My Trading Background - First Two Years

First Year (April 2012-May 2013) 17/18 Years old

(If this is your first time reading my blog/this story, read part 1 HERE before reading this)

(This is a pretty long read, sorry about that. I just kept typing until I was out of brainpower.)

   The few weeks before my Dad funded my new Fidelity account with $2,500, I tried to find ways to make money fast in the stock market. I played MarketWatch virtual games after my high school Economics Class's virtual game ended, and I figured out that by going to the largest % gainers in OTC stocks, I could find stocks that go up 100% over and over; .0001 stocks. I simply bought a boatload of these stocks and sold them for 100% profit the next day for huge profits. I was 1st place in every game I played. So, once my Fidelity account was finally opened, I tried out this strategy with $1,000 of my account by placing an order of 9,999,999 shares of EFIR at .0001. I filled only 1,000,000 shares after a few weeks of waiting, and then decided 100% of that amount was enough. I tried selling at .0002 for $100 profit, and after a few more weeks of waiting realized that something was wrong. There was a flaw in my plan, it was too good to be true. If you think you have a fool-proof plan in the stock market that can make quick, easy money by trading penny stocks, then I have some oceanfront property in Arizona to sell to you.

     I knew about the pump and dump scams and APS pumps that were obviously scams but I figured if you timed it right you could make money buying them. So I ended up somehow following the stock ICNB on iHub. I was reading that it was the next big thing, the company was legit, etc. I knew that was BS but I figured I could trade it for a quick 30-40% profit. So I bought it at .08 on July 30, 2012.

Here's the ICNB chart from back then.

The next day, at one point I was up about $100 and I thought I really nailed this one. Just one more day up and I could cash in my $300 profit and run for the hills. So the next day I woke up, excited and reading iHub and all of a sudden the stock was crashing. But people were buying the dips, LONG and STRONG, so I held on. In the end, I lost over $1,500 on this stock out of my $2,500 account.

     At this point I didn't even know what a chart was or how to read a level 2, I just looked at the level 1 quotes to check on stocks. I kept going back to the biggest % gainers list for OTCs, and tried finding stocks that frequently went up and down a lot. I traded this way for several months, and got decent profits every now and then. But overall it was a slow downward spiral, and at the end Summer 2012 the $2,500 account was down to just $300. I couldn't believe I didn't succeed, I thought it would be easy.

     My parents told me I had to stop trading, so I did for a month. I couldn't stop thinking about trading, and I knew that I couldn't just give up this soon; I put too much effort into this already, I was addicted. I had roughly $3,500 in my bank account from saving money since I was 10 years old, so behind my parents back I took $2,500 and opened my own eTrade account in August 2012. I wanted to take it slow but still trade penny stocks. I joined a few chat rooms, learned some basic charting skills and how to read and use a Level 2, and finally put some effort into learning to actually trade and not try the get-rich-quick schemes.

    But even though I was learning, that didn't translate into immediate profits. By the end of 2012, that account was down to $1,500. I wasn't feeling very confident, although I was improving. I made good trades and profited a few hundred dollars, but then would get cocky and lose it right back. Then I ended up joining Sneeb's Stock World in February 2013.  It was a very small chat room, but Sneeb was a good teacher and he taught me all the basics for penny stocks and really helped my trading. He put me on the right track, and my account reflected that. I was up to $2,000 at one point, and I felt great. I was FINALLY getting a hang of trading! Then of course, I got into one penny stock, GYST, at .0022 back in early 2013, and it was just going to be a scalp. I was up a few ticks real quick, got greedy, it went back to my entry and I figured I would wait and I'll sell once it goes back up a few ticks. Long story short, I bagheld the stock down to .0003 before finally selling and my account was at a mere $500.

     I started hearing about shorting stocks because another friend of mine in Sneeb's chat room used Suretrader and was doing REALLY well shorting penny stocks. Sneeb had a great strategy, and I opened up a Suretrader with $500 from my bank account to try it out. I slowly worked my account up, taking it slow and steady after learning my lesson from my past accounts of getting cocky and greedy trying to hit homeruns. I got it up to $1,200 in a few short weeks, and really fell in love with shorting. There was just something about it that made me feel at home instead of longing stocks. In late May 2013, a chart started hitting my scans every day and it was hitting my criteria perfectly for a short. I'm sure everybody remembers this ticker....FNMA. I started shorting it when it hit around 3.00, and scalped it several times and made $50 here, $50 there. Then I thought I would hold it a bit longer term for a short that day, and it started moving up into the close. 

