(December 2013-November 2014)
(If this is your first time reading/this story, read part 1 HERE before reading this, and part 2 HERE) (FYI, this is another long read. I packed almost all of my big moments this year of trading into this post.)
Near the end of December 2013, I got into a debate with my Dad regarding trading. I ended up making a bet with him: if I could make $200/day for 2 weeks straight, he would give me $1k cash. If I made $1k one day and then lost $500 the next day, but then made $2k the next day, it didn't count. It needed to be $200+, GREEN every single day, for 2 weeks. Basically, I was taking an ideal goal of being green every day for a year (as a steady stream of income) and scaling it down into a smaller time frame. So, as I watched the market open that next Monday morning, I had a brand new mindset that I had never felt before. For the first time, I was more focused on the losing side of the trade rather than the winning side. I was afraid to lose money because I didn't want to lose the bet. I was playing to avoid a loss where before I had always played to win.
So I traded almost paranoid for the first few days of the bet. I sought out trades with decent setups where I could risk little to no money, and make a quick $100-500. What were those setups that risked no money? Scalping sheep chatroom alerts. Yes, its a shameless admission. I would study and find out the average amount of $ that flowed into a stock after a lame FURU bought a stock. I would do the math quickly in my head, reacting within seconds of the "alert", figuring out a position size that was decent, and taking the trade. Then I’d sell within minutes and make my daily goal. I did this for the first few days, but I knew I couldn't do this for much longer. I felt like I was cheating to win the bet: I wasn’t truly trading and I wasn’t learning anything by doing this. So I moved on to trading "real" setups. I would take a trade, sell within minutes and lock in the fast money, and then quit for the rest of the day to make sure I didn't do anything stupid. After a week of this, I felt near euphoric. What was this feeling? How did this happen? It happened because I was forcing myself to be green on the day and not give it back.
The next week, the pot stocks started getting action. This was VERY early in their runs and I had no idea how far they would go. I would just very quickly scalp them for a few pennies here and there. The $200/day goal was demolished in minutes by scalping CBIS, MJNA, HEMP, PHOT, etc. I could buy 100k-200k shares, sell them in under 10 minutes, and usually make $1-2k. By the end of the second week I had made nearly $8k, which averages out to about $800/day. I'm sure my Dad was surprised, but I was even more surprised. It was amazing to me how much one small tweak in my trading mindset could affect my profits. I asked my Dad to give me the $1k since I had won the bet, but he said he wasn't really serious about giving me that money. I was a little upset at first, but I soon realized that $1k wasn't the real prize from winning the bet. My dad had unknowingly showed me how to open the door to the stock market. I finally learned what the key to success was in trading: consistency. That weekend after the bet was over, I decided to take the bet and move it to a bigger scale. I made an Excel Spreadsheet with two columns: one with a goal of $50k/year, and the other with $100k/year. To accomplish these goals I needed to make $200/day and $400/day, respectively. And after each day, I would mark the day as green if I hit my goal, and red if I didn't. Then I would also mark each week green or red depending on if if I hit or missed weekly goals.
The next few weeks I started getting more aggressive, holding pot stocks overnight for gap plays and selling them the next day at open. Several times I would be up over $1k in the first 30 seconds of the market open, and I would get up from my computer, walk over to my Dad drinking his coffee at the table, and tell him "I'm up $1k today." Another day, it would be "I'm up 2k today." It was almost TOO easy, I was making money hand-over-fist, and by the end of January 2014, I was up $35k. At the end of February I was up $63k, just shy of $100k YTD. Mid-March I was up $100k in March ALONE, $200k YTD. It was almost too easy to make money and it seemed like every setup worked. To be honest, I think it was a bit of lucky timing that I had this bet with my Dad right when pot stocks started moving. The bet was perfect timing as pot stocks created huge opportunities, which was perfect timing to give me the confidence and boost of mindset to start trading well.
I was 19 years old, and where less than 6 months ago I was struggling to pick a dime up off the floor, now 3 months into 2014 I was up $200k. Nothing could stop me, I was on fire and my trading ego was massive. Then came ISR.
