Trading was HARD Until I Learned this BASE HIT Strategy

Summary

In this trading-focused episode, the host recounts a pivotal moment in 2017 that transformed their trading approach. After a tough loss, they analyzed their trading data and discovered that consistent, smaller 'base hit' trades were more profitable than infrequent 'home run' trades. This insight led to a strategy shift, emphasizing discipline and smaller position sizes to minimize risk and maximize gains. The episode also touches on emotional trading pitfalls and the importance of having a solid strategy and the emotional fortitude to stick to it.

Takeaways

• 😌 The trader's journey to consistency and profitability involved a significant turning point in 2017, which led to a change in strategy and a more stable trading career.
• 📉 Prior to the turning point, the trader experienced a cycle of large gains and losses, causing emotional stress and an inconsistent equity curve.
• 📊 After a particularly bad loss in September 2017, the trader analyzed 10 months of trading data, leading to a discovery that shifted their trading approach.
• 🤔 The trader found that the top 25 biggest winners and losers did not account for most of the profits, which was a surprising revelation.
• 💡 The real profit came from a large number of smaller trades, which were more consistent and less emotionally taxing to manage.
• 🚫 The trader realized the importance of not 'swinging for the fences' and instead focusing on 'base hits' with smaller position sizes.
• 📉 The emotional impact of trading can lead to 'emotional hijack', causing traders to deviate from their strategies and take high-risk trades to recoup losses.
• 💼 The trader emphasizes the importance of having a strategy, discipline, and the ability to manage emotions as key to long-term trading success.
• 📈 The trader's equity curve shows ups and downs, illustrating that even experienced traders face challenges and setbacks.
• 🛑 The trader sets a daily maximum loss limit and adjusts position sizes based on market conditions and the stock being traded.
• 🏁 Trading is described as a marathon, requiring daily discipline and the ability to handle the emotional ups and downs of the market.

Q & A

What was the turning point in the trader's journey that significantly altered the trajectory of his trading career?

The turning point occurred in September 2017 when the trader analyzed his trading data from the previous 10 months and discovered that his profit didn't come from his top 25 biggest winners and losers but from smaller, more consistent trades.

What was the trader's initial belief about his success in trading?

The trader initially believed that his success depended on hitting home runs, meaning making large profits from a few significant trades.

What did the trader find when he analyzed his top 25 biggest winners and losers over the last 10 months?

He found that his top 25 biggest winners amounted to $215,000 and his biggest losers amounted to -$23,000, which was surprising because the profit from these trades was not as substantial as he expected.

What was the trader's discovery after further analyzing his trading data?

He discovered that his actual profit came from a large number of smaller trades, where winners between $0 and $4,000 amounted to $510,000 and losers between $0 and $2,000 amounted to $156,000, resulting in a net profit of $354,000.

How did the trader's strategy change after his discovery?

He decided to reduce his share size and focus on base hits instead of trying to hit home runs, which led to more consistent profits and less emotional stress.

What is the trader's advice on managing emotional hijack during trading?

The trader advises to accept reality when a loss occurs and not to let emotions dictate trading decisions, as emotional hijack can lead to taking high-risk trades in an attempt to recoup losses quickly.

What was the trader's starting balance when he started his small account challenge on January 1st, 2017?

The starting balance was $58,315.

How much profit did the trader make in the first month of his small account challenge?

In the first month, he made a profit of $116,000.

What is the trader's daily trading goal and maximum loss limit?

The trader's daily trading goal and maximum loss limit are both set at $5,000.

What is the trader's approach to adjusting his trading strategy based on market conditions?

The trader adjusts his position size and daily goals based on market conditions, the price range of the stock he's trading, and his performance on any given day.

What are the two main reasons the trader believes most people fail in trading?

The two main reasons are not having a strategy or system in place, and not having the discipline and emotional control to follow the rules of the strategy.

