As you can see HERE, I post ALL my trades publicly and unlike far too many in trading/teaching, I don’t hide from my losses, I look to highlight them so both you and I can learn from them as losses are THE BEST TEACHERS!
See previous blog posts on big losses:
Yes, that’s right, as I said in bullet #3 in this key blog post with 40 lessons from my top student passing $4 million in profits just a few weeks ago, there’s absolutely NOTHING wrong with losses. They are a part of trading FOR EVERYONE and you MUST learn to deal with them and minimize them in the future.
Earlier today, I made this MUST WATCH 25+ minute video lesson today for my newsletter subscribers with a thorough detailed look at this loss:
…but below are 7 more basic lessons I’ve come up with that I think are helpful:
The loss was bad for me, in fact, worse than ANY other loss I’ve had in the past year. But in the grand scheme of my trading, it’s puny, less than 2% of my profits over the past year and I’m still green in March, so it’s REALLY not that big of a setback. Most importantly, when something unexpected happens in a trade, it’s important to cut losses quickly and not allow any small mistakes to turn into potential big disasters.
Download a PDF version of this post.
2. I dip-bought a solid pattern on a recent Supernova’s first green day and was up a few thousand dollars on my position at one time. But, I wanted to give it more time and I got a bit unlucky with after-hours news. So, I reacted well and minimized my losses after-hours due to the uncertainty…very mechanical, not emotional, as successful trading should be…I was trading from the middle of the Caribbean Sea aboard this yacht, on which I’ve been hanging out with several of my topstudents the past few days (get ready for some awesome Q&A videos I’ll post soon):
Good morning! Here’s your #dailyreminder from our crazy #yachtlife in the #caribbeansea that #lifeisgood and it can be great when you #studyhard and #workhard and earn yourself true #financialfreedom like my top student @timgrittani who has now turned $1,500 into $4+ million in 5 years and @tbohen who is the @stockstotrade master while making roughly $50,000/year #stocktrading part time in the #stockmarket the only question is how badly do you want success and what are you willing to do to achieve it? #dreambig #iloveteaching #startedfromthebottom #dailymotivation #yachtparty #thegoodlife #workhardplayhard #jewyachting #jewboat #thisismysynagogue
…so I wasn’t even sure if I had sold my entire position or at exactly what price, since my satellite internet connection was so bad!
…so I estimated in my realtime alert and as it turns out, I actually still have a small long position which I was finally able to see this weekend when our connection was stronger. I’ll sell tomorrow near the market open and update my overall loss on this trade.
3. It’s not a total surprise that this company announced another financing as they only have a few million dollars in cash in the bank. I simply underestimated how quickly they would announce it, given they just did a financing round in February. So, my mistake was not being cynical enough. I figured at worst they’d have some hyped-up news this coming week and then announce a new round of financing, but I was wrong.
Congratulations to short sellers on the stock, like this great up and coming student who is fast closing in on $1 million in trading profits in just 13 months, since joining my and starting with just $27,000.
I don’t mind when students trade against me. If they’ve done their own research and planned their trade out, according their own strengths and weaknesses, then I’m glad, because that means they’re thinking for themselves and I must remind you yet again that ALL of my top students are entirely self-sufficient and we often trade the same stocks differently. THAT’S OK, BECAUSE THERE’S NO ONE EXACT FORMULA FOR TRADING SUCCESS.
4. Even though I cut losses quickly when I saw the stock dropping below key support of 3 after-hours, I made 2 mistakes before that…one was going so big, as the last time I traded aboard a giant yacht was HERE where I made $70,000. So, I wanted to be the “yacht hero” again and instead I was the “yacht loser” as this solid young trader has made $5,000 and this old man has made roughly $3,000 while this veteran part-time trader didn’t trade, since he doesn’t like trading with such bad connections while the rest of us are addicts. So, I’m the only one with losses (although I would have had losses and still been in last place in any case, even if I had a smaller position).
Don’t feel like you EVER have to be the “hero” on any trade and learn from my mistake and don’t bet big when you barely have an internet connection…sure, sure, trading in this environment gets your heart beating faster and I’m not going to lie, because it is a fun rush and I’m an addict. But, you must learn to control your addiction and need for “action” or “a rush” as that is DANGEROUS and EXPENSIVE, as I just proved nicely!
