MAX LOSS transcript

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.