My Trading Problem

Ever since my large loss on $CALI, I’ve been more hesitent when I trade. I don’t know if it’s entirely caused by that one trade alone or because of the cumulative, yet small, losses that I’ve had in my IB account. The problem I’m faced with is entirely psychological. When I paper trade with the exact same setup in TWS, I do not hesitate to make trades and as long as I stick to patterns I recognize, I end up with decent gains even with 100 shares.

The problem seems to come down to risk management. I always try to determine my risk before entering a trade; which is obviously best practices. This ends up being a trap though since I generally determine there is too much risk (such as 20c to the downside, which is usually the low of a previous candle). I then do not take the trade and end up watching the setup play out perfectly. I always talk myself out of the trade by finding an excuse as to why it will not work: big spreads (5-10c), declining volume, huge 5m candle wick, time of day not ideal, etc.

I started watching “How to Think Like a Professional Trader” on YouTube. This part really stuck out to me:

(it has since been removed by YouTube)

If you didn’t watch the next 10 minutes of it, my main takeaway is this: you have to size down to the point where being wrong or losing money no longer matters. I thought 100 shares was small enough for me where I could focus on patterns and not care but it is not. On Monday I am sizing down to 10, and if that’s not enough I’ll go to 1.

After a few weeks of this I should be able to size up to 20 then 50 then 75 and hopefully back to 100 and just keep progressing slowly. I’m so glad I’m not under the PDT and the fees at IB are small. Every trade will still be a loss due to commissions but that doesn’t matter. Percent gain is what I’ll be going after when I post my trades, and I’ll be removing the dollar gain/loss from the chart. That way I can focus on just the chart and try to have good entries/exits.


I saw some “OK” opportunities on Monday and Tuesday but I either passed them up or missed them. Today I saw $GRPN had earnings and it had a nice morning panic. I waited for it to go green on the day (get over the open price) then I bought in with small size. My risk was down to the 5m 9 EMA or VWAP. I did not expect a huge move out of it and I got out when it couldn’t get over the premarket bounce at $5.50.

That ended up being perfect since there was a conference call at 10:00 that I was unaware of and then it proeceded to tank. I managed to stay in and not get faked out by the drop and captured almost all of the move.


That’s pretty much it for the week. I ended up paper trading on Friday for half the day and managed to make some money on $HEAR twice, and made a little on another stock that went red to green. Both worked out rather well. This weekend I’m going to work on my algorithm again with some new ideas.


I am not a registered financial adviser/broker/anything. Use this information for entertainment/informational purposes only. Any tickers mentioned are not recommendations to buy/sell/or sell short. They are used as examples only.