Outlines

00:00

📉 Trading Roller Coaster and Turning Point

The speaker reflects on a pivotal moment in their trading journey in 2017, which led to a significant shift in their strategy. Initially, they experienced a cycle of large gains and losses, leading to emotional stress and an inconsistent equity curve. After a particularly bad loss in September 2017, they analyzed their past 10 months of trading data and discovered that their biggest wins and losses were not as impactful as expected. This realization prompted a change in their trading approach, focusing on consistency rather than chasing large profits.

05:01

📊 Analysis of Trading Performance

In this paragraph, the speaker delves deeper into their trading data analysis. They were surprised to find that their top 25 winning trades only amounted to $25,000 in total, averaging less than $10,000 each, and their top 25 losing trades were similarly sized. Upon further examination, they discovered that when excluding these extreme trades, their actual profit came from a large number of smaller, more consistent wins and losses. This insight led to the understanding that smaller, more frequent trades could be more profitable and less emotionally taxing.

10:02

🔍 Discovering Profit in Smaller Trades

The speaker recounts the revelation that the majority of their profit over the past 10 months came from trades earning between $0 and $4,000, significantly outweighing the losses from smaller trades. This discovery contradicted their previous belief in the necessity of large, high-reward trades for success. They learned the importance of trading with smaller position sizes, which reduced emotional stress, slippage, and allowed for quicker recovery from losses. This realization marked a turning point in their trading strategy.

15:03

🚀 Implementing Changes and Seeing Results

After the strategic realization, the speaker decided to reduce their share size and focus on consistent, smaller trades, or 'base hits.' This change led to a more stable and profitable period, with a noticeable uptick in their trading performance. However, they also discuss the challenges of maintaining discipline, especially after experiencing significant losses, and the emotional hijacking that can lead to poor trading decisions.

20:03

🤯 Emotional Hijack and Trading Discipline

The speaker shares personal experiences of emotional hijacking in trading, where a loss leads to impulsive decisions in an attempt to recoup quickly. They discuss the importance of maintaining discipline and sticking to a strategy, even in the face of setbacks. The speaker emphasizes the common reasons for failure in trading: lacking a strategy or lacking the discipline to follow one. They also highlight the importance of accepting losses as part of the trading process.

25:04

💼 Long-Term Trading Strategy and Risk Management

In the final paragraph, the speaker summarizes their long-term approach to trading, emphasizing the importance of a well-defined strategy and risk management. They discuss setting daily goals and maximum losses, adjusting trading size based on market conditions, and the importance of not letting emotions dictate trading decisions. The speaker concludes by reminding viewers of the challenges and rewards of trading, and encourages them to approach it as a marathon, requiring discipline and patience.

Keywords

💡Trading

Trading in the context of this video refers to the act of buying and selling financial instruments such as stocks, with the goal of making a profit. It is central to the video's theme as the speaker discusses his journey and strategies in becoming a profitable trader. An example from the script is the speaker's mention of his 'small account challenge' and the various trades that led to both profits and losses.

💡Equity Curve

An equity curve is a graphical representation of an investor's profits and losses over time. In the video, the speaker uses the term to describe the ups and downs in his trading performance, highlighting the periodic big dips that he experienced, which were a turning point in his trading strategy.

💡Home Runs

In the video, 'home runs' is a metaphor for aiming for large, significant profits in a single trade. The speaker initially believed that his success depended on these big wins, but later discovered that a more consistent approach of making smaller profits, or 'base hits,' was more effective.

💡Base Hits

Base hits, borrowed from baseball, are used in the video to represent smaller, consistent profits from trades. The speaker learned that focusing on these smaller, more frequent wins rather than the occasional 'home run' led to a more stable and profitable trading career.

💡Striking Out

Striking out, a term from baseball, is used in the video to describe the experience of incurring significant losses on trades. The speaker mentions 'big strikeouts' to illustrate the substantial financial setbacks he faced in his trading journey.

💡Momentum Strategy

The momentum strategy is a trading approach that involves buying securities that are increasing in price with the expectation that the trend will continue. The speaker discovered this strategy after analyzing his trading data and found it to be a key factor in his later success.

💡Risk Management

Risk management in trading involves the process of identifying, evaluating, and controlling risk to minimize or eliminate potential losses. The speaker's realization about trading with smaller share sizes is an example of risk management, as it allows for more control over potential losses.

