So I'm not a profitable trader. I don't think I'm the worst trader out there though. I'm up all time on OTCs (+1.9k if I exclude the exorbitant $1100 I paid to Schwab to trade F stocks, somehow my best trades). I just have a lot of leaks. And my leaks suck.
I'm becoming a transparent trader and I want to learn from them and show you all the thought process behind why I stuck to these losing trades. I'll be going over trading shares, might throw a bad option play in the mix.
BMRA Swing: June-October 2020 (-$378.90)
This was one of the first tickers I ever traded. Lost more today than this 3 month bag so obviously my risk appetite has increased since starting, probably not for the best.
I didn't know any technical analysis and believed pumpers about a catalyst (you'll see this is a recurring theme). Didn't work out and I realized FDA approval isn't a guarantee so cut my loss to focus on other things.
Entry: 8.02 avg
Exit: 5.59
Position: 150
My EEENF shot: April 6, 2021 (-$1139.60)
All time I am up 1k on EEENF, it was one of my best OTC plays. Got in fairly early and added to a position on the way up. This ran from subpenny to 10c on amazing hype. There was a binary catalyst of an oil discovery and people bought in eagerly hoping for an MDMP-type spike to 0.40 and beyond!
I don't regret this one too much because I'd never experienced such an event before. I probably should have held less but I decided to hold half on the day before news was expected.
Of course this company had a track record for disappointment but I held anyway. Stomached the loss okay, I supposed I was so keen to get over PDT I wanted to take a shot and it didn't work out, but a disciplined trader would have taken that and used it to fund more trades. Yes you miss out on any huge potential gap up but that rack could have been used to build my account more. I suppose risk management is key here, I could have probably scaled out closer to 75% but as you can tell I have terrible FOMO.
I guess this isn't close to being my worst trade given I made money on it but it's one of my bigger overnight losses so wanted to share what happens when you get greedy.
18,500 shares
Overnight hold: 0.084
Out: 0.0224 average
PQEFF and GEGI: May 25, 2021 (-$265.04)
Thursday trades after 3 winning days in a row, averaging almost $100 a day in profit. My appetite for risk tends to increase after green days along with stubbornness and it's a huge leak.
GEGI I just got burned by a sell off at market open after buying the spike and should have cut. This was one of my first times I noticed an inability to adjust to the markets. Subpennies were running out of steam and dumping started to happen early on but I didn't realize.
I can't upload photos but the buys went like this:
50,000 @ 0.0055
150,000 @ 0.0049
300,000 @ 0.0041
Sold 500,000 @ 0.00424
The price spiked from 0.0045 to 0.0056 in the first minute then immediately dipped to the mid 004s. It was a play that worked for me before and I got burned when trying to scalp out of the gate let to someone profit taking big. There's no reason I should have been taking a 2k position in a subpenny with a 5k account and in retrospect it showed how a lot of my OTC trades were just aggressive scalps and when I was wrong I was wrong big.
PQEFF came about 20 minutes later and I bought $1220 later, sold about $1080 worth. Bought 0.167 and sold 0.147 in a choppy play. No reason to take this much risk. I was tilting and saw something was way up and hoped for more. My inability to cut losses in the first 6 months of 2021 probably cost me thousands in terms of my P/L. These leaks weren't apparent as the markets were so hot but I'm realizing a lot of the bad habits I learned back then.
The AMC "YOLO": June 3, 2021 (-$1484.88)
This was the first mini-blow up of my account and led to my most recent break from trading.
Bought AMC after its run from 12 to 69 in the premarket, not doing my research that news of an offering PR had just dropped. So I kept trying to buy the dip and ride the momentum, taking a 57 share position ($3716.99) at an average of $65.21.
Now, knowing the stock has bounces, I wanted to hold through the dip thinking it would bounce back up.
And at 11:21 AM at a moment of max pain (remembering that this stock dropped 57% in a session after its January spike), I sold realizing I had a position that was bigger than I could afford to lose. I sold at a 40% loss at a $39.11 average and then of course, 15 minutes later it started to curl up and actually rally above my average price.
So this was one of the hardest losses to stomach at the time. But this was the perfect FOMO trade. Terrible entry in both price and size, no consideration of downside only dreaming of upside, and then although my plan was to hold through a large dip (which is the riskiest type of rule break), the loss became too sizable to emotionally handle after some other recent losses, so I got shaken out near the bottom.
I don't regret cutting because it could have continued to panic down, and I needed to learn the lesson. I haven't taken such large positions since and I'd rather experience this kind of loss before my account sizes up past PDT. It's acceptable to me to make these kind of boneheaded mistakes in my first year of trading, as long as I learn from it.
You don't need to "diamond hand" when you have a great entry and risk management. If it's a volatile beast and you have a bullish thesis, risk small and average down sensibly.
I had too much FOMO about missing out on a big win (a common theme) and this is what led to this huge blow up.
