Don't Buy Breakouts in a Bear Market!!! | Trading Audit
all right welcome everyone to the first episode of the trading audit in this series i'll be taking uh interviews with random people who want to take a deeper dive in their own trading and uh post it on youtube because we've always seen the dave ramsey kind of financial audits where people call in they say they have all this debt and then he digs into them and he'll provide some good information but i haven't seen it with trading so we're going to try it on my channel and see where it goes if you're interested in doing a trading audit yourself you can email me at stocktrackswithnick gmail.com that email is in the description of the video so you can find me just shoot over trading audit and then i'll get you the list of questions and we get going from there but my first guest today i'm super excited to have charlie on i know charlie from twitter he's been involved with the trading lion group uh and he's been learning a ton so today we'll be going over kind of an introduction uh getting to know charlie getting to know his background and trading what he does well what he has some area to improve on and then go through some of his trades in august uh charlie has sent me all the trades that he took in august and we'll be highlighting uh five or six of them depending on the the time limit for this so charlie thank you so much for being my first guest and uh if you just want to introduce yourself a little bit and how like how long you've been trading and how you got into trading i'm charlie and i've been trading uh for about two and a half years i started during the i started just as the coveted crash started actually and i i don't trade full-time or i do trade full-time but i don't rely on it as a source of income i'm mainly just learning so i can eventually make it my full time uh i started off just thinking it'd just be easy i watched all these videos on youtube um but what really got me into is my dad emphasized the importance of money management really early in my teenage years and from there i just he he showed me uh some things about what he does and that got me interested and i started my hand in futures trading and i got burnt pretty bad there then i then i tried options trying to get these alerts from you know dumb services and then i thought maybe i'd be smart and i maybe just maybe fundamentals got something i can be an investor and then i try to invest all through 2020 2021 i keep averaging down i'm losing more and more money and i'm just like because during that whole period i was also experimenting with trading a little bit and technical analysis understanding that more but so i had those two sides and i kept losing money on the fundamental side but then the technical side just made more sense it's like if i cut my losses and i keep my winners bigger i'm gonna make money so eventually i got fed up with the losses i'm just like screw this i'm going all in on technicals and managing the risk war relationship and since then there's no more losing money it's been a lot better that's awesome so you kind of had like the reverse of what i would say the traditional entrance into the market is like usually you start with stocks and then you hear about options get really excited about the potential gains there and then go on to futures from there but what what brought you into futures trading first um oh i don't know i i think it was just a potential to get rich quick yeah i wanted to make money every day and i i was like calculating like i can make a full-time living just making like 100 bucks per day you know each tick is 12.50 i'm gonna make i'm gonna get so rich and i end up losing like a dozen a lot right yeah and and i know we talked about this earlier but that that pain of loss is actually kind of a wake-up call and gets you to kind of focus and find the strategy that works with like your personality and that actually has the results right yeah yeah i i was watching a movie and i i kind of relate it to a near-death experience obviously it's not but when you take so many losses you're like okay i cannot do this anymore this is not gonna work if i keep doing this i'm gonna my life is gonna be ruined forever and just like you know if you have a near-death experience you're like okay life is precious i gotta make it worth it when i lose all this money trading i can't keep losing money i have to figure out how to make this work so exactly and trading is a very frustrating thing because you think like if you're an intelligent person or if you're like really into math and that's kind of the background that i came in from you think you could just like outsmart the market but you get humble pretty quick if you try to do that yep yeah so at what point did you start the the technical analysis side of trading you said you got in kind of in the the kobe crash and then we we rally so everyone's making money hand over fists um but then once you start to learn risk management when did you get into that part um i think it would probably be the second half of 2021 i got i shout out to richard moglin man his interviews is what got me here today all of the interviews with the us investing champions see what's good about them is they have proof behind their returns so when you listen to them and understand what they're doing you can you can feel content because you know they actually know something they they have proof on their returns so i i started off that i think oliver kell is one a big inspiration inspiration there after seeing that yeah that that's where it started that's awesome yeah in the second half of 2021 that's when a lot of the growth stocks i mean march of 2021 really we started hitting those growth stocks to the downside and um i really like what you said about all the u.s investing champions and they have something in common is they're very humble and they talk about losses and that's something we don't see like on tick tock ever twitter very rarely but really like trading trading well for an extended period