💡Emotional Hijack

Emotional hijack refers to a situation where emotions override rational decision-making, often leading to poor trading choices. The speaker discusses instances where he was 'hijacked' by frustration and anger after losses, causing him to make impulsive trades.

💡Position Size

Position size is the number of shares or contracts of a security that a trader holds or is trading. The video emphasizes the importance of adjusting position size to manage risk effectively, with the speaker sharing his strategy of starting with smaller sizes and increasing as profits are made.

💡Discipline

Discipline in trading is the ability to consistently follow a set of rules or strategies, even in the face of emotional pressure or market volatility. The speaker stresses the importance of discipline as a key区分 between successful and unsuccessful traders.

💡Panic Selling

Panic selling is the act of selling a security due to sudden fear, often triggered by a market downturn or significant loss. The speaker mentions the need to avoid such behavior, instead advocating for a calm and calculated approach to trading.

💡Market Conditions

Market conditions refer to the current state of the financial markets, including factors like volatility, liquidity, and economic indicators. The speaker adjusts his trading strategy based on market conditions, emphasizing the importance of being flexible and responsive to changes in the market environment.

Highlights

The trader's journey to consistency and profitability involved a significant turning point in 2017.

A cycle of big losses and the pursuit of 'home runs' in trading was identified as problematic.

Analysis of 10 months of trading data in 2017 led to a pivotal discovery impacting trading strategy.

September 2017 was a particularly bad month with a $4,400 loss, prompting a strategic review.

The trader's top 25 biggest winners and losers were surprisingly balanced, revealing an unexpected pattern.

The realization that consistent smaller trades ('base hits') were more profitable than occasional large wins.

Emotional challenges in trading, such as dealing with frustration and the desire to 'flip the desk'.

The importance of discipline and strategy adherence even in the face of emotional hijacking.

The trader's experience with a software error leading to unexpectedly large positions and profits.

The psychological impact of trading losses and the tendency to chase them with higher-risk trades.

The trader's approach to managing risk, including setting a daily maximum loss equal to the daily profit goal.

The concept of trading as a marathon, requiring long-term discipline and strategy.

The common reasons for failure in trading: lacking a strategy or lacking the discipline to follow one.

The trader's strategy for adjusting position size based on market conditions and daily performance.

The availability of a free PDF of the trader's small account strategy for those interested in learning.

Final thoughts on the importance of managing emotions and maintaining a disciplined approach in trading.

Transcripts

[Music]

