I'm a Broken Man and Here's How I'm Fixing It transcript

all right everyone well today is a Max loss red day recap welcome to therapy uh we're going to be uh talking about how I became so broken uh in the head this is the thing with trading that's really remarkable and we say this all the time and today we've we've got fomo Friday with our trading psychology team and one of the things we say is that trading is 50% mindset and 50% skill of course you're not going to find any success as a Trader if you don't have skill if you don't have a strategy if you don't have a set of rules you need all of that there's no question about it but then there's the other battle which is going on up here and if you can't maintain the discipline and also the presence of mind to really be connected with the true state of the market and your own ability to be in control and to know whether or not you're becoming emotionally compromised and then more apt to make mistakes if you're not even able to realize that then you're going to spiral and you're not even going to be able to stop yourself and so part of trading is mindset and part of trading is skill and what I've been struggling with this week is the mindset now I don't know maybe it's co brain and uh sure we'll blame it on that why not I've been trading with covid for the last week I mean I feel a lot better now than I did a week ago but uh it's probably not that but let's just say it is because that's a nice excuse cuz I refuse to hold myself accountable so I'm going to blame I'm going to blame Co and I'm going to blame this stupid computer and I'm going to blame June cuz she looked at me funny today that's my dog um this is something a lot of Traders will do and try to dodge that it's right here this is the problem so where did things kind of fall apart well we're going to look at today's trades um which were just stupid and frustrating uh and we're going to look at yesterday's trades because I did my recap yesterday I uploaded it and then I started working on uh a new episode that I'm going to upload to to YouTube soon and when I finish that episode this is one of the challenges that I have is that I'm working here at my workstation so of course I'm seeing all these stocks that are moving so you know I finished this episode yesterday and I see that GS IW you know was looking pretty good for a trade into the close and you know schmuck that I am I went ahead and said why not why not take a trade into the clo up 5,000 on the day was that not good enough see this is the thing that you know you've got to kind of ask yourself the question is why you know I already had a good day yesterday well it wasn't a great day but you know I was anyways I was up five grand went to Red then went to back to five grand I should have been very grateful for that and instead I sat down and saw GS IW into the clothes and all I felt was fomo the fear of missing out I didn't want to miss out on this squeeze and so I ended up taking a couple trades on it um I took a trade on it into the close right here for the break of eight it goes up to about 850 or 840 and then drops down and I stopped out so now this is what tends to happen now I'm up only 4,300 on the day so I kind of now got a little kick in the teeth and I'm like gosh darn it now I want to make back that 700 I just lost it squeezes up right here and I miss that trade it then dips I buy the dip at 10 it pops up to 1050 I add and then it dumps to 950 boom $3,000 loss in I mean guys I'm telling you it's like in an instant I'm back to flat on the day or up a thousand on the day I'm like this is unbelievable and then what do I do I I'm like well gosh darn it you know now I'm getting frustrated um and I I try to a I try to take another position on it down here for a curl that doesn't work it flushes again and now I'm just overtrading the back side of the move like an idiot so this is the thing that and it's really hard for me to let myself off the hook uh when I have that kind of trading so I ended up finishing the day down um $7,500 yesterday I went from green to Red look at this p&l oh it's kind of hard to see when I zoom in like that but anyways you could see right there I I went red green red green a teeny bit more green and then in I mean but like in three tra I just spiraled and this is the thing that um I get so frustrated about because you know I I'm just like Ross you know you've been doing this for so long how is it that this still happens and that question um that very question speaks to there's a flaw in that question I know it sounds like that Jordan Peterson guy that's question that begs the question of what is a question uh but there's a flaw in the question of Ross you've been trading for this long and you haven't figured it out because it assumes that these types of days no longer happen once you achieve a certain level that's the implied presumption right or the Assumption and that is a myth and I've seen traders who are far better than me I've even seen billionaire investors who have taken positions that objectively you look at and you're like what are they thinking and then they lose like $300 million or 500 million or a billion dollars and and it's like whoa you know and You' think at a certain level that would stop happening but it doesn't and so there's this concept of being able to radically accept that as a human trying to trade the markets we are doing something that is incredibly difficult and we will whether it's every few weeks or every few months or every few years