So what was the risk on VRX? You mention you went all in on VRX and looking at the move for the day it looks like you mean you actually put all your account in one trade for a 10k gain on a total move from low to high of day of 11.5% ( low = 28.92 and high of 32.72) I'm looking at the numbers and thinking its a miracle your not at 30000$ for end of the day. I've watched this thread and applaud for actually keeping the journal going but I haven't yet seen anything that mentions any type of setup or plan or system to your approach. I really think you could do just as well with less risk per trade and a coin flip. This to me is like going to the casino with your entire networth and putting it all on red, double or nothing. Anyways, everyone's gave their input here and I don't think theirs one person who has said this is a good idea. I'd consider looking up risk/return formulas and some understandings of probability and randomness before continuing. http://chatwithtraders.com/ep-057-jesse-psycho-on-wall-street/ Theirs a good tale of someone making 500k in 90 days and losing it all in a few months. I've seen several other people interviewed talk about racking up 100k plus then losing it all. Just be aware of the swings possible and that everyone always thinks it won't be them.
Yea, pretty accurate. Not much signs of risk management. My thought was ride the bounce, and exit if it went down 1% from where I went in. That is a "plan" but is nothing close to good risk management. If you were in my shoes, how would you have played the VRX bounce? I had $35,000 in my account and $140,000 Daytrade Buying Power to start. It would really help if I can get an example to compare myself to.
First off I don't day trade, swing trade off daily/weekly charts myself. Also only been trading for a little under a year myself so take it with a grain of salt and learn what works for you. The way I make my stops on my discretionary trading(which has setups and rules) is that I identify the setup, and I mark the chart with my stop where if price gets to this point, I know my setup was wrong and I just scratch the trade as a loss. 75% of the time I never get to this point, because I also use a kind of a time stop where after each day I slowly move the stop up if its going sideways until I just stop myself out and scratch the trade as a small loss or breakeven. I then take current price - my stop price and divide that into 1% of my account equity to come up with a position size. So at 35000$ I'd risk 1% on the trade for a total of 350. Your stop was 1% drop in VRX's price. So lets say the entry was 29.50 today your stop price would be .295$ so lets say .30 cents below the entry at 29.50. I'd take 350$ / .30 = 1166 shares for a total of 34.397$. Today's close was 32.63 so we be looking at a profit of 3,649.58. Now not sure when you got in. If at 29.50, great catch, looking at the 5 minute chart it'd be hard to be a buyer until around the 31 range. But if you have a pattern or method/system that you know has a profitable edge that you could identify an entry at 29.50 or lower it'd be a good day. But this stock seems to impress me everyday as when I think theirs no way it can go lower, it goes lower lol so I'd want some solid confirmation to even look at a buy when theirs many other options for trades.
Got in at $29.36, a pretty lucky entry. Also thanks for the link to chat with traders. It was fun to listen to Jesse. However from what he is saying on the interview, I think he is a total amateur that still doesn't have the most basics in trading down. LOL this coming from an amateur (me)... hahaha. IMHO what he is doing will not make him profitable in the future nor consistent. He is not trading, he is gambling. I wonder what his P/L is.
