but what I should probably do given you know Thursday Friday I should probably try just finish this week at smaller share size go into the weekend sort of recharged you know reset feeling good have a couple days and then by Monday you know I'm almost a week out from the sort of big loss now I'm going to be you know kind of I think I'll be feeling better and and by that time I might have already made back half of the loss and I will be at a point where I would normally take the restrictions off I don't want to restrict myself too much from growing and I want to keep those restrictions on and the training wheels for as little time as possible but I don't want to take them off too soon because I've done that before and then that's when you know I have a couple of green days and then boom I do something like that and then I'm like oh my gosh you know now right now I'm in to totally going in the wrong direction so I can't afford a loss like this until my account is back up here you know once it's up there I could afford that loss and I could handle it but right now I can't so if I can't handle that loss I can't take that risk so I got to keep my risk pretty well in check again if I have a really good day on Thursday and Friday and I got myself up 5 or 6,000 then I could take a little risk using that as my cushion with my stop at like only maybe $1,000 on the day but I have to be very careful with that because it could be a slippery slope so it's best to stick with the system follow the rules that I laid out for myself as part of Trader rehab so um now interestingly today swi this Chinese stock um gave us some some fireworks uh unfortunately I saw um some people lose on it so you know out of nowhere it halts up once twice three times four five 6 7 8 nine 10 times in a row it went from $22 a share all the way up to 70 but then it halted down once and twice and people started buying the dip in these areas looking for the move back up but it didn't bounce it went lower and lower and lower and you know remember as we've said uh and Danny reminded me of this a couple weeks ago why should it bounce it's a another one of these Chinese stocks that is you know we just keep seeing this happened and they don't bounce so did it eventually bounce off the low you know it it did from 21 up to 32 so it's a 10-point bounce but it was like a 100% retracement it even went a little lower it's lower than where it started so when I saw it moving up I was like well I'm not going to touch that it went up on about 500,000 shares of volume high volume at the top and then all the way back down so didn't touch it risk was just way too high I really just want to stay focused um on on trading breaking news you know pre-market and then trading at the open based on how those stocks are performing and avoid distractions like this until I build my cushion and I'm a little bit more in the driver's seat so anyways I need to get a drink of water uh hope you guys enjoyed this recap hit the thumbs up I hope you subscribe to the channel and I will see you for the next episode tomorrow all right thanks as always for tuning in reminder that trading is risky my results aren't typical so manage your risk and take it slow