Hey There! This past week has been an absolute blast, to say the least. What can I say? This week sealed the 1 year Anniversary of my immersion with the Markets. I will do a special recap this Sunday, so make sure to check that out. Today I will be going to over $SMSI, which as you can see by the chart below, it was an absolutely golden opportunity. Overall this trade did not go in my favor, even though I did manage to finish green on the day. I just need to emphasize that we all make mistakes. I was on the right track shorting $SMSI, but I failed to lock in profits. I must remind myself to lock in profits as the Markets make Money available to me. As I will explain the recap below, I completely ignored the Double Bottom, which is a Bullish sign to taking into consideration that it's a Friday. And if you know anything about the Markets, Friday's are a special day of the week. If NOT then I encourage you to check out this Video from my Guru Tim Sykes here. Overall there are many lessons that can be learned from this one particular trade. As I say you are only as good as your last trade. With that said I did finish my sample size of 20 trades, which I will review and analyze. I will share with you my insights on this Sunday's Recap.
$SMSI is a classic Short Squeeze, same fucking pattern outlined in Tim's Video Lessons. Of course, predicting a Short Squeeze is nearly impossible. It's NEVER Impossible to prepare for the next opportunity. There are key indicators that foreshadow a potential squeeze, which I will share with you in the video lesson. As I mentioned I did manage to finish green on the day, but the trade overall was not right. I made roughly $260. I don't aim to make that, because my risk is $250. Do you see the Problem? I had a horrible risk to reward, upside/downside. In the Moment I did not realize it, I got a bad entry for one, and I did not manage to lock in profits where the Market made money available to me. In my opinion, the only great thing I did in the trade was CUTTING MY LOSSES QUICKLY. As I will share with you in the recap. I could have potentially lost $5000+ assuming I held the entire day, which for my schedule that would have been the case. I EXIT THE TRADE WHEN MY THESIS IS BUSTED. Sometimes you may have heard me say that Trading it a ODDS and PROBABILITY GAME. Trading it's NOT about being Right or Wrong. You have to change your Mindset. Again I could type more, but why when you can hear me go on a rant in the Video Lesson Below. Enjoy!
Cut Losses Quickly: This is Rules number one that Tim has ingrained my head. Never hold and hope, holding and hoping is NOT a strategy. Yes sometimes you may get lucky, but that will NOT give you lasting success in the Markets. DON'T BE A DEER IN A HEADLIGHTS
When your Thesis is Busted get OUT: Go into every trade with a thesis, never trade a Randomly that will only lead to Random Results. Think of your self as a scientist about to perform a laboratory experiment. Understand that this game is NOT an Exact Science, sometimes the pattern does just not work. Always have a backup plan.
Understand that YOU can go both LONG and SHORT: As my Mentor says have a forehand and a backhand. Be adaptable in the Markets. Recognize that you can go both Long and Short. You don't have to be Bearish or Bullish all the time, just find what suits your personality as a Trader. As of right now, I am not long-biased. I understand I need to grow my knowledge on that side of the Hand since it offers so much opportunity on pays like $SMSI.
Respect Fridays: Understand that Friday's are a very special day of the Week. It's the last trading day of the week, meaning that the majority of Traders will close out any positions. This leads to high volatile moves, once again it's NOT an exact science, I just go by the ODDS.
RISK MANAGEMENT: This one is highly underutilized As I say in the past. YOUR GOAL AS A TRADER IS TO STAY IN THE GAME. I always get asked how much money I make. My answer is always the same. ENOUGH TO KEEP ME IN THE GAME A LITTLE LONGER. I understand that this may seem counter-intuitive since the goal of Trading it to Make money. I don't mean to break the bad news, but you don't make money in the Markets. It's Transferred from one Trader to another. As the Saying goes the Markets transfers money from the Uneducated to the EDUCATED. There is a reason that 90% of Traders don't find a state of Profitability, not taking into consideration the Learning Curve. I will explain this more into detail in the Video Recap.
Have a Great Weekend.