I received below e-mail from Andrew Aziz of Bear Bull Traders. For context, the guy is very consistent and rarely has losses (from my observation) Interestingly enough I had a very similar experience on this day and I think Andrew's self-assessment maybe missing something very important. ---- my trade ---- AAPL went up around 7% the prior day in anticipation of iPhone 5G event. I had caught good chunk of that run and decided to hold 1/2 position overnight. AAPL was nicely up about 1.5% pre-market. Sweet. But closer to the open, it started dumping. Ah, I knew exactly what "they" were doing. Trying to steal the shares from me with the opening dump right before the announcement! No way! Not from this guy! Perfect opportunity to get back to full position. Well, of course I added and added until I got stopped out for break even. I had a long bias and I refused to accept the reality. The lessons for me : 1) Have awareness that the bias exists. 2) Identify ahead of time condition(s) that would invalidate the bias. ----------------- Andrew's trade ------------------------ Dear BBT Family, As many of you saw today live in the chatroom, I had my biggest loss of my trading career: a $38,000 loss on Apple, right at the open. The loss was so bad that I had to leave the chat, so I could evaluate what happened. Social media is full of traders posting big wins and bigger losses, so this is nothing new. I decided to write this email though to share with you what happened and what lessons I have learned from this experience. I am used to having losses left and right in the open session, which is the most volatile time of the day. However, this loss was significant not just because of the dollar value, but because I had no plan for it. It was not part of my TradeBook. I had no edge on that trade and I thought it "should" work. If it did not work, well, I had no plan for it. As Mike Tyson has said, "Everybody has a plan until they get punched in the mouth." Now, imagine me (or you) getting a huge punch in the mouth, without a plan. On October 13, 2020, Apple had a big run. It was up over 7% as investors were speculating about Apple's "event" and the release of its new iPhone and services. I held 500 Apple shares overnight as a swing trade. In the pre-market, Apple gapped up around 1.5% and I was therefore already up. I thought the move up was going to go higher and I decided to load up even more in the pre-market, believing that Apple would rip higher at the open. By 8:40am it was trading just above VWAP and it was a perfect setup for my TradeBook 1-minute or 5-minute Opening Range Breakout. At around 8:42am Apple lost the VWAP in the pre-market, someone dropped around 300,000 shares and until the open, Apple was being traded below VWAP. I knew I should get out and I had absolutely no place being long while a stock is being traded below VWAP in the pre-market. I did not! The TradeBook for 1-minute or 5-minute ORB ups was not there. I did not exit, and I held onto my position at the open and even added more to it; another deadly sin that I myself tell people not to do. At 9:30am it sold off heavily (as one could expect) and it turned out to be a very nice 1-minute ORB down, instead of up. I eventually exited my big position at $124.60 with a massive loss. What did I learn? I have no TradeBook in pre-market trading. I was gambling and really hoping Apple stayed above VWAP and made a nice 1-minute ORB up. When it lost the VWAP at 8:42am, I should have exited before the Open. I was hoping it could claim the VWAP and go higher. It did not. If I was exiting the trade before the Open, I could have taken a 1-minute ORB down on it, but since I was in there long, frozen like a deer in the headlights, I could not. If I had not been in a psychological mess over that loss, I could have taken a reversal trade like Brian did around 9:53am. I just couldn’t though. Trading is a game against yourself. Who should I blame? No one, except myself. I had no plan, no edge, and no TradeBook. I have absolutely no excuses. Is the market crazy? Is trading impossible? Not at all, it is me who must take responsibility for my actions. Blaming others and the market is just an excuse. Why did I do it? From time to time, we all get away with these kinds of mindless gambles and then we get excited as we try to repeat them. More often than not we can, but that one time that we get a slap in the face from the market, it may very well not be that easy to recover from. For me, that loss was only around 3% of my account, but it hurt, and it shook my confidence. It was also of course embarrassing.
Apple stock fell 2% and this gentleman took "the biggest loss of his career." That tells me that this trader's risk-of-ruin is 100%. Not a matter of if, but when he blows up his account.
I caught falling knives when I was a newbie trader. Based on the way he trades, he doesn't appear to be an experienced trader. He failed to focus on the very recent candlesticks and he is trading based on hope. ___________
When this historic bull eventually peters out, 99% of the Class of 2020 daytraders will vanish with it. Yet this guy is (apparently) one of the smart ones, cashing in on chat room subscriptions and training courses while the opportunity is there.
Morning qlai, Thanks for the share. I personally do not see anything wrong with the trade the trader took. It was a good trade. I think the trader did a good job managing the trade and entering the trade. He took a trade long at the bottom of a range, betting on a reversal and average down when price went lower. Then he stopped out for a loss. Very good trade. I am learning in my own trading to stop getting upset when I take a loss and prepare for the next trade and believe in myself. I just took a loss on ES for $125. Price came right to my profit target, and reversed. I had to get out. Now I am long on the breakout, hopefully I make some money. Thanks,
Over 20 years, 90% of my losing trades have been made away from my systems. The lesson is clear. But learning it takes getting wacked repeatedly until it finally sinks in.