For anyone that has spent substantial time sitting around hearing players moan at a poker table, you’ve heard someone complain about being “upstuck.” A state of being “up” but having given back a large portion of your gains so you still feel as if you’re “stuck.”
Well, after reading some of what Yumi @samuraipips358 has to say about mental game for traders on X, I’m trying to avoid thinking about being stuck. Trying to avoid looking at my P&L throughout the day or after or during trades. Trying to focus on whether I made the correct entries and exits. Trying to keep looking forward to the next trade rather than backwards at the previous one.
To an extent that’s possible. However when I’m constantly trying to reflect on my decisions and improve their quality over time, I still do go over every trade after I complete it wondering what could have been.
This morning I woke up at 3am and after doing my morning routine justice, I logged in to premarket trading several hours before the open. I found, to my great surprise, a quantum stock $XNDU that IPO’d recently that I had been trading in and out of over the past few weeks and was broadly familiar with its personality, had just rocketed down 70% off its $35 share price to the $10 levels. What a surprise right?
It turns out they had exercised some dilutive function that had been lingering in the background waiting for a trigger that had been exercised on Sunday evening.
This photo really struggles to do justice to what kind of slaughter had just happened prior to me clicking in to the symbol.
You have a stock puking its guts out for an hour. An eleven billion dollar market cap stock dropping 70% of its value straight down. THEN when I had entered, the shorts eventually covering along with some people buying the premature right side of the V caused it to go 55% back UP, before about facing and coming back down.
This was a watershed trade for me for a few reasons.
It was one of my longest hold times. I was in the trade for three hours.
It was also one of, if not my biggest ever winner, as a % gain in one trade.
I also made several errors during it. Some errors of understanding and one primary one of execution.
Yet my entries were great, top notch really. I’m very, very happy with them. And I had set my take profit points for 1/4 of my size in a spread at the first red triangle and above it. When price started to tick up as all the shorts were puking their guts out I didn’t adjust my higher take profit targets lower to get triggered. I’ll get back to this in a bit, but the key point here is I avoided a sin that I have been habitually committing of taking profits prematurely/myopically/fearfully etc. Didn’t do that. Great.
Then I re-added when it came back down to an area that I intended to set my stop loss on the other side of some thick bids. Good base of support to long off of and I thought it had run its course and was now going to proceed to have some degree of retracement occur.
The only thing that worried me was the the morning auction and the morning open were just around the corner and what if when institutional traders are able to join in to this stock they send it to even lower lows? Fear and uncertainty in the back (front?) of my mind for sure.
I ended up holding onto my size for the first few minutes of the open until it started to have a strong pullback and demonstrated that it wasn’t going to immediately lift off out of its lows upon the market opening. Concerning! So I covered at a modest profit just before it ended up retracing a significant amount, going limit up to a trading halt having the circuit breaker hit because so many people were trying to buy the stock’s recovery. Watching from the sidelines, I had to wonder what had gone wrong to be making ~1/3 of the potential profit that I was positioned to benefit from.
What did I do wrong? I made $900 on this trade. Objectively it was my largest winning trade by a mile. But it could have been so much more. Was I missing something?
Upon reflecting I realized that there were a few items missing from my analysis. During the trade I had seen the dilution headline but I hadn’t properly digested it. Nor did I know what an F-1 filing was. And I only had a cursory understanding of price action following dilutive events. And I had no priors outside of $POET recently for such an incredible destruction of market cap like this. POET hadn’t ended prettily either as it sunk to new lows beyond the extent of the initial damage, which was definitely in the back of my mind.
What I realize now is that when I set my profit targets based on some levels of potential price retracement, the stock wasn’t doing a bouncy-ball retracement pattern that I anticipated. When I reviewed the symbol aftewards I realized that the shape of the shorts puking straight up in a almost literally flat line and then it about-facing even more steeply in a similarly straight line was really just a market mechanic of two directions covering rapidly, not some kind of price discovery retracement mechanism that I see in so many other instances and which the stock attempted to do several hours later.
You saw similar puking occurring in $CAR as well, as far as straight lines of sequential covers over and over. It’s quite a distinctive pattern.
I didn’t identify this in real time. If I had (and when I do in the future after such a monumental move occurs and this type of price action follows its bottom), I actually would have violated my “fixed take profit targets that I don’t want to fearfully/greedily bring in prematurely” and adjust them to exit right after the price turned for whatever size I had left, even potentially flipping net short to ride the wave back down if I’m feeling particularly bold. At the yellow arrow below, offloading the rest of my size.
Price is not coming back to this neighborhood for quite a while and it’s time to get off the bus.
What I’m saying is that rules for trading are flexible. I need to stay aware of what the price action I’m viewing in a symbol is reflecting for the interactions of the participants behind the prints.
I traded 53 symbols today across 22,134 shares executed and booked a winning day.
That in itself is a win.
What isn’t to be celebrated is that in one of the most important spots I’ve seen so far, I failed to realize what was occurring and then dumped my size while still significantly onsides out of fear.
Let the trade work!
Also not to be celebrated is that I made a number of unforced errors. I had a few other great trades, a few terrible ones. I’ve identified the errors I made and will seek to avoid them in the future.
Our visibility into the markets is so rich and it is only becoming sharper as we roll out more research and scanners. I am worried about stretching myself too thin. 11 hours of trading is a lot. Trading nanocaps, megacaps, premarket, MOO, MOC, the open, midday chop, earnings, illiquid afterhours, major headlines, stock specific news, dilutions… I mean seriously it’s a lot. But I am confident that the reps I am getting in are compounding quickly.
Being able to net a penny today after that many executions is hard to do by accident.
Something I did yesterday and today that I am adding into my daily routine is “man stares at wall for 10 minutes without moving his eyes from a specific point and processes his thoughts.” I do a meditation meeting on Sunday mornings that I enjoy but there’s something about taking a break from my screens and relaxing my eyes and letting my mind wander through whatever was floating, unresolved without me realizing. It’s great.
I also am on a 10 day porn fast that I expect to immediately roll over when it restarts. I attended an SAA meeting and to put it simply, I do not want to need to belong to a room like that. Nothing against its participants, I think they benefit greatly from the space, but for myself I can handle this and it’s a different degree of spiritual malady than what I witnessed. I’m just a guy without a girlfriend in good shape with a high libido and no outlet that is breaking the habit of using it as a coping mechanism. Attending that meeting actually gave me strong motivation to rectify this issue- so I don’t belong in those meetings.
I am so hungry to succeed at being a better version of myself, you simply cannot believe it. You would have to feel it. There is deep internal alignment and I am swinging with full force every day. I look forward to meeting my future self.
Lots to do tomorrow! Will be up bright and early. All the best, OTN.