of time and the trading consistency is all about managing the downside when you're trading so uh the best to do it always stress that so there has to be a reason behind that right yeah winners are good losers i love that i love that uh next question is uh where do you consider yourself in your trading journey trader line put together kind of three different phases of trade that traders go through you have your beginner trader and there you might have a a lower win rate and your losses vastly outperform your wins so you're just significantly unprofitable for for a long period of time and i'll say this most people start there unless you started in 2020 like a lot of people start as an unprofitable trader i know i started that way and then eventually you find the right system that kind of works for you but it still takes time to master if trading was easy everyone would do it so you have your intermediate your boom and bust cycle and then finally once the pieces of the puzzle start coming together and you know when to press your strategy in the right environment then you kind of become the expert where you're consistently putting in higher lows in your equity curve so uh within those three kind of beginner intermediate and expert where do you think you're at right now i think i'm probably an intermediate i i don't trade my full account so it's kind of hard to say like i i know they like to track the equity curve a lot but since i don't share my full account it's kind of hard to actually track that stuff but because i use a lot smaller size than what i can be doing but i'm definitely intermediate because i'm not i'm not really making a lot of progress yet and it's not like a full-time thing so i'm definitely just i'm in the learning phase and i don't think we ever exit that phase right like we always want to be constantly improving on our system improving on our signals stuff like that but um i really wanted to highlight one thing that you just said is you're not using your entire account on every single trade right now and knowing myself my second year in trading i was doing that all the time still so the fact that you found like the right people to follow like found the right interviews to to research and then also you're trading a little bit more conservatively than than you could given like where your knowledge is right now is really both impressive and like something that i want the viewers to stress is your first couple years you don't need to be making money to get yourself on the right tracks to be a successful trader your first couple years is all about learning as much as you can and really losing as little as you can what do you think you struggle with most in trading um i have a couple different options here maybe you can hit on one or two of them uh like your trading knowledge uh risk management stock selection or trading psychology yeah it's it's kind of hard to say because it's kind of hard to judge what you are best at and worst at it in a in a bear market because it's like you can't really get that many big winners but i can definitely say that i manage my risk well it's easy to take losses but i find it that i'm sometimes over trading so i would say stock selection is a little bit of an issue maybe maybe i'm not picking the best of stocks and i trading psychology would kind of go with that i i don't have any like big tilt issues or anything like that i've never had anything like that but that could just be because i'm not treating big size yet once i increase the size which is what i want to do when the bull market starts so i can get in the groove and you know make money but i think that those two yeah training psychology and stock selection and looking through your log and i'll put this up uh so everyone can see but a lot of your stocks are stocks that i've traded myself and they're in the right types of groups that we're working in august so you're hunting in the right place maybe it's just not the the right type of entry uh where you have a lower risk entry in in this bear market so um if stock selection in general is your kind of weakness i would still say that's above well below well above where i was uh two even like four years into it um and that comes back to finding the right people to learn from and just like ruthlessly uh studying the market um you kind of touched on this but you excel you would say at risk management the most yeah it's just it's like there i think there becomes a point where you just completely internalize the fact that losses are part of the game and when you hear i've watched so many interviews you know oliver kell mark minervini ryan pierpont these guys are they have 30 to 50 win rates i mean you'd think that after 40 years you'd be able to hit it out of the park a little better but these they're losing over half the time and they're still killing it you know absolutely killing it so i i just realized that the name of the game is just to keep keep your losses small and take your profits when you're at a multiple of your risk it doesn't matter if it keeps going up just keep the risk-reward relationship intact with the right position size and you will be able to make money yeah i i think you nailed it there um kind of the asymmetrical risk reward that mark minorini always covers is can i get two or three times my risk on the trade and how quickly can i move my stop up to even how quickly can i sell a piece just to reduce that initial capital risk on the trade and then use that elsewhere build up your exposure while keeping your risk minimal so one thing that you said that i really want to highlight is that you don't have a problem taking losses it's just kind of part of the business that's something that mark talks about as well every business has expenses and the more we treat trading like a business the more we understand okay this loss is an expense it's not emotional like you're not taking that loss emotionally you're not saying like i'm dumb for doing this or like your ego's getting hit every time you take a loss