but for most people it's going to be every few weeks every few months we will fall into this trap the market just very carefully pulls Us in and next thing you know we're capitulating and spiraling this is not entirely avoidable it just isn't I like I said I I I no traders who been doing this for a lot longer than me it still happens to them but I get frustrated myself because when I step back I'm like wow you're a idiot you went from up 5,000 on the day to down s Grand that's $12,000 swing so now you're in a draw down right and then I step back here and I'm like gosh so you know a second red day here for the month of September and then what do I do today I come in and pretty much immediately I go into the red and so now we've got another red day and it's like this is where things I start to feel like I'm getting a little unhinged and you know you can you can spend you look you you know put me on the on the on the couch and you know analyze my brain why is it that I'm doing this if I was going to try to analyze myself I would say that this all stems from fomo I mean this is the fear of missing out why do I feel it so strongly I mean it's not like first of all as many of you know I trade in a retirement account so I mean I'm happy to make as much money as I can but at the same time I can't spend the money right now so I don't there's not really a sense of being like Oh I need that money so I can go buy something tomorrow or next week or whatever um but I think this is what it is for me and I'm just you know this might I I don't know I think this is it last year was a really tough year for me last year was one of the slowest years had in a long time you know we had the bare Market of 2022 small caps were just dead 2023 it was like just a slow rally overall Market was doing well but small caps were tough and then this summer I had in June and then July and August two of like the best months I've had in over a year and a half almost two years I had two of my single biggest green days I'd had in a long time and I think all of a sudden I was like finally and it feels so good to have a really big winning trade and that is a a tough thing with trading is that it it does generate emotions when you have great trades you feel good and when you have bad trades you feel bad and when you start doing that emotion seeking um that can be dangerous and that can lead you to take high risks because you're chasing that good feeling and so this month that has slowed down a little bit right beginning of September it was like the faucet just sort of Switched Off and I started first day of September struggling and the rest of first week was tough then Monday of the next week I take that you know $1,000 loss which was right here which was another day where it was avoidable um I went red miraculously got myself all the way back to green and I went back to Red in like two trades and then took a final trade at the end of the day and just things got even worse right Bas very similar to to yesterday in a way and you know then I had a nice some nice green days here so since my last red day I've made about $45,000 um you know but then to give back 7 Grand yesterday you know gives back you know 20% of that or whatever um and of course I have fees and commissions which make it worse but you know it's not it's not the end of the world I mean the the glass is still full but the fact is uh it's not full it's it's you know but it's still half full whatever um but the fact is I'm trading right now from a place that's very emotionally activated and I'm carrying the emotion sort of from day to day to day so like you know I had the spiral last week I had that spiral the first day of September and then I've had several other days where I was like big green and then gave back half and it's like I'm trading really aggressively right and that was my problem today I sat down and I started really aggressively and I was like first of all start slow and I did i c i maxed my cap myself at 5,000 shares on my first trade and on my first trade of the day I made 200 bucks and I was like o that was was not great second trade of the day I made 1,000 bucks so now I'm up 1,200 and right away I took my cap off I got back in the same stock with 12,000 shares and it dumps and just like that I'm down three grand on the day we'll look at the p&l you can see what it looks like for today so this is a technicality red day because technically it's a green day but after fees and commissions I'll be in the red and uh ghhg was uh was the one that flipped me from green to red on the day um and then I guess the loss got bigger with crev nby and then I got a couple trades that redeemed myself so my p&l today basically started green 1,000 red 3,000 and then slowly recovering um until I'm you know back to where I'm at right now which is 209 bucks so I guess you know it's a it's a red day recap Max loss when we factor in that I haven't updated you until now on what happened yesterday after the close so or into the close so the combination is is a net negative but um I suppose you know if we look at the calendar uh here for September second red day of the month um and you know it's not a it's going to be a more or less a flat week after fees and commissions and the fees and commissions are frustrating because um you know I've been churning a lot of fees and commissions just over trading so if we look at it after fees and commissions you'll see that uh yeah it's going to be basically a flat week might might even be red um depends on