Day Trading Struggles Q/A Webinar

What is going on, everyone? Welcome back to another video. In this video we are going to go over the questions that you guys posted on the trading struggle part on the online form. So just to kind of give you guys an overview, these are the questions I will be going over. So a lot of people in the community had certain trading struggles and I just wanted to address that one by one so we can move forward. Now just to kind of start these sessions off because this is session number one for our online form that you guys saw. We do have trading struggle number one and two, so I'm going to address both moving forward. If you guys have struggles or have questions, all of these will be posted in this section. So before asking question, I would highly recommend searching for your question if you do have, if there is a similar question, just so there's not, you know, repetitive things out there. So with that being said, let's get started. And I just kind of want to put out this disclaimer that this is just for educational purposes only, just so we're on the same page. That being said, let's get started. Right, so like I said, I'm gonna start with this and take it from there. And also down below we have timestamps if you wanna skip over to something. If you wanna go to something right off the bat, you can click on that timestamp and just, you know, skip certain parts or certain questions that you don't really care about just to go to your part. Right. So first question I have is from Henry. He basically said, recently I've noticed that catching a breakout or anticipating breakouts will be followed by a big pullback which has significantly affected my risk to reward ratio. As a big pullback hurts more than a successful breakout. If I exit with the big red candle after a false breakout, my premium usually gets hurt 20 to 30%. So sometimes I wait until the IV comes down. But there are also times it just keeps going, going down. What should be the execution after a certain flush? I've attached some examples here. I anticipated a breakout above pre market high and yesterday high and it was followed by a big pullback non stop. I exited after breaking down previous support levels. Also Airbnb today with an ascending triangle trying to break the 200 level, it suddenly flushed and I exited with a big loss. I'm not sure how to deal with this kind of situation. So great question. Now some of these examples I'm very familiar with, especially this Airbnb play. If you guys remember, in this SML community, I took this Airbnb Play very tight. Stop got in right there. So I'll kind of address this. Now. You guys have to keep something in mind. And I spoke about this over and over again. When you're trading options, right? Options and stocks become two different type of financial instruments when you're trading. So when you're trading either or, you kind of have to understand options. Options become a little bit more complex. There's more things that go into option trades. And you have to be very good at trading stocks before you can even carry over here. Because if I go and I trade a stock, let's say a stock, just to give you guys an example, let's say a stock is at $110. It starts rallying to 112 in like two minutes, right? Now, if I buy a stock at 112 and I put a stop loss at 110, I'm risking about $2 on a stock now in an option, right? Because of this quick move up, the IV could move up massively. The premiums can get very juiced up. We might have a very high VIX in the overall market, so that may juice up the overall premiums of that stock, right? So if you're trading call options, the risk to reward ratio may not be the same. Where if you get in at 112 and. And the stock pulls back even one point, your risk may be way more than average risk that you put out. So that's one thing you really got to get narrowed down. Now, I've spoke about this a lot, and I'll say it again. Before you guys jump into options, I highly recommend that you trade stocks. You get good at execution, you get good at finding names, you get good at actually following your plan before you jump into any sort of option trades. I know everyone jumps into options right off the bat, but you have to understand it's extremely, extremely risky. And I don't recommend anyone to jump into them up until you get good at reading price action. You get good at creating your plan. You actually follow your plan and you're able to execute at a high level. Up until then, options should not be touched, in my opinion. Right? That's number one. Now, going on to these questions right now. Some of these plays, like this play, I kind of know what happened. Same thing with this play. I'm familiar. I think one of them was Baidu, right? I don't know if you said it or it looks like Baidu's chart, but yeah. So basically these were this week. And this week, if you, if you remember, market conditions were Very choppy. We did not have momentum in the market, especially towards the upside. Market did not have direction. Now, as a trader, you need to understand when you trade certain setups, let's say break of pre market high or pre market low, a stock is not simply going to break a pre market high and just keep going higher, right? You need to have a lot of things outlined. You need to have market context. Market has to show momentum. Market has to show strength. Market cannot be in a choppy zone or a tough spot because if it is, it will be harder for that stock to actually make a strong move towards the upside. You also want to see, do we have strong relative volume? Is volume actually stronger than usual? If it's not, that play is not really going to continue. Now, a second thing that I know about some of these plays and I, and I'll talk about the Airbnb play after, is, you