in today's episode I want to share with

you one very specific turning point that

I had in my journey to become a

consistent confident and profitable

Trader this actually happened uh many

years ago is in

2017 and prior to that I'd been making

money and I had just started my small

account Challenge on January 1st of that

year but I felt like I was in a cycle

the cycle was that I was swinging for

home runs and I kept having big

strikeouts I would take these really big

losses and the result was that My Equity

curve would periodically experience

these big dips and whenever I would have

these dips I would feel like I needed a

home run to get my account back to whole

so I would continue swinging for these

home runs but it was like I was on this

roller coaster where I kept having these

big dips so after one particularly bad

loss and this was in September of 2017 I

decided to take a look at the last 10

months of my trading data and I made a

discovery that I want to share with you

today from that Discovery I implemented

changes in my strategy that have

significantly altered the trajectory of

my trading career now as we know 2020

2021 2022 the market was crazy but I was

still implementing the same lessons that

I learned from this very specific moment

in time where I made this discovery so

let's go ahead and jump into the data

here and I'm going to start walking you

through what I learned okay so if we

look at the month of September here it's

uh probably clear to you that it was a

red month I was down

$4,400 which you know at the end of the

day is not a crazy amount of money to

lose but it's definitely disheartening

and it's frustrating cuz look I showed

up every single day I'm showing up to

trade but I'm not walking away with

consistent profit now at this point in

the year if we take a step back and we

uh I don't know if we'll be able to

easily in this calendar view but it was

a good year in total I had a great start

January February March April was good

May was fine and then it did slow down

in June July in August so I had sort of

some slow summer months and then coming

into September I started with you know

well I guess is this in this case it was

first um first day of the month with a

$4,000 red day so now I'm digging my

myself a whole and I'm sure many of you

have experienced that then we have a

Memorial Day weekend I come back get a

trade on Wednesday it's a red trade so

now I'm down 8,000 on the month no

trades Thursday trying to be disciplined

small trades Friday still red on the

week so now two red weeks in a row I

come back for the next week the first

full week of September and you can see I

got nothing to show for it right I'm R

again this week not by a lot but I'm

feeling frustrated now the Third third

week of the month I got into a little

bit of a Groove made some progress did

really well and then boom in 2 days

literally gave back everything I had

just made in that last week so this is

where on this day right here I was like

all right man take a step back cuz this

was one of those days where I was ready

to flip my desk I was so frustrated I

wanted to throw my laptop out the window

I was just like I'm done I was so angry

I'm sure many of you can relate to this

who are AC Traders the emotions can get

big so after I had this like meltdown

just so angry I was like okay well take

a step back and slow down because you

know what I did several years before

that when I had a turning when I had

like a big struggle a big kind of blowup

loss I went back and I looked at all my

metrics and that was when I discovered

the momentum strategy that I still trade

to this day so I said let's do that same

thing let's go back and look at the data

so this is what I did I looked at the

previous 10 months of data and I made

some discoveries so one of the things I

noticed when I looked at my top uh my my

last 10 months of data was my I looked

at my first my top 25 biggest winners

and my top 25 biggest losers so my top

uh 25 so top 25 my biggest winners

amounted to uh

$215,000 and my biggest losers amounted

to minus

$23,000 so this was over the last 10

months of trading and this actually kind

of surprised me and I'll tell you why I

had the belief that My Success depended

on hitting home runs you know I

periodically would have a day where I

was up 15,000 or 20,000 or something

like that so you know when I was

thinking about my top 25 biggest days I

was thinking those would probably be

anywhere from 250 like

$300,000 so I was a little bit surprised

that my top 25 biggest trades were only

$25,000 because it means they were

averaging less than $10,000 that kind of

surprised me and then what surprised me

even more was that the losers my top 25

biggest losers were also averaging close

to $10,000 just under and I had lost

203,000 so in other words if you took

away my top 25 biggest winners and my

top biggest losers from the last 10

months what am I plus and minus like 12

Grand right plus and minus you know

$112,000 it's uh it's not a lot of money

so I was like wait a second because

because here's the thing I knew that

over the last 10 months I had made

around

$300,000 so I was like if the profit

didn't come for my top 25 biggest

winners and losers then where did it

come from okay so so let's set this to

the side so what we know is that the top

25 biggest winners and losers amounted

to only 12,000 in profit these are

trades where I was objectively hitting

for or swinging for the fences I was

trying to get a big win but sometimes

those big swings it's a big strikeout