what my commissions are today it might be R 200 bucks or something but um you know whatever it's that's not the issue though the issue here is that I'm trading too aggressively so you know I'm I'm in this place where my emotions are really heightened and so the question here is you know how do I proceed how do I slow myself down how do I stop spiraling um and I think you know the tough thing like this morning when I first came in is I was like all right you know my best shot at a good day here is is the first couple hours so I was aggressive during that time and typically that is the right time to be aggressive if we look at my metrics uh for the month and we said is there a prescription that could um cure you Ross for the rest of the month of this sickness in your brain um let's see if there is let's see if my metrics point to any um any cure so we're going to look at days and times because I already have an idea of one of them oh there it is you idiot um stop trading past 11:00 a.m. would you please so that's $177,000 and that's another five that's $26,000 in losses uh into the close Power Hour and after hours so you know why is it um that and I don't know what this is from this is this must be from think or swim or something I guess because I've got my thinker swim challenge in here but anyways um you know why was it that I started trading in this time frame if we look at August did I have any trades during that time frame in August last month um it's very unusual for me to trade later in the day but you know what it looks like I did so this is this is very interesting I would say this is where it's such a slippery slope you know you're like ah look I'm fine I'm going to have a couple drinks I'm fine I'm fine next thing you know a month later you know things have really Fallen apart and and this is the thing with trading is when you deviate outside your strategy it's like oh this is working no it's okay it's okay we get a false sense of confidence and then reality catches up to you because over the long term I know I typically don't do well in the afternoon and into Power Hour that's not usually when we have breaking news and I do well trading breaking news so the first prescription uh for the rest of the month is that I need to walk away at noon hard stop at 12:00 noon um and it's tough because if I'm sitting here and many days I am doing recording episodes for you guys on YouTube and this and that I'm seeing things moving right so that's like sitting in the bar and saying don't take a trade and I don't I don't mean to compare it to something that's um you know some people have what would be a real problem with uh but but I think the Temptation there exists and it's hard when you're sitting here and you're watching these things move and you're having to discipline yourself and say no I'm not going to take a trade I'm not going to take a trade meanwhile this thing is going higher and higher and higher so and that's that's kind of what happened on a lot of days um during the month of August because I was teaching classes and then when I finished teaching classes at two I'd be like oh yeah see I was watching that move let's go ahead and take some trades to three and four and you know I guess I had some good luck probably that was it because the market was strong but that ran out so I've given back um I mean quite literally half of my entire month uh it appears half of my month is gone because of trading in the afternoon okay so this is the importance of tracking your metrics so you can make these observations learn these things and do something about it now the fact is I was already aware that I was making this mistake a little bit you know last week and yet we kept seeing these big moves and I just I I I thought you know that's you know just keep maybe you'll get a nice win and but at this point enough is enough and I've got to stop doing what I'm doing um my profit loss ratio for the month has gone slightly negative because of the these large losses my accuracy is 56% so this month is really very different from the month of August and in August I did a better job starting each day just focusing on first hitting that thousand profit with 5,000 shares um but then when the market started heating up I started being more aggressive right out of the gates and I'm not saying that that was a mistake I mean I had a great month of August but I wasn't quick enough to Pivot here in September when things started to cool down so things have cooled down a little bit here in September and I I've not been fast enough to adjust now statistically September is usually one of my worst months of the year so you know because I had just come off a really hot July and August I wasn't really thinking it was going to be a bad month I thought it was going to be a great month but you know that's so far that's not been the case so I do need to make an adjustment going into next week and the most obvious one is to stop trading past 11 or past noon and then I think the second is on the Shar size side of things so today you know first trade of the day I break my break the ice you know that was on uh bzi so bzi is my biggest winner today um and this one you know I mean it gave us some nice action but also some huge Jack knives really choppy big big rejections you can see right here right here this one here another little topping tail there so my first trade on it was right at 700 a.m. on that breakout and right there I made 200 bucks but it ended up being a jack knife to start the day