B The Trader

Trading Coach and Mentor Akil Stokes is here today! He is part owner of Tier One Trading and has his own podcast called Trading Coach Podcast which I listen to regularly. You will learn a ton from this Forex Coach/Trader and you will realize it doesn't matter if you trade Forex or Stocks, Same mentality. 

This was a very special episode for me! I had 3 experienced and consistently profitable traders on the show - Kyle Williams, Harry Hoss, and Jack Kellogg. We had a great time answering Twitter questions and discussing the trades from the week before. We chatted about sticking with the chosen trading strategy and remaining consistent despite feeling tempted with the exciting yet not proven setups. We discussed the interesting tickers of the past week and the trades that the guys made or missed out on. We also talked about the FOMO - fear of missing out - and if it should affect your trading habits. We talked in-depth about the optimal win percentage in correlation with the risk/reward ratio. Guys shared their recent win percentages while talking about how random the sequence of losses and wins can sometimes be and how, if you’re not careful, 1% of losses can take out 99% of wins. We chatted about the scariest moments of their trading careers as guys shared their stories. Kyle revealed that he was once ready to pick up a side gig just to recover the losses from a trade gone bad, but managed to turn it around. Harry finished this fun episode with a rant about short sellers and the strategy that burns them time after time, yet people remain falling for it. What did you like the most about this episode? What did you learn?

In December I challenged myself to not post any of the trades and not look at the daily or weekly P&L. I did it because I wanted to focus on trading well by following my trading strategy. The truth is, it’s harder to stick to the 3R target than it seems. It’s challenging to kick an old habit of taking profits in the support area of 1.8R. If I make most of my profits at 1.8 and take the rest at 3, the average will be somewhat close to 2R. But in the long-term, that won’t leave enough room to cover for the mistakes, and I know that I will make mistakes no matter how successful and consistent I am.   I’ve talked with experienced traders such as Kyle Williams, Brian Lee, Jack Kellogg - do check their interviews if you haven’t yet -  and all of them say that mistakes happen. You just have to make sure that they don’t happen too often and not let them spiral out of control. At the same time, you have to learn how to not take your profits too soon. If one mistake wipes out 3 or 4 profits, that could crush your mindset. If one mistake erases 1 profit, it doesn’t feel like that big of a deal.   So this week I did a better job waiting to hit 2.8-3R, and I’ll continue with this strategy. I will also be focusing on Big Cap markets. Looking forward to that and the added challenge of managing my time as I start a new job - watch the video to learn more about that!

Jack was 18 when his friend introduced him to day trading. His trading journey wasn’t a linear path to success: he took big losses at first and struggled against brokerage fees while barely breaking even. Nevertheless, he became a successful and profitable day trader, making $1-2k a week consistently even when the market is slow. We talked about emulating mentors and following strategies of other people. Sometimes it works out, and sometimes you can’t seem to get the setup right no matter how hard you try. Additionally, the market is changing, and strategies that used to bring consistent 4-figure income are not as successful anymore or don’t come across as often. We discussed the difference between trading NASDAQ and OTC stocks, and how a successful strategy used on penny stocks will paper cut you all the way down on NASDAQ - and vice versa.   Jack shared the brokerages that he currently uses, how busy he is with the current state of the OTC market, and how much money he generates on a good week. We chatted about the misconceptions that he used to have about day trading and how different the reality is. He also described the challenges that he faces when day trading and what he does to overcome them. What is your takeaway from Jack’s interview?

Kyle Williams discovered stock market trading in June 2016 and dove straight into it. It took him 12 months to become profitable. 3.5 years later he’s up $115,000, so now he’s teaching other people how to do it. Still a college student, Kyle gets up at 5.30 am to trade (he lives on West Coast), then goes to school and has a normal college student life. He shared how he structures his day to be able to trade and monitor the market while maintaining a full schedule. We chatted about Kyle’s journey as a beginner trader struggling to become profitable. We discussed trading strategies that he used back in 2016, and how he managed to learn the market and become consistently profitable within just one year. We talked a lot about the mental, monetary, and planning aspects of increasing risk over time. He shared how much harder it is to risk 1% once your trading account grows and how he’s pushing himself to accept that the same 1% represents that much more money. Kyle compared his current strategies with the setups he used to seek out at the very beginning. We talked about feeling confident about the benefits of starting with 1 or 2 setups instead of chasing tempting experiments and spreading yourself too thin looking for multiple trades and untested strategies. What did you learn from my interview with Kyle and what do you think about his trading path?

In our recent conversation, Brian Lee shared an equity curve simulator tool, and that was a complete game-changer for me.   In the simulator, you enter your win percentage, your risk/reward ratio and a time period, and you really get to see your projected results over time.   When you are trading, when you are “in the moment”, you only see each individual trade, each loss, and each win. In one day you may lose 6 trades and you may only win 2 trades, leaving you with a pretty bad win/loss ratio. But as long as you stick to the 3:1 rule, all you lose is 6R. At the same time, by winning twice you get the same 6R, so you are actually OK at the end. However, you only get to see it this way if you’re looking at the big picture, as you do in the equity curve simulator. In the moment, 6 losses in a row might seriously hurt your confidence and destroy your mindset.   The lesson here is to pay less attention to the win percentage and each loss individually. Instead, focus more on following your profit plan long-term. I’m planning to give my 3:1 Reward to Risk trading strategy at least 3 months to let my wins and losses accumulate before drawing any conclusions.   Subscribe to my newsletter to see my trading tips and follow me on social media to see the latest updates.