because you're keeping like looking through your trade log you kept all your losses in check i think your largest loss was like six percent seven percent yeah and that position size was like one-fifth normal size too okay so uh we've been getting your background um that that's been awesome you've crushed all the questions what would you like to get out of this one-on-one the most um i i really i don't have a very good concrete rule list because i've ingrained a lot of the protective rules like always did your losses and all of that but what i find hardest and i think that's what everyone finds hardest is when to sell when you're at a game especially in this sort of market it's like i i i've heard lace friday talk about your maximum favorable excursion and i've tried that too before a couple times but it's like i can't i i don't have like there's no concrete rules i can find to sell on the strength and be able to keep your profit and that's something i've been working on a lot but i i feel like you'd be able to help me out on be able to figure out when's the best time to show the strength so you can uh keep that risk-reward release risk reward ratio intact yeah i think there's it is definitely the most difficult thing it's something that i'm still kind of tinkering with myself um but one thing that you you already do which i applaud is you keep a trading journal and then you can keep your trading stats from that so your average gain on winning trades uh say it's five percent right in your last five trades i always look back like five to ten trades my last five to ten trades if my average gain on a winning trade is five percent and a stock already has run five percent for my entry point then i'm at least taking a third of that position into strength especially given the market um right now today like we're filming this on on wednesday market rallied we went oversold bounce solar stocks ripped higher um but the indexes are still under declining eight and 21 day emas we're still in a pretty tough market we rallied on outside of solar stocks low volume across the board um so just understanding kind of where the market's at will also be reflected in your trading stats in the most recent couple trades is that something that that you've looked back like your last five winning trades six winning trades something like that before um i do i keep i keep in track like if i my pass through trades or losses and things like that i i do notice that but i don't have a specific like sheet for the past 10 trades because it's uh i should probably do it but i i don't do that yet i used to obsess over my trading stats and try to always sell into my you know manage my trading triangle as mark whenever he calls it but i found that i actually get too obsessive over because i used to track my trading stats every single week it's like if i sell into three and a half percent that's just not paying for my risk so i used to be obsessive and if but if i be obsessive i won't be making enough money you know i have to get two to one risk award and i'm not there yet so i can't be i used to be obsessive and i can't do that now so yeah so one thing i like to do especially like either if i'm coming out of a trading slump or my average gain is below five percent on my last couple trades is once you get one time your risk so say i have a stop loss at five percent or planned exit point at five percent and the stock rally's five percent from my entry point so i'm up one time my risk i'll usually sell one third into that like one r or one risk multiple because by doing that and keeping your stop loss the same you actually like take your your risk fro of the trade down from a full like five percent to one point three three percent one third of your initial risk so that that quick sell into one r especially in a tough environment when you're your average gain is below five percent i found it it eliminates or it vastly reduces your uh downside risk very very quickly and personally like i probably trade a little bit quicker than most people um i'm especially in this market pretty fidgety around things um but i found that selling a little bit larger of a chunk not just like a quarter but a third or even a half at one time my risk that really loosens up the stress that it puts on me knowing that there's no actual like initial capital risk that's what i call it initial capital risk on the trade anymore and so once we get to that point then it's like okay nick i can sit on a winner a little bit and then if the market environment starts to get conducive to my trading style that will be reflected in the trading stats and that's when you can kind of balance the risk multiples so your distance from your entry to your stop loss um and then your average gain on winners so maybe you take a third at your first risk multiple um and then uh if your average gain is below like five percent on a winner but then once the market starts saying hey this is a good trading environment for us then instead of one time your risk it's actually one time your average gain so then you're expanding kind of your uh your first piece as the market environment gets better for us i have a little bit of a mental block with selling one-third at 1r because 1r doesn't pay for my risk when i have a 36 win rate right now so i maybe i maybe i should try that out because i actually wrote on i have a whiteboard from mark interviewing his mindset book he said get a huge whiteboard so i have a huge whiteboard and i wrote don't even consider selling at a gain until above two times risk so it's kind of interesting that you say that maybe i need to erase that so that's what i've found um like especially in this environment right like we're in a bear market we're still under declining eight and 21 emas until like this our trading strategy starts to get those results that okay your average gain is a 10 winner or 15 winner where we're finding stocks that are breaking out and continuing that move where it's easy to make 15 on on a nice trade um until then we're playing as strict defenses we can we're trying to go singles and doubles just like dip our toe in the market um and not try to hit any home runs like we we've talked about all right next we're going to jump to mark smith and break down a couple of charlie's trades um with the trading audit i asked that you sent me your last month of trades so i can go through kind of calculate your win rate average gain on winner average loss on a loser and then take a look at your largest win largest loss and then we can highlight some some trades to to go over which uh is going to help the people in the audience and also help yourself so um charlie sent me 14 trades that he made in august um of those he had a win rate of 29 with an average win of 3.83
