Real Money Recap: First 10 days

It's been 10 days since my first real trade already?!?! Wow.

It has been a roller coaster for sure. Friday the 5th is when I subscribed to live market data for $20/month. I made $51 in 82 seconds on $TLRY. It was setting up so I went long. The instant I was in a position some tab scrolled up blocking my access to the trading buttons on the chart. What would have been $150+ ended up being only 1/3rd of that.

I thought about nothing but trading all weekend, and I believe I even traded the open of some day in my simulator, Think or swim on demand. Ended up making some money.

Monday rolls around and I made $87.50 and left a ton on the table because $IGC just kept running. It's okay though, I did not feel bad about it as I know this will happen often. What blew me away, was knowing how much money I would have been up if I had been trading that $13k size position from Friday... So much potential.

Tuesday I ended up taking no real trades because of an account setting I had that sweeps my excess cash over to the commodities side of the account, which disqualifies it for use on equities or something. I changed that setting and traded in the sim.

Wednesday the Market was very slow and I made some mistakes, which I covered in my previous blog post. Ended the day down $53.20 after commissions, which was about 2/3rds of that!

Thursday was slow as well and I got the inclination to walk away from the market down only $3 on the day, but $TLRY looked like it was setting up for a break higher and I took the bait. This is where my week really got worse. One beautiful thing about interactive brokers is that you can set your orders to size your shares based on a dollar amount, so your equity performance and dollar performance are much more closely linked. It keeps you swift as you no longer have the burden of doing the math to size your positions and can just click your hot keys to enter the position. Unfortunately I did not read the fine print when I checked off the option to set my position to be $1,000. A little box popped up that told me "Any position under 100 shares will execute at 100 shares", so when I went to trade $1,000 of a $136 stock (which would have been only 7.3 shares) it got me in at the minimum 100 shares, a $13,600 position! That is just one of the mistakes that ruined my day. Another unfortunate mishap was that I was setting a limit order to enter on the break of a recent high, and it executed me instantly at basically the top of the resistance instead of on a break of it like I had planned. I still do not know what happened to cause that, but regardless, I was in a position that I did not desire to be in. It was only 10 or so seconds after execution did I even pick up on the fact that I was in with 100 shares. I was panicked, but I decided to see if the trade would turn out as my instinct had suggested. Well, no it didn't because my instinct was only wanting to go long on the break of highs, which never happened. I took a loss of $110...

I then told myself "I am very familiar with the way this stock moves, and every time I trade it I walk away with profits on it". With that in mind I decided to stick with trading it and at the same $13k position size. I ended up taking 2 more losses and finally caught the bottom, but was shaken out given the fact that the stock kept making lower lows. The interesting thing, which seems to be happening to me a lot in this slower, choppier market, is that I end up taking losses when the stock offered me gains. If you look, the second and third entries would have paid me back and more on my first loss, and the fourth entry would have done even more so! Instead, I ended the day down over $330! It was a sorrowing defeat for me that day, because I had said earlier that I was going to walk away because the market was slow, and I was down $3... While $TLRY did have potential, I simply disregarded my own words. What I had realized after my $TLRY incident, was that it was having it's lowest volume day in a month, and the range on the day was only $4, which for $TLRY was not much, especially given that the spread alone on that stock is routinely $.50-$.80!

It was very difficult for me to face the markets again on Friday, and my only goal was to finish up green. I wanted to go into the weekend in the green. One thing that did help me feel better, was to realize that the loss I took on $TLRY was so damn small, that had I been trading it as a $1,000 position, it would have been basically a $10 loss... That's NOTHING! While I was tempted to come back trading with that full $13k size from the day before, I knew I was probably not in the best emotional state to be doing that. I ended up coming back to make $41.61 Friday, but commissions ate into that making it only $22.20! While that is a bummer, I am trying to keep in mind that I am trading $1,000 positions to acclimate myself into trading real money and the emotions that go with it. I still struggle to lose $20-$30, but I think that can be minimized with the right perspective. I mean, I'll go out to dinner and spend that without remorse (usually), why can't I spend $30 happily and without stress if it means I can get $100 back?

