I just wake up and get crushed everyday. There are so many ways that I get chipped away at.
Some of them are user error. Some of them are from the PvP elements of markets that are anticipatable but not predictable. Some of them are from a lack of knowledge. Some of them are from a lack of skill.
I have a list of my common leaks that I refer to:
SIN 1 – FOMO’ING IN, BETTER TO MISS THAN BAD FILL
SIN 2 – FLIPPING A LOSING POSITION IN THE OPPOSITE DIRECTION
SIN 3 – LEANING ON ALL TIME HIGHS
SIN 4 – UNTRADEABLE STOCK – SPREAD
SIN 5 – UNTRADEABLE STOCK – ILLIQUID
SIN 6 – UNTRADEABLE STOCK – MANIPULATION
SIN 7 – SHORTING ILLIQUID PRODUCT WITH LARGE SPREAD AND NO VOLUME, GRIDLOCKED
SIN 8 – CROSSING THE CONSOLIDATION
SIN 9 – ENTERING A CONSOLIDATION IN THE MIDDLE IMPATIENTLY RATHER THAN WAITING TO PASSIVELY ENTER FROM THE SIDE
SIN 10 – RISK AVERSE TP
SIN 11 – SHORTING LOW FLOAT NANOCAP, EXERCISE CARE ESPECIALLY AROUND HIGHS
SIN 12 – LACK OF SITUATIONAL AWARENESS WHEN INITIALLY CLICKING IN, ENTERING AFTER PREV HALTED OR SETUP FOR SHORT SQUEEZE
SIN 13 – FADING A NANOCAP WITHOUT REALIZING IT HAS A REAL CATALYST
SIN 14 – OVERTRADING BETWEEN [90 MIN AFTER OPEN THROUGH 30 MIN FROM THE CLOSE]
SIN 15 – HAVING TOO MANY ACTIVE POSITIONS OPEN AT THE SAME TIME; CLOSE THE LESS VALUABLE CHARTS AND FOCUS
SIN 16 – DON’T EXECUTE INTO A HALT UP OR DOWN THINKING IT’S A HELD ORDER
Recently we’ve added “getting lunch money’d” to our trading vernacular. All of trading is PvP but some aspects of trading are particularly PvP.
The approach to trading I am refining is to find the highest volatility, highest volume symbols and to hyperscalp off order flow. There are particular large participants in these nanocaps that execute $200k-$500k orders that push price, sometimes by 5-15% as soon as they enter. They often blow through people’s stops.
Sometimes a particularly large number of stops getting triggered (especially around a longer consolidation near highs after a large % move, like +200% on the day, when price is stacked up against a bunch of large offers with say a 3% wide consolidation that has a base of bids that have enough confidence to form and a bunch of stops positioned above the offers and below these bids) can cause a whipsaw effect where one set of stops gets forced to cover then price sweeps across the consolidation AND takes out the offers/bids on its other side and triggers the other stops, all within two seconds. So price round trips like a 8-10% move and then it settles rapidly within that range trying to reestablish equilibrium, often preceding a larger move in one direction or the other.
Those disruptions are hard to anticipate.
Similarly hard to anticipate is a whale adding huge offers and moving price, crushing your long position or vice versa.
I am overall very happy with my trading yesterday in RDAC. 80% of my executing yesterday was great and my level of situational awareness and understanding of core trading concepts I work on is improving constantly. My trading below was honestly pretty well executed. In this window I captured something like 30% of my max position size with an average position of like half my max. It was awesome. I also identified the top turning over and held for a very long short (one of my longest by % and duration in this type of spot) 3/4 of the way through it.
You can actually see the giant green candle that I exited into. That was someone buying 500k and pushing price 10% in one go. Thankfully I had covered 50% of my position prematurely just prior as I saw it finding a bottom. I actually adjusted my plan here. I had initially thought it would find a bottom somewhere further down in an earlier consolidation, something like 10-25% lower, and I was right, the stock had one more leg up through afterhours and then died off. But I moved my TP up for half my size as sellers and buyers flipped dominance.
And then here is the after hours trading of RDAC. I don’t have photos of my executions but you can see broadly what was happening here.
