What would you do? transcript

What's up, everyone? All right, so in today's episode, I'm going to break down the price action from this morning and we're also going to talk about the price action from yesterday. Yesterday, I did not upload a recap. Yesterday was a no trade day. Today is also a no trade day. I'm exercising patience and I'm being picky, but I also don't want to subject myself to unnecessary loss. I had a couple of great days early in the month, so I'm already in a good position here for the month of May, much better than I was last month at this time.

Last month at this time, I was in the hole $70,000 working on recovering the loss. And that all happened because I lowered my quality standard, aggressively traded a low quality setup with big share size and got completely smoked. Here's the deal. I'm trading this year with bigger share size than last year and even in previous years. This is probably the goal of many traders to keep increasing your share size a little bit each year.

It's not like tripling it, but just steadily increasing share size. But I've kind of reached a point with my share size that if I am trading a stock, you know, between $4 and $6 or $7, and I take 20,000 shares, I'm going to probably get a little bit of slippage on my entry. Maybe 4 cents, maybe 5 cents. So that's like $1,000 of slippage on 20,000 shares. And excuse me, in other words, if I was trading with 200 shares, I would get in at exactly $5.50.

But when you press it for 20,000, you get a little slippage because you're buying from the seller at the ask and so you might end up getting filled at 5.55, for instance. So 5 cents higher because you've got bigger size. And then when I go to sell, I often will get a little slippage on the exit if I have to sell on the bid. Now, if I can sell into strength on the ask, that won't happen, but if the stock doesn't work out well, I'm selling on the bid, I'm going to get slippage on the exit.

So, that means I might be losing 10 cents on slippage on a 20,000 share position. So, in order to accommodate losing due to slippage, I need the trade to go up at least an extra 10 cents just to cover that. So, that means essentially, if I have a 10 cent stop on my trade plus 10 cents of slippage, my loss is really 20 cents. Which means I need to be able to make two to one profit to loss. I need to maybe be able to make 40 cents a share.

So, 40 cents a share is kind of the minimum for taking a bigger position because realistically I can't get stops usually tighter than 10 cents when you're trading a stock between three and six or eight dollars a share. So, 10 cents stop, that's a pretty tight stop plus 10 cents of slippage, 20 cents. So, you need 40 cents of profit potential to take the trade. And right now, I'm not seeing setups where I feel like I could get 40 or 50 cents of profit potential.

So, as a result, I'm sitting on the sidelines. Now, you could argue just trade with smaller size. Sure. Okay, I could trade with 2,000 shares. Bring it all the way down. That's 90% less size than a typical position. And so, then I would make 90% less profit. And so, the motivation to trade with smaller size isn't really there because I would simply make less. I'm more motivated to hold my discipline and be patient and to save my ammo for when we finally have something that looks good and then trade that aggressively and have a $20,000 green day.

So, in a hot market, $20,000 a day is the goal. In a cold market, it's usually more like $5,000 a day, which is $25,000 over the course of the week, plus or minus. So, realistically, one good trade each week has the potential to make the week. I had that trade on Monday. I was up 20 grand. And then, I overstayed my welcome gave almost all of it back to being up only 2,800 on the day. So, now I sit here only up 2,800 on the week because yesterday and today are both no trade days.

So, now I've got 2 days left in the week for me to hopefully have a second opportunity like what we had on Monday except this time not screw it up. All right, let's jump on in the screen share. Now, on Monday I was feeling um I was feeling a bit defeated having been up $20,000 and then given back um you know, nearly well, 90% of the profit. And I was reminding myself that $2,800 is still a lot of money. That's that's some really good money.

So, you know what I did? I I I stopped trading. I said, "I'm going to go take a break. I'm I'm done trading for the day. I did my recap." And I drove to the garden store. And I said, "You know, I'm going to look for um uh something I can plant in in the yard." And I saw they had apple trees and they had pear trees and peach trees. And they're they're like 100 bucks each. And so, I said, "You know what? I'm I'm going to get 10 of these trees.

I'm going to expand the the little orchard that I already have and add 10 more trees. It's 1,000 bucks. And so, all of a sudden, I spent $1,000. And and yet I hadn't spent nearly only about a third of what I had made that day, but I now had something very tangible to kind of show for my morning. And suddenly I I didn't feel so bad about the $2,800. You know, I sort of got out there and realized, "Wow, all right. You know what?