average loss of 3.74 so a little bit more on his winners than his losses now this doesn't take into account position sizing so he could have larger position sizes on his winners and less on his losses and then that would make up for uh the win rate under what would that be like 50 um but this is just what i'm looking at largest win was a 7.4 percent gain largest loss only a 6.7 percent so um right off the bat really want to applaud you for the average loss 3.7 in a bear market that's that's exactly where we want to be um if we can bring that under three that would be ideal but i mean second year trading 3.74 that's awesome and then largest loss 6.7 and you you mentioned before uh that that was a smaller position size but that's one of the the stocks that i want to cover in in more detail anyway so we'll get to that in a bit but so you bought on eight one which is this day and i know so well here let me actually pop this over so we get a little bit more information i know this so well because i took this exact trade but uh do you want to just walk us through what were you thinking um and where you took some profit and manage your risk here yeah so yeah i i i always like to look at charts before they set up but um the reason why where you want to set it up so we're looking at big four yeah we could do that let's do uh seven what is that 30 7 29 29 okay so here we go um day before charlie's looking at this trade yeah what are you seeing you can see the really well controlled pull back into that 21 ema just under the 8 or 10 ema you see getting really tight and the thing that really got me into it was that volume drive i mean it is so dry it's ridiculous a lot of the time you don't see that great volume drive i find but when you do see it it's a really good sign it's kind of like a mini cup and handle a little bit but not really and then so that's why i bought it and then now we can go forward yeah so also wanted to point out this is in the biotech group fourth strongest group at the time out of 197 in the market one of the reasons i bought it was we got this big volume on the move up from five all the way what was the top here 13 so really strong move and then like charlie said we get that volume dry up so i was looking at exactly the same stuff which uh is nice to hear someone else was uh watching that so right so it was up 157 157 percent in 33 days i really like to see that i love power plays so it goes out on the first day and i was really managing risk tightly here i think i might stop at minus 2.9 so basically i buy through that high of that small bar i think i gave it like five to ten percent above that five to ten cents above it because i don't want to just get ticked in so it's probably like a three point three percent stop loss that's where i had it and i think i sold a third into 2r almost it was nearly two hours it was up like 6.6 intraday it looks like and then it
just squatted but i already had i already had a third out so my risk was pretty much covered and the next day i'm going to the next day next day it does nothing or it just it you know it's progressing it's good sign and then next day that big day happens but luckily it was actually a gap up in the morning a little bit and then it rallied up which i actually sold a little more into i got lucky i sold a little more into and i'm not sure if i had my stop at break even but regardless i got out i got stopped out and i got out with a two percent gain i think i managed this like exactly the same way so one thing that i saw is on this day we broke over 13 so nice round number but we couldn't hold that we very quickly went from 1303 back down through 13 and squatted on that day and this was a day we go back a little bit but this was a day that the market came in a little bit as well we could see so it made sense that it's squatted it was still a strong stock and a strong group so outside of selling a little bit into strength where we see prior resistance to the left side of the chart so taking some profit off limiting our downside risk the second day i didn't do anything either because we had a strong closing range the market also started to participate and rally higher and then this is kind of a disaster that you would want to avoid and you did avoid really well using your stop loss and selling something into strength right at that previous like we broke over 13 or we might have gapped over 13 but quickly lost it right right and that's another sign okay something's weird here and playing biotech stocks you have to be very vigilant with your stop losses because they can go uh against you very very quickly so uh taking a 2.1 percent gain on this which was a quality setup quality group strong entry right over the previous day's high nice tight stop loss i would say and this is for kind of the audience too like you see a 2.1 percent gain and you think that's not great but the execution how charlie handled this trade this is something that he'll look back on and say this is an a plus execution type trade that's exactly how i look at it yeah the entry was right the taking profits into previous resistance was right and then the risk management on the downside was right and you see a ton of volume coming to the downside here so it's easier like now we reset to today and it's