{"id":49526,"date":"2020-01-21T10:56:01","date_gmt":"2020-01-21T15:56:01","guid":{"rendered":"https:\/\/www.smbtraining.com\/blog\/?p=49526"},"modified":"2020-01-21T10:56:01","modified_gmt":"2020-01-21T15:56:01","slug":"7-reasons-why-you-should-never-exceed-your-stop-loss-trader-education","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/7-reasons-why-you-should-never-exceed-your-stop-loss-trader-education","title":{"rendered":"7 Reasons why you should NEVER exceed your stop loss (Trader education)"},"content":{"rendered":"

In this video learn 7 reasons why you should never exceed your stop loss as a trader. We review one of our favorite trades: The Big Dog Consolidation, in step by step detail, while providing critical feedback to help a senior trader reach the next level in his trading.<\/p>\nView Video Transcript<\/strong><\/span>

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in this video learned seven reasons why<\/div>\n<\/div>\n<\/div>\n
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you should never exceed your stop-loss<\/div>\n<\/div>\n<\/div>\n
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as a trader hi I’m Mike bellafiore<\/div>\n<\/div>\n<\/div>\n
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co-founder of SMB capital and we’re<\/div>\n<\/div>\n<\/div>\n
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proprietary trading firm located in<\/div>\n<\/div>\n<\/div>\n
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midtown Manhattan and I’m also the<\/div>\n<\/div>\n<\/div>\n
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author of the trading classic one good<\/div>\n<\/div>\n<\/div>\n
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trade and the playbook<\/div>\n<\/div>\n<\/div>\n
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in this video review one of our favorite<\/div>\n<\/div>\n<\/div>\n
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trades the Big Dawg consolidation and<\/div>\n<\/div>\n<\/div>\n
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step-by-step detail Wow<\/div>\n<\/div>\n<\/div>\n
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providing critical feedback to help a<\/div>\n<\/div>\n<\/div>\n
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senior trader reach that next level in<\/div>\n<\/div>\n<\/div>\n
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us trading<\/div>\n<\/div>\n<\/div>\n
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[Music]<\/div>\n<\/div>\n<\/div>\n
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I did a playbook on AI npx the move that<\/div>\n<\/div>\n<\/div>\n
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happened January 7th following a really<\/div>\n<\/div>\n<\/div>\n
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big move and after shark came in and<\/div>\n<\/div>\n<\/div>\n
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really brought this stock to our<\/div>\n<\/div>\n<\/div>\n
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attention which doesn’t happen every day<\/div>\n<\/div>\n<\/div>\n
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and I thought was very interesting I’m<\/div>\n<\/div>\n<\/div>\n
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running through the backgrounds start<\/div>\n<\/div>\n<\/div>\n
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off with a big picture I keep it real<\/div>\n<\/div>\n<\/div>\n
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short and sweet all that really matters<\/div>\n<\/div>\n<\/div>\n
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to me right now is we’re in a very<\/div>\n<\/div>\n<\/div>\n
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strong bull market I don’t want to<\/div>\n<\/div>\n<\/div>\n
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overthink anything no matter what you<\/div>\n<\/div>\n<\/div>\n
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see newswise everything that’s going on<\/div>\n<\/div>\n<\/div>\n
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the market just has been grinding higher<\/div>\n<\/div>\n<\/div>\n
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for months now and I want very much to<\/div>\n<\/div>\n<\/div>\n
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not overthink it<\/div>\n<\/div>\n<\/div>\n
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intraday fundamentals I npx had moved<\/div>\n<\/div>\n<\/div>\n
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from everything split adjusted so I<\/div>\n<\/div>\n<\/div>\n
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don’t even know the actual numbers but<\/div>\n<\/div>\n<\/div>\n
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it was a less than a dollar stock that<\/div>\n<\/div>\n<\/div>\n
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went from approximately two to three<\/div>\n<\/div>\n<\/div>\n
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cents up to about 60 cents in just a few<\/div>\n<\/div>\n<\/div>\n
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days the day prior to the trade and why<\/div>\n<\/div>\n<\/div>\n
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shark brought it to our attention is the<\/div>\n<\/div>\n<\/div>\n
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middle of the day they announced a 1 445<\/div>\n<\/div>\n<\/div>\n
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reverse split so they could stay<\/div>\n<\/div>\n<\/div>\n
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compliant with Nasdaq listing<\/div>\n<\/div>\n<\/div>\n
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requirements I was trading a very high<\/div>\n<\/div>\n<\/div>\n
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volume I think he said it traded 300 and<\/div>\n<\/div>\n<\/div>\n
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300 and some million shares the day<\/div>\n<\/div>\n<\/div>\n
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before and from the very brief and<\/div>\n<\/div>\n<\/div>\n
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cursory fundamental analysis it looked<\/div>\n<\/div>\n<\/div>\n
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purely on hype I couldn’t find anything<\/div>\n<\/div>\n<\/div>\n
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they could justify that kind of a move a<\/div>\n<\/div>\n<\/div>\n
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company has 5 million dollars in<\/div>\n<\/div>\n<\/div>\n
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revenues no earnings so walk me through<\/div>\n<\/div>\n<\/div>\n
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that<\/div>\n<\/div>\n<\/div>\n
