Hey loyal VWAPians,
Yesterday morning, you watched me trade LIVE while under the weather, and I appreciate everyone’s well wishes very much.
Awww – thanks, friends
Trades like Workhorse (WKHS), The Trade Desk (TTD), and Village Farms International (VFF) emerged on my early Warlock Watchlist on momentum, and kudos to the nimble day traders who played the right side of the VWAP!
I also dropped quite a few important Knowledge Bombs on you – so important, in fact, that I want to reiterate them in this space today.
First, let me begin by stating what I feel should be the obvious, but seems to trip up some of the bright-eyed freshmen traders playing the Reddit boards: Nothing works 100% of the time.
Not even my most consistent trade – buying the Invesco QQQ Trust (QQQ) when it’s breaking back above the 1-minute VWAP – is failsafe, people.
So if you’re going into your trades expecting perfection – let me just stop you right there and say, “You’re not ready to trade.”
Yes, the stock market is run on algorithms, as VWAP has proven to us time and again – but if it worked 100% of the time, wouldn’t everyone be trading it by now?
Or, more importantly, wouldn’t I be Scrooge McDuck-level rich?
But it’s about how you RESPOND and ADAPT and LEARN FROM those days that matters… Which is why my first tip is:
- Never say “I gotta make something happen right NOW.”
Last Friday, I found myself trying to force my trades to work by 10:30 a.m. ET, because I had plans and needed to leave shortly thereafter.
Desperate, hurried trading usually doesn’t end well.
After all – the finding of ideas is the easy part. I’m usually looking at earnings reactions and stocks moving on headlines.
It’s the execution and trade management that’s difficult.
So if you don’t have the time to dedicate to your due VWAP diligence (those IF/THEN statements I talk about) and staggering your stops and targets, well…
- Nothing IS a position.
Don’t trade simply for the sake of trading or because you’re anxious for a win.
I respect people who are comfortable having no open positions and making no moves. That feels very professional.
That means the trader’s smart enough to recognize that there’s nothing worth sinking their money into at the moment, so they decide to be patient.
Which brings me to…
- “Bored and money” is better than “broke and exciting.”
Just as you shouldn’t force trades out of desperation or a lack of time, you also shouldn’t force trades out of boredom or a sense of duty.
Sometimes the volume just isn’t there – like on Fridays in August, for instance.
So at the end of the day, I’d rather say to my wife, “The session was like watching paint dry, but I didn’t lose any money today,” as opposed to the alternative.
But hey – instead of telling you what NOT to do, here’s some actionable advice to help you deal with or avoid a bad stretch of trades in the future:
- The longer you stay in the casino, the more likely they’ll get your money.
Seriously – if you can’t seem to make money in this market, sometimes you need to take a break.
I don’t mean sit at your usual trading spot and stew about gains you’re missing out on – I mean take an actual sabbatical away from the market and your computer or trading apps.
Go on a spirit walk and clear your mind.
Have a VWAP zen moment.
- Don’t put too much on your plate.
Nobody should own more than five stocks at one time, in my opinion.
I don’t understand these traders who try to actively manage, like, eight stocks. Having that much overdiversification means the positions can’t get the attention they need to thrive.
In fact, I hate stock ownership so much that I practically don’t do it! Not overnight, at least.
I’m a day trader, as you know, so I’m typically cash by the closing bell, and I’m perfectly happy with the sleep I get at night because of it.
So, I’m not saying you shouldn’t swing trade or be an investor – to each his or her own – but just remember: Sometimes less is more.
- Go back to the well on what works.
Speaking of focus – when building your watchlist as a VWAP day trader, I suggest sticking to what’s worked so many times (but not every time!) in the past: clutch earnings reversals and momentum stocks swinging on news.
That’s why today, you’ll find stocks like Planet Fitness (PLNT), SmileDirect Club (SDC), Halozyme (HALO), and 3D Systems (DDD) on my daily Warlock Watchlist.
And when you develop your IF/THEN exit strategies around those stocks, continue to plot out potentially key pivot points from the after hours, like I did with Decarbonization Plus Acquisition (HZYN) yesterday:
Will HYZN come into play today?
Remember how long Advanced Micro Devices (AMD) stayed on my radar after earnings? It was literally DAYS – because IF IT DOESN’T WANNA DIE, IT’S A BUY!
Not to mention I have a rolling Warlock Watchlist of my go-to names that have popped on and off my radar over the past few weeks.
In closing, just remember that you need those bad days to grow as a trader, and as long as you’re learning and adjusting because of them – not to mention learning from those who went down that road first (like me) – you should be able to stay in the game.
Thank you, Jeremiah! Glad to hear it!
At 7 p.m. ET this Thursday, Money Morning LIVE is taking it to the big leagues – we have some exciting stuff in store, including some exclusive top trade ideas from experts like yours truly.
Sign up now to save your seat! It’s gonna be EPIC.
In the meantime, I’ll see you in the room at 9:30 a.m. ET each day…
Kenny “The Warlock” Glick
One response to “6 Tips for Bouncing Back from a Bad Trade”
August 10 2021