all the way up here but in that moment and that's the only the only time we can manage risk is in the moment you did it exactly the right way so wanted to applaud that and two percent gain on this trade is exactly what you're looking for now uh let's dial it back a little bit and i have to ask what were you thinking on this one um eslt this is an aerospace defense not a super strong group um and also the daily volume on this is extremely light only 26 000 shares traded a day i see this is israeli manufacturer of surveillance land vehicles all that stuff um so i i see on the chart like what you're looking at you see and oh okay let me bring this back to the day that you trade you don't have to do that if you don't mind um but yeah so one do you have a uh volume requirement on your setups i have a volume requirement but it's it's more focused on dollar volume because that's really what i care about you know it's i i do see that is maybe low on the volume side but as long as there's dollar volume i i'm pretty much fine with it because i'm not a big player fair fair um when you see this it looks like it gets traded in other markets as well with all the gap up and gap down um that's something that i personally avoid especially in a bear market where like we're getting punished left and right for any mistakes that we make um so that's something that i try to avoid especially with the stock thinner traded um and then not the strongest group at the time but right well i say this you you made 3.6 on the trade
so yeah i got a little unlucky but i i yeah i'll explain it so i think during the time when it broke out yeah on that big balloon day if you can highlight the date 8-03 i think yeah nlc was kind of setting up getting close to highs which is what also what got me a little interested in looking more defense names i was thinking about the theme but that's not really what interested me i think the main thing was i wasn't afraid of the gaps because it was an uh 8.9 billion dollar company and the adr is only two percent which is something i look at um since it's lower adr i can usually lower adr and high market cap they're not going to be as volatile even if they're gapping around and i thought it was just a really nice dcp setup those two days right before the breakout was on pretty low volume which i was happy with so i bought it through there but and i i'll review the trade now so i have my stop loss i think below those two tight days like so it's one and a half percent stop but i did get some slippage when i bought it so but i bought it it progressed and i sold it on the eighth which is when it squatted and i sold it directly into strength i think at two times i tried to get it at two times risk but it wasn't two times risk because of slippage yeah but that that's what i was looking for i just wanted to get out because i just felt nervous about the market and that that's something i don't like i don't like trying to be subjective about when i should sell when i should sell which is why i'm here trying to see if you can give me more concrete rules to sell stuff yeah so i think i would have handled this relatively similar the so another thing that i want to caution you on and what i saw like reviewing your trading your entry points is you tend to buy a lot of things at either higher pivots or as they break into new highs and while we're in an unfavorable environment those like the pivots that everyone sees in the market are going to attract the most liquidity and in a strong market that liquidity will push those stocks higher but in a market where everyone's trying to reduce risk and and take um take liquidity out of the market basically the bigger players need those liquid areas to sell a larger portion of their positions um so that's why you usually see like a stock go through a pivot and then immediately reverse while we're in a bear market if it's breaking into new highs or like a very very clear pivot that everyone can see right okay that's why i've had the most success trading stocks like either oops reversals where we gap down below the previous day's low and then recapture that typically if i do that with a uh market leader around the 21 ema i found the most success there because then you're kind of getting an alternative entry where you're you're getting in and then people are chasing it up because it's starting to show relative strength and you still have that that tighter stop loss where if you're buying as it extends into a liquid area you just risk not now with like emph like that worked today right but you're just risking a little bit more uh that a big player is going to use that liquidity to to get out of the market that's why one of the sayings is you don't buy breakouts in a bear market just a couple things with this like the illiquidity the the gapping overnight i like what you you mentioned about the adr so the volatility isn't very high on this um but just one thing that you got to look for is kind of those liquidity zones and who's using liquidity are we using it to break it out or are we using it to sell off into uh next we have vrtx this we're going to highlight again no buying breakouts in a bear market but uh leading group biotech uh he bought this on 815 which i believe is this blue candle yes uh breaking out into new highs but you did buy it a little bit lower uh you're 298 297 50. so he wasn't buying the absolute high he's buying over this pink bars high i would assume 2297 76 so right around there um you want to walk us through this trade yeah so my thought process was this i've been watching this stock for months now and it finally looked like some sort of pullback buy to me it broke into the highs and then pulled back you know what's happening often and then i set up that one tight candle yeah it was like a good volume drive right and i was trying to bite through that i got a little bit of slippage again so but i get in and it you know it just peters out it doesn't do much so i got stopped out i had my stop at the low of 8-11 and i just got