I haven’t been updating my blog the last few days because I have been in the thick of it. This has been some of the hardest times for me to date. I blew up after doing two trades that were outside of our playbook. In a sense, I not only lost a lot of my own money, but I sabotaged the endeavor by setting me back quite far by forcing myself to drop down in size.
Now is this the best outcome for me ultimately? Just like you have to break in a horse or a mule, I feel I am similar. I’m very, very stubborn. And to be sufficiently humbled to focus on best practices and my process, I think I had to keep going until I was finally broken. I went +16k then -29k and -25k on VCX and POET – I was max long in POET and POEL (2x leveraged POET ETF) when they diluted. It was the worst dilution I have seen so far in terms of most % drop over shortest timeframe. It also hit right when I was about to stoploss for the day so I was already at the end of my rope. And it was while I was doing a “trade” that I’m not even really supposed to be doing. I was speculating on where price ought to be, not trading. And staying in a position while suspiciously sharp sellers were present that didn’t make sense to me at the time, although I think they anticipated the potential for a dilution announcement during the subsequent window. It felt karmic to be so exposed and then get punished literally as forcefully as I possibly could at my most exposed moment, karmic for being caught doing something that I “shouldn’t” be doing.
Afterwards I gave up. I added additional risk controls that I cannot circumvent (software-side that my partner controls) which scale according to the market cap and volatility of a stock, such as lower limits after hours or during earnings. And then I had him reduce my now quite limited max position size by half. And then the next day by half again. So for the last few days I have been trading with 1/4 of the size that he thought I should be reduced to after these staggering losses.
It is freeing in a way. I have lost enough money in aggregate that it makes me radically re-evaluate my living expenses, it makes me second guess my actions. It makes me respect the dollar and tick. It makes me hit out of positions when I should and respect the implementation of the strategies that I have been practicing. It makes me avoid taking “trades” that I shouldn’t. This has gotten to the point where it’s existential and I cannot deny it any longer.
I am proud of my execution over the last few days. I’m also proud of requesting my risk limits to be further limited so I can truly focus on my process. Despite all of these tragic missteps, my process has been improving each day. Sharper clicks, better entry selection, selectively longer holds.
I’ve been doing a substantial amount of research with Claude and am much more comfortable trading earnings, news, and other parts of our core playbook.
My style is becoming more clear. I am a dissenter. When stocks get overextended in either direction, I want to bet on its reversion. When fake news occurs I want to scoop up its retrace. When a stock drops 50%+ of its market cap I want to find its bottom and long it, then flip short when the shorts are done puking up. When a stock is running out of steam after a long drive, I want to short its turn. When a stock has lingered for too long in a tenuous stretch of consolidation, I want to short it turning over. These require precise entries and disciplined risk control which I am working on.
I do all of this on top of elements of the core SMB playbook and topics my partner has taught me.
I am taking sharper clickins and diligently hitting out. Rarely in the back half of this week did positions run far offsides for me. I still have so many situations crop up to trade each day, many of which I take. However I am focusing on making sure that I NAIL the A+ spots when they infrequently occur. The execution of those when I trade large size are going to dictate the bulk of my P&L so I hyper focus during them. I nailed an UBER news trade today.
We are adding more functionality to the software to help plug leaks like working on holding winning positions for longer. I have a ton of modeling I want to add to get alerts about particular spots we are looking at adding to our playbook.
I don’t know what else to say really. Basically all time lowest $$ just with my head down, putting in 12-15 hour days. I’m looking at moving to live next to my partner so we can have our desk in person. I’m all in. There’s nothing I want more than to make this work. Truly everything I want is on the other side of succeeding at trading. And I’ve finally got it through my thick skull to trade small enough that I can focus on the process. I just want to stack days of consistently good clicks, working on my entries and exits and avoiding my sins and refining how I approach spots, working on holding longer and giving up less unnecessary ticks on my entries.
That’s all for this update I guess. Beaten down, still kicking. Going up a mountain tomorrow to get some sun. Have a good weekend, OTN.