know, personally, for me, when I see plays that look very, very, very simple and straightforward, I'm not a fan of trading this. I'm more of a fan of trading. You see this breakout, you see a pullback, you see that the stock is holding this level, you identify, especially if you're a scalper. Let's just call this 110.4, right? In this situation, what I would identify is I would identify the bids are actually holding this. The bids are holding 110.4. Even if you go a little bit below 110.4, the bids step up aggressively and hold that level. The reason I would trade that is because as an option trader, my premiums here are not jacked up, right? My premiums are flat. And even if the stock takes a hit or breaks that key level, for me, I'm able to exit out of a tight stop and put out little risk. Now, what a lot of people do is they don't like taking these trades. They rather go for that break. Now, if trading was that simple, I'll say it again, everyone would make money. Those breaks are great. But now the problem with these breaks are if you get in premiums already jacked up, and because premiums already jacked up, if there is a pullback, your risk to reward ratio becomes massive and you can take a really, really big hit. So that's number one. Now, I really like the fact that you kind of identify where you got in, where you got out. That's very important, especially even if you go back as someone that's journaling. Second thing with this, this was a trade I actually took. I remember this airbnb I got out a little bit before it started dumping. I saw a huge wall. I think it was around 200, 201. There was a huge wall on the ask and it wasn't able to be taken out. So when I see something like that, I want to see how, you know, time and sales kicks in, how the tape is being printed. Are we seeing aggressive buyers? And every time we went up, a bigger wall on the ask kicked in. So I got out of this trade, and I wish I played the downside. I didn't. I wasn't able to flip quick enough, but that's what happened here. So you have scalper sometimes you have to be able to read that momentum as well. Now, same thing here. I think this. This play right here was okay, but like I said, it's hard for me to kind of give you an example because now it's. It depends on the stock. How does this stock move? It depends on the market context. Now, if you have a market that's very, very choppy that day, and by the look of this price action, you're seeing a lot of wicks. You're seeing a lot of, you know, crazy movement happening. I wouldn't be a fan of trading on a high of the day. You know what I mean? I would want to see more accumulation or more of a hold. And I would also want to see how the overall market is doing, especially if you are trading big names. Same thing with this. If you just look at your pattern that you're trading, you're looking at simple plays where it's like, oh, the stock is going up. I'm going to go, I'm going to trade the high of the day. You get trapped right away, you know. So with me, in situations like this, it's like you want to find plays that actually found a bottom or a base, especially if you're trading options, right? Because if you're trading options, you get in here and you get out there, your risk is way more than someone buying the stock here and selling the stock here, because they don't have to worry about IV and they have to worry about the premiums being juiced up and taking a big hit on the downside and the bids and the bids and the ask having a widespread. So this starts being like really big problems in situations like that. So you got to keep that clear. Once again, especially if you are trading options and you got to get, in my opinion, get a little bit better at taking good entries and also factoring in market conditions. And if you factor in this week we're in March 5th today, today's a Friday. If you factor in this week, you guys can see we had maybe two days where we had nice clean sell offs. Everything else, Monday, Tuesday, Wednesday, such, just messy, messy price action, you know, so that's got to be factored in. Next question from Zach. Hey, Umar, where do you find the stocks you're watching each day? Also, what would you say is a good percentage to cut losses on each trade to fall under the category of people who have lower win percentage but are still profitable scalping options? Okay, good question. Now number one, the first question from Zach. Where do I find the stocks? So if you guys are joining me in the daily charting sessions, I go over those stocks, what stocks I'm watching. And if you have noticed, a lot of the stocks I talk about are consistent. So I have a list of stocks that I keep consistent. I constantly keep watching. I understand the price action, talking about Apple, Amazon, Tesla and all these names that I'm heavily scalping options and day trading options on them. Then going into, let's say, names that have a lot of potential, a lot of momentum. I'm looking at names that have any sort of catalyst, right? For example, catalyst could be companies with earnings. So if a company has earnings, right, that to me is a company that has a catalyst, that a company could come out with a new deal, new agreement. That's a catalyst. Anything that can drive fuel to the underlying stock and that fuel could give us potential or give the stock potential to go up or go down. Right now a lot of eyes go on that stock. It could be something with a sector. If you remember the whole EV sector, boom, the marijuana sector, boom. You know, those sectors got a lot of hype around it and that was a good catalyst to start looking at those names. So that's number one, once you kind of get more in tune with the market, I mean, you're showing up every day, you're looking at what's going on. You're