This $2,800 goes a long ways." But if I had stayed here in front of the computer, I would have pissed away that money so quickly because what would have happened is I would have jumped in another stock with 20,000 shares, lost another 10 cents in slippage plus a 10 cent stop. And all of a sudden I go from up 2,800 to red 1,500. And then I do it again. Now I'm down 5,000. And now I'm spiraling and next thing you know, I could be down 15, 20, 30,000 dollars.

So, sometimes when you're trading, it we can become disconnected from, you know, the gains and the losses. Um the gains especially, especially on a day where you could do give back a lot. And we can no longer be grateful for what we've got. So, getting a little bit of perspective, getting out of the real world can be helpful. And that did help me quite a bit on Monday. And it gave me something to do other than sit here and look at stocks that were very slow.

But, what was interesting on Monday, of course, is W O K. So, this is a Chinese stock that on Monday popped up during pre-market, if you recall, we were watching it and I said I'm not trading it. Pops up in pre-market 250, sells off, halts down at like a dollar 30, resumes below a dollar, goes all the way down to about 15 cents a share. I mean, this thing just got destroyed. And then, slowly, it curls back up. It gets, in fact, back over a dollar in the afternoon.

Over a dollar 50, up to two dollars. And suddenly, going into power hour, it rallies to three, micro pullback, up to four, micro pullback, squeezing up to a high of over $6.50 from a low of 20 cents a share, whatever that was. What a recovery. Unbelievable. This is classic China stock behavior. It then comes all the way back down to two. And it seems like it's over, completely over. And then, yesterday, it rallies back up and by 7:00 p.m., we are rallying all the way up to a high of 11:50, 12.

And this morning, all the way back down. But, here we go. So, is it going to be at $20 by the end of the day? Uh I don't know. I The these stocks are it's a lot to stomach these kind of waves. It's a big roller coaster. I took no trades on it. Um I missed all this cuz I was out um picking these apple, peach, and pear trees. So, I missed all of that. Um then yesterday I said, "Well, this is a dead cat bounce off the low." And in any case, I'm not I'm not interested in messing around with it.

Lots of halts. Difficult to trade. So, no trades on that. After hours goes up. This morning, same thing, no trades. I'm not interested. Um I'm not going to get 40 cents a share on it in this area. You know, maybe in these areas I could have, but uh I don't typically trade at that time of the day. So, in any case, nothing on WOK. FCHL, this one was on the scanners this morning. Interesting that it has a very high level of short interest, but trading a little cheaper between $1.60 and $2.20.

Not enough range for me to get a good trade on it. It's too cheap. AEHL, same issue. It's too cheap. Is it moving? It's moving a little bit. Continuation, but it's just the headline chasing the next explosive small cap run. Sounds promotional. Chinese company. No, leaving it alone. Um you know, unfortunately today we just didn't have anything to hit the scanners that really looked good. So, rolling back the scans here to earlier this morning, you see Wolf um higher float, 28 million shares.

WOK, that was um well, from 4:00 a.m. and then it immediately rolls over. FCHL, 4:30 in the morning. TVIC, we've traded this one before. It's too cheap. Doesn't trade nicely. Very thinly traded. AEHL, we already talked about that one. Chinese. Um MRAM, this was on the watchlist on Sunday, but I wasn't interested cuz the float's higher, price is higher. No trades. Uh then, let's see. ERNA hits the scanner, no news, no trades.

Left that alone. Same headline chasing the next explosive small cap run. Um uh, so then, uh, you know, and then yeah, 8:00 8:39 there were no headlines. And so it's just crickets. I mean, that's really all we have. Um, and so I'm holding patience. It's not easy, but um, it is the right move. Overall market is at all-time highs. Traders may not feel that they need to go into speculative asset classes when the overall market's doing so well.

So that's possibly a factor, but you know, I mean, the market obviously has these waves up and down. Uh, looking at the last 90 days, um, of trading for me, you could see, um, had the the drawdown back here. That was a bad one. Had this drop back in December. That was a tough one also. Um, but more of the red days have been a bit smaller and more controlled, uh, which is good. So, you know, P&L is really at my all-time high.