next trade was GD HG and GD HG I jumped into this um also right at 7 a.m. here first entry was around 450 as it breaks vwap it goes up to five I make a th000 bucks and then I got back in right here for the break of five and it dumps right there and I did that with 10,000 shares so or 12,000 whatever it was so that was awful and right away I went from up a th000 to down 2,300 and then immediately I felt the kick of the emotion and so I was like all right next trade um 10,000 shares so then LF ly comes up LLY and on this one I buy 10,000 share starter right here you know whatever it was 7:00 a.m. for break of vwap now this one did a attempt it it failed it was a small loss but then it worked later but I kept trading this with big size my trades here were with 20,000 shares so it's like I was just being way too aggressive now look being aggressive when the market is hot makes sense and it's a little bit confusing because the market has been very volatile this week but because I've been trading a little too heavy relative to how much I'm comfortable risking my emotions have gotten really big so I end up stopping out on flushes then adding back at the at the top and just sort of getting into that emotional trading where you're you're deviating from sort of the the written process and rules of the strategy I think for the most part all the stocks I traded today were the right stocks to trade um crev that was a lighter volume one that popped up sorry CR um this one was lighter volume that popped up I got in right here at about 680 for the break of seven and then I added at 780 for the break of 8 and then it dumps all the way to 560 so I mean what can you do with that like that maybe on a day when the market was hotter that would have gone to 9 and 10 and it would have been a nice winner but today for whatever reason the market was not hot and and it feels like the things have just been sort of Colder nby cheaper stock don't usually like these got in for the break right here of a dollar it false breaks lost on that got back in pops up to a do five drops back down stopped out again so down 700 on that one and then GS GS IW I took a trade on that earlier um for the break of vwap here and that also failed although I thought at the time it could be nice for tested the highs from yesterday but of course glad I didn't get stubborn on it cut my loss and moved on ended up dropping down about 50% on the day um crbp was tempted on this but said nope too expensive easy to borrow not worth it don't mess around with that um aent saw it on the scans and said nope not worth it don't mess around with that um so really my Saving Grace today was the curl on bzi at the open which which I traded but only sort of conservatively because I was already down 3,000 on the day and I knew I was like all right two red days in a row this is not good so we ended up getting a dip and then a rally pulled back drops rips back up and then just a lot of chop so in total you know today wasn't a super clean day I shouldn't feel fomo today because I really didn't miss anything um I mean I'm I'm I guess slightly red after fees and commissions but um you know I I did the best I could today and there really wasn't much to be had so you know that's is what it is but yesterday was really disappointing and now I've got myself a little bit of a um you know a hole that I've got to recover from uh so not you know I've dug myself a hole of whatever you know $77,000 7500 9,000 with fees and commissions so you know round it up to 10 grand and realistically if we actually have a stock that's clean I it's not a to make that in one day I mean that's one decent day is you know $510,000 so it's it's not a question of if I'll make it back I mean I'll make it back but it's just a question of how long do I want to continue to trade at the edge of this sort of emotional comfort zone and am I getting rewarded for it trading at the edge of my emotional comfort zone through July and August paid really well I was trading really aggressively I was trading with big size and I made I I mean as I sit right now in the year I'm up 600 plus th000 um net of fees and commissions so year to date this is I mean I'm in great shape 645,000 right and I'm really cruising here so it's just so this is also the challenge of like in totality um you know if you have a really narrow view of just one red day it's like everything is terrible but you step back and it's like that oh well you know this is just one component of the part of trading but it is frustrating it's frustrating to feel that you make the same mistakes or you find yourself in a similar position of oh here I am again down $5,000 down $10,000 because I over traded I gave back some profit and then I started getting frustrated I got emotional I started chasing it um and so there's sort of two choices for how to proceed one of course is to make some put some restrictions on my account some guard rails to help prevent mistakes now I didn't trade after hours today I mean I today I trade within my time frame but I still had a bad day I had a bad day because I took too much share size too early and that immediately brought the emotions out it wouldn't have hurt if IID had a winner but because I had a loser the emotions came out so I think that going into next week I have to be I have to discipline myself uh you know given that we've got two red days in a row maybe on Monday what I have to do is I have to say look $5,000 is your max share size until you have a Green Day close the day green