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sure so thesis is stocks up too much<\/div>\n<\/div>\n<\/div>\n
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thesis is like no fundamental basis that<\/div>\n<\/div>\n<\/div>\n
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I can justify at all I read the press<\/div>\n<\/div>\n<\/div>\n
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release and it said we’re going to spend<\/div>\n<\/div>\n<\/div>\n
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this much money buying this<\/div>\n<\/div>\n<\/div>\n
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it did not outlay or give me anything I<\/div>\n<\/div>\n<\/div>\n
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could point to you that would lead to<\/div>\n<\/div>\n<\/div>\n
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earnings or any real change in the<\/div>\n<\/div>\n<\/div>\n
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fundamentals it was a hope and high<\/div>\n<\/div>\n<\/div>\n
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press release though I could see no<\/div>\n<\/div>\n<\/div>\n
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substance at all so and I don’t want to<\/div>\n<\/div>\n<\/div>\n
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overplay it I did my fundamental<\/div>\n<\/div>\n<\/div>\n
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analysis on this was less than 5 minutes<\/div>\n<\/div>\n<\/div>\n
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anyone covering the stock that you were<\/div>\n<\/div>\n<\/div>\n
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looking out for no no one covers the<\/div>\n<\/div>\n<\/div>\n
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stock overall 5 million in revenues at<\/div>\n<\/div>\n<\/div>\n
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all<\/div>\n<\/div>\n<\/div>\n
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nothing it’s this is and I really wonder<\/div>\n<\/div>\n<\/div>\n
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about what those revenues are meaning<\/div>\n<\/div>\n<\/div>\n
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you wonder if they’re real if they’re<\/div>\n<\/div>\n<\/div>\n
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pertinent to their business ok<\/div>\n<\/div>\n<\/div>\n
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so I don’t think it’s fraudulent I just<\/div>\n<\/div>\n<\/div>\n
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think it’s what’s the right word<\/div>\n<\/div>\n<\/div>\n
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lipstick on a pig yeah and so when<\/div>\n<\/div>\n<\/div>\n
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you’re looking through so you think<\/div>\n<\/div>\n<\/div>\n
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something’s up too much and you start to<\/div>\n<\/div>\n<\/div>\n
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look through whether or not it’s<\/div>\n<\/div>\n<\/div>\n
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sustainable generally what are some of<\/div>\n<\/div>\n<\/div>\n
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the things that you want to know if it’s<\/div>\n<\/div>\n<\/div>\n
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a company that doesn’t have earnings or<\/div>\n<\/div>\n<\/div>\n
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particularly in this case revenues a<\/div>\n<\/div>\n<\/div>\n
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path to that a product that’s coming to<\/div>\n<\/div>\n<\/div>\n
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the market we’ve spent a lot of time on<\/div>\n<\/div>\n<\/div>\n
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biotech which are there’s a lot of<\/div>\n<\/div>\n<\/div>\n
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clinical stage development developmental<\/div>\n<\/div>\n<\/div>\n
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biotech companies which don’t have any<\/div>\n<\/div>\n<\/div>\n
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revenues but but have a molecule or a<\/div>\n<\/div>\n<\/div>\n
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compound or some intellectual property<\/div>\n<\/div>\n<\/div>\n
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that they own the rights to I can’t see<\/div>\n<\/div>\n<\/div>\n
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anything that this company has that’s<\/div>\n<\/div>\n<\/div>\n
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proprietary that is exclusive at all so<\/div>\n<\/div>\n<\/div>\n
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but yeah a pathway to profitability or<\/div>\n<\/div>\n<\/div>\n
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at least revenues so intraday<\/div>\n<\/div>\n<\/div>\n
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fundamentals again given the 145 1 445<\/div>\n<\/div>\n<\/div>\n
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reverse split I really don’t have a lot<\/div>\n<\/div>\n<\/div>\n
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of confidence in the integrity of these<\/div>\n<\/div>\n<\/div>\n
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but I put them in here anyway<\/div>\n<\/div>\n<\/div>\n
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just checking the boxes and it’s worth<\/div>\n<\/div>\n<\/div>\n
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keeping in mind if you want to learn 3<\/div>\n<\/div>\n<\/div>\n
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real world setups that our traders use<\/div>\n<\/div>\n<\/div>\n
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including this simple setup that we<\/div>\n<\/div>\n<\/div>\n
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teach all of our new traders and the set<\/div>\n<\/div>\n<\/div>\n
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up that turned one of our traders into a<\/div>\n<\/div>\n<\/div>\n
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seven-figure big money earner check out<\/div>\n<\/div>\n<\/div>\n
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the free webinar that we’re currently<\/div>\n<\/div>\n<\/div>\n
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running just go ahead and click the link<\/div>\n<\/div>\n<\/div>\n
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that should be appearing right now at<\/div>\n<\/div>\n<\/div>\n
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the top right hand corner of your screen<\/div>\n<\/div>\n<\/div>\n