As the weekend ended, even though I finished green Friday a lot of enthusiasm had left me. I am trying to learn to let it go so that I can maintain the proper mindset for this. Without the mindset there is no long term success. I didn't do any studying that I can recall, but I also couldn't wait for Monday to get back in the ring and make up those losses. My goal was not to make them up though, it was just to trade good. And, I have to say Monday was another frustrating day. I took so great trades but just (once again) left a lot on the table!

I actually traded $TLRY because it was setting up. This stock can bounce like crazy and it usually puts in a nice long green candle with volume as the signal that the bottom is in. Even though I hesitated and did not take the initial entry I wanted, that would have paid me hundreds of dollars easily, I still traded it too conservatively when I actually did enter! Thankfully when I was at work turning on my platform to record my days charts, I saw it had broken out hard and pulled back. It was an important level to break and I felt the need to take the opportunity for continuation on the stock, so I did. I ended up making about another $90. It crashed pretty damn hard after that so I was thankful to have exited pretty much perfectly on the remainder of my position.

So that was a nice way to end the day. up $238.70 real money on the account, but I was still bitter about not having executed on my gut and buying what was essentially a routine bounce for $TLRY. Literally ever dollar per share that thing moved would have been $100 profit to my account, and I legitimately missed about $10/share of moves, to be conservative about it. Anyhow, I had made up the losses from last week and was still up $14 from when I had come back to real money trading.

Today I came back to trading a $1,000 position, and the only stock I traded was $FFHL. It popped up on Ross' scanner and I felt like I should take a stab at it. I almost got stopped out, as it violated the lows just barely, but I held on and had set my limit at high of day. I got filled as it popped up and came right back down for $112 on the day. I said I was done, and I kept it that way, even though $TLRY had some incredible movement this morning. It ended up hitting $170 premarket. I had a feeling I should take a small over night position on it, but I did not do it. Oh well. My goal for next the rest of this week will probably be to continue trading $1k positions and just slowly building my account. I just want to prove that I can do it with this size, and then naturally I can increase it all. I have just $30 to go to make up my losses from last years real money trading!

Red day recap and digesting my mistakes

While I was green on Friday making $51, green on Monday making $87.50, and Tuesday having no trades because the cash in my account was not available, today I lost $58.10.

Why does this deserve a blog post? Because I have some key points to talk about, and I am using the lessons I perceive today to grow instead of beat myself up about things as I have so heavily in the past on days like today. The funny thing is, I say "Days like today", but today is not a catastrophic one like many of the past even though it is a red day. Just in having taken the time to reflect and see these lessons today, I already see a gigantic change in who I was as a person and the difference in how I would have handled myself just weeks ago. My problems today are basic, crystal clear to me, and most importantly nothing that I need to get upset about. It was not an easy day today by any means, and I do still hear the remnants of that demon in my head that wants to take over and make it mean things it doesn't have to mean, but it's more like I am observing from a monitor in a secure room while it is locked up in a prison cell.

Today started out much like the last two days, meaning not much up on the scanners, and what was up did not have much volume behind it. To start the day I took some premarket trades on something with decent news,  volume and a good chart setup. After the open it had a brief spike that failed so I tried to buy a dip, took a loss, and I did not touch it again. It proceeded to fade all day if I remember correctly.

If you notice on the chart above, I never respected risking a break of the lows and got scared out with small losses. Furthermore if I had held my position of 249 shares from $4.01 I could have sold into that spike at the same $4.43 (on my chase trade) for a profit of $104.58 if I would have simply respected the lows. Instead after all those trades I took a profit of only $6.02, which after commissions is a loss of $6!