and that's why I had the losses so you

know if you think about for instance um

one of these one of these trades that

maybe I took where we had a stock that

was kind of squeezing up the scanner

moving higher it pulls back you know

just for a moment then it pops up right

here and I get in it I'm in it and then

immediately we have one of those kind of

jack knife candles right and maybe this

is like a 10-second chart and on the one

minute it's just like a big you know

either topping tail dogee or even a

shooting star dogee so it's just like

you know I just had enough of those

trades where I stepped up to the plate

for that big trade and then with 10,000

shares the bottom falls out and I'm down

you know almost a shared down 10 grand

okay so you know and I so I was looking

back uh on January and for what it's

worth January 1st of 2017 was when I

funded my account with

$583 15 all right so the starting

balance here was

58315 and I produced $116,000 of profit

which no doubt was a you know an

impressive amount of money to make in

that that first month some people by the

way you know like to see the broker

statement to verify that so I'll just

show this to you here um this is my

actual

audit of my trading that began on

January 1st of 2017 because this is when

I started my small account challenge so

that first month I actually got uh

2746 return even though it wasn't like a

crazy amount of money at 16,000 it was

still a big percentage return now I've

continued trading in this account for

the last you know 1 2 3 4 5 6 7 8 years

and the account's still growing it's

over 10 million now and audited verified

gains I'll remind you as always that my

results are not typical but my hope for

an episode like this is that you're able

to learn from my lessons my mistakes

I've made and from some of the turning

points I've had in my career and that

perhaps some of these could help you in

your own trading so so anyways January

was 16,000 you know that was solid I did

though have you know that one kind of

bigger red day going into Fe February a

$60,000 green month which was great a

couple of big red days and this is sort

of the theme is that I'm generally

consistent but then periodically I'm

hitting losses that are bigger than my

average green days how many of you guys

experienced that you've got you know

nice decent green days but then when you

hit losses there you know three times or

four times what you're averaging on

those green days so this was kind of the

theme through 2017 uh this was a good

month in May the the red days were

really small but this was an exception

not the norm and in fact I didn't make

even a lot in in May and this was the

beginning of when things kind of slowed

down it was slow in June only with 8,000

in profit it was slow in July it was

slow in August and then as we know it

was read in September so this was part

of what was getting me so angry in

September was the fact that things had

gotten really slow and then sort of in

the midst of them getting really slow I

end up you know taking some big losses

and I feel like at that time I I just

couldn't afford it you know it was like

this isn't something that I could really

tolerate right now okay so since I knew

that my top 25 biggest winners and

losers had not accounted for a very

substantial amount of profit over the

last 10 months I decided to kind of open

up my filters a little bit more and I

said well let's let's look at winners

that are bigger than

$4,000 and then losers that are bigger

than 2,000 right so I I'm kind of

setting the bar just like a little bit

uh wider so you know casting a wider net

and what I discovered here was that my

winners that were 4,000 and up were

$319,000 and this of course included the

top 25 so I was like nice okay that's

that's more in line with you know what I

was expecting and then and then I look

at the losers which were $2,000 and up

and I realized that I had lost $

361,000 000 in this same 10mon period so

I was actually down like 40 Grand

$42,000 and I was like wait a second

this is crazy so so you're telling me

that if I look at all my winners of more

than 4,000 which I felt like were like a

solid winner and I also look at all my

Losers of more than 2,000 in the last 10

months I'm actually losing an average of

four grand a month so now I was really

perplexed because I'm like well wait a

second then where is my profit coming

from so well the obvious place to look

now is Winners that are between $0 and

4,000 which I would consider not to be a

home run but just kind of like a base

hit trade so I was like all right well

you know I I wasn't expecting to get

down this far but all right let's just

look at it so now I'm looking at winners

that are 0 to

4,000 and losers that are between 0 and

2,000 all right and this is what I

discovered right in here my winners

$510,000 in the last 10 months and my

losers were only

156,000 which gave me a net profit of

354,000 now remember when I said I was

only up about 300,000 in the last 10

months so all of a sudden I'm like wait

a second if I focus right in here

meaning I'm focusing on winners between

you know basically 0 and $4,000 and

losers of less than 2,000 I would be

averaging in fact $4,000 more per month

even if I never had any more home run

trades and this this really did confuse

me because I was like I I can't really

accept the fact that I could be making

more money with smaller share size

because this was the thing that I also

calculated my average position sizes up