Here's the 1-minute chart on ISR on day 1 of its move:
My first short was early on, during the first speed up/para to 1.70. I shorted high 1.50s, and covered at 1.44, making about $2k. ‘Nice trade for the day,’ I thought to myself, ‘maybe I should take the rest of the day off...Nah, I'll short the next bounce and hold for the fade back to low 1s.’ So I shorted 10k shares at 1.52 on the next pop over 1.50, and it held up very well. It then dipped below 1.50 and I thought it was finally done, but then it pushed back over and consolidated for a while. I was being stubborn, risking my gains from the earlier short to potentially make even more. It then grinded back to the HOD and I was back to even on the day. I had to leave soon to go play some music with my friends, but I decided to leave the trade on and monitor it from my phone. I checked it an hour later and it was above 2. I now was down on the day and kind of pissed, but I just let it go. I could just add when I got home . Another hour passed and I came back to my computer to see ISR at 2.45. I was now down about $8k on the day, definitely bad, but I was OK with that. I could just trade out of it eventually, right?
Eventually, as you see in the chart above, it ripped to 3. Keep in mind that this stock was at 1.10 near market open and was now at 3. Shorts were absolutely screwed, and I was one of them. I ended up adding several times during the grind up and actually nailed the top, shorting 10k more in the 2.90s. But at 2.90, I was down nearly $30k. I had 30k shares at an average of around 2.05.
ISR had its first real pullback of the day near close, and at one point it hit 2.30. I could have covered there and taken a small $10k loss (ok, it's not that small but definitely small compared to what I was down earlier in the day.) It rebounded back to 2.50, and I wanted to box half or all before close to stay safe overnight. But I was frozen; I couldn't make a decision and I couldn't place the order. I was greedy and I wanted this to gap down the next day and let me out for even. Lesson #1: Don't get greedy on day 1 squeezes of a short, thinking they will go right back down the next day. Especially after a float rotation day. So at close, I was short 30k shares at 2.05 average. Oops. Several times during a/h trading, the stock dipped back below 2.40 and I had SEVERAL opportunities to box my shares, which I should have done before the market closed. But I was still frozen, and helplessly watched every tick of that a/h session.
Throughout the night, I had several dreams that ISR was up to $4 premarket, and I panicked and woke up terrified. But I realized I was dreaming, because I knew there was no way it could get to $4. Right? I finally woke up before my alarm clock because I couldn't fall asleep, and turned on my computer to see what ISR was really doing. It was sitting around 2.70 premarket, a small gap up. I was pissed I didn't box the day before, but the only thing I could do now was focus on the day ahead of me. Near market open, ISR crept up to 3.20s and I was down more than $30k already. God dammit Nikkos, what are you doing??? I added 10k more shares at 3.20 during premarket and it pulled back into the open, and the action was very strange near open. It was sitting just under 3.10 and there was barely any volume, almost like orders were being held. Then maybe 15-20 minutes in, the volume EXPLODED as well as the price, and I was frozen again. It was back at 3.20, shit...and then it grinded up to 3.69 in the first hour. At the top I was down nearly 80k after adding even more near market open, and I was literally about to pass out. I had to get up from my computer and try to take my mind off of ISR. I was hyperventilating and felt like I was going to throw up. I couldn't do this anymore...why am I even trading?
ISR ended up going back below 3 in the next few hours, and I had a chance to cover AT LEAST my adds above 3 for small profit to reduce my unrealized loss. But I didn't. Once again I was frozen. Over the course of the next few hours, ISR grinded back to a new HOD above 3.70, and during that grind I panicked and actually went net LONG ISR. I bought 75k ISR, which boxed my 35-40k shares short and made me long about 35k shares of ISR at 3.50. At first, it worked...it hit 3.70 and I made back $7k real quick. I thought about selling and just going back to neutral, so that I had net no position in ISR. But I wanted $4 on ISR, and I remember thinking desperately, “please squeeze to $4 and let me make some money back.” During this part of the trade I was talking with a buddy of mine who was in Investors Underground (IU) chatroom, and I was asking him what the traders in that room were doing with ISR. He told me that they shorted near dead top in the 3.70s, and that it was a HOD stuff. I had several chances to sell my net long position for even, but I ended up selling for a .10 loss. Instead of taking the quick $7k profit on the long, I sold for a $3.5k loss. What the HELL was I doing?????????????????? After market close, I felt mentally and emotionally demolished. I put on my jacket and went on a walk around Boston. I pondered my existence, what was I doing on earth, why was I even trading after I had hit my yearly goals in the first few months of 2014? Money was controlling my life and emotions, and it felt terrible. Lesson #2: There are more important things in life than making money in the stock market. Don't let it take over your life and affect your life outside of trading.