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that’s gonna open up this free<\/div>\n<\/div>\n<\/div>\n
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registration page in the new window so<\/div>\n<\/div>\n<\/div>\n
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don’t worry you’re not gonna lose this<\/div>\n<\/div>\n<\/div>\n
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video you’re gonna learn more in a<\/div>\n<\/div>\n<\/div>\n
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couple of hours from this trading<\/div>\n<\/div>\n<\/div>\n
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workshop then from years of online<\/div>\n<\/div>\n<\/div>\n
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education this chart is really<\/div>\n<\/div>\n<\/div>\n
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interesting to me this is nine hundred<\/div>\n<\/div>\n<\/div>\n
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dollars here this is again on a split<\/div>\n<\/div>\n<\/div>\n
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adjusted basis and the stock had just<\/div>\n<\/div>\n<\/div>\n
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declined from about nine hundred dollars<\/div>\n<\/div>\n<\/div>\n
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down to five before the activity and<\/div>\n<\/div>\n<\/div>\n
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these are all the trades that we did but<\/div>\n<\/div>\n<\/div>\n
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it literally doesn’t even show up and<\/div>\n<\/div>\n<\/div>\n
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this is September of 2018 I’m still long<\/div>\n<\/div>\n<\/div>\n
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so this is not over a long term time for<\/div>\n<\/div>\n<\/div>\n
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I didn’t buy the typo<\/div>\n<\/div>\n<\/div>\n
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five that would be that would be<\/div>\n<\/div>\n<\/div>\n
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discouraging to come on from there and<\/div>\n<\/div>\n<\/div>\n
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all that yes this is this tells me that<\/div>\n<\/div>\n<\/div>\n
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there’s something going on here and it’s<\/div>\n<\/div>\n<\/div>\n
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shark did mention it it’s they<\/div>\n<\/div>\n<\/div>\n
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consistently issue stock so this is the<\/div>\n<\/div>\n<\/div>\n
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short-term activity and this is the very<\/div>\n<\/div>\n<\/div>\n
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you know feud a run up where it went<\/div>\n<\/div>\n<\/div>\n
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again split adjusted where it two<\/div>\n<\/div>\n<\/div>\n
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dollars down here and we get up to a<\/div>\n<\/div>\n<\/div>\n
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twenty eight dollars right here this is<\/div>\n<\/div>\n<\/div>\n
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the day before where he was all active<\/div>\n<\/div>\n<\/div>\n
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and and then this is when they announced<\/div>\n<\/div>\n<\/div>\n
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the one for forty five split stock just<\/div>\n<\/div>\n<\/div>\n
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absolutely imploded so in terms of<\/div>\n<\/div>\n<\/div>\n
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naming the trade I call I thought about<\/div>\n<\/div>\n<\/div>\n
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a second day play some things like that<\/div>\n<\/div>\n<\/div>\n
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but I went with trend trends because you<\/div>\n<\/div>\n<\/div>\n
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know is actively in a downtrend and I<\/div>\n<\/div>\n<\/div>\n
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was looking for intraday breakdowns and<\/div>\n<\/div>\n<\/div>\n
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you know down trends within the<\/div>\n<\/div>\n<\/div>\n
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downtrend so reading the tape I don’t<\/div>\n<\/div>\n<\/div>\n
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have level two my system up here so that<\/div>\n<\/div>\n<\/div>\n
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wasn’t a big part of it so I just you<\/div>\n<\/div>\n<\/div>\n
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know there was persistent selling over<\/div>\n<\/div>\n<\/div>\n
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the day so here’s where we get into the<\/div>\n<\/div>\n<\/div>\n
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details and what I was really looking to<\/div>\n<\/div>\n<\/div>\n
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do I’m on the sim so there’s it’s you<\/div>\n<\/div>\n<\/div>\n
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know it doesn’t cost me anything and I’m<\/div>\n<\/div>\n<\/div>\n
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really trying to experiment but I’m<\/div>\n<\/div>\n<\/div>\n
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trying to figure out how to really push<\/div>\n<\/div>\n<\/div>\n
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size how to get big and do it<\/div>\n<\/div>\n<\/div>\n
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intelligently and in a manner that’s<\/div>\n<\/div>\n<\/div>\n
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very consistent with not losing a lot of<\/div>\n<\/div>\n<\/div>\n
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money but also my designated limits I<\/div>\n<\/div>\n<\/div>\n
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have a theoretical limit of 500 dollars<\/div>\n<\/div>\n<\/div>\n
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per traded I want to lose more than five<\/div>\n<\/div>\n<\/div>\n
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hundred dollars per trade and that’s<\/div>\n<\/div>\n<\/div>\n
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what I used here this is a consolidation<\/div>\n<\/div>\n<\/div>\n
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area of about 725 and I used to stop<\/div>\n<\/div>\n<\/div>\n
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order to enter at the close<\/div>\n<\/div>\n<\/div>\n