looking at pre market data, after hours data, and you're kind of picking up on hot names and weak names and rotation, which is what's happening now. You start getting a gist of some names and then your watch list creation or building becomes a lot better in my opinion. Right. But that's what I do. Like I said, I keep everything consistent on what I'm watching. And you'll see my watches kind of stays the same over and over again. I'm not doing pre market scans and looking for penny stocks. Some people have that Strategy that works for them. Great. That's not something I'm into. Now, what is a good percentage to cut losses on each trade to fall under the category of someone who has a lower win percentage. Now, I don't want to talk about percentages right there, but I do want to say, you know, obviously you want to keep the 2% rule on every trade on your overall account equity, you can increase this if you are doing well and you are able to manage risk better. But overall, you know, scalping options comes down to, okay, if I'm taking on a trade and I see a stock's going to break this level and it fails, I know based on the stock, I'm going to cut my losses here, right? So those levels need to set out. Once those levels are set out, the next thing that kicks in is how much capital you put in. Now, you have to understand, with options, risk management becomes a little bit different, right? For example, a lot of people trade one contract of, let's say, Amazon, right? Amazon. One contract of Amazon calls or puts might cost you 3K, right? Let's just say now the same person might say, hey, you know what? I've been doing well trading one contract of Amazon. I'm gonna go and I'm gonna trade two contracts of Amazon. I'm only jumping from one to two. Yeah, from a number perspective, you are jumping from one to two. But from a cash perspective, you're jumping from 3,000 to 6,000. Like you're jumping way too much. And your risk right there is up over 100% on options. So you got to keep this cash amount invested in mind, right? That's number one. Number two on the risk amount, it comes down to, let's say you're trading Apple. Each contract is $100 for one full contract. You know, your stop is let's say you're buying this contract for, I don't know, a dollar, right? If you're buying it for a dollar, your stop is hypothetically 10 cents below, you think it's going to make a 10 cent move down below based on where you're exiting at that point. Cool. You're losing $10 per contract. Now, if you buy 10 contracts and your trade doesn't hit, you're losing 100 bucks. Great. But now if you buy 20 contracts, you're immediately increasing it to 200 and so on. So now this comes down to your account size, how big your account is, how well you're trading, are you able to increase size or you're not able to increase size? Now if you're someone that's been trading options right off the go and you're doing a bad job and you're not doing well, you're unable to execute, you're unable to write out your positions, I would recommend go to stocks and then go back into options because stocks can really, really hurt you right.

Now. Next question from Loren. Something I've been struggling with is I'm finding that my win ratio is decent. 50%. Okay. But my losses are typically larger than winners. Now this is something I actually want to. Before I go on, I want to talk about guys win ratio, in my opinion, doesn't matter. I know people with the 30% win ratio that do very well and I know people would a 80% win ratio. And there's people in our community with both situations that don't make money, right? And the reason is this right here, this is where everything matters. Your risk reward ratio, how much risk are you putting out? And based on the risk you're putting out, how much return are you getting? That's the only thing that really kind of matters, right? Because you can be right, you know, 10 times and every time you write, you make $100. Great. You made $1,000. Phenomenal. But now that one time you're wrong, right? You lose 2,000 out of 11 trades. It took one trade to wipe out the full gains. So your win percentage, in my opinion does not matter. It goes down to, you know, how you manage your risk. We as traders are professional risk managers. That's our job. And we need to manage risk first before anything. It's not about being right, it's not about being wrong. It's about managing risk. Right? Okay. So I stay true to exiting at my mental stop loss placed at a location where my price action indicates that my hypothesis is wrong. Okay, that's good. I scalp options. Perhaps I'm not writing my winners out well and placing my stops too wide. Any advice is appreciated. If you can do me a favor, if you can give me an example, one or two examples of a trade that you've maybe taken with. You know, actually give me like four examples of where your stop was and where your gain was. And give me examples of two losers and two winners. Don't pick the best one. Just pick something on a random day. I just want to see it. I think the problem could be that the problem could be, you know, your loss may be too wide. And every time you see a little bit green, because you're seeing probably a bunch of red, that green is mentally messing you up and you're like, oh, I see green, I'm up 100 bucks, and you take it off the table. I went through that too myself, where there were times where I would have a week or two weeks or three weeks of just red. And every time I would see a little bit green, 100 bucks, a thousand bucks, I would take it off the table right off the bat. And that becomes more of a psychological thing. So that could be one thing. There is another component of that that relates to options, which I'm gonna talk about. But I just want to go into this part right here also. What's