Eventually, over the next few weeks, I scalped ISR trying to slowly make back my loss. But I failed. Eventually I took the biggest loss of my trading career, -$38k.
Here's the ISR daily chart over the course of the next several weeks after this incident:

The next 2 months I was stuck in a rut. I could only think about trading to make back my loss. $500-1k profit on a trade wasn't enough. I wanted $3k, $5k, $10k: enough to make a decent chunk of that loss back. This was the 2nd HUGE turning point/lesson in my trading from a loss, the first being when I was -$10k on the year in 2013 and was only focusing on trying to make back the money I lost. I had to do the same thing I did back then to get back on my feet: STOP trying to make your loss back. It's OVER: quit moaning over the loss, stand the fuck up, and focus on trading well. Forget the loss, because you can't do anything to change it. The only thing you can change is your mindset moving forward. I went back to the mindset I had at the beginning of 2014: stay GREEN every day, no matter how much. ‘Just force yourself to stop trading once you are green on the day,’ I told myself, ‘at least for a few weeks, until your thinking is healthy again and not distorted/out of whack from the big loss.’
Near the end of April 2014, I decided to join InvestorsUnderground. I had heard and read about that chat room since the beginning of the year, and it seemed like the real deal. All of the best traders are in there, and they traded all the same stocks I did and more. I was and still am very cynical, and I knew all the chat rooms I had been part of before were mostly scams. So I joined the chat room, started watching all the webinars, bought Nate's DVD Textbook Trading, and I felt refreshed. This community of traders wasn't full of dirty bullshit behind the scenes like all the rest. IU, along with the mindset of being GREEN every day, really put me back on track. I spent the rest of my summer connecting with other traders in the chat room, which is the single best part about IU. There are some amazing trades every day in chat no doubt, but that's not the real value of IU in my opinion. It's the fact that you can ask questions to top-notch traders for no extra fee. You can get advice about trading and the massive rollercoaster it is, for no extra fee. I've made some really great trading friends in this chat room and its absolutely amazing the amount of support that flows from them every day. If you are down in a rut, they will pick you up, give you advice, help you out, etc. That's what you don't see advertised about the chat room, and that's the best part about it. There are some genius traders in there, like the one who predicted a move in gold/JDST months before it happened. You can watch and learn from people like that for no extra fee. IU is the best trading community to be a part of, hands down.
Up until mid August 2014, I was having an amazing summer trading. I was up almost $100k since my ISR loss, putting me at around $250k profits YTD, and I was really starting to find my niche trading: shorting smallcap runners that were garbage. Stocks where the perception of value and reality of value differ immensely. The stocks could be up on news at first, but that's not the reason they are up 100%+: they are up because the float has rotated and shorts are getting squeezed. I really tried to force myself to wait for the backside of the move to swing short (although I would still scalp the front side of the move to build up extra profit). And sometimes stocks are up 100%+ over the course of a week with NO news, just pure sympathy or speculation, just like LAKE and APT recently. It was all float rotation and short squeezes like Nate explained in his float rotation video.
I was back on track with my trading again, and I felt great. But in August 2014, I had a weird feeling. I noticed that whenever I felt the best about my trading, or the most ecstatic about it, is when I would usually take a huge loss. My account was at all-time highs, and I was doing the best I had ever done in trading, but I decided to ignore this feeling. Then came JRJC. Long story short, it was pretty much just like ISR. Stubborn short, add add add, and I took another big hit, -$34k.