I gave back all my gains on the day w/ that unrealized loss, but I decided to hold overnight to risk it. I was sure it wouldn't go higher, and if it somehow did I could just add some.  The next morning I woke up late and quickly ran to my computer to check my account and FNMA. It had gapped up and was sitting around 3.30 I think. My account was back below $1,000 and I was kind of upset, but I stuck to my plan and added. It started going higher and higher, and I was frozen. I didn't know what to do, it wouldn't stop. Pretty soon I saw these market orders fill to cover my FNMA short, and I had no idea what was happening. It turns out, Suretrader was covering for me. I blew up my entire account.

     I felt awful. I just lost almost all of my life savings in the stock market, just when I started to get the hang of things. I was the typical stubborn short, blowing up their account on a parabolic chart by shorting too early and holding on forever. I let my ego take over my trading, because I thought I was better than the market after growing my account from $500 to $1,200 in a few weeks. My first year of trading was nothing like I had imagined. It was nothing like all the chat rooms and newsletters portrayed. Rejection after rejection until I lost all my money.


Time to quit trading, Nikkos. Maybe trading was the one thing in life you couldn't succeed at, no matter how hard you tried.

Trading Background Part 2 (Summer 2013 - End of December 2013)

     So there I was, just graduated from high school, getting ready to leave for college in a few months, and I lost all my life savings that I'd been saving up for the last 7-8 years. I've never been a quitter my whole life, but there is a first for everything, right? To be successful, you need to know when it's time to push through the hard times and not give up. But to be successful you ALSO need to know when to quit. I thought that it might be time to stop for good, I lost my life savings but I learned a LOT along the way. That money was like my "stock market tuition" as many people say. I learned several important lessons about not only the stock market, but life lessons. It was worth it in my eyes, and there are other things I should be doing anyways besides trying to do the seemingly impossible to many; be consistently successful in the stock market. I should be doing what typical kids do during summer, whatever that may be.

     Just kidding. I wasn't done trying just yet. I don't give up that easy. I could do this. Not to mention I was more addicted to trading than ever at this point. Even now, I almost miss this phase of my "stock market life" and learning experience. It's like being a baby, walking around the new world, absorbing all these new words and ideas around you like a sponge. It's the same way I miss when I was just learning how to play guitar. Everything was new, there was so much to learn and so much you didn't know, very naive to the music world.

     At this point, it had been a little under a year since I had lost all the money my parents had initially given me to trade. My parents still had no idea I had opened that eTrade account with my own $2,500 or the Suretrader account with $500 and lost it all. My Mom didn't really know much about the stock market or seem to be as involved in my trading back when they initially gave me the money. My Dad was always keeping a close eye on what I was doing, and would walk by my room and make sly comments about my trading every now and then, such as "Made some money today, huh?" or the MUCH more common "So you lost money again?" My Dad thought that the last year while I was always at my computer I was just studying the stock market and not trading any real money. So that made this next part much easier...

     I asked my Dad if I could give the stock market a try again. He was hesitant at first, but he saw all the time I was putting in so I figured he might let me. And the next time I asked, he said no. I bent the truth a bit, saying that one reason I didn't do so well the first time was because I was under the PDT rule, and I needed an account above $25k so I could day trade with less restrictions. But I promised I wouldn't trade any larger positions that would result in big losses, I would keep it small but only use that $25k+ to avoid the PDT rule. Long story short, after plenty of begging/pleading, he let me try again under a very tight leash. 

     And I really did trade smaller positions. The largest position I took was $10k and the majority of my trades were much smaller. The first few weeks, FNMA was still very volatile and I was learning some new techniques on day trading the weeks before so I gave it a go. I ended up nailing one of the huge bounces it had, held it overnight and it gapped up even more. I ended up make $3-4k on FNMA alone within a few days, and my Dad was impressed. Maybe I really did improve over the last year. Of course, it got to my head a little bit again (that's one of the hardest things to avoid for many traders in the beginning after winning, especially me) and I walked down the ladder a little bit at a time and gave back all my FNMA gains over the next month. Then the next few months, I was hitting decent wins here and there, MUCH MUCH MUCH better than my previous trading. But...by the end of July 2013 I was down 6.5k.

