If you're a struggling trader or a trader who just isn't happy with your overall performance, what are you doing about it? Seriously, what's your plan? Simply saying, wishing, hoping, thinking and maybe even praying that somehow tomorrow will be different probably isn't going to work.
What you’re about to read is from a GTMI. For those that don’t know, a "GTMI" is what we affectionately call a trader who we feel is Going To Make It. A trader who is well on his/her way to becoming and staying consistently profitable. Our GTMIs all have a lot in common. They work hard on their process. They’re honest with themselves. They want candid feedback. Overall, they “get” what it takes to be a Professional Day Trader. You can read more about them here.
The trader who developed this plan for himself is already consistently making money. He’s just not happy with his overall performance. He wants to become a better trader. And let’s be honest: he, like all of us, wants to make more money. He knows that this not going to magically happen overnight, so he came up with a plan.
Note: Anything that is underlined contains a link to what the trader is referencing – our free webinars, another blog, etc… When you’re done reading this blog and want to check out some of the material he used to develop his plan, just click those links.
With permission, here's a copy of his plan:
Trading and Budget Plan for July 2019
Fear of Losing $ is one of my biggest continuing Fears that is impeding my trading progress. I have not fully embraced and taken on the risk that is necessary to be a profitable trader. As you stated in the Fear webinar, to make $ in the market you have to risk $. What I did over the last 50 trades was a half measure. Like several of my past trackers I was regularly using small share size, usually 500. This was trying to play it very safe but make $ and it just does not work. As my recent tracker reflects I kept trying to hold on to the full position as to scale would be so small it is not worth it from a P/L perspective. So, I ended up always selling on pullbacks to try and capture some profit and not wanting it to come back to my entry.
The Fear of losing $ is also reflected in total # of trades taken, although there were definitely slow periods during the most recent 50 that I really did not have any interest in putting on a trade. My prior tracker to this one I did take more A+ setups but again with smaller size so was still a half measure. It is also reflected in fear of giving back any profits as I am in such a rush to sell and lock in small gains and end up leaving so much $ on the table.
As you always say it’s the trades you did not take that cost you the most both from a financial and psychological/emotional perspective. Today is a perfect example. Early NVAX trade< I did scale and try and stay with it but only took 1000 shares. Then 2 KERN trades< which I handled ok from an execution perspective, even getting back in for the 22 break. Granted I only took 200 shares but the way that moves and the risk it entails I felt I could take 200 and if it got legs it still would be a trade with a good potential return, allowing me to sell 100 and then see what it can do. The first 2 did not go but the third break of 22 was the one that moved nicely. On that one I was waiting to see if it could meander a while but it did not wait and did make a nice move. The one I did not take was ATOS which was a great call by you and even though I missed the .76 entry I could have taken the .81 and had a limit order ready but did not pull the trigger. This was the trade that really worked nicely and if I had taken 2k shares, scaled into first pop into 90s ish then had some patience and let it work could have scaled the rest of the position as it broke 3 and moved toward the 3.31 PMH. More importantly, I would have been executing a Process rather than just being in Fear mode and selling all or most to just book a gain. I do this over and over as you can see from my trackers.
Bottom line is if I do not actually take the trades and use a process I will continue spinning my wheels for years.
Establishing a budget at the beginning of each month to take away some of the stress as you outlined in the Fear webinar, and treat it as the cost of doing business. Instead of living and dying with each trade, which is what I have been doing and quite frankly is part of my personality make up which we talked about on a call. I do not have to make every trade be all or nothing, black/white. This is a personality/emotional trait that I am well aware of and it stares me in the face every day I trade. I need to depersonalize my trading by executing a process consistently.
JULY 2019 Budget: $200 per day for the 22 trading days of July: $4,400. This is a figure I am completely comfortable with from a financial perspective and if I lose the $4400 so be it.