here were about 15,000 shares all right

right now my average posi positions in

this area were more in the range of 6 to

10,000 shares so they were smaller

positions so I'm like how am I making

more money with smaller positions that

seems counterintuitive to what I would

expect you know over the years having

thought about this

more with a smaller position it's a lot

easier emotionally to cut your losses

you can just let it go you're like it

doesn't matter and with a smaller

position it's also easier to move in and

out of the market you don't get as much

slippage you start trading with 15

20,000 25,000 shares especially on a

thinly traded stock you could easily get

five eight even 10 cents of slippage and

that could be the difference between a

break even trade and a$2 or $3,000

losing trade and then on the losing

trades it's a difference between losing

only let's say with 5 to 6,000 shares

maybe you lose 10 cents you're down 600

bucks you do that same trade with 15,000

shares you're selling when the stock is

is dropping you're getting a ton of

slippage and you're losing let's say you

lose 30 cents all of a sudden you're

down 4500 on a trade that with only

6,000 shares would been 600 bucks and I

think that that was one of the big

discoveries for me so this was again in

2017 this was before the pandemic and

before commission free trading so it was

during a period of time when there

wasn't as much volume in the market as

there is today so moving in and out of

Trades at in those days was not as easy

as it is now so think there there are

some things that are a little bit

different but the moral of the story and

the big lesson for me was the

realization that I actually would be

making more money if I trade with

smaller share size and did not try to

swing for the fences and so what I ended

up doing coming out of this uh sort of

slump that I was in here in August and

September is I said all right well let's

see if I can apply this moving forward

so moving forward I decided to reduce my

share size so I brought my share size

back down I became a lot more

conservative and I ended up focusing

just on base hits now what ended up

happening was over the next uh 30 days I

had a nice stretch here that began as

you can see right here on September 27th

so this was the turning point right here

so these were nice nice small days and

then going into October look at this

this ended up being a no Red October now

to be honest I didn't have a lot of huge

green days I had a $5,000 day but the

rest of the days were in the range of

you know $2 $3,000 I finished up $35,000

here for the month of October and I felt

so confident I felt I felt on top of the

world my account was back at alltime

highs I was like yes I'm doing this I go

into November I keep it up now I'll say

as you can tell I had a couple of

setbacks one of the things with this

setback right here was that I had two

Incredible Days and these these days

were really interesting because this was

actually not the result of swinging for

home

runs this was actually the result of a

of an error in my trading software which

was kind of crazy so what what happened

there I remember these days because on

Wednesday the 15th I get into this trade

and you usually what I do for those of

you that are familiar is I'll often

press the buy button a couple of times

and I had just switched to new software

and the software that I was using was

changing the position quantity based on

um the current number of shares that I

had so typically if I'm getting into a

position with 3,000 share positions I'm

going to buy once and twice maybe three

times so I did that I got in 1 2 3 times

9,000 shares so I I went kind of to the

top of my window of share size which is

about 10,000 ,000 shares and then I I

think I said I was like okay I want to

add to this position and go up to like

10,000 shares or something like that and

so I pressed the buy button and I think

I pressed it twice and so it sent two

more orders out for 9,000 shares so now

all of a sudden I accidentally sent out

for a 27,000 share order and I remember

looking at the bid and being like whoa

there's someone bidding on this stock

and it was my order I didn't even

realize it so I I didn't get a full fill

on my order I got a partial fill and

then the rest of it was sitting on the

bid now the stock ends up going up over

a dollar a share and I locked up

$33,000 which I think at the time might

have been one of my biggest green days

that I had ever had and I realized after

the fact that I had had this like this

was this was nuts like what just

happened and so I thought I figured out

the problem and I thought that I fixed

it and then literally the next day it

happened again and it it's just like

honestly it was lucky that it happened

on days when the market happened to be

hot because if it happened on days when

the market was really cold I could have

gotten destroyed but the market was hot

and so I ended up having two huge green

days and then Friday ended up having

kind of a a bigger red day and you know

I don't recall what happened on this day

here um I guess we could take a look at

it and see see where things went

wrong H yeah so I went into the green

and then dipped down into the red and

then was down 5,000 this looks to me

like a day where I fell victim to what I

would call emotional hijack because my

final trade let's see what time of day

was this 11:50 so it's later in the

morning right I went from green to Red I

almost made it back to flat and then