the best way to manage risk with scalping options, I typically trade options with the thin spread and high volume Apple, Spy, PLT, etc. My strategy is choose one or two out of the money premiums with the lower delta so my losses won't be huge if it goes against me. And the gains will increase due to Gamma if it moves in my favor. Is there anything wrong or should I keep in mind with the strategy, how can I better manage risk? Okay, I wanted to go into this so I can answer this question better. So I think also with this situation, what's happening? And once again, I could be wrong. That's why I kind of want to see your trades. And I'm bringing this up because I noticed with another member in our community, they had a similar problem where they had about an 80% win ratio, but they were losing money scalping over and over again. And the reason for that was, and this is something you should look into, you have to understand when you trade options on Monday, Tuesday, Wednesday, and I'm making an assumption that you're playing weekly expirations, right? You're playing weekly expirations. So the risk amount as you get closer and closer to Friday, becomes larger. With options, the risk amount also gets larger as I.V. increases, right? So, for example, you might have a 50% win ratio or 60% win ratio. You do great. On Monday, you take two trades. On Monday you're green, you take two trades. On Tuesday, you're green, you take 2 trades. On Wednesday, you're one green, one red, right? Thursday comes, you take 2 trades, you're wrong on both of the trades. And then maybe Friday you take one trade and you're wrong. So your win ratio is 50, 50. But because there's elevated risk when you trade options, you have to understand, on a Monday, let's say you buy a stock at 110, you buy call options at 110, and the stock goes to 109. Right? And you pay, I don't know, let's say you pay $300 for a contract, a call contract, okay? Remember, a call contract is when you make money when a stock goes up. You guys should know that by now. If not, you should not be trading. Now in this situation, when the stock goes down on a Monday from 110 to 109, because you have four more days until the contract expires, your premium may go from 300 to, let's say 280. I'm just throwing random numbers. You go to Tuesday, it may go from 300 to 270. You go to Wednesday, it may go from 300 to 260.

You go Thursday because it's theta. Thursday, it may go from 300 to 220. And then you go on Friday, it may go from 300 to 190 on the same move down or even lower than 190. Now do you see where this is going? That's a big component. Like, I'm pretty sure so many people can relate to this. And if you just go into your trades, I promise, if you just dive into your trades and you kind of look at, okay, I'm noticing I'm making money Mondays, I'm making money Tuesdays, I have a 50% win ratio. My losses are bigger than my gains. But where are my losses coming? Oh, they're coming Thursdays and Fridays. Okay, that's not a good thing. You know, that's why I'm taking a big hit. Now, a few things I would recommend is if that's the case, like I said, I don't know, I could be completely wrong, but I'm just going off an assumption. If that's the case, I would highly recommend, when you're trading on Thursdays or Fridays, don't play weekly expirations. Go the next week out. That's number one. Right? Especially if you're going out of the money. Because if you play Friday out of the money and a stock makes a one point move down your option premiums are really taking a massive hit. Right? You have to be really, really right. So that comes to now selecting days, being selective of what days you're going to trade and also being selective on when you're going to trade if IVs high or not. Like recently with this whole market dump and increased, VIX IV has picked up on a lot of names. VIX has picked up, making premiums more expensive. So the same move that paid you a certain percentage requires a bigger move, you know, so those things have to be really understood, especially when you're trading options, because the risk component of options changes on each day, on each week, on each moment of a trade because of implied volatility and how VIX can increase and market conditions can change. So you as a trader have to be able to adjust to that quickly. Which is why if you notice, sometimes I go from stocks to options a lot. And if some people are unable to go to stocks because of being under the PD2 rule or whatever the case is, I understand. Don't trade that day. There's no need to go on a Friday and say, you know, I'm going to trade zero dt. I typically suck because trading the same day expiration can be very, very profitable. However, if you're not on the money with that play, you can lose a lot too. Right? And remember, we're not here to gamble. We're here to manage risk. So manage as much as risk as you possibly can and smart with that. Right. Another question. Does it make sense to have the option premiums chart up to look at even though we're trading based on the price action of the underlying? I mean, if you want. That's up to you. I don't, I don't see a, a point of looking at the option premiums chart because option premium chart could show you a beautiful chart pattern, but that doesn't isn't going to rely on the underlying. It can be printing very well on the tape but, but you know what happens in the underlying stock, that's what's ultimately going to move the option premium. So I don't really care about the chart. The reason I have my level 2 open for any sort of option plays is just to see where the bid and ask is just to see how wide the spread is for execution purposes. That's it. It's not to kind of dictate where the stock is going to go, where the premiums are going to go. Right.