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excuse me at the open that was triggered<\/div>\n<\/div>\n<\/div>\n
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at $7 so I was short shares of $7 at<\/div>\n<\/div>\n<\/div>\n
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9:30 and this is about 931 I’m in the<\/div>\n<\/div>\n<\/div>\n
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hole I did again the sim factored into<\/div>\n<\/div>\n<\/div>\n
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my decisions here I didn’t let that faze<\/div>\n<\/div>\n<\/div>\n
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me I really wanted to see how this is<\/div>\n<\/div>\n<\/div>\n
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gonna play out this happened so fast<\/div>\n<\/div>\n<\/div>\n
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that he didn’t literally didn’t have a<\/div>\n<\/div>\n<\/div>\n
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chance to respond it just went straight<\/div>\n<\/div>\n<\/div>\n
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up and then straight back down in about<\/div>\n<\/div>\n<\/div>\n
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four minutes so I went way below past my<\/div>\n<\/div>\n<\/div>\n
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risk limit but I was back here with you<\/div>\n<\/div>\n<\/div>\n
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know down there’s only a couple minutes<\/div>\n<\/div>\n<\/div>\n
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later and and just didn’t have time to<\/div>\n<\/div>\n<\/div>\n
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respond I did not have a automated stop<\/div>\n<\/div>\n<\/div>\n
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and it was I wasn’t<\/div>\n<\/div>\n<\/div>\n
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using a mental stop at this period at<\/div>\n<\/div>\n<\/div>\n
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this point just because of some of the<\/div>\n<\/div>\n<\/div>\n
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volatility this also influenced my<\/div>\n<\/div>\n<\/div>\n
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decision not to enter the trade here I<\/div>\n<\/div>\n<\/div>\n
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did recognize this at the time it moved<\/div>\n<\/div>\n<\/div>\n
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up I was down all right so I have to<\/div>\n<\/div>\n<\/div>\n
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stop there absolutely I think you know I<\/div>\n<\/div>\n<\/div>\n
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have to stop you there yes<\/div>\n<\/div>\n<\/div>\n
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you work at a proper and you will meet<\/div>\n<\/div>\n<\/div>\n
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with your floor manager your floor<\/div>\n<\/div>\n<\/div>\n
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manager will go over your maximum<\/div>\n<\/div>\n<\/div>\n
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intraday loss the firm is giving you<\/div>\n<\/div>\n<\/div>\n
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license to lose that amount intraday<\/div>\n<\/div>\n<\/div>\n
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term is not giving you license to lose<\/div>\n<\/div>\n<\/div>\n
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one dollar more than that losing one<\/div>\n<\/div>\n<\/div>\n
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more one more dollar losing a dollar<\/div>\n<\/div>\n<\/div>\n
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more than that is a breach of trust it’s<\/div>\n<\/div>\n<\/div>\n
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irresponsible it is at a hedge fund they<\/div>\n<\/div>\n<\/div>\n
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may even treat it more drastically it is<\/div>\n<\/div>\n<\/div>\n
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a fireable offense on the spot period<\/div>\n<\/div>\n<\/div>\n
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full stop and you know the reason for<\/div>\n<\/div>\n<\/div>\n
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that is your cost you’re a custodian of<\/div>\n<\/div>\n<\/div>\n
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the firm’s money and the firm is telling<\/div>\n<\/div>\n<\/div>\n
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you you can lose thousand dollars a day<\/div>\n<\/div>\n<\/div>\n
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it’s permission you to lose that it has<\/div>\n<\/div>\n<\/div>\n
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not permission you to lose 1,001 dollars<\/div>\n<\/div>\n<\/div>\n
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that’s number one it that this is a I<\/div>\n<\/div>\n<\/div>\n
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think people look at this as this is a<\/div>\n<\/div>\n<\/div>\n
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risk issue or a risk management issue<\/div>\n<\/div>\n<\/div>\n
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it’s actually an ethical issue for<\/div>\n<\/div>\n<\/div>\n
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everybody here you ethically do not have<\/div>\n<\/div>\n<\/div>\n
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the right the firm has not permissioned<\/div>\n<\/div>\n<\/div>\n
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you to do anything more than trea within<\/div>\n<\/div>\n<\/div>\n
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its guardrails so when you’re in a<\/div>\n<\/div>\n<\/div>\n
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position you need to be thinking about<\/div>\n<\/div>\n<\/div>\n
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all the things all the crate and this is<\/div>\n<\/div>\n<\/div>\n
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crazy you need to be thinking about all<\/div>\n<\/div>\n<\/div>\n
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the crazy things that could happen so<\/div>\n<\/div>\n<\/div>\n
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you do not lose the trust of the firm<\/div>\n<\/div>\n<\/div>\n
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and you can’t get that wrong alright and<\/div>\n<\/div>\n<\/div>\n
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then you know as you get as you gain<\/div>\n<\/div>\n<\/div>\n
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more experience and you work with the<\/div>\n<\/div>\n<\/div>\n