I basically made the same mistake on $ACRX with not respecting the lows and getting scared out of several trades that never would have gotten me out before a good profit opportunity. However the $ACRX trade was not a planned trade at all. My wife pointed out that it was rocketing, and then Ross in the chat room pointed it out as well. I looked into the news and it had just been given a price target of $10, which means it was a long way away from that. I wanted a pullback to get into and it did not seem like it was going to give one, so I took that initial position with the goal of cutting quickly if wrong, and I did. I kept trying to play it due to the news, but I guess the market in general is not hot enough. Either way, a good deal of profit was available to make up for any losses I would have taken if I had simply respected risking off a break of the lows. It was even making higher lows, which I did notice.

I did happen to trade two other stocks well today. $IGC (+$16) and $ASTC. (+36)

All throughout the session I had to keep awakening to the tense state of my body to consciously loosen muscles and breathe. Surprising as it may sound, I often had to do that with my paper trading. People in the realm of trading frequently say contest that paper trading isn't any help, but I think it is if you have the ability to operate from the conviction that what you are doing is real. We see people all the time playing video games on edge because they've suspended their disbelief and have become invested in something that for the most part holds no real world threat. The best performers in any field are those who can detach as if there is nothing at stake, so that they can enter a flow state and execute optimally.

I have been employing (or attempting to employ) some very specific perspectives on this journey in order to operate from that detached place as much as possible.

Every morning I attempt to remind myself that cutting losers is so important, that it is basically the strategy itself. While I am experienced and have a repertoire of tactics that come to me without effort at this point, none of them can have any hope of expressing a long term advantage if I can't keep my losses small when the trade does not complete the pattern as anticipated. 

A reminder I tell myself to help ease any difficulty in cutting losers, is that I have plenty of money in the account, plenty in the bank to replenish some if needed, and a great job that I can earn to replenish with as well. There is literally no need for me to fear taking a small loss. But, as simple as all of this is, it is not easy, and that is the paradox. The real work does not so much lie in strategy, but in self mastery. Caring enough to cut the loss and follow the rules, but not caring so much that you are too scared to trade or respect the risk in the first place. Today, that was my shortcoming. It was my fear of losing that caused me to lose money today.

To sum up the errors for today:

1. I kept trading after I noticed the market was slow, as it has been for a few days now. There were very few stocks gapping up on big volume. I forgot to trade the market we are in, not the one I wanted to be in. That means that buying dips on support and taking small wins is probably going to be the recipe for success, but that's my general attack anyhow! I chased some moves and it was not ideal for the overall market energy. 
2. I kept trading after I said "Ok, I'm up on the day, I'm going to walk away". When I said that, I was up $47 on the day ($70 something before commissions). From now on, if we are in a slow market and I say that, I am going to stick to that. I only kept trading because $ACRX popped up with what seemed to be a good enough catalyst for a trade. 
3. I kept trading as it was moving into midday. Volatility just dries up and people aren't trading as much. That means potential for follow through is much less, and trading is just a bad idea for someone who want's quick and volatile movement.
4. Possibly the most obvious one of them all is that even when I did come back to trade and spotted come correct big picture patterns, I got scared out of them because I did not respect the risk off the lows. That means I was trading my P&L and not the chart. (I will add the caveat to that, that there were big sellers on the ask that kept pushing price down. While I did felt the squeeze was coming, and it eventually did, what matters is the price and level II right now. Right then I was seeing much larger size on the sell side than the bid.)

After running all the numbers, had I respected my risk I had the potential to make a combined total of $248 on the day  (including my other trades) instead of losing $58.10.

To be fair, If I had made that initial $104 on $NVCN I think I probably would have called it quits or traded very differently, as this first week my general desire is to make at least $50 a day. Who's to say though. Either way todays lessons are very important and need to be remembered every moment during the trading session. I am thankful to only have paid an amount that can easily be made up tomorrow if the market presents a good pattern and I trade it well.

This is all hindsight, and hindsight always makes it feel deceptively easy to know what you should have done. Hell, I could have respected the lows and kept getting stopped out for larger losses than I did today, which may have ended up me being down even more on the day. It's truly anyones guess, but I have to keep reminding myself of one monumental truth: I have over 9 months of tracked trades that shows I can't just be getting lucky.