Last question. Could you explain what is exactly is meant by having an edge? Maybe some examples would helpful. Yeah, sure. So I'll talk about a few plays, right? So let's just say we talk about. Let me just open up this chart real quick. Let's go right here. All right, so what we'll talk about here, we'll talk about having quote unquote, an edge. Now you have to understand when you have an edge or you have anything in the market, you're going to get a lot of different sets of movement each and every single day. Right? So let's say we start with, with Today, right? You go into today and I'm just gonna break down something super simple. I'm gonna take this off and give you an example of like just having an edge. And this goes back to a few trades that I took today, right. And I'll, I'll post if you guys look in the trade recaps by the time you're watching this video. I posted my recap. Now edge could be something like this, right? You see the market opens, right? We're looking at spy, we're looking at Tesla and you know SPY and Tesla very heavily corre also looking at the 10 year yields, especially today or this week or the past two weeks is heavily important because they are dictating the move of the overall market. Looking at the 10 year yields today, two 10 year yields were going up. Seeing Tesla open right on the drop, right on the open hold.618, seeing a weaker market, right? And now you start going to times, you start seeing, we see we got a weaker market right here, we're at 617 right in the open. You see a weak market right now with Tesla. That edge could come from looking at underlying conditions in the market. Looking at that 620 area, which is a huge wall going into 610, which is another huge scalping area. So when you see that weakness kick in to let's say this area right here on the underlying stock of Tesla, right at 633, you see a little bit weakness kick in, you see that strength kick in and then that weakness is unable to hold. You go right into the market too. You look into the market, you're looking at around similar time, you're seeing 634, 633, you're seeing weakness nonstop even 633, 634 pushing down, making a new low, seeing weakness in the market. The add in the market was weak, tick started falling down. 10 year yields were holding. Vix was going up. So you're seeing a pretty tough market and we know that the tech sector has been taking a hit. So that's where rotation kicks in and it's like okay with everything kind of dumping a name like Tesla would take a major hit. So getting puts same day, right? That could be, that could be having some sort of edge, right? Some people look at simple price action or you can look at overall market conditions. Now going into my SPX play that I took a few days ago, I'll kind of break that down just to give you everything from an edge component, right? So let's just Say I'll go on a five minute just so I can go into, into more days. This was the day, right? So looking at SPX, what happened this day, as you guys remember, around 30, 38, 60, we saw a quick bounce in 3866. I took an entry around here. Then I added here. The reason I added here and the reason I took the entry here is because the market was heavily focused on the 10 year yields. And I saw them increasingly picking up alongside with vix. And right away when I see market conditions don't align. A lot of times a market, from what I've noticed, create fast moves up to allow people to exit or you know, trap people in. And then right after that big money follows the underlying thing, whatever it's focused on. And right now it's the 10 year yields. So that's where my SPX trade came in. Now there are certain situations where, you know, you may have an edge as a midday play or you may have something, let's say you go into Lyft, right? I spoke about this on the weekly webinar as well. I think it was Wednesday when VIX started, not lift, started moving. We had the level around 60s. We broke 60s. We took the high at 61,26061s out. Right. Seeing that with strong momentum and the market also picking up this day. Even if you go into Spy on the third, right, Let me just kind of adjust this for a second. If you go to Spy on the third as well, right, let's just go to third and look at that time period. Let me just go on a five minute. I'm sorry.

Right.