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risk manager more and more you will<\/div>\n<\/div>\n<\/div>\n
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develop rules for being a bigger trader<\/div>\n<\/div>\n<\/div>\n
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but at the start there really shouldn’t<\/div>\n<\/div>\n<\/div>\n
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be any one going over and and it we<\/div>\n<\/div>\n<\/div>\n
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won’t look at it as a risk issue we’ll<\/div>\n<\/div>\n<\/div>\n
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look at it as an ethical issue<\/div>\n<\/div>\n<\/div>\n
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we can’t trust you to stay within 500<\/div>\n<\/div>\n<\/div>\n
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dollars<\/div>\n<\/div>\n<\/div>\n
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how could you know how can we trust you<\/div>\n<\/div>\n<\/div>\n
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when your stop-loss is one hundred and<\/div>\n<\/div>\n<\/div>\n
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fifty thousand dollars and you’re short<\/div>\n<\/div>\n<\/div>\n
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a hundred thousand shares of beyond how<\/div>\n<\/div>\n<\/div>\n
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we possibly that can go from one hundred<\/div>\n<\/div>\n<\/div>\n
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and fifty thousand to a five hundred<\/div>\n<\/div>\n<\/div>\n
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\n
thousand dollar trip and more pretty<\/div>\n<\/div>\n<\/div>\n
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\n
quickly secondly secondly the market<\/div>\n<\/div>\n<\/div>\n
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\n
that we’re in right now has so much<\/div>\n<\/div>\n<\/div>\n
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opportunity one trades not worth<\/div>\n<\/div>\n<\/div>\n
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stopping yourself out for the day even<\/div>\n<\/div>\n<\/div>\n
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\n
as illogical as beyond was at 135 even<\/div>\n<\/div>\n<\/div>\n
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\n
as you may think Tesla is up here at at<\/div>\n<\/div>\n<\/div>\n
\n
\n
these levels and there’s a counter to<\/div>\n<\/div>\n<\/div>\n
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that that it’s going to 600 even with<\/div>\n<\/div>\n<\/div>\n
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the clvs yesterday even with this<\/div>\n<\/div>\n<\/div>\n
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particular stock there’s going to be so<\/div>\n<\/div>\n<\/div>\n
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many opportunities you have to keep<\/div>\n<\/div>\n<\/div>\n
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yourself in the game because there’s<\/div>\n<\/div>\n<\/div>\n
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\n
just a lot of easy trades out there and<\/div>\n<\/div>\n<\/div>\n
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\n
so I know that you all want to flex your<\/div>\n<\/div>\n<\/div>\n
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muscles and get big and take on a lot of<\/div>\n<\/div>\n<\/div>\n
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\n
risk and think that’s the path to making<\/div>\n<\/div>\n<\/div>\n
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\n
a lot of money there are a lot of<\/div>\n<\/div>\n<\/div>\n
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traders in the prop space who don’t come<\/div>\n<\/div>\n<\/div>\n
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anywhere near their intraday loss I was<\/div>\n<\/div>\n<\/div>\n
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at dinner with the trader who made and<\/div>\n<\/div>\n<\/div>\n
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I’m gonna approximate over the course of<\/div>\n<\/div>\n<\/div>\n
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two over the course of<\/div>\n<\/div>\n<\/div>\n
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about 300,000 and drew down made 300,000<\/div>\n<\/div>\n<\/div>\n
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over the course of a couple of days and<\/div>\n<\/div>\n<\/div>\n
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\n
drew down guess how much what was his<\/div>\n<\/div>\n<\/div>\n
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\n
biggest draw down he made $300,000<\/div>\n<\/div>\n<\/div>\n
\n
\n
traded a couple of different stocks<\/div>\n<\/div>\n<\/div>\n
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\n
mainly into stocks guess how much he<\/div>\n<\/div>\n<\/div>\n
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\n
drew down yeah 30 okay and that would be<\/div>\n<\/div>\n<\/div>\n
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\n
terrific right that’s still a 1 to 10<\/div>\n<\/div>\n<\/div>\n
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\n
ratio what do you think he drew down 50<\/div>\n<\/div>\n<\/div>\n
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\n
max 100 $3,000 in judo and so and and<\/div>\n<\/div>\n<\/div>\n
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\n
swang just had back-to-back quarter<\/div>\n<\/div>\n<\/div>\n
\n
\n
million dollar days and drew down almost<\/div>\n<\/div>\n<\/div>\n
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\n
nothing gave it had some Poland’s where<\/div>\n<\/div>\n<\/div>\n
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\n
he gave back some open profit but there<\/div>\n<\/div>\n<\/div>\n
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\n
are people that don’t need to that that<\/div>\n<\/div>\n<\/div>\n
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aren’t taking pain in this market to<\/div>\n<\/div>\n<\/div>\n
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make pretty good numbers and I’m not<\/div>\n<\/div>\n<\/div>\n
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\n
suggesting that you shouldn’t develop a<\/div>\n<\/div>\n<\/div>\n
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\n
system where you draw it down a little<\/div>\n<\/div>\n<\/div>\n
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\n
bit I’m just saying it’s not true that<\/div>\n<\/div>\n<\/div>\n
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\n
you need to draw it down and make a lot<\/div>\n<\/div>\n<\/div>\n
\n
\n