5. Aside from going too big with my position size, I also made 2 more mistakes in not listening to my own advice that I gave in the chatroom when the stock was bouncing nicely, if only moderately, into the market close:
Nice PULM bounce, remember to take profits into strength, don’t get greedy
Posted: Mar 17, 3:44 PM / $
…and then going so far as to stubbornly add to my initial long position when the stock broke below my original entry price, because I still thought it had a good chance of gapping up/morning spiking the next trading day.
Obviously, hindsight is 20/20. But, it’s usually a good idea to cut losses on a Friday long when a late day spike attempt into the market close/short squeeze doesn’t materialize or fails…the other 2 stocks I was considering buying late Friday, EKSO and DFFN, also both failed to uptrend/spike into the market close. So, no matter which stock I went with, I would have been wrong…I simply chose the worst performer of the 3…by far…due to the after-hours financing news.
6. To all the shorts beating their chests after this win, I’m happy for you, as I know it’s been a frustrating few months with many Supernovas that have gone further than ever before, causing some massive losses and/or at least massive anxiety.
Some people proclaim that nobody should ever buy junk penny stocks due to their terrible fundamentals and risk, but the truth is that despite most of these junky penny stocks coming down in the long run, and yes, many of them doing financing rounds that do push their stocks down, as we saw here, traders with small accounts CANNOT GET BORROWS on these stocks when they are ripe for shorting and thus should be long-biased in this speculative market as “junk penny stock” after “junk penny stock” like AUPH, BCRX, TGTX, DPW, EARS, INNL, CERU, IDXG, ETRM, DRYS, PBMD, DFFN, GLBS, TOPS, SINO and ESEA and so many more have multiplied spectacularly, all in a few hours or days on huge volume and it’s wasteful not to try to capture some of those moves.
Never forget that sometimes the stock price of the company with the worst fundamentals can spike the fastest, as early short sellers get squeezes and momentum traders who couldn’t care less about fundamentals bid the stock higher and higher.
I still find it laughable when shorts who get squeezed on fundamentally flawed stocks go on tirades about the injustice of the stock market…I thank you for your over-aggressive trading and your naivety, keep shorting early, we need people like you to help create the squeezes that allow for such big runups!
And to those who think it doesn’t matter to learn about short selling because you only focus on longs, wake up and realize that the best longs are the stocks that scare the short sellers the most, so it helps you big time to learn how both side think…trust me, I’ve made millions going long and millions going short, too. It’s like learning a forehand and backhand in tennis. If you don’t learn one, your opponent, in this case the stock market, will expose your weakness and beat you.
7. Was this a terrible pattern for me to buy? Absolutely not. Too many of you get discouraged based on 1 or 2 or even 3 or 4 losses, I prefer to use much bigger data sets in determining the best trade setups and dip-buying a recent Supernova that’s holding intraday support that’s spiking on big volume into the market close on its first green day is a solid pattern that works the majority of the time, I simply was caught off-guard by this financing and yes, bad, unexpected news CAN HAPPEN TO ANYONE AT ANYTIME, long or short. So, at least I didn’t just ignore my overnight position like my previous biggest loss in 2017, when I went to sleep in Asia (due to the time difference) holding an earnings winner long and woke up to discover it wasn’t holding support well so I had a $2,000ish loss.
Until the data changes dramatically, the fact is that this remains a GREAT market for longs, especially dip-buying longs with my favorite penny stock pattern right now HERE. But, not those who chas, and while this loss sucks, it doesn’t deter me from making more trades just like it…and then if I continually lose more and more, I’ll simply adapt and look for better patterns.
It’s your job as a trader to adapt to what works. One piece of bad news on a long position does not a trend make. But, I’ll keep my eye out to see if it does keep happening and then I’ll simply move on. It’s not the end of the world, it doesn’t mean I’m a bad trader, I’m not panicking, yes, thank you for the many messages, I’m okay. It’s kinda of funny to me how some of you guys freak out when something unexpected like this happens. But, this isn’t my first loss nor is it my last and the good news is my “biggest loss in a year” barely wipes out a few good days of my recent trading, so I have contained it quite well.