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What A $30,000 Losing Trade Looks Like, And How To Bounce Back

Ross Cameron - Warrior Trading

Well, my trading career just broke a new record. Unfortunately, that record will go down in my loss column. On Wednesday, March 20, 2019, I recorded my second biggest single-day loss ever of -$29,058.17, almost all of that due to a single trade.

Although not my biggest loss ever, it is the largest I’ve had in recent history. It’s also the worst one I’ve had since I started my challenge of growing my trading account from $583 to $1 million just over two years ago.

The biggest irony of the loss, and probably one of the main factors that led to it, was that prior to Wednesday’s loss, I was only about $6,500 away from crossing that $1 million threshold.

You know, I was so certain that I would be able to finally hit that goal in March, and I might have been able to do it. However, this month has been marked by extremely mixed results. That should have been my first red flag that something in the way I was trading just wasn’t working. I started March with an $8k loss and continued the month bouncing between the red and the green.

Another factor was how successful February was for me, clocking in above $70k in a shortened month. I came into March hoping for a repeat of those results, got rebuked on the first day, but just kept poking the bear.

As for the trade itself, a 24,000 share position between my IRA and main account in Estre Ambiental Inc. (NASDAQ: ESTR), I made more mistakes and broke more of my personal trading rules than I could rightly defend.

To preface the actual setup, I came into the day feeling big-time FOMO for missing out on a lot of action in Bio-Path Holdings Inc (NASDAQ: BPTH) and Vaxart Inc. (NASDAQ: VXRT). Once the bell rang, I started off with a disappointing trade in Motif Bio PLC (NASDAQ: MTFB) in which I was stopped out at break-even right before the price shot up to its high-of-day.

Given all of that, I was eager to have a big win. So when I saw ESTR moving 40 percent in a matter of minutes, well I took a blind leap at 9,000 shares for the break above $4. As it kept creeping up, I made an even more reckless move in anticipation for a circuit-breaker halt, adding a little less than 15,000 shares in my IRA.

With that, I was in a huge position with almost zero context.

The context was that ESTR had almost none of the characteristics that I look for in a winning trade, let alone the home run I was expecting. For one, its float was almost twice that of the stocks I typically trade. Beyond that, there was no news on the stock, it hadn’t made any big moves recently and, probably worst of all, there really was not enough volume to carry it beyond its initial surge.

There certainly wasn’t enough to prompt a halt. Once the stock broke over $4, it completely broke down. At that point, I was all-in on hope, a terrible position to trade from.

Ultimately, I sold out of my IRA position as it fell below $3 and, thanks to slippage, exited my main account position at a low of $2.50. In total, my loss on ESTR clocked in at -$30,942.84.

It was ugly, it was painful, and it was a lesson I hope not to have to learn again.

So, with the goalposts pushed back way back on my $1 million challenge, my only objective right now is to simply finish March in the green. As of Thursday, I am down only about $4,000. I only need to average about $1,000 a day to come out ahead. It’s not the most ambitious course of action, but it’s the one my trading account needs right now.

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