of money and so in dr. steam Berger said<\/div>\n<\/div>\n<\/div>\n
\n
\n
something really interesting – one of<\/div>\n<\/div>\n<\/div>\n
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\n
our really good traders the other day<\/div>\n<\/div>\n<\/div>\n
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\n
which is one of the traders that he<\/div>\n<\/div>\n<\/div>\n
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\n
works with who made so much money last<\/div>\n<\/div>\n<\/div>\n
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\n
year I actually can’t even say it<\/div>\n<\/div>\n<\/div>\n
\n
\n
because the number is just ridiculous I<\/div>\n<\/div>\n<\/div>\n
\n
\n
mean the amount of P&L; that this<\/div>\n<\/div>\n<\/div>\n
\n
\n
particular trader made he looks at it<\/div>\n<\/div>\n<\/div>\n
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\n
this trader looks at it as and he has<\/div>\n<\/div>\n<\/div>\n
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\n
risk limits on him as well he looks at<\/div>\n<\/div>\n<\/div>\n
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\n
it as a challenge each day he’s so<\/div>\n<\/div>\n<\/div>\n
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\n
competitive that he views it as a<\/div>\n<\/div>\n<\/div>\n
\n
\n
challenge never to get stopped out in a<\/div>\n<\/div>\n<\/div>\n
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\n
particular trade he’s not gonna let it<\/div>\n<\/div>\n<\/div>\n
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\n
happen and so for you guys and and he’s<\/div>\n<\/div>\n<\/div>\n
\n
\n
made as the numbers he made or as big a<\/div>\n<\/div>\n<\/div>\n
\n
\n
numbers as I’ve seen and<\/div>\n<\/div>\n<\/div>\n
\n
\n
you know so there’s our three different<\/div>\n<\/div>\n<\/div>\n
\n
\n
ways to look at that’s a risk management<\/div>\n<\/div>\n<\/div>\n
\n
\n
issue yeah III think that that’s not<\/div>\n<\/div>\n<\/div>\n
\n
\n
sure about that and so and the other<\/div>\n<\/div>\n<\/div>\n
\n
\n
thing is at the beginning what are you<\/div>\n<\/div>\n<\/div>\n
\n
\n
really working on you know what are you<\/div>\n<\/div>\n<\/div>\n
\n
\n
what are you all you guys in here<\/div>\n<\/div>\n<\/div>\n
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\n
working on you’re working on being<\/div>\n<\/div>\n<\/div>\n
\n
\n
working on being consistent that’s if<\/div>\n<\/div>\n<\/div>\n
\n
\n
you can get to the point where you’re<\/div>\n<\/div>\n<\/div>\n
\n
\n
consistently profitable it doesn’t even<\/div>\n<\/div>\n<\/div>\n
\n
\n
matter how small the numbers are you can<\/div>\n<\/div>\n<\/div>\n
\n
\n
get to the point where you can trade<\/div>\n<\/div>\n<\/div>\n
\n
\n
every day put on your PlayBook every day<\/div>\n<\/div>\n<\/div>\n
\n
\n
and at the end of the month your win<\/div>\n<\/div>\n<\/div>\n
\n
\n
rates good risk reward is good Sharpe<\/div>\n<\/div>\n<\/div>\n
\n
\n
ratios good you make money you’re<\/div>\n<\/div>\n<\/div>\n
\n
\n
positive days are way more than or<\/div>\n<\/div>\n<\/div>\n
\n
\n
negative days that is such a powerful<\/div>\n<\/div>\n<\/div>\n
\n
\n
position to be in it’s only a matter of<\/div>\n<\/div>\n<\/div>\n
\n
\n
time before you’re gonna be able to turn<\/div>\n<\/div>\n<\/div>\n
\n
\n
the knobs up on resk and make more money<\/div>\n<\/div>\n<\/div>\n
\n
\n
and I’ll say one other thing as well<\/div>\n<\/div>\n<\/div>\n
\n
\n
which is at the start this is the worst<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’re ever gonna be as a trader this is<\/div>\n<\/div>\n<\/div>\n
\n
\n
the worst you’re ever gonna be today max<\/div>\n<\/div>\n<\/div>\n
\n
\n
as a trader it’ll you’ll never be worse<\/div>\n<\/div>\n<\/div>\n
\n
\n
than you are today and so if this is the<\/div>\n<\/div>\n<\/div>\n
\n
\n
worst you’re ever gonna be as a trader<\/div>\n<\/div>\n<\/div>\n
\n
\n
okay why would you risk a lot of money<\/div>\n<\/div>\n<\/div>\n
\n
\n
when this is the worst you’re gonna be<\/div>\n<\/div>\n<\/div>\n
\n
\n
it doesn’t make any sense mathematically<\/div>\n<\/div>\n<\/div>\n
\n
\n
you know save that risk for when you’re<\/div>\n<\/div>\n<\/div>\n
\n
\n
you’re you’re better don’t dig yourself<\/div>\n<\/div>\n<\/div>\n
\n
\n
into a big hole for when you get good<\/div>\n<\/div>\n<\/div>\n
\n
\n
I can tell you that you know I know a<\/div>\n<\/div>\n<\/div>\n
\n
\n
trader who was in a hole and but kept it<\/div>\n<\/div>\n<\/div>\n
\n
\n
manageable and in one day because he<\/div>\n<\/div>\n<\/div>\n
\n
\n
kept it manageable and had traded poorly<\/div>\n<\/div>\n<\/div>\n
\n
\n
for an extended period of time but in<\/div>\n<\/div>\n<\/div>\n
\n
\n
one day wiped out his home one made<\/div>\n<\/div>\n<\/div>\n
\n
\n
money so those are reasons to consider<\/div>\n<\/div>\n<\/div>\n
\n
\n
for staying one is staying away from<\/div>\n<\/div>\n<\/div>\n
\n
\n
stuff and and look I will also say that<\/div>\n<\/div>\n<\/div>\n
\n
\n
sometimes crazy stuff happens and we got<\/div>\n<\/div>\n<\/div>\n
\n
\n
to deal with it but it doesn’t have to<\/div>\n<\/div>\n<\/div>\n
\n
\n
so yeah so we’re back here and<\/div>\n<\/div>\n<\/div>\n
\n
\n
reiterating my point is my thought in<\/div>\n<\/div>\n<\/div>\n
\n
\n
looking at this was I hoped to be able<\/div>\n<\/div>\n<\/div>\n
\n
\n
to get big and that was a decision I<\/div>\n<\/div>\n<\/div>\n
\n
\n
made coming in today and taking this<\/div>\n<\/div>\n<\/div>\n
\n
\n
trip on chairs<\/div>\n<\/div>\n<\/div>\n
\n
\n
I’m really glad it turned right around<\/div>\n<\/div>\n<\/div>\n
\n
\n
but I was going to be looking to do<\/div>\n<\/div>\n<\/div>\n
\n
\n
something like the way it worked out<\/div>\n<\/div>\n<\/div>\n
\n
\n
later anyway five sporting a little bit<\/div>\n<\/div>\n<\/div>\n
\n
\n
I did see this consolidation and I was<\/div>\n<\/div>\n<\/div>\n
\n
\n
looking for going after the title big<\/div>\n<\/div>\n<\/div>\n
\n
\n
dog consolidation trades looking for<\/div>\n<\/div>\n<\/div>\n
\n
\n
opportunities just short breakdowns so I<\/div>\n<\/div>\n<\/div>\n
\n
\n
just actually passed on this one waited<\/div>\n<\/div>\n<\/div>\n
\n
\n
I got back down here and then was just<\/div>\n<\/div>\n<\/div>\n
\n
\n
sitting watching most of the day and<\/div>\n<\/div>\n<\/div>\n
\n
\n
started using stop orders to enter into<\/div>\n<\/div>\n<\/div>\n
\n
\n
some trades when it was breaking below<\/div>\n<\/div>\n<\/div>\n
\n
\n
levels that I’d identified which you can<\/div>\n<\/div>\n<\/div>\n
\n
\n
just pretty clearly see here my real<\/div>\n<\/div>\n<\/div>\n
\n
\n
focus on here is how to get big<\/div>\n<\/div>\n<\/div>\n
\n
\n
intelligently so I shorted chairs at 761<\/div>\n<\/div>\n<\/div>\n
\n
\n
with a 780 stop that’s the color but you<\/div>\n<\/div>\n<\/div>\n
\n
\n
know essentially dollar exposure aside<\/div>\n<\/div>\n<\/div>\n