stopped out there nothing much to it yeah and i mean the initial pullback came on lighter volume too so there wasn't like uh like okay this this stock's going to completely fall apart it just hit your stop you respected risk uh and you got to respect that but again just buying into kind of these liquidity zones where people are looking at at all time highs or very clear pivots it's going to be tough to uh to do now i have done that a couple times during 2022 but i'm much more quickly selling a larger portion in his strength whether it be a third or a half the first one that comes to mind not that we want to cover my stocks but is th this is a potential market leader that twice in one week it got going and broke out but because it was one of the only stocks that was on everyone's radar they had a triple inside day going into this breakout i knew everyone was watching it so the second it went over my entry point i got in and then very quickly it was up four percent five percent and i just unloaded at least half as it was going up because the more people are watching the area that that you're getting in especially during a tough market where there's very very few number of setups the more volatility you're going to get in those kind of liquidity zones so um just one thing to to keep an eye on if you're trying to buy breakouts in the bear market is you can do it but i found more success like using that liquidity and using that breakout to sell a very large portion of it into right but yeah so 2.7 loss again you're not even thinking about this
if we're not covering it on the channel so i'm pretty happy about that trade actually because i held it through that you know usually i i get pretty nervous when i'm holding losses overnight i don't like it but i'm pretty i'm proud that i held it because i want to practice holding positions for longer so i'm actually happy with that trading yeah i mean so again i'm very quick to cut losses um and in a bear market i probably will if i'm at a loss when the market closes i'll usually take at least half of the position off and then if i need to put it on like on strength the next day then i'll do that but just really like i don't want to lose money in a bear market right right it's not about like flexing on people and being like oh i'm up eight percent this month in this bear market it's all about let's keep our mental capital let's keep our actual capital ready to roll once we get the the correct market to press in so we got two more stocks and two more trades that i want to cover oxy and lqda first we'll go with oxy here let's see you enter the stock 819 i think this is the same trade that i took too so yeah go ahead uh to talk us through this one i i'm just so i'm proud and sad about this straight at the same time because everyone was talking about this april got on twitter so i bought it and i sold half of it on the first day the same day i bought it i sold half of it into strength that day um i think it was almost i got out probably for seven and a half uh yeah i got i got out half for like no i got a seven half percent average gain on everything but the first day i sold half for like five percent but and then i held it i held it through that gap then i didn't sew anything under that or through there and then the next day it popped up again and i just sold it into i think it was 3r i tried to sell it into 3r and just took it right into that liquidity zone yeah yeah that too i was looking at that too there we go yeah and um so oxy for people tuning in oil and gas name that group has been strong this stock individually um i mean beautiful pivot set up but on this day the news came out that warren buffett was asking permission to get up to a 50 position size on it so um now charlie i don't think you have warren buffett's cell phone number i don't think he knew he was putting putting that out there but um what's interesting is that the news came out after it broke out that's what's interesting and i gotta say this is the perfect look sheet this is like perfect that volume it's just so perfect i gotta add this to my model books even though it failed i'll add it to my field setups yeah i mean and look how close we're getting especially on oil and gas names um and energy names i've noticed that the tighter you can get to that 21 ema on those and not buying extended pivots the better and we pull back on lighter than average volume we get that volume dry up we also get um volatility dry up like four or five trading days very very tight action but a good closing range the the previous day that sets up a nice low cheat right around what'd you get in at 60 630 awesome awesome entry point awesome setup um and then yeah you the next day i think this was actually is this over a weekend yeah it was so monday we gapped down but we hold pretty good daily range and then shoot higher the next day i actually sold everything like into the clothes this day because we were right near the previous resistance and it was kind of fine that it got going a little bit i thought if oil and gas can get going then i can find other kind of lower entry points around the 21 ema on other names that i've been watching i just don't want to be holding too much when we get to a new high into an area where i know sellers are going to be lurking and since then like you said like it went up a little bit more but nothing notable and then we've since crashed under the 8 under the 21 and now we're back to the 50-day and right back to that pivot but because you sold into strength uh you made seven and a half percent on the trade it was your your best uh trade on a percentage basis in in august or 2022 and i love what you said you got to print this setup out it's a model book setup and me and you we don't know warren buffett we don't know what he's going to do but a setup like this you roll the dice on because you can keep a tight stop loss under the 21 ema and then over 100 trades maybe 70 of them work out in your favor and that's a win rate that it doesn't matter if you're