So here's an example with a 5 minute chart of how I'd make an entry if I day traded using a pattern I use on daily charts. The first thing I'd see is the up bar at 12:15. This bar sticks out from the crowd, theirs no equivalent bar to be seen on the chart and managed to take the price from the middle of keltner bands to the top band. Something is different with this bar. I'd then watch the action after to see how price reacts. the Small doji candle isn't the best pullback entry after the retracement but its showing that buyers and sellers are in equilibrium here. After price starts retracing I'm watching the candles to see how the buyers are acting, after the breakout of the last bars high I could make a case for an entry at the breakout of the previous bars high. My stop I'd feel confident at 30.50 with the expectation that this could go for another small consolidation with an entry of 31.18 we have a total loss of .68 cents per share. 350$ (1% of equity) / .68 cents I get a total of 514 shares so lets round down to 500 for a nice even lot. The green line is my 1R target. I measure my trades in multiples of R which is risk. Because of different volatility in stocks and such it gives me a way to brings trades to some sort of equal measurement. I risked 350$ for the trade and and my goal is 350$, when my price gets close to this goal my stop gets moved up to break even. I can also look at taking partial profits at this range depending on the action. Once its breaches this I really start moving my stops up aggressively especially if it starts moving parabolic with free bars above the bands. Things that go up fast, come down fast. These pullbacks and a few other patterns I got from Adam Grimes I have done extensive manual backtesting. I just could not figure out a way to do it with programming. Almost impossible(atleast for myself) to define what a trend is, what a pullback looks like, whats too deep for a pullback, whats too long, whats too volatile etc. Theirs just too much discretion involved. But I do have 100's of manual backtest from me replaying charts and tracking with excel. I go through these and sometimes add a new rule such as scaling out at 1R and replay those trades with what would happen to this trade if I did this, etc. Then this is all built into a trading plan so when stuff goes down I know what to do because I've learned the hard way. Been trading for almost a year and my first 6 months was just ridiculous. Figured out that entries are pretty easy, what to do when X happens is not fun to figure out especially in the middle of it. First 6 months, down 25%, so far this year up 8% but I will say I was in cash for quite some time beginning of year as I couldn't find any setups that met my criteria. Which I'm alright with, waited, got on board the nice rally up we've had and with any luck if we have a retracement down to those winter lows I won't give it back.
Hey thank you so much for the extensive breakdown. I think I'm understanding what you are saying and it's great to see what other people are doing. I feel you're a lot more technical and trade a lot with trading knowledge than me. I think I'm a little less technical, use less signals, and tend to rely more on pattern recognition and my intuition based on how the stock is moving against the overall market. I don't have a set plan with stops like you except "try not to lose over 1% per trade". I appreciate your time and your comment. Good luck to you.
this is gonna end up really bad, he's going to try catching a falling knife like VRX that won't bounce and his account is gonna get shredded this is a tragedy waiting to happen, just a matter of when, not if
I really think the best strategy for you considering your age and the salary your pulling, is to save a little money on the side (about $1000) and start trading in your free time maybe during the weekends. If your consistently making good money trading on the side, then it might be time to quit your current job. I would really advise against it because your making good money during a tough period for the global economy. People just don't have money to spend this year and the next year. In all likelihood, there should be a financial crisis next year (2017. Wait and go for the right time. This is not the time to be quitting your job. If you have about $50K in cash, then you could go for a risk like this. Keep in mind, having a day job gives you a sense of discipline that will help you when you start your own business (trading in this case). Having a job is the best way to go. If you are upset with anything at your current job, consider interviewing for another job. At the end of the day, your co-workers are a great resource when you starting a new venture. Maybe you want to explore other opportunities. I would suggest looking for another job and trading with some money on the side.
Day 16: Beginning of day: $43400.00 End of day: $42851 P/L: ($549); -1.26% Took out $2,092.74 to keep for loan interest payments and bill payments that will come up later in May. Switched over to IB. Woke up late, went to work, and checked the markets late. Saw the nice bounce and rise of DUST and VRX. If only I had money... I think it would've been easy to get into these stocks. If I traded in the morning, probably would have gotten into DUST, but wow VRX is just killing it. The real winner for me today was the single share of VRX I have in Scottrade. It's up like 15% since yesterday lol... Mid day I was able to fund my IB account and explored the platform. Looks pretty cool, just need to navigate a little more and get used to it. There was a lot of work to be done at work for me today so I was planning to skip trading for the day. However couldn't get myself to resist not trying out IB... so I put on a small position on FCX just to try buying/selling, and like the moment after I bought it started dropping. Was watching for a bounce and when it was down 1% I just exited. Sigh... $549... the cost of trying out IB for the first time. Giving myself 2- for today's trading. Probably should not have put 25% of my capital on a weak volume play, but it was not going anywhere for a good amount of time that I thought it wouldn't go anywhere for the next 5 minutes. This carelessness cost me a 1% loss..
Excellent thread, super high risk! but I will throw down and say do what you love and try and make this happen!. I cant wait to see you hit 100k by years end pay off the loan and start trading your own capital! Good Luck!!!!