\n
\n
from my core position they’re at it<\/div>\n<\/div>\n<\/div>\n
\n
\n
again after a relatively sure look and<\/div>\n<\/div>\n<\/div>\n
\n
\n
you have a lot more experience than<\/div>\n<\/div>\n<\/div>\n
\n
\n
almost anyone in the room and you’re<\/div>\n<\/div>\n<\/div>\n
\n
\n
transitioning and and you know when you<\/div>\n<\/div>\n<\/div>\n
\n
\n
talk about Sim trading you’re really<\/div>\n<\/div>\n<\/div>\n
\n
\n
just talking about transitioning from<\/div>\n<\/div>\n<\/div>\n
\n
\n
one platform where you’re live into<\/div>\n<\/div>\n<\/div>\n
\n
\n
another platform where you going to be<\/div>\n<\/div>\n<\/div>\n
\n
\n
live and that’s where you’re going<\/div>\n<\/div>\n<\/div>\n
\n
\n
through that and and and good for you to<\/div>\n<\/div>\n<\/div>\n
\n
\n
be thinking about how you get bigger but<\/div>\n<\/div>\n<\/div>\n
\n
\n
even for you<\/div>\n<\/div>\n<\/div>\n
\n
\n
transition is real even experienced<\/div>\n<\/div>\n<\/div>\n
\n
\n
trader transitioning from one platform<\/div>\n<\/div>\n<\/div>\n
\n
\n
to another<\/div>\n<\/div>\n<\/div>\n
\n
\n
one environment to another I would be<\/div>\n<\/div>\n<\/div>\n
\n
\n
focusing on being consistent as well so<\/div>\n<\/div>\n<\/div>\n
\n
\n
the idea this is a this is a good<\/div>\n<\/div>\n<\/div>\n
\n
\n
example of you developing a thesis you<\/div>\n<\/div>\n<\/div>\n
\n
\n
finding a setup that you like you see in<\/div>\n<\/div>\n<\/div>\n
\n
\n
confirmation and you executing on that<\/div>\n<\/div>\n<\/div>\n
\n
\n
trade that is super if we can do a lot<\/div>\n<\/div>\n<\/div>\n
\n
\n
of that in the first couple of months<\/div>\n<\/div>\n<\/div>\n
\n
\n
that would be terrific that would be a<\/div>\n<\/div>\n<\/div>\n
\n
\n
terrific goal for you and then from<\/div>\n<\/div>\n<\/div>\n
\n
\n
there for us to say it let me really<\/div>\n<\/div>\n<\/div>\n
\n
\n
lean on it<\/div>\n<\/div>\n<\/div>\n
\n
\n
I like the intellectual exercise and let<\/div>\n<\/div>\n<\/div>\n
\n
\n
me get you up but we’d be super happy if<\/div>\n<\/div>\n<\/div>\n
\n
\n
we were sitting there seeing consistent<\/div>\n<\/div>\n<\/div>\n
\n
\n
results and you were saying to us I want<\/div>\n<\/div>\n<\/div>\n
\n
\n
to make more money I want to make more<\/div>\n<\/div>\n<\/div>\n
\n
\n
money and and we were talking about from<\/div>\n<\/div>\n<\/div>\n
\n
\n
those consistent results how to do that<\/div>\n<\/div>\n<\/div>\n
\n
\n
yeah an important distinction is is I’m<\/div>\n<\/div>\n<\/div>\n
\n
\n
using five hundred dollar position<\/div>\n<\/div>\n<\/div>\n
\n
\n
limits and not an absolute day limit and<\/div>\n<\/div>\n<\/div>\n
\n
\n
I’m only you know if I go if I lose two<\/div>\n<\/div>\n<\/div>\n
\n
\n
or three in a day in a day I’m okay I’m<\/div>\n<\/div>\n<\/div>\n
\n
\n
Donna down 1500 bucks or something<\/div>\n<\/div>\n<\/div>\n
\n
\n
and that’s something that I want to you<\/div>\n<\/div>\n<\/div>\n
\n
\n
know have a conversation about going<\/div>\n<\/div>\n<\/div>\n
\n
\n
forward but you know say this is going<\/div>\n<\/div>\n<\/div>\n
\n
\n
against me we’ll go and get into that at<\/div>\n<\/div>\n<\/div>\n
\n
\n
the end I was very fortunate and that<\/div>\n<\/div>\n<\/div>\n
\n
\n
when I really started puts eyes on just<\/div>\n<\/div>\n<\/div>\n
\n
\n
never won against me and so I added in<\/div>\n<\/div>\n<\/div>\n
\n
\n
here in here and here I got up to this<\/div>\n<\/div>\n<\/div>\n
\n
\n
short and made you know the better part<\/div>\n<\/div>\n<\/div>\n
\n
\n
of the dollar on it and just started<\/div>\n<\/div>\n<\/div>\n
\n
\n
taking you know got down there seven<\/div>\n<\/div>\n<\/div>\n
\n
\n
which identified as an area and started<\/div>\n<\/div>\n<\/div>\n
\n
\n
taking size off and smaller so if in<\/div>\n<\/div>\n<\/div>\n
\n
\n
each at seven six ninety five and six<\/div>\n<\/div>\n<\/div>\n
\n
\n
ninety and then at 6 87 on a market<\/div>\n<\/div>\n<\/div>\n
\n
\n
order the clothes and I went home short<\/div>\n<\/div>\n<\/div>\n
\n
\n
with I think go back to that slide so<\/div>\n<\/div>\n<\/div>\n
\n
\n
the one thing you want to check when it<\/div>\n<\/div>\n<\/div>\n
\n
\n
breaks out of the BigDog consolidation<\/div>\n<\/div>\n<\/div>\n
\n
\n
is you you want to see volatility of<\/div>\n<\/div>\n<\/div>\n
\n
\n
price showing you that the buyers aren’t<\/div>\n<\/div>\n<\/div>\n
\n
\n
there anymore and you want to see an<\/div>\n<\/div>\n<\/div>\n
\n
\n
increase in volume in that an initial<\/div>\n<\/div>\n<\/div>\n
\n
\n
down move confirming that the sellers<\/div>\n<\/div>\n<\/div>\n
\n
\n
are heavy here more likely to keep going<\/div>\n<\/div>\n<\/div>\n
\n
\n
so I’d love to see the volume at the<\/div>\n<\/div>\n<\/div>\n
\n
\n
bottom of this chart as well but those<\/div>\n<\/div>\n<\/div>\n
\n
\n
are two things to think about all right<\/div>\n<\/div>\n<\/div>\n
\n
\n
go ahead so trade management I moved<\/div>\n<\/div>\n<\/div>\n
\n
\n
this year as I said we’ve walked through<\/div>\n<\/div>\n<\/div>\n
\n
\n
this already the stock did do all this<\/div>\n<\/div>\n<\/div>\n
\n
\n
it moved really close really quickly and<\/div>\n<\/div>\n<\/div>\n
\n
\n
then after that I was just looking for<\/div>\n<\/div>\n<\/div>\n
\n
\n
consolidation breakdown opportunities<\/div>\n<\/div>\n<\/div>\n
\n
\n
with the expectation of this stock going<\/div>\n<\/div>\n<\/div>\n
\n
\n
out low today again the 45 for one<\/div>\n<\/div>\n<\/div>\n
\n
\n
reverse splits some of the very unusual<\/div>\n<\/div>\n<\/div>\n
\n
\n
things I was expecting this to just<\/div>\n<\/div>\n<\/div>\n
\n
\n
trend lower all day and that absolutely<\/div>\n<\/div>\n<\/div>\n
\n
\n
impacted how I managed to trade the stop<\/div>\n<\/div>\n<\/div>\n
\n
\n
I was using hard stops after the first<\/div>\n<\/div>\n<\/div>\n
\n
\n
couple minutes each time with only about<\/div>\n<\/div>\n<\/div>\n
\n
\n
another’s risk and I brought them down<\/div>\n<\/div>\n<\/div>\n
\n
\n
as the stock work twice worked lower I<\/div>\n<\/div>\n<\/div>\n
\n
\n
just you know I kept manually moving<\/div>\n<\/div>\n<\/div>\n
\n
\n
them down as trailing stops going into a<\/div>\n<\/div>\n<\/div>\n
\n
\n
little bit more detail on day two and<\/div>\n<\/div>\n<\/div>\n
\n
\n
three so I’d worked down to down to<\/div>\n<\/div>\n<\/div>\n
\n
\n
shares over the day I can’t remember<\/div>\n<\/div>\n<\/div>\n
\n
\n
which I came in with and then the next<\/div>\n<\/div>\n<\/div>\n
\n
\n
morning I started rebuilding my position<\/div>\n<\/div>\n<\/div>\n
\n
\n
and this is what I want to talk about<\/div>\n<\/div>\n<\/div>\n
\n
\n
right here because there’s a little bit<\/div>\n<\/div>\n<\/div>\n
\n
\n
of volatility at the open but nothing I<\/div>\n<\/div>\n<\/div>\n
\n
\n
was not comfortable with then when it<\/div>\n<\/div>\n<\/div>\n