This doesn't include my profits for Monday, but only 2,800. So, um, well, minus the cost of 10 apple trees, but I don't factor that in. Uh, this is just the gross profit. So, in any case, um, you know, I mean, a million dollars in the last 90 days, life is good. I can't complain. Uh, but I will complain a little bit because the last, you know, few weeks have been slow. I mean, you could see I'm hitting a periodic 40 50,000 dollar green day, which is awesome.

And then, you know, 15 20,000 dollar days, a lot of 5,000 dollar days. But in between this, which you can't really see, is that there are a number of no trade days. So, uh, no trade, no trade, no trade, no trade, no trade. Um, no trade, no trade, no trade, no trade, and I think this was Good Friday holiday. No trade, no trade, no trade. I think maybe President's Day. No trade, no trade, no trade. So, you're you know, you're seeing a decent amount of no trade days.

You know, we look at last year just for comparison. There were some no trade days in here. You know, so it's it's not totally uncommon to have a few no trade days you know, scattered throughout the year. This there was a lot of no trade days here. I mean, this was a almost more no trade days and trade days in the month of August. This was very slow. So, you know, you could see here. I mean, it just Yeah, I mean, it was it was a very slow month.

I started with a big loss and then, you know, recovered it you know, by the second week and then was like, all right, be grateful you recovered the loss. Keep the quality standard high. This is a theme. Big loss, adjust the quality standard, fewer trades. So, what just happened you know, here in March or in April? I have a big loss. I adjust the quality standard and then there's you know, fewer trades. Now, you know, still decent but a bit fewer and here in May because I had a nice start at the beginning of the month.

I'm like, all right, let's hold it together. You know, don't over trade. Just take good quality setups. So, no trade, no trade. Trade the best, leave the rest. That's where I'm at right now. So, yeah, today's a no trade day. I'll be back at it tomorrow. Hopefully tomorrow we have some better opportunities. It's it's amazing how momentum can shift on a dime. Company puts out news and all of a sudden boom, we've got action.

We've got something we can work with but until that happens, I'm just sitting on the sidelines. So, I'm we're we're in the trenches here. You know, we're saving our ammo. We're just battening down the hatches. We're just surviving. And when there's opportunity, we know how to strike. It's just we're not seeing enough good opportunities right now. But that's not unusual for a colder market. So, in trading, you know, there's a a certain degree of um you know I I if you've seen that show Alone on uh you know, I don't know what channel it's on, but um you know, where they go out into like some remote area and they have to survive.

You kind of have the strategy of being like a big game hunter. You're going to try to take down like a moose or a bear and survive off of that for like, you know, months. You know, or you're someone who's eating like, you know, dandelion and wild carrots and you know, roots and stuff and you're just nibbling on the tiniest little bit of scraps you can get. And um I I guess maybe in my in my opinion um it makes sense, at least in the context of the market to try to set your sights a little higher and conserve your energy for the bigger the bigger hits.

Um I there's something to be said for hitting, you know, lots of small winners, but that in this current market is just not really obtainable because we're not seeing good enough quality setups to get those little base hits. Even just little base hits. I mean, unless you go all the way down to like four to six cent base hits, which are very small and uh you know, realistically are I mean, that's just that's very small.

You You could, but that's really setting the bar quite low. That's like eating crickets. Um or ants. I mean, you you could do it, but gosh seems like there's a better way and I'm sitting in a pretty good spot in the month right now because I got, you know, I I took down a a good trade early in the month. Two Two of them, really. So, now I can be a little patient. And I know we'd like to be catching these big trades every day and in a hot market it's possible, but that's not the current reality.

So, you have to be really accepting of the current reality and the fact that as a trader there is ebb and flow. There is hot cycles and there's cold cycles and you don't get to enjoy the hot cycles if you can't make it through the cold cycle. So, you've got to survive the cold cycle to make it to the other side so you can reap the rewards of hot markets and that's kind of what we're going through right now is just getting through this period.

So, that's it for me. A reminder as always trading of course is risky and my results aren't typical so manage your risk, take it slow and I'll see you guys back here streaming first thing tomorrow morning at 7:00 a.m. All right, see you guys in the morning.