It’s really important to reflect on your mistakes and make adjustments for improving in the future. Even veteran traders like myself make mistakes from time to time and it's important I share these with you so you can avoid them.
Here is an important lesson about giving back profits on secondary setups.
The Game Plan and Execution
I did all of my homework on Sunday night the day before. I told all of my students both on Sunday night and Monday morning before the market opened that MOMO is the play of the day. Our plan was to hit it at the open, it’ll probably drop really fast in the first ten minutes and then we’d be done.
I knew MOMO was going to break under $36. If the stock opened even slightly green, that would have been the perfect spot to get in. Once it opens green and starts drifting towards red, that’s where you enter in with full size. So once the market opened, MOMO just tanked and I was up $1000 on the trade quickly.
- I got greedy. As MOMO started to shake out, I ended up reshorting it when there was clearly no real setup.
- The secondary setup after a big flush is never as good because you’re using your daily range on that one push. Now that it’s over, I’m shorting mid-range when there’s no edge.
- The VWAP was so far away, by trading with a stop that’s too far, I ended up holding my huge position for too long.
- I ended up giving back a chunk of my profits so now I was stuck in front of the computer all day. I wanted to make it back. The rest of my day was just grinding.
- What we saw here was a big flush down right at the open. The previous day had more of a stair step down. You can carry these stair steps longer since they’re more gradual. But when you’re getting flushes, you have to take them.
- Finally the holy grail of lessons is and always will be to trade when you have a plan, when you have a pattern. Trade only when you have an edge, a strategic advantage on what’s going to happen and your reward to risk on it.
Our next 60 day bootcamp starts October 3rd. If you want to learn how to trade stocks from A - Z this course is perfect for you whether you want to be a full-time day trader or part-time swing trader. If you have any questions or want to save your seat then email me at firstname.lastname@example.org