During Step 1 the goal was simply to trade the chart and see if I could capture more % positive of a stocks upside over time than I lost.

During Step 2 the focus began to be equalizing my position size over all trades so that the dollar gains more accurately reflected the equity gains. In the very beginning I had some major mental hurdles brought about by the size of the positions. I got stubborn on only a handful of trades and took devastating losses, that most of, if not all, where in profit at one point or another. The bottom line is, I was truly devastated by these losses because to me it meant I would never be successful. After regrouping and almost giving up entirely after 19 or so years trying this, I began to think differently. I began to understand that if I did give up, I would never be what I wanted, or achieve what I had desired so much of my life. The only change that took place at the apex of this chart was me lowering position size to a mentally manageable level, and cutting losers.

I try to look at these charts often and realize that is what has made all the difference, and that the same person who has turned horrible results around on paper, can continue the upward trajectory with real money. Perhaps the only real world hurdle I face besides my own discipline right now, is commissions and not trading on the platform I love that allows me to see everything I need to see to trade my best. This first week I am trading with only $1,000 positions, and although my commissions are quite small compared to the rest of the brokers, if I trade too much by taking less than optimal setups I will eat away at my profits in a very detrimental way.

I have since made what looks to be a turn around since I stopped trading a year from the very last real money trade I took. I not only find it hilarious that it was basically a year exactly that I came back to real money trading, I find it consoling, because so many things in my life seem to happen so coincidentally as this. I am certainly not saying I have mastered this, either in concept or execution, but I am saying that I have never been more convinced that I am going to make this happen in a big way. My present course forward has me getting comfortable with trading $1,000 positions and slowly ramping it up so that commissions don't eat into my profits so much. As of right now with a $1,000 position, if I make a 5% gain on a stock that would be $50. If I am trading a stock that with 250 shares, the commissions would be $2.50 per round trip trade. Just the commissions alone would eat up 5% of my profit because I am trading a per share commission structure. In the future as I increase my standard trade, I plan to switch to a flat fee per trade at some point. Anyhow, today was just one day out of the journey, and I got something out of it.

Going Live

Today after trading and making $612, my wife asked me "Why aren't you live yet? What are you waiting for?" and I said "I don't really know honestly... but, if I'm going to go live I'll need a market data subscription for interactive brokers."

So I went online and added the live market data for $19.50 per month. I then logged into the live account and indeed saw that the data was live now. Then I took a look at $TLRY, a stock we have been paper trading for a month now. I saw a setup, and I clicked the buy button. I was in the stock and as soon as I was, a tab flipped up and blocked my view of the buy and sell buttons!!!

46 heart pounding seconds later, I figured out how to get rid of the damn tab and close the position. I could have made about $150 in those forty or so seconds, but I ended up banking $53. What's worse, I could have easily lost $150 too, but I got lucky.

After the trade I sat there shaking because of the frantic attempt to find my buttons again. I asked myself how much of that physical reaction was honestly due to the panic of not finding the buttons, and even now hours later, I'd say almost all of it. I did my best to rationalize what I was doing and stay zoomed out. At the end of the day I have been doing this profitably for 18 days straight now, and overall, I have several hundred trades under my belt that prove to me I know how to do this. It is so important to make it my mantra, that keeping losses small is the real strategy. As long as I am trading volatile stocks, buying on dips for the most part, and cutting losers, the winners will more than pay for them. Not only does it help to remember that, but it also helps to remember that I have plenty of money in the account, more waiting on the sidelines, and even more that I can save to refund this operation should the worst happen. But, I am not going to let the worst happen because I am in control of this. The only way I should be losing any large amounts of money is if my broker fails, which is highly unlikely.



After I was finished with the trade, I went into my spreadsheet to input it and was surprised to find out that the last real money trade I took was one year ago yesterday.

It's just kind of interesting to me. Anyhow, as I am writing this I am spending some quality time with the Trader Work Station platform (From Interactive Brokers) so that come Monday I am hopefully familiar enough and have my hotkeys workings correctly. It seems that I have it mostly figured out now.