My Trading Background - Most Recent Year

(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:

10/16/14 the day Ebola stocks finally wet the bed RIP
— crawfish_poboy (@crawfish_poboy) October 16, 2014

 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)

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

My Trading Background - How I Got Into Trading

     A little backstory first; I've always had an extremely addictive personality. Any time I found something I liked/enjoyed, I would spend countless hours and hours doing it, whether it's watching a TV show/series, playing a video game, playing basketball, studying an artist, etc. And I've always been into money management, although I didn't think of it like that back then.

     When I was about 7 years old, I remember going to Steve's Pizza to play arcade games with friends, maybe for somebody's birthday party. But the problem was, the parents would only give the kids a small amount of quarters to play the game, which only amounted to playing the racing car game 2-3 times. I didn't feel like that was enough, and I really liked those games, so I started saving quarters. I kept a little hidden bag in the corner of my room, labeled "Steve's Pizza Quarters" and I ended up having what seemed like an infinite supply of quarters after a few months of saving whatever spare change I could find. Every quarter in my eyes was another way to score another shot at the racing game! Seems so stupid now...I could have saved those quarters and opened up a trading account instead!

     I used to collect Pokemon cards when I was young. Man was I addicted to that! I loved playing Gameboy Color and learning all the Pokemon, trying to get the best Pokemon and level them up, etc etc etc... But after several years, I grew out of that phase (hey, I was 10 now, too mature for those!) So instead of letting them sit in a corner like most kids and rot for the next 20 years, I decided that I could try to re-sell them and make money. So, I took printer paper, measured the length and width of paper I needed to properly wrap a group of 10-20 cards in a homemade package for re-sale, and spent hours and hours doing this until all my cards were now in neat packages. Who could I sell them to? I had trouble finding a customer who wanted these because I didn't know how to use eBay back then. Then suddenly, my Mom told me my Grandma wanted to buy them! Great!!! I sold them to my Grandma for a little more than $200, and now I was a rich 10 year old. Not sure how many kids my age had $200 lying around, but that was great! (Of course, many years later I found my Pokemon cards in the back of a closet, and came to the realization that my Grandma didn't really want to buy my cards, and my "Grandma" was really just my Mom helping me out.)

    After this I started seeing the fun in collecting/saving money. I didn't really need it for anything, although I would imagine the things I could buy with it. But I never did spend it on big purchases, because I knew in the long run it wouldn't be worth it. I imagined myself 5 years older, a whopping 15-years old, knowing that at that age I was bound to know of an intelligent thing to do with this much money.

    Around 7th/8th grade, the big thing among my friend group was to buy a ton of greasy chocolate chip cookies for $1 each, and chocolate milk for $.50 each from the cafeteria, and eat as many as you could during lunch. But I couldn't ask my parents for $10 for lunch just so I could buy 8 cookies and 4 chocolate milks for a healthy lunch. That was irresponsible and I would feel guilty even asking. So I devised a plan to make my own money at school to pay for it. At Costco, "5 Gum" was being sold in bulk, and doing the math I found they were basically being sold for $1 per package. So, I bought a ton of those, and re-sold them to fellow students for $1.50 per package. This worked for a while, but pretty soon all my friends and peers already had gum that I sold to them 2 weeks ago, and they hadn't finished the package yet so why buy more? So the plan worked...kind of.

     Next, I started playing an online MMORPG (or whatever its called). I was full-on addicted with my friends. Insane amounts of time we spent on that game, in the end it helped me make money so it wasn't like I was wasting my life entirely on this game. I started scheming up ways to make a ton of money in this game. The fastest way to make a ton of money was by scamming people! Just like Wall Street I guess. So I found many ways to do this with my friends (we were ruthless I tell you!) and I ended up making a shit-load of virtual money. But wait...how can I make real money off this? Lots of my friends at school played this game too, so I would sell them the virtual money for real money. And it was awesome, I made several hundred dollars over the span of a few months. 