Take every A+ I see and can get, no picking and choosing. This will exclude those A+ trades I generally have a hard time with such as large spreads. I usually let these go as I need to be quicker on scales and often do not get them off in time. As I get more nimble as a trader I will be able to take them. Also on Inflection Point trades, I have been using limit buy/stop on quote orders as I find my timing on the breaks on L2 is still not good enough to prevent me from mistiming and in some cases getting in before it is a “true” break of the Inflection point. I usually give wiggle on the entries on the BSL orders and get filled more often than skipped.
Take appropriate size based on the stock Price and risk. Generally, for the lower priced A+ setups I will consistently take 2 or 3k shares, looking to scale 1/3, 1/3, 1/3 or on the 2k ½ and ½. So today, both NVAX and ATOS would be 2 or 3k. If it is low priced but moving very quickly will reduce to 1k as I have in the past gotten the deer in the headlights when they crack back. Also some of these lately whip so fast that I have found I can’t get a sale off before it pops and drops. If a stock is moving with that much velocity I don’t handle them as well and will just use my judgement on whether it is realistic for me to take the trade and be confident I can get a scale. For the higher priced stocks such as the KERN’s and BYND’s I will take 200 to 300 shares as feel I can manage that and take a full stop if necessary. It also is large enough size so I can scale and if they do get legs can make decent $ on the trade. I was not trading this afternoon so missed your BYND call but saw it later in chat, Nice Call!
Stops: For most of the lower priced ones I take Mike's perspective and if it is not immediately green, I am out. The thesis did not work, move on to the next trade. For stocks like BYND I will give it a $ and did that on my most recent tracker. However, I am still thinking on this and may just switch it to hit out if breaks my entry. Like BYND yesterday, got 160 break, goes to 160.34 then fails. There was a second mouse in the afternoon which I was not at my desk to get but I saw you got that trade. Often there is a second mouse on these clean inflection point traders and so I may modify the stop going forward, to hit out at entry then re-enter when it sets up again.
Finding my own entries: I am not at the point where I can have 5 different charts up at the open and monitor them all and pick entries. I still rely a lot on the heads up from You, Mike and Jane, especially on the morning gappers. On the IP trades, they take longer to set up, I know what the IP is and have taken those on my own or in conjunction with a call by You or Mike. That is going to be that way for a while. If I am scanning multiple charts at the open for the gap and gos I will end up missing a lot of them as I just don’t have that skill level yet. Over time this will change but that’s where I am at on the early trades. I still get most of the early trades that are called in the room as you can see from my tracker.
You have been guiding me and encouraging me to increase size responsibly as I do have consistent risk management on my trading. I am committed to executing that with my budget and trading plan for July. I learned more about my trading and myself in these last 50 than any previous tracker. I am starting to see the setups better and understand more deeply what a setup is versus taking a trade. I also know that I Can Do This! Trading is freaking hard but I am emotionally wired to generally make things much harder on myself by: not trusting myself and the process, making everything a live or die fight or flight situation (taking every trade personally) and not taking a full seat ie, doing half measures because I am afraid to actually fully commit. (both financially and emotionally).
As always, thank you for all the effort, support, guidance and encouragement you have always provided since I started this process!
WOW! That's what I said when I read this. You see why he's a GTMI? I certainly do! One of the things I love about this is how he incorporated so many of the different elements from various blogs, webinars and the course into a specific and actionable plan. But what I love the most is how he dug deep and really figured out what's going on with his trading and his psyche. Only by doing that was he able to develop an actionable plan that will get him to the next level.
My hope with this blog is that his plan will inspire YOU to go make your own plan. If it doesn't, and I'm just being honest here, you're most likely a NGTMI. If you're serious about getting out of your trading rut, read his plan again, click on some of those links to read/watch even more and then get started on YOUR plan.
Finally, a big THANK YOU to the trader for allowing me to share this with everyone. It takes a lot and is tough to put yourself out there with me, let alone to everyone else who's now read this. Your generosity and desire to help and inspire others is greatly appreciated. Trust me when I say, your plan will help someone else too.
Thanks for reading! Questions? Comments? Drop one below and/or reach out anytime.
PS: I know I said last week that my next blog was going to be all about Level2 and the deniers out there. Well, that got pushed. NEXT time... This was way more important.