What’s up guys! Madaz here, coming at you guys with another information-packed blog post where I will discuss 2018, the lessons I learned, and how I plan on improving on myself to become a better trader in 2019.
2018 was a great year is so many ways. It was overall a pretty good year in terms of profits as I finished up +$319,111.31! But also it was a year of lots of lessons and most important it was the year that birthed the gamechanging #NoBlowUpChallenge. Let’s break down the entire year, both the ups and the downs from the rocky start in the red all the way to the blue sky breakout strong finish!
2018 Highlights: The Good, the Bad, the Ugly…
Let’s start with the good stuff, the positives! The biggest wins this year came from the plays where Madaz does what Madaz does best, nailing them washout longs, baby! RKDA on 3/15 and LFIN on 4/6 offered some epic washout longs and I took full advantage.
Both were textbook Madaz washout longs on classic multiday runner stocks where shorts were clearly in pain as the stock keep making higher highs ripping on both swing/overnight shorts and new intraday shorts causing the resultant squeeze. You can check out the live trading videos with thorough explanations and thought processes from start to finish from those days below!
RKDA Halt/Resume Washout Long – 3/15/18
LFIN Halt/Resume Washout Long – 4/6/18
So you guys know me, I’m always about the silver lining in things. In the past few years, I’ve learned to focus more and more on the positives and cut out on all the negatives in life, taking up things like meditation to help clear my mind and maintain a calm and cool demeanor, something that is critical for trading. I’ve always felt that it’s the way we handle adversities that truly determine our character especially when it comes to trading. Do we just simply let our failures get to us and then just mentally crumble and deteriorate or do we extract the lessons and come back twice as strong? I choose the latter.
Let’s dive into the first big draw down of the year, which occurred only 4 days into the year on 1/4/18. Now I had a great start to the year opening with a #FiveFigureClub invitation for +$13,578 on the first trading of 2018, 1/2/18, and I followed that up with a solid +$6,707 day the day after. So after only 2 days into the year, I was off to an absolute dream start up +$20,285! What could go wrong, right? Well if you watched my video on winner’s tilt/overconfidence bias, you would know that a lot can go wrong, and I fell victim to this very trap.
Having come off an epic finish to 2017 because of the blockchain mania where I finished October to December up over $300,000 AND starting 2018 up over $20,000 had my head in the clouds. I felt invincible. I quickly found out that especially in trading, this is exactly when we are most vulnerable or susceptible to a big loss, when we think we’re too big to fail (just ask the Lehman Brothers).
The date was 1/4/18, the ticker: CNET. Front side shorting blunder at it’s finest. Then on 1/5/18, revenge washout long with ridiculous size at it’s finest. This stock alone took me for more than -$94,000 in just the two days, dwarfing my epic $20,000 green start by nearly a factor of 5 to 1. Not stopping out, repeatedly adding to a loser to size so large that slippage probably added an additional five figures or more to the loss was absolutely disturbing.
I would eventually recover from this and get my YTD P/L from the depths of hell from -$20,000 to nearly $200,000 in May but then…
Don’t BLNK because you might wanna HEAR this. More front side shorting and being stubborn led to an even bigger loss than the ones on CNET. This time it was even worse as it took place in May. As the old wall street adage goes, “sell in May and go away.” This meant that after taking this big hit, I would have very little opportunity to recover these losses in a timely manner as volume decreased substantially and so did the quality of the plays available.
Those close to me know how much of a mental challenge it was for me to endure the next 4 months or so trying to chip away at -$133,000 in losses, sometimes only a few hundred dollars each day. Believe me, words can’t describe how excruciatingly painful it is. Remember in the movie, The Shawshank Redemption (one of the best movies of all time, if you guys haven’t seen it, you must be living in a cave or you were born in the year 2000!), where the guy basically digs his way out of jail over the course of like 20 years using a rock or whatever. Yeah this is what that felt like. But THANKFULLY, like the movie, The Shawshawk Redemption, my story here has a similar happy ending. Keeping reading to find out more! (whoaaa… cliffhanger!)
BLNK was a brutal one. I got caught front side shorting this one with size, then on the next day I went long as the thing broke out of highs but then got stuck in that infinite dump with no bounce with major revenge size. Again, oversizing got me again. A prime example of why revenge trading never works. The front side shorting loss of -$77,449 on BLNK was my worst loss of all of 2018. Follow that up with another pretty painful loss of -$44,500 on the infinite dump long, then you got yourself a pretty shitty couple of days.
HEAR was similar to BLNK day one. I was still in a compromised mindset trying to recoup losses on BLNK and of course got caught shorting frontside yet again this time believing that the stock was a day 2, low hanging fruit scenario, I kept adding until the thing ripped to more and more highs and subsequently this led to another terrible day I’d like to forget.
The Silver Lining
Enough was enough at this point. Two massive draw downs of over six figure each and the fact that these were pretty costly mental lapses and had I averted disaster my P/L could have been double what it ended up being by year’s end.
I took a few weeks and studied and looked at my losses, desperately trying to find any patterns, any commonalities to help prevent this again the future because I was a at a point where I simply could not deal with another big loss. A loss that took out several months worth of work was acceptable and most definitely not healthy for both my account and my mindset. The result of all is what we all know now as the #NoBlowUpChallenge, which you can read all about here. The #NoBlowUpChallenge was something I should have done a long time ago. It sounds so silly because it really is what it sounds like. Don’t freakin’ blow up. But the ideology behind it was something I never really developed any substance behind. Okay, don’t take a big loss, but how do we go about not taking a big loss. This was something I never really sat down and thorough developed some hard guidelines for. Things like discipline and self-control now all have hard, concrete rules and definitions for.
So far since the inception of the #NoBlowUpChallenge, things have been very smooth and I’m very happy with the way things have gone. There have been almost no major draw downs since then, finishing the year on a +$267,830.31 run. My discipline and self-restraint are at all time highs and as a result so was my YTD P/L.
I won’t rehash material in this blog post about the #NoBlowUpChallenge and turn this blog into a full on novel so I highly suggest any of you guys that hasn’t read the blog post about the #NoBlowUpChallenge to do so.
2019 and Beyond
I wrote this blog as a note to myself to remind me of my experiences in 2018, both good and bad. Also, I wrote this to share with you guys so hopefully you can extract any lessons from my trading so you can guys improve and become better traders yourselves.
I’m very excited to start the first full year of the #NoBlowUpChallenge and see if there’s still any tweaking left needed to really make it totally solid. I’m sure there will be at some point but I’m very stoked to see how it stands the test of time and any challenges that come my way will be welcome.
Those big losses I took in 2018 were not fun. However, again, I want to look at the positives, the silver lining from these mistakes. I became a better trader, a better person, a stronger person out of it. The last seven months of perseverance validated my ability to come back time and time again and going into 2019, I fully intend to build on this and become stronger than ever with the goal of having the biggest year of my career.
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Affiliate Disclosure: I know what you're thinking. Madaz, ya sneaky bastard, trying to sneak in some affiliate links. Any compensation I may receive from this will pay for big macs on days where the market isn't feeling so charitable. For a more complete version of this mumbo jumbo, please click here.