I'm hoping once my account blows up past PDT I will be more battle ready and cautious and okay with taking profits, I think for me it's probably for the best this loss came in Year 1 or I would have learned the harder way later on and maybe traded with a size I never could have recovered from.
ALZN, today: (-$360)
I was initially upset with myself for this trade but this one was bound to happen and I think I'm going to learn from it. Not my biggest dollar loss but one of my biggest % losses.
Was playing it up in the 10s this morning after the news spike. Alzheimer's study (hot play). It seemed to have weakness and I had a 50 share position so I cut half before it fell too far below 10.
Here's the problem, this was a FOMO trade. I should have cut everything when it looked like it was going to dip below 10 in the PM.
But seeing how crazy bio plays have been running, I held on and hoped remembering all the crazy spikes these plays got.
Here's the problem, if you expect the market to do something and ignore price action, it is a recipe to get burned.
I ignored the fact it was a larger float (40M) than a lot of these runners, I ignored that this has a high short %, I ignored the huge 2 red candles and the break of support at 9am, I was convinced the play was going to turn back and averaged to 9.5 with $950. Very aggressive and I needed to manage the loss as soon as it kept dipping.
My problem is with a cash account, I burned most of my capital for a trade and I had FOMO for not having a play for the day.
I have to be okay with walking away with no good trades/no trades that were seen through.
I have to be okay cutting all my buying power for the day. Much better traders had a slow day, if I feel entitled to gains that's when I'm going to get burned.
Yes, it's important to pay attention to market tendencies, but tendencies aren't guarantees. I just got caught up with the catalyst and recent plays and held too long.
Plus trading on 2-3 hours of sleep and it was just a recipe for disaster. I've seen plays dip and turn and I think I really needed to get burned by a slow fader because I just hold and hope way too often.
I know what a beaten down shorted stock looks like, I just didn't want to accept the loss and I truly believed that a stock that was up 95% in premarket would always recover. And it's dumb, irrational belief but that's what my tired self was convinced. "Come on, it's gonna turn!"
I gave it a heavy mental stop after it gave up in PM of 6. And I almost didn't stick to that. But when people don't want to buy and sellers are licking their lips and there's other better plays, of course it's going to keep tanking. There is no way in hell I would have bought if I had seen that play at any point for the first time after 9am, maybe I would have bought just before market open to try and scalp a spike (it didn't) but after getting beaten down constantly I just needed to cut.
So here's what I learned. I just need to cut. I need to be okay walking away from potential gains because if I get stubborn every time I'm going to get burned like this all the time. I'm sure I will find exceptions where I can hold but this company that's already been incredibly beaten down was not the ideal candidate.
I need to stop speculating based on catalysts, part of this was kicking myself for cutting NURO and missing out on significant gains, not looking at IGC's catalyst before trading it yesterday and kicking myself for missing a "gimme" based on the catalyst... price action is king.
It doesn't matter what the markets did yesterday or the day before, if the price action is showing that buyers aren't interested and you're a long, stay away or get out. Yes market makers have their fake outs but if a stock looks like it's taking body shots the whole day once it breaks a support it sure as hell is going to be knocked out.
The traders I look up to would not have stayed. I have to evolve my approach and be more patient, and be happy to walk away in the pre market with $10 of gains if that is all it's willing to give me.
There are just so many things wrong with holding this play from that first mental stop:
1. Price action was bearish and extremely bearish at 9am
2. This is heavily shorted
3. It broke multiple key supports
4. It is a larger float (37m) with quite low institutional ownership
5. It was just not breaking through resistance
I got faked out at 8:15 am when a big short covered, unfortunately I had no fill and that enticed me to stay in. Next time I just cut even if it's well below my mental stop. Yeah it can always turn around but the problem is stocks can do anything despite what you "think" it should do, so if the setup isn't how you like it you gotta get out.
It comes back to Trading 101 and cutting losses quickly. I "missed out" cutting losses quickly this week big time with NURO and it just made me less disciplined the rest of the week. I need to be okay making $50 in a week instead of trying to push, push and push. I need to control my greed and risk at the end of the week. I need to be more patient with entries and define risk and stops before hand. I need a plan for if it goes wrong. Not so good at that.
It sucks to lose a sizeable chunk of your trading account in 1 day but honestly I'd rather get all of these mistakes out of my system now. I know it's bad trading. I am too bullish on things and need to have more healthy skepticism.
Singles add up and I can see the risks of going for a homer every time. You really can get burned.
Anyways this was my long reflection about my trades that have gone really bad. There are more which I'll share in the future. But although there's that 10% of me that wanted to quit real money trading I know I can make profitable trades and I have an edge, just have to work on these leaks and iron them out before they blow up my account big time.
What are my takeaways:
1. Less risk
2. Better entries
3. Price action is king
4. Catalysts ain't shit if the price action isn't there (huge clues)
4. Be okay cutting
5. Be okay being forced not to trade
7. Be okay not trading
8. Be okay not trading
9. Be okay not trading
10. Be okay not trading
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