On Monday, December 2, I was in San Antonio for a wedding. On the way out I made a stop at a restaurant for breakfast and decided to check out the stock market and see if I could trade on the go on my laptop since I had Das Trader installed. Guess what, I haven’t opened it on my laptop in months. My watchlist was outdated, so I didn’t know what to look for. The Friday list of active stocks was saved in Das at home on my PC, and I didn’t have any of this information with me. I did my own research on the spot and I got some leads from my buddy Carl. But I ended up not trading since I didn’t see any great setups. I drove home, opened Das Trader, and saw that HEPA had a first red day after moving up for several days in a row. If I was home, I would’ve definitely seen this setup, traded it (I typically sell short), and made a nice return. I described this situation to my buddy Brian Lee (check out his interview if you haven’t yet), and he laughed at me. He said that I should’ve used the Thinkorswim app. I actually use it, but I just didn’t think of uploading my watchlist into the app before leaving for the trip. So now I’ll be using Thinkorswim for charts and Das for execution even though I prefer sticking to just one platform. I also made a trade later in the day on Roku. It was a good setup, paired with some negative news for the company it was a great short sell. I made a 2.5-3R return on it and was quite happy to see how it turned out. Watch the video to see the full trade recap!

This past week I ended up with 1R loss. That was not the best result, but at the same time I’m pleased that the loss was so low - it means that I’m becoming more disciplined with my trading, and that’s something to be proud of. I can also take pride in trusting myself a little more now. When I started, I didn’t really believe in myself, and I used to get out of trades despite being right at the end because of a lack of faith. I learned how to trust myself with experience, but somewhere along the way, I lost it again as I started branching out and doing risky trades. If I didn’t branch out and tried new strategies with actual size, I would have been ahead of where I am right now. But that’s the tricky thing: once you start trading well and feeling like you’ve figured it out, you start thinking that you can predict the market when in reality you just need to react to it. I took some big losses due to trading random setups with an entire account, and that’s a lesson learned. When you work with full size, you can risk less at a time - a 10 cent risk will set you back a lot when you work with volume. However, if you only operate with 100 shares, you can afford the whole zone (ex. $2-$2.25 range) to be tested. If I take a small position, I can give it a bigger range to see how it does, feel the trade and learn from it. And when it comes to small trades like that, the goal is not to make money but to gain confidence. I have a background in sales, and it also took time to learn how to control my emotions such as greed and impatience. The important difference between sales and day trading is that one mistake here will set you back all the way to the beginning, while a mistake in sales will only lose a single sale.

I’ve been working on believing in myself as this is something I’ve been lacking lately. I do it by sticking to my plan and doing things that proved themselves to be leading to profits. I also promised myself to not adjust my risk too soon. I decided to not get too excited, and add when I think that I should add rather than be scared of it. I like to add when things are bouncing rather than when they are dropping, and I did that today on two tickers - SRNE and HEPA. I did my shorting very well - shorting the pops, covering the dips. But most of all I was glad that I believed in myself and did it exactly right like I knew I would. There are some strategies that I know better than others, and there are strategies that I’m not so good at. So sometimes I trade a small amount just to get a hang of it and gain confidence. This journey is about knowing my weaknesses and strengths and finding out how I can make the most out of my experience no matter if it has a positive or negative impact on me at the moment. You see, I used to feel so negative about searching for a day job, but now I realize that it will help me succeed in my business and get a smoother ride while I’m trying to make it. It is my journey, and no two journeys are alike. Maybe my experience will help other people succeed in the world of day trading and show them that you don’t have to profitable from the get-go to be a successful trader long-term. 

I had a really honest conversation with my childhood friend, and he said that it sounded like I didn’t truly believe in myself, like I didn’t think that I could actually make it as a day trader. Sadly, I realized that he was right. All of those times when I didn’t stick to my risk because I didn’t want to take a loss, when I entered a trade and got out right away even though I was right - all of those times I didn’t believe in myself, and that’s why I did all those things. I’m not sure how to fix that except for pushing myself to believe more. After all, I left a very successful career to do day trading. I didn’t make it the first year because I was still learning, but this year I didn’t do very well because of a lack of self-belief. I’m trading right now, and I want to keep myself accountable, so I’ll share the information here. I’m trading SSI, I’m short for an average of $4.41, risking $4.62. It has just closed first red day. I’m looking for a gap down and further. I am not cutting it unless I hit $4.62 or I hit my goal.  It’s been so stressful to look for a day job while trying to stick to my rules and do day trading. Sometimes when I’m feeling really low it almost feels like a failure, even though I know that it’s not. I will keep pushing at it, and I know that I can multitask well. It will happen for me, it will just take time, discipline and consistency. Please support my journey by subscribing to my Youtube channel and listening to my Podcast on your favorite platforms!