back to a little deeper red and I think

I probably I probably took a high-risk

Hail Mary trade hoping to get myself

back to green and then flush deep into

the red I think this is a day of

emotional hijack and the fact is when I

look back in my trading unfortunately I

do still fall victim to emotional hijack

even today so now this is 2017 so we go

all the way forward to

2024 and you know you'll see these nice

long stretches of green days but here in

March uh of this year emotional hijack

on this day right here it was actually

two days of emotional hijack and you

know I finished that that week red

15,000

now one thing I would say about

emotional hijack is that you know

contrary to you know the focus here

which is on this is very much strategy

based this is about figuring out

essentially the analytics of your

trading and modifying your strategy so

you're doubling down on what's working

and totally dropping what's not working

my Discovery was learning that I was

making a lot more money on base hits and

so I should stop focusing on trying to

hit home runs and and just go all in on

base hits but inevitably what would

sometimes happen is after a period of

you know 2 3 weeks whatever four weeks

that are consecutive green weeks I'm

doing really well I have that day where

you know I step up for a base hit but

bad luck I get caught in a news flush or

a stock that announces like an offering

or whatever it is and with even small

size I'm down five grand and immediately

it's like a kick in the teeth and I'm

angry I'm frustrated and I'm immediately

hijacked by those emotions and now I'm

looking for another trade to try to

recoup that loss as quickly as I can we

can look at this Monday here um the the

11th because this is a perfect example

of it I was in the red in the green and

then gave it up here and then traded all

the way to the end of the day this is

total emotional hijack terrible terrible

emotional self-control and then on this

day I came in swinging really hard and

just got totally smoked on a trade where

I took way too much risk and I took too

much uh too many shares and the reason I

took so many shares on that was because

I was trying to recoup the loss from the

previous day and so one thing that I've

come to learn is that with trading it's

very common even after years and years

of consistency and success to deviate

away from what you know is sort of the

rule of your strategy in moments of

emotional hijack and emotional pressure

where you feel like you've made a

mistake and now you need to recoup those

losses and maybe today it's okay that I

just take more size because the thing

that happens is when you're in this kind

of um mindset of focusing on base hits

you know just nice consistent Bas hit

trading when one of these happens all

the confidence and the good feelings you

had right here are gone and right here

you are feeling sad and you're angry

you're disappointed and the fact fastest

way to feel better is to be able to

press you know contrl Z undo the last

trade and go back to right here but

unfortunately as we know the market uh

doesn't work that way so the only way is

either to have a lucky trade that gets

you right back to whole or to accept

reality right now that you got knocked

down and it's going to take a little

while to recover and it's hard to accept

that until you accept that you'll keep

swinging like this and then that's when

you can end up you know going like this

and I've seen Traders do that I've seen

Traders have an excellent run of weeks

months even years and then a loss of

confidence stubbornness frustration and

now from a place of emotional hijack

they're not trading the market they're

trading their p&l and they just start

stare stepping down so you know we're I

think we're all um going to be victim to

this at some point because listen

trading is hard and we're only human and

we're trying to do something that's very

very difficult I have also come to learn

that most people in trading fail for one

of two reasons the first reason is

because they don't have a strategy at

all now a lot of the people that came

into the market during the pandemic

GameStop era and everything else they

had a lot of beginners luck it seemed

like everything that they might have

bought was going up and they didn't need

a lot of strategy same with the Doom

bubble but when the bubble burst and

when the pandemic you know when all of a

sudden interest rates went up because of

inflation everything else the market

softened and now people are like whoa

do I actually know what I'm doing and

some people started to lose money if you

don't have a strategy a system a set of

rules that you're going to follow every

single day in your trading you're not

going to be able to do this for decades

on end you're not going to have

beginners luck that'll last that long so

the first reason most beginner Traders

fail is because they don't have a system

or a strategy now I by the way I will

let you download the PDF of my small

account strategy you can download it

it's free you can practice trading it on

your own and if it's helpful for you I'm

happy for that if you decide to become a

member of warrior trading that's awesome

if you don't that's okay too there's

going to be a like pin to the top of the

comments and Linked In the description

where you can download my small account

strategy so you can download a strategy

you do not have to be the traders that

are in group number one who fail because

they have no strategy but then there's

group number two the second reason