Big whale offer above me (evil rectangular monster aka probably EternalEnvy1991) forcing a ceiling on price. First circle being roughly where I entered and second circle being roughly where I exited at scratch thinking that there wasn’t selling volume to cause capitulation and that the stock would likely continue trending throughout afterhours/overnight like HTCO had this past week before dying off and I would come back to it tomorrow, keeping in mind price had been artificially pegged high without genuine buying interest but rather just paper thin nanocap speculation, which is what caused a huge selloff in HTCO when no manic buyers showed up the next day to trade it.
Turns out I was wrong and RDAC died off something like a minute after I exited (RIP).
I was so close to adjusting and trading each stage of RDAC appropriately — had a great short for ~20% of RDAC’s value before the initial buying whale came in, and I was positioned for another great short identifying a strong potential for a potential cascading selloff during afterhours without circuit breakers. All this along a bunch of microscalps that made greatly. Overall, this was awareness and execution that I wasn’t doing a month ago. I should be happy with it.
But I ended up getting lunch money’d by the buying whale (still had 50% of my size in that short that got pushed much less onsides) and this morning, I got lunch money’d again by the same nanocap shorting whale. He has very distinct fingerprints. This time in HCAI:
My first executions here were actually exits not entries, as I took +15% from my entry off the open prior to it halting up (cha ching!). But then the whale entered shorting the stock, pushing it down a few % with the weight of his offers. And even AFTER I had seen him come back, I tried to find new longs based on a few other positive factors I was witnessing. And I got punished HARD. He added more offers right after people had stacked up long on that potential breakout candle up and collapsed price ~8% causing me to puke pretty far offsides. Lunch money’d.
In this way it’s broadly anticipatable that this large player will enter these types of stocks but his exact entries aren’t yet predictable. The more entries I see, the better it will help me develop heuristics to understand when he is likely to enter and when my onsides trades are riskier than they appear due to low frequency high magnitude interruptions that can occur. It’s expanding my understanding of the game tree.
For now, I am adding a new sin to the list:
SIN 17 – BROADLY DON’T BE POSITIONED IN THE OPPOSITE DIRECTION OF SHARP NANOCAP WHALES
If I had applied that, I wouldn’t have stacked up long on that last entry and taken a larger hit after seeing the whale already 1) identify what they think is the top of this overextension and 2) demonstrate interest in wagering large amounts of money betting on it which causes incentives for them to continue forcing price down to protect their existing position.
*Breathing out*
While doing this I’m usually executing other types of trades in my other windows.
I have a 3×2 grid across widescreen monitors (2 of my 4 monitors) with two of the slots rotating charts for particular price action we trade. So while I am knife fighting my way through nanocap low floats in particularly hardcore PvP streets, I am simultaneously walking and chewing bubble gum taking other types and timeframes of trades- be they fades, catching pukes, leaning, opening drives, reacting to news, or otherwise as cued by our software. Maybe I’m doing too much and should focus my attention. I am reluctant to do so though because I have a decent understanding of these other trades and generally make on them. They just have a much smaller impact on my P&L than the low floats as the share prices are typically much larger and the trades are for much smaller % moves so they have a fraction of impact on my daily P&L. I am positive I am making in a number of those spots though and am improving in the other ones. So I don’t want to cut them out.
Instead I want to simply raise the standard and improve myself until I can navigate these low floats successfully and handle them in parallel to trading our core playbook.
And to be honest, I don’t get crushed every day. Some days it just feels like it – like today.
Here are a few areas I want to focus on in May:
- Avoiding trading on tilt- obviously this is #1 given my last post.
- Trading is a game of pennies. If I execute 7,000 shares in a day and lose 2c across each share (that’s one cent adversely on each entry and exit!) I am down $140. Many of my sins relate to suboptimal entries and exits.
- Sharp clicking! Because I trade so rapidly, I still have some issues getting my mouse and tartarus (external keypad) to be in perfect sync with my brain. My speed of execution is improving but now I need to focus on accuracy. Avoiding lazy clickins and clickouts. If I’m giving up 8 cents on my way out, that’s often the same quantity as throwing a large chunk of the EV of the trade out the window.
- Differentiating between where I’m sharp and where I’m not and sizing accordingly.
- Identifying microstructure and larger structural change that induces participants to enter
- Scaling my size more aggressively using 1/4 and 1/2 of my max size more often. Using my max position size less frequently. Respecting the max size.
It’s all going to work out. I know that a year from now I’m going to look back at the struggle that I was going through this quarter and be proud of myself for showing up everyday in the face of such adversity.
One day at a time. OTN!