getting two two times your risk that's uh going to pay pay out over the long run so um i i would say this is your best trade uh just because uh well one it was your best trade alt was also kind of an a plus execution you like two percent win that's fine but a plus execution um but really nice trade on oxy and then last stock i wanted to cover was lqda this you took for a 6.7 percent loss we've talked before this this was a smaller position size but go ahead and walk me through this one yeah and i'm not proud of this one um so it from the lows on 7-19 i was looking at it it went up 160 in 25 days and i i really like to see that sort of power and then it goes into this 102 consolidation and i got to say the marcus smith charts make it look really ugly and not tight at all but yeah on my charts uh those little those two days those three days it got really tight with some good volume dry up and and i i bought again very small amount of shares it's just very small so i took it and the next day um it just completely flushed i mean i think it went down 20 to 5 minutes i mean this is this is a very liquid stock i agree with that but um i one thing about liquidity i actually i like a little bit less liquidity because it means it's less followed and the supply demand dynamics do sometimes work a little better but i think there's a cut-off point where it does actually just go bad but i'm not proud of this trade because it was too short it was kind of a power play kind of wasn't but the main thing is just it was just too short just too short yeah a couple things like on the power play when when leave talks about high type flags he says that you really want the pull so like from the bottom to the top not to have overhead resistance like a little bit's okay but the fact that this went from seven down to three now we're right back to a previous resistance area you probably size it down a little bit which you did i'm not i'm not calling you after that i'm just saying for the viewers um and then yeah uh because we have this very quick move down you have to use a hard stop or be glued to your computer and not be emotionally attached to like a position before you you take that but 6.7 loss you're gonna get that um and i guess one thing that i would caution um in bear markets less liquid stocks yes they can go up very fast but they can also go down very fast just like us people are trying to pull liquidity out of a bear market more times um so thinking back to probability more times they're going to be pulling out of uh in the liquid stock and when a big player tries to get out you see a 20 decline pretty quickly so yeah like you said not i i would say one of like your worst like seven grades i think it probably is a strong group which is like again i'll give you that that's a little bit of probability that we're adding to the trade it was tightening up um but thankfully this wasn't a 20 loss 6.7 percent
you're writing it down it might hurt a little bit but you didn't put large position size on it it doesn't barely hurt yeah it's like i think it's like 10 of a regular position size perfect all right we just covered kind of charlie's background the questions he had what he does well what he can work on and then the trades that he made in august overall charlie's doing an unbelievable job both in his own personal trading journey and surviving this bear market that we're seeing in 2022 so um although his his win rate was low his average loss on a loser was only 3.7 percent that's something that everyone can take away we want to really minimize losses um and if we can position size smaller on our our uh setups that aren't a plus setups uh that's going to help us out in the long run uh so charlie thank you so much for coming on this is the first trading audit that i've done uh if you guys are interested in conducting our own trading audit you can email me at stock tricks with nick gmail.com if you guys enjoyed market smith you want to give it a try yourself there's also a link to try that out you could do three weeks for 20 also using a link in the description below charlie thank you so much for coming on this was awesome you did a great job uh if you could go back to when you first started trading would you do anything differently or like what advice would you have for like anyone watching or your previous self no i don't i i wrote it down i don't think i change anything you know even though i took so much losses and when i actually realized those losses you know it hit my confidence a lot you know taking huge losses it makes you really feel like crap it's like what what am i doing wrong how can i be so bad to take so much losses but i wouldn't change it because i don't know about you but i have never heard any successful u.s investing champion any successful market wizard i don't i don't recall any of them not blowing up or losing a lot of money in the beginning it's it's like it's part of the process because if you don't lose a whole bunch of money in the beginning you're gonna lose a lot of in the future you need you need to have it ingrained in you so you respect risk you never you never let it get out of control you have to take it it's part of the game yeah and even if you lose 100 of your account when you first start trading it's going to be a lot less money than losing 100 of your account when you're 15 years into it uh so making those larger losses when we're younger when we have smaller account sizes um although it hurts it's it's definitely the the market tuition um is worth worth it there i think there was a ton of great information um in this trading audit definitely go back and watch it if you guys enjoyed the video please leave a like subscribe to the channel i make my own kind of breakout watch list every sunday go live on tuesday nights at 7 pm central and then other do other training related videos on thursday whether it be trading audits or just general trading videos so thank you guys so much for tuning in and i'll see you guys in the next video you
2022-09-13 19:14