people fail is they have a strategy but

they don't have the aptitude and the

emotional wherewithal and the discipline

to follow the rules of the strategy and

I'm telling you sometimes it feels like

I am barely holding it together myself

cuz it is such a struggle on some of

these days not to flip over my desk and

just start slamming that buy button CU

I'm angry but being able to have

discipline and composure is absolutely

what separates traders who make it long

term from those who don't and not

everyone has that attribute that ability

to be calm cool collected I don't think

that I naturally have it but I've

trained myself into it and so there is

hope there is a chance that you can

train it even if that's not how you are

naturally so these are really to me the

two most important things in trading a

strategy set of rules in a system and

the discipline to follow it but I want

you to remind yourself that yes you're

only human and you will have setbacks

from time to time and that's the thing

you'll be on a good track and then all

of a sudden you'll have a little bit of

a setback so if we look at my trading

here um I mean we could just look at the

last um last year uh we go to we can do

the last like 18 months or whatever um

let's see so we'll go to recent uh no I

want to go to detailed and I just want

to show you the equity curve here and

just to kind of give you perspective

that this is the reality for me at least

of what it's like to be a Trader there's

ups but there's obviously Downs you can

see these dips and when I'm having Downs

I get depressed I get bummed out and I

start to feel like man the only way to

recoup this loss quickly is to hit a

home run but base hit trading is how I

have built my career and even during the

crazy markets of the pandemic I was

still trading just focusing on base hits

the only difference there was that

everything seemed to be bigger I could

take bigger Shar size the base hits were

bigger but they were still for the most

part base hits so this is the way I

trade it's just slow and steady and if

we go back to looks like if I do it like

this I could go into 2017 so we'll go to

2017 here and this is what you'll notice

so I had this really strong first

quarter of the year with a small account

and then I went into this period of

going kind of you know stagnant I was

going sideways and it was because I kept

having these bigger red days right if I

wasn't having these bigger red days

every couple of weeks I would have been

you know making progress up here and so

this was the turning point right here it

was September 27th that was the point

where I said all right Ross you got to

focus on base hits reduce share size and

I realized it's so much easier to get in

and out and to be Cutthroat about

cutting your losses when you trade with

small size you can be nimble you can

lock up these profits and you can do

really well now I'll tell you that as I

said during the pandemic I did pull away

a little bit with my share size and I

got more aggressive and that was the

right move for that market but even

today right now even though I've made

more than $10 million a trading I start

each day with a maximum position of

5,000 shares until I have made more than

$11,000 I start each day at zero because

I'm a day trader and I set my Max loss I

don't like to go down more than five

grand but to be honest because I start

each day with $5,000 position size the

only way I can go down 5,000 is either

losing a full dollar a share on one

trade which is terrible or more likely

having like three losers like this where

it's just not working and if that

happens then that's fine I'm out of the

market but these are still for me

reasonably small days that are red and

as long as each one of these losses is

more in the range of

$1,500 I can tolerate three losses that

total out to 4,500 but on the flip side

on a day when things start working with

one or two trades next thing you know

I'm up, 1500 1,600 and then as soon as

I'm up more than $1,000 I take off that

cap I could start taking a slightly

bigger size up towards 10,000 15,000

shares Max generally speaking and then

you know I can make my way up towards my

daily goal which is 5,000 I like to set

my daily goal the same as my Max loss I

don't want to lose more in one day than

I can make in one day so if I'm

averaging only let's say 2500 a day in a

current market I'll tighten my Max loss

to that same amount and I'll set that as

my new Target so these are always this

is dynamic I do adjust it based on

market conditions and I adjust it based

on the price range stock I'm trading

naturally 10,000 shares of GameStop is

not the same as 10,000 shares of a 30

Cent stock or something like that so you

know you do have to be able to kind of

give this some wiggle room but um I I

think one of the things that I just want

to emphasize for you is that what I've

learned in my career is that trading

really is a marathon in the truest sense

of the word that you fight every day

it's a struggle it's not easy it's not

exactly fun but it can be rewarding and

those who find success are the ones

ultimately who are very disciplined I

hope you found this episode helpful if

you did I hope you hit that thumbs up I

hope you subscribe to the channel Feel

Free as always to download my small

account strategy PDF and I'll remind you

as always trading is risky my results

aren't typical so manage your risk take

it slow and I'll see you here for the

next episode real soon

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