I knew what I did wrong, and over the next 3 weeks I made back $28k of that $34k loss, by once again NOT trying to make back the $ I lost, and rather focusing on good trading and being consistent. I didn't even realize I made back $28k that fast until I took a step back. I was making $3k here, $4k there, over and over, and somehow it added up.
Next up was SCOK. You would think I would have learned my lesson by now with shorting these stocks early on and adding adding adding, right? Well I had almost made back my full loss from JRJC, but just as that realization sunk in, I screwed up. I started shorting SCOK early on in the day, and was up $1k real quick. But I didn't take it. This happens often when you are on a hot streak: you don't want to ruin your green streak by taking a small loss. Don't let this happen: the small loss often turns into a huge loser because you are too stubborn. I went back to my old thinking of trying to make back the remainder of my loss from JRJC. NEVER do this. If you learn anything from this post, let it be the fact that you should never let yourself think that you need to make your loss back. FORGET the loss. Anyways...SCOK went back up, and I was down $500. ‘Well,’ I said, ‘I will just wait and cover when I am back to breakeven.’ But it didn't pull back, and then it pushed more and I was down $2k. But since I was so close to making back my JRJC loss, I didn't want to take a $2k loss. I was being stubborn when I shouldn't have. Cut your losses quick, right? MUCH easier said than done, but the faster you can get some damn self-discipline to do this, the quicker you will improve in trading, I am sure. So I ended up being stubborn and taking ANOTHER big hit, -$33k on SCOK.

Over the course of next month I was stuck in a bad mindset of trying to make back my losses. This time it was different: I was cutting my losses quick but the trades themselves were taken with the mindset of making back some of my recent losses. They weren't taken because they were great entries, necessarily. From mid-August 2014 to September 2014, I had lost over $120k. I felt exactly the same as I did with my ISR loss, except this time it was worse. ISR was a one trade loss. But this was a slooooooow deadly downwards spiral into a dark abyss. I knew I needed to stop trading but I couldn't.
My Dad called me one day to ask me what was going on with my trading. He told me I needed to stop trading, just like this time about a year ago. ‘Quit while you are ahead,’ he said. ‘You are still up over 100k on this year, and that's AMAZING. Don't feel like you failed, you still did great.’ But in my eyes I failed. This was the lowest I had ever been in my trading career, emotionally. I broke down and started crying (yes, I cried.) I couldn't stop trading: I had put too much effort into this to stop (sound familiar? see previous blog posts) Trading can take a serious toll on your physical and mental health if you let it, and I was letting it. Once again, money was controlling my life. Hadn't I learned my lesson earlier this year?
I took a break from trading for a week, fully convinced that I was done for the rest of the year, taking my Dad's advice to heart. But over that week of taking a break, I deeply reflected upon my mistakes. And I realized, once again, I had to sneak my way back into trading. I saw APT and LAKE moving up on their first day, and knew the moves weren't warranted. But as I had learned, that didn't mean they couldn't go higher. At market close October 9th, I ended up with 30k shares of APT shares boxed. I was ready to nail this trade, and be extremely patient for the perfect entry. Over the next few days I did scalp APT intraday, but most of the time only with 10-15k shares. This was still the front side of the move, and I wasn't going to be a stubborn short again. I FORCED myself to wait to swing short this stock. You can't do this again, Nikkos. Exercise some self-discipline this time and nail it when the time is right.
Over the next several weeks, I had a strong conviction that I wanted to swing this stock back to mid 3s. I missed a lot of the move, as I was scalping it when the Ebola stocks showed their TRUE sign of death, that the short squeeze was finally over.
I think Brandon/crawfish_poboy sums it up best with this tweet:
Even though I missed a lot of the initial drop from 9 to 4, I still made a lot of money. But I wasn't done with this greasy pig yet. I lathered it up with oil and let it roll in mud again, waiting for the squeeze-a-roo to re-short. And BOOM: NYC Ebola news hit.
This was the re-short opportunity of a lifetime, let's do this. I had extreme conviction on this trade, and over the next several weeks the junk known as APT faded off into the dark abyss it had come from. It was my best trade to date:
During these few weeks I was trading APT, I was also trading other PERFECT setups for swing shorts such as ESI and ZAZA, to name a few. I didn't care about scalping stocks for small profits: I wanted the PERFECT opportunities only, very few trades but very high success rate. I could size in and nail them with conviction. And I did. October 2014 was my best month ever, making over $100k and nearly all my losses from the previous month back. But I couldn't forget what I had told myself just a few weeks ago. I knew I needed to stop trading, at least for a while.
My life isn't about money. I'm not about money. My goal isn't to make $500k a year from trading; my true passion is music. Since day one, trading has been a way to accomplish bigger goals. Trading is a way to make steady income so that I can focus on what I really love to do and not have to worry about paying bills on time or paying off student loans. Life is all about goals. Without goals, one is just a lost soul, living a lost cause. I've been at my high points in life when I have a clear vision of my future and my goals. And since earlier this year, I haven't had clear goals. I lost sight of what I really wanted to do. And that's why I'm taking the next few months off from trading. I need to regroup, sit down, take a deep breath, and focus. I need a vision, I need to regain my purpose and passion.
To sum up the most important lessons I've learned since I started trading, and some advice:
1) If you are struggling with trading, don't keep digging yourself into a deeper hole. Before trying to work on making a lot of $ trading, one must first work on fixing their mindset. One of the greatest feelings you can have when in a trading slump is ending every day GREEN. It’s the @crawfish_poboy special. It doesn't matter if you were making $500 a day for the last year and all of a sudden you got in a slump and you could barely make $50. Make it a goal to be green every day. $50 profit every day is better than losing, and you can walk away from the computer each and every day feeling like you accomplished something. Make an Excel Spreadsheet; make a bet with a friend that you can trade green every day for 2 weeks straight. Find something with which to hold yourself accountable, so you don't end up making $500 one day and decide to keep trading and then end red on the day. It's a terrible feeling to go from green on the day to red. It's very important that you do not take this "goal" concept the wrong way. It is NOT a number that you MUST hit everyday and therefore will force bad trades just to hit the goal. It IS a number that IF reached, you can stop trading for the rest of the day. If you have a goal to make $200/day and you hit it in the first 30 minutes, why are you still at the computer?
2) If you are a newer trader, don't expect to make money your first year trading. I'm just being honest, and I'm sure many other more experienced traders would agree. It took me a full year to even smell a whiff of green, and another 6 months to start being somewhat consistent. Your focus shouldn't be on making money at first: it should be on fine-tuning your mindset to trade consistently. You WILL know when you are ready to make the move to trading for profits, but it took me a long time to move from the 'learning' phase to the 'profiting' phase. There's no set time to when this will happen. I can't say if it will take 6 months or 6 years, but you will know when that time comes. There's a feeling I just can't explain. You are in the ZONE, and if you have trained your mind to focus on consistency, you can be in the ZONE every day. The money will come naturally if you trade well.
3) Don’t jump the gun on trading as a career. As stated above, don't expect to make money your first year trading. I was lucky that I started trading young, and I didn't NEED to make money to pay bills. I'm sure many people start trading because they want to quit their 9-5 job, and they hear about all the glamours of trading, such as buying a fancy car or a fancy watch and a big house. I could care less about those materialistic goods, but some do. But people who quit their jobs to trade might NEED to make money to pay the bills. Don't quit too early while you are still in the learning phase, and make sure you have backup money; I’d recommend a few years of your salary in the bank as a backup plan.
4) If you just had a huge loss or drawback, forget about trying to make back that loss. I wasted several months of trading trying to make my losses back, and sometimes I lost even MORE while trying to make it back. Go back to the basics; be green every day. There's nothing more rewarding and healthy than being consistently green every day. And then one day in a few months, after trading green every day, you'll look at your account and realize you somehow made $50k, $100k, whatever. It's amazing how fast it adds up.
Thanks for reading my story, I hope you enjoyed it.
Nikkos (IU: Nikkorico)