     Some reasons I got down that much - I tried to recreate my FNMA trades, which was a homerun for me at the time. NEVER go for homeruns, just bat singles and the homeruns will come when you don't even expect them. Several $1k losses added up quickly, and my emotions were getting in the way of trading, not the charts. It was terrible and my Dad was very disappointed in me. I felt awful, I let down my parents again and lost a good chunk of money. The next day I decided to give it one more try. STXS was very volatile the last several days, and I hadn't traded it once. But I was an emotional wreck, and saw lots of people making money on it in other chat rooms so I decided to give it a go. I was nearing a $9 breakout, so I bought 5k shares in the mid to high 8s. Now let's compare this position size to my normal position sizes I was supposed to be taking. 5k * $8 is a $40k position. I was going on margin, more than my account was worth, just to make a small amount of money! The chart and r/r was terrible for a long, and in fact it probably would have been a place where I would short it as my current self. It quickly went against me, I was down .20 in less than a minute because I was buying w/ emotions, where shorts were getting squeezed and idiots like me at the time were chasing it. I panicked a bit, but I would try to cut it off for a $500, .10 loss. I put my order in, but it just wouldn't get to me. It barely bounced, and stayed heavy. All of a sudden, it dropped another .20. My heart was racing, I was a fucking idiot. What am I doing???? I market ordered out, took a $3.5k haircut. I realized I was sweating bullets the whole trade, my heart was about to jump out of my chest, and knew I wasn't supposed to even be trading today. My dad was going to come home from work in a few hours, and I started worrying.
He couldn't see what just happened to his account. Eventually I heard the garage door open, and I immediately went to the door and greeted him, tried to distract him, anything to stop him from checking his computer and seeing the big disaster after he TOLD me I needed to stop the previous night. FUCK........my life is over.

    Of course, he saw it eventually. -10k. Wow. He told me I couldn't keep doing this. My parents wanted to retire and stop working soon, my family couldn't afford any more losses in the market, $10k was big enough anyways. Another fail in the stock market. I should probably stop this time right? This was getting serious. Losing my personal life savings was bad, but I was young, I could make that money back. My parents were saving for retirement, I was losing THEIR money, not just mine.

     But I'm Nikkos, the king of stupidity!!! There was no way I could quit yet. Albert Einstein said that "[Insanity is defined as] doing the same thing over and over again and expecting different results." I was definitely fucking insane if I was going to try this damn trading thing again. So be it. I'm insane. Let's do this.

Looking back, this really was stupid trying again. Like I said earlier, to be successful you also need to know when to call it quits. But here we go again, I needed to scheme up another way to keep trading. All my trade confirmations were being emailed to my Dad at the end of each day, and that's how he knew I was still trading. Of course, if he saw the account numbers moving, he would know too. But...I could change one of these things. So I slyly went onto his computer when he wasn't home, changed the email the trade confirmations would be sent to so that I would get the emails, not him. And my plan was to only trade stocks VERY quickly, in and out so that if my Dad decided to check the account during the day, he wouldn't see any new positions, just an empty account. So I only made very fast trades, and if my Dad was home when I was trading I would make sure he wasn't at his computer when I made a trade, to avoid him finding out I was still trading.

     This kind of trading went on for a few months, and I slowly, and I mean SLOOOOOWLY made my way back to only -5k, instead of -10k. My dad didn't seem to notice, so I kept trading. Eventually I made back all the money I lost, so I was back to where the account originally started. Now this was a HUGE risk, and to be honest I don't remember the specifics of how I did it. I still thought about trying to make back the 10k I lost as my goal longer term when I wasn't at my computer, but while trading I would NEVER think about trying to make back money I lost. And I was forced to make VERY fast trades so my Dad wouldn't see. So I had to only trade absolutely PERFECT setups that worked within 2-3 minutes so I could get in and out fast. This forced me to focus on PERFECT setups, no boredom trading and sitting in a trade for a few hours wondering why the hell I got into the trade in the first place.

One day my Dad decided to check the YTD profit/loss page, and noticed it didn't say -10k anymore. It was actually green. So he asked me what happened, if the broker/website was making an error, and I admitted to him that I was still trading the last few months. But VERY careful, more afraid to lose money than I have ever traded before. It was an eye-opening experience for me. I finally found out what I needed to do in order to be successful with trading. But keeping this up and abiding by these rules in the future is a different story.

     The next several months, from mid September 2013 to the end of October 2013, I was +10k on the year. So the account made a 20k swing, what the fuck? I was hitting big winners without focusing on trying to, just trading smart and being really selective. Then November 2013, I proceeded to lose 9k of the 10k I made. I made an agreement with myself and my Dad that if I went red on the year, I would stop trading. But this time was real, I actually told myself inside that I would. It was the first time I truly knew that I would stop. I got into FNMA one day, with a little too much size, and I was down about $800 at one time, so if I took the loss there I would be up $200 on the year. Dangerously close to actually having to stop trading. I survived that trade and actually made a bit on it. Then I worked my way back up, slowly, to +4k on the year. Phew....that was close.

     Near Christmas time in December, we had family visit for the holidays. One day when we were all just hanging around we got into a discussion of the stock market and how I was trading in it, and I got into an argument with my Dad that it wasn't gambling, it IS possible to make money if you are disciplined. What resulted from this argument ended up being possibly the single BEST moment of my trading career EVER.

Hope you enjoyed it, let me know what you think!

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-N

Read Part 3 of my story HERE