    I continued to play this game on and off over the next few years, as did my friends. One of my friends used to come over to hang out all the time and we would play ping pong and pool/billiards and video games. But not just for fun, we would place bets, betting certain amounts of money in the virtual game I mentioned above. It was really fun for me, and that was my first experience being on somewhat of an equal playing field trying to make money (instead of being a salesmen with a product, selling to somebody else with limited to no risk of losing my own money). It was close to 50/50 chances, because we were both fairly good. That gave me an adrenaline rush every time we played, especially as it got closer to the end of the match and the scores were close. But that was just virtual money.

    Another friend of ours who lived right down the street had a nice pool/billiards table, so we would go over there and play often. But it got boring just playing for fun, so what could we do to make it more interesting? Oh yeah...we could bet real money. We started off small, betting $50 at a time; sometimes just one game and other times best of 3. It went back and forth and nobody really lost or gained any money for several rounds. Then I played another friend of mine, and it was a close game until the end and I finally knocked the 8-ball in. I made $50, cool. But my friend had a desire to win, I could see it in his eyes. He offered to play again for double-or-nothing, so I said sure why not? Then...I won. $100, not bad! He continued to offer me double-or-nothing until he owed me $800 and his Apple laptop. I felt really good, of course, $800+ in one day while being in high-school isn't bad. I didn't need him to give me his laptop (I wasn't that much of a dick), but he did pay me all the cash he had on him which was around $267 if I remember correctly. In the end I didn't make him pay me the rest, I figured that was enough. So my addiction to gambling/betting/collecting money started sprouting.

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Long story for you to read maybe, but its the first time I've put this down on paper/typed it out. The point is, I've been into making money for a while. Not really to spend it on extravagant things, but just because it's fun to have goals (to make $10 to buy a bunch of cookies and chocolate milk, or make a few extra hundred dollars on a video game to save up for something I might want when I'm older). Scalping 5 Gum to other kids or making money off a video game's virtual money isn't the typical job teenagers have, I came up with original ways to make money because I didn't feel like working at a fast food place. It was extremely fun and challenging for me to come up with ways to make money, but it wasn't WORK at all, because I loved it. I got a rush whenever I came up with a new idea to make some extra money, in ways that the typical person usually can't. Hmmm...

   My senior year of high school I had to take an Economics class. We had to play a virtual stock market game on MarketWatch.com, and there wasn't really any prize for 1st place. But it was another good challenge for me, and I got addicted to it quickly. I had a few friends who were into it like I was, and of course most of the class just bought AAPL and INTC and NFLX and held them the whole semester. But I knew that wouldn't make the most money, so I tried coming up with strategies with friends that would be the best. 

One kid named Caleb started shooting up in the leaderboards. He ended up explaining to me his strategy, which was going to Yahoo Finance Top % Gainers right at market open, and seeing which stock was up the most. He said usually stocks above 50% are the best, and he would just short sell the stock a little after market open, and his results were amazing. He would just hold on for a day or two and the stock would fade right back down. His first HUGE winner was shorting HMNY, I remember this ticker for some odd reason. I just looked at the chart from that day, and WOW what a friggin trade. HERE's the daily chart, he shorted the spike mid March 2012. 

     This is the first time I've typed this out, and it's eerily similar to my strategy that works best for me now. Obviously his strategy was very primitive compared to what I now look for to short, but the concept is the same. Look for stocks up a huge %, see if the move is warranted at all, and if not, short it for a huge fade.

    I ended up using this strategy myself and beating Caleb at his own game, getting first place in the game. Maybe this could correlate to the real stock market...

I then started to talk to my parents about trading with real money; I tried to prove to them my strategy worked. I wrote down on a piece of paper a ticker I would short, and gave it to my Dad before I went to school. Then I would come back home from school and check the results. Several days in a row it worked, and he was surprised. Then I remember I wrote down DEER one morning, and came back the next day and it actually went higher. That was the first time it happened, I was really surprised it didn't work for some reason.

    But even though there was one outlier, my Dad believed in my strategy enough to give me $2,500 to try out. He opened an account with Fidelity and funded it for me, and I started off on my journey. Definitely a rough journey to begin with...

Read the Part 2 of my story HERE