Now, right here you can even see on the third, right? You come into 730, you come into 720. You see that this name the market dumped and the market started stabilizing. So it's now looking at relative strength. What names are dropping because of the market, what names actually held and even going into names that held. If you guys remember ba, right, it was the same thing. Now the edge that came in from BA was going into the third. Seeing that ba, right, was holding up pretty strong around this time, right? The whole time the market was dumping. Market bottoms out. We go into 7:25am Pacific time, market bottoms out. BA is holding. BA showing a lot of relative strength. So we realized that, okay, if the market gets one bounce or the market stabilizes, BA could possibly start pushing because we are seeing extreme strength in ba and you can see right when you know the market makes its first bounce up you see, BA starts getting traction because it held through that huge move down. So you're seeing a lot of relative strength. So it comes down to identifying, you know, what you're looking at. And my biggest thing is when you're trading, you want to look at the overall market. You don't want to just go and trade primarily off, oh, it made a high of the lower, it made a low of the day. Yeah, but you know, if trading was that simple, everyone would make money. It's also looking at market internals, understanding is the market strong? Is this a real move? Am I seeing strong prints like this? You know, there's so many components that go into it and they have to be put together. And that's going into, you know, starting from. From phase one, right? What, what are you even trading? Are you trading stocks? Are you trading options? Are you going to scalp? Are you going to day trade? What time frames are you going to use? If you're going to trade off the one or five minute, very hectic. But, you know, you got to get into the tape. You got to be able to read strength. You got to be able to find very strong plays, get in, get out, make the money, walk out, cut your losses. Like, there's so many components that go into the full piece of finding that edge. Because every trading style is gonna have a different strategy, and that strategy is gonna require a different edge. And also, depending on your personality, some people I know can't scalp. You know, they have a very hard time scalping. Not because, you know scalping is bad or not. It's just some people are unable to execute at a high level and make very fast choices in a short period of time. Some people can do that right off the bat. So it also comes down, in my opinion, a little bit to you right next. So last week, I blew up my account every day in February. Prior to this day, I was green and up nearly 100% on my account since December. Okay. I woke up with the lack of motivation. I knew I wasn't having a good day. But I traded anyways. I got into Roku puts near 400 on 224 21, looking for the break of 400 to move down to 380. Okay, I was wrong. And instead of cutting my losses short, I added more. I had no self discipline. I held overnight. Then the next morning, 225, I sold Roku puts and forced to trade on Nvidia. I bought calls when they were one, overpriced due to IV2, jacked up due to the initial price move that morning. I then held those calls hoping that they would rebound after Thursday MasterCard. But they never did at this point. The puts I sold on Roku for 1.12 Thursday morning were now at 10.2. These impulsive actions caused me to blow up my account. From not accepting I'm wrong and cutting losses short and adding more to prove my idea was right, I blew up my whole account. The thing that bothers me the most is that I found my edge and what it takes to be consistent. But one bad day with a bad mindset and poor risk management took it all away. Anyone who has blown up an account in the past and has some input, it would be greatly appreciated. If not learn from my mistakes. After a big loss, take a step back for a few days, weeks so you don't go numb to losses like I did. Alright.

Alright. So this has happened to a ton of people. You're not the only one. That's the first thing I want to say, Michael. Right. You're not the first one that's happened to. It's happened to a ton of people, including me in the past. I remember, I think five or six or seven years ago, I don't remember how long ago, but I've done this plenty of times, right. I would go into a trade, let's just say I had a 20k account, whatever the case is, I would properly position size into a 5K. That position would go against me. I would say oh, it can't go against me. I'm going to add more. I put five more. Since I'm so into it, I would start going on a tilt. And for anyone that doesn't know what a tilt is, I would highly recommend that you look it up. I'm pretty sure everyone that has traded and is even watching this has been on a tilt. That's basically when you're trading and you just lose self control and all of those, your discipline and everything and you just start getting super reckless. And it happens a lot to gamblers and that's kind of how, how they, you know, burn themselves. But it carries on to trading a lot too, right? I've been on until even now there's days I completely go on a tilt but it's like how do you deal with it, right? Like I remember I think in December or was it November? I don't know when, but a few months ago I went on a complete tilt one day and you know, my P L that day, thank God, wasn't, wasn't crazy but there was A time I was down like 15k, then I was up 2k and then I was down 5k, then I was down 17k, and then that same day up 7k and then closed the day like 8 or 9k red, something like that, right? And that was a whole tilt. There's other times where, you know, I would get into a position, I would mess up and I would keep going on a tilt. And if you guys remember my SOS trade, which I had a good entry I was up on, I added more, I took a hit. I didn't, you know, kind of manage the trade well. And once it went down to six, there was a part of me that was like, add more, add more, add more. And I, and I know, you know, mentally it's like I'm going, going on a tilt and I know when I'm going on a tilt, immediately cut up, cut out my positions, be cash and get out. So I cut my positions, I went cash and I said, you know what, maybe I could get in and you know, I can make some money on it or I can lose a ton more. I don't want to lose more. I'm a risk manager. Everyone as a trader should be a risk manager. I'm going to cut my positