Hi Alex, thanks for these blog entries and for the interview. Can you write more about passing from swing trading to your current style? This is something I’ve recently realized myself. I mean the retail trading world is all for following the trend and looks down on anything that’s short-term and discretionary. what made you realize swing trading hitting home runs wasn’t for you? What made you change your mind to the way you trade now? Any difficult moments?
First off thanks for the awesome question – that’s what is going to fuel this blog. I read something once that said traders typically take on the system they first found success. So if you hit your first big homerun on the short side you typically focus on shorting and if it’s a swing then you focus on swing trading. While that might not be the case for everyone it sure was for me. Because I was working full time when I started trading I knew of nothing else other than researching stocks at night, placing trades in the morning, and just letting them work for a few days til I somehow decided it was time to sell. And well… it worked. It worked so well that after not many trades I was able to hit a few big home runs and made the leap to go full time.
When I transitioned into fulltime I had absolutely zero intention of day trading. I was just going to pick amazing stocks time after time, sit back, and count my money as they ran 100%. As you know, that plan didn’t quite work out AT ALL. I was picking loser after loser and watching my account slowly dwindle. I got in the terrible habit of holding losing stocks overnight just because I was a swing trader and that’s what I thought I was supposed to do. Within a few weeks I couldn’t sleep at night and all I would do after the market closed was look at my losing positions trying to figure out how I was going to get out of them. Every once and a while I’d have a big win and start the cycle all over again.
It was either in The Daily Trading Coach (book in the resource section) or another similar to it where the author says something like “figure out what causes you the most pain in your trading and stop doing it”. For me it was clear. I was holding losing trades overnight and it was wrecking my mindset. Even holding winning trades overnight was difficult for me because I feared the worst lurking around every corner. Something wild happened when I stopped holding positions over night. I could come to the market with a clear head each day and make decisions based on what was happening right in that very moment. I wasn’t letting losses snowball because I knew at the end of the day I had to be out so it was either, deal with them now or right before the bell rang. Were there times that I could have gotten the big gap up the next day to save me on a loser or multiply a winner – sure. Many times I was heartbroken thinking of the coulda, woulda, shouldas of holding a few overnight, but I started sleeping like a baby again and learning ways that I could trade with my emotions totally in control. For me, that way just so happened to be small cap intraday trading.
So I challenge you to answer the same question I did a few years ago. Find some quiet time and think hard about where you keep taking steps back in your trading and make a plan.
Keep grinding traders
**I don’t want anyone to think that I am saying swing trading or holding positions overnight is bad – I’m actually looking to bring it back into the mix later this year or next year. Just wasn’t right for me at the time and thought it was a great question to be shared.