\n
\n
broke below the opening low I added<\/div>\n<\/div>\n<\/div>\n
\n
\n
again it back tested and you know held<\/div>\n<\/div>\n<\/div>\n
\n
\n
the resistance there found foreign a<\/div>\n<\/div>\n<\/div>\n
\n
\n
nice little wedge and yet again I was<\/div>\n<\/div>\n<\/div>\n
\n
\n
shorting it again so I’m getting pretty<\/div>\n<\/div>\n<\/div>\n
\n
\n
big I’m back up so I think shares short<\/div>\n<\/div>\n<\/div>\n
\n
\n
because I hit this twice with both times<\/div>\n<\/div>\n<\/div>\n
\n
\n
weren’t there and then I endured this<\/div>\n<\/div>\n<\/div>\n
\n
\n
again I never went negative even with<\/div>\n<\/div>\n<\/div>\n
\n
\n
what I had the position on I went from I<\/div>\n<\/div>\n<\/div>\n
\n
\n
think up like up like one and this broke<\/div>\n<\/div>\n<\/div>\n
\n
\n
above a resistance level and some things<\/div>\n<\/div>\n<\/div>\n
\n
\n
and I didn’t have anything in place what<\/div>\n<\/div>\n<\/div>\n
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we talked about at the meeting earlier<\/div>\n<\/div>\n<\/div>\n
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today and again I was fortunate indeed<\/div>\n<\/div>\n<\/div>\n
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iddin do any take anything more off that<\/div>\n<\/div>\n<\/div>\n
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day so the ax<\/div>\n<\/div>\n<\/div>\n
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that you hit below the lows have a<\/div>\n<\/div>\n<\/div>\n
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different stop than your swings yes so<\/div>\n<\/div>\n<\/div>\n
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you want to be thinking that way so I’ve<\/div>\n<\/div>\n<\/div>\n
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got a swing trade on that has a stop and<\/div>\n<\/div>\n<\/div>\n
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a target and then I’m pushing it I’m<\/div>\n<\/div>\n<\/div>\n
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leaning on it those have a target and a<\/div>\n<\/div>\n<\/div>\n
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stop as well that are different right<\/div>\n<\/div>\n<\/div>\n
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and you want to stick to them and and<\/div>\n<\/div>\n<\/div>\n
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the extras that you added either you<\/div>\n<\/div>\n<\/div>\n
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needed to take profits in them in the<\/div>\n<\/div>\n<\/div>\n
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money or be out of them<\/div>\n<\/div>\n<\/div>\n
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\n
yeah and that’s literally the exercise<\/div>\n<\/div>\n<\/div>\n
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I’m going through and what we talked<\/div>\n<\/div>\n<\/div>\n
\n
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about this morning that’ll be the next<\/div>\n<\/div>\n<\/div>\n
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slide so it ended up working out very<\/div>\n<\/div>\n<\/div>\n
\n
\n
well when I saw this was a high-volume<\/div>\n<\/div>\n<\/div>\n
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push down here I just took a lot off and<\/div>\n<\/div>\n<\/div>\n
\n
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I basically you know that basically<\/div>\n<\/div>\n<\/div>\n
\n
\n
closed out the trade at the end of the<\/div>\n<\/div>\n<\/div>\n
\n
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day at around five dollars I had a<\/div>\n<\/div>\n<\/div>\n
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little bit left over that I took it just<\/div>\n<\/div>\n<\/div>\n
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below five the next day I don’t know why<\/div>\n<\/div>\n<\/div>\n
\n
\n
it trended down to 350 it’s just a day<\/div>\n<\/div>\n<\/div>\n
\n
\n
or two later and you know thinking of<\/div>\n<\/div>\n<\/div>\n
\n
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stocks down to too much is I should have<\/div>\n<\/div>\n<\/div>\n
\n
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just let it run but fast forwarding to<\/div>\n<\/div>\n<\/div>\n
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what we’re talking about I’m searching<\/div>\n<\/div>\n<\/div>\n
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for a consistent process where I can<\/div>\n<\/div>\n<\/div>\n
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\n
automate and hopefully you know how<\/div>\n<\/div>\n<\/div>\n
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\n
something in place that’s more of a<\/div>\n<\/div>\n<\/div>\n
\n
\n
script instead of a manual stop and as<\/div>\n<\/div>\n<\/div>\n
\n
\n
we talked this morning I looked at the<\/div>\n<\/div>\n<\/div>\n
\n
\n
21 so this is the exact same day or<\/div>\n<\/div>\n<\/div>\n
\n
\n
talked about this is the area where<\/div>\n<\/div>\n<\/div>\n
\n
\n
would have gotten in trouble here’s<\/div>\n<\/div>\n<\/div>\n
\n
\n
where I hit it going down and you can<\/div>\n<\/div>\n<\/div>\n
\n
\n
see not well but there’s in the red line<\/div>\n<\/div>\n<\/div>\n
\n
\n
is the 21 day moving average I<\/div>\n<\/div>\n<\/div>\n
\n
\n
historically have used a 50-day in a<\/div>\n<\/div>\n<\/div>\n
\n
\n
different period and for the way that I<\/div>\n<\/div>\n<\/div>\n
\n
\n
trade it looks to me like that works a<\/div>\n<\/div>\n<\/div>\n
\n
\n
lot better this is a really volatile<\/div>\n<\/div>\n<\/div>\n
\n
\n
stock you know I wouldn’t have been<\/div>\n<\/div>\n<\/div>\n
\n
\n
involved in there but it stays below it<\/div>\n<\/div>\n<\/div>\n
\n
\n
stays below it big spike down comes back<\/div>\n<\/div>\n<\/div>\n
\n
\n
up tests it it wouldn’t and I’d probably<\/div>\n<\/div>\n<\/div>\n
\n
\n
use a closed so here’s where I’m getting<\/div>\n<\/div>\n<\/div>\n
\n
\n
stopped out on these ads from here still<\/div>\n<\/div>\n<\/div>\n
\n
\n
profitable but certainly keeps me out of<\/div>\n<\/div>\n<\/div>\n
\n
\n
this problem and that’s something I’m<\/div>\n<\/div>\n<\/div>\n
\n
\n
gonna be exploring now it’s your turn<\/div>\n<\/div>\n<\/div>\n
\n
\n
what’s the most powerful reason you<\/div>\n<\/div>\n<\/div>\n
\n
\n
found in this video to never exceed your<\/div>\n<\/div>\n<\/div>\n
\n
\n
stop-loss in a trade let us know by<\/div>\n<\/div>\n<\/div>\n
\n
\n
leaving a comment below right now<\/div>\n<\/div>\n<\/div>\n
\n
\n
<\/div><\/div>\n<\/div>\n<\/div>\n

\"\"<\/a><\/p>\n

* no relevant positions<\/p>\n","protected":false},"excerpt":{"rendered":"

In this video learn 7 reasons why you should never exceed your stop loss as a trader. 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