make however much you can make with 5,000 shares close the day green don't take bigger size because you have a third red day in a row you're going to get really upset so just 5,000 shares Max position and so you know I'll kind of write this down here so um let's see so 5,000 shares 5K Max until Green Day closed and that's a closed Green Day so that means Monday I'm going to be capped at 5,000 shares and that you know that is that that's going to restrict me it could prevent me if we have something that's really really clean from doing as well as I would do if I took 10 or 15,000 shares but it won't stop me from having a decent day I could still have a decent day with 5,000 share Max so and if I have a red day then at least it's more measured it's not going to go as deep as uh I've gone yesterday and today so 5,000 share Max size until I close a green day and then um resume 5K Max until plus you know maybe we should say I don't know maybe we should say I mean I don't know I've been I've been doing a thousand it's been working it's been working so maybe just a thousand and then maybe we do Max until you know 2000 and then you know 10K Max until five grand the thing the thing with this that is a little tricky is that then once you're already at 5,000 on the day you've kind of that's usually you've had a couple really nice trades so now it's almost like I should size back down you know after I cross that $5,000 mark normally I wouldn't size down after I cross 5,000 I would say size up but um given I've had several days where I cross that $5,000 Mark and then I give it back I wonder if I should size down well some of this I still have to think about a little bit um and and sort of come to a decision of what makes the most sense but I I can I can get on board with this right here for Monday because this addresses my concern about wanting to avoid having a capitulation of coming in on Monday Monday morning swinging big on the first stock that I see and then losing 2500 on trade one and the problem today was that there just wasn't a lot of really good quality opportunities so I you know I just didn't it was like I said yesterday I ended up having to lower my quality standard in order to continue trading and I was trading just to dig myself out of the hole and that's not really a good way to trade and I could have avoided digging the hole so deep if I had just been a bit more disciplined and stuck with smaller size until I had a bigger cushion so that's kind of where I'm at right now um you know it's it's nice that we have the weekend because now I've got two days off that allows the emotions to kind of subside a little bit and although I'm disappointed with today I'm not um I don't feel as upset as I did yesterday yesterday I felt quite upset yesterday evening um you know i' given back my whole day I'd gone from daily goal to Max loss today I never hit my daily goal I never hit my Max loss I was just sort of in the in between and the fact is that that's not that's not that big of a deal it's only Annoying really because it's in the context of you know yesterday being a bad day and it would have been nicer to have a little recovery today but um that just wasn't possible so you know it's really going to at the end of the day come down to the condition of the market if we have good opportunities it's not hard even with 5,000 share cap to hit my daily goal it's if we end up you know tomorrow or Monday is like today and it's kind of choppy and slow it's hard to tell what's obvious then it doesn't really matter how many shares I buy it's going to be hard but if I buy more shares I'm going to get more slippage and I'm going to have bigger losses on the losers and that's what's happening so I need to and this has always been something I've struggled with you know just to be honest is easing off the throttle when we go from hot to cold I have no problem putting the pedal to the metal I have a hard time easing off the throttle some people have the opposite problem they have a hard time scaling up by the time they scale up it's like the Market's cooled off but I scale up pretty quickly I have a hard time slowing down and that's why usually I'll do really well during a hot streak and then I'll give back a little bit more than I probably would like to when things start to get a little colder and the fact is I've got to be thoughtful about the fact that I am green on the month here um I don't need to hit rock bottom you know I did take money out of my account so my current account balance has oh probably $150,000 let's see um let me check to see what it is um yeah I've got $158,000 in my account here this morning so um you know that's that's not bad um it's I could even take a little bit of money out to prevent myself from being Reckless and that would be a further step that I could take if I felt it was warranted so I'll consider that next week but um but for Monday I've got a little bit of a game plann here um and so this is going to be the approach of Monday and then this will address uh after Monday we'll see how Monday goes and then we'll look at that for the week ahead so for those of you guys um that tune in the channel I hope you're subscribed I've got some uploads coming this weekend which I think you'll enjoy and I know you guys appreciate the transparency so red day Recaps Green Day Recaps you guys see it all so thank you as always for tuning in and I'll remind you trading is risky my results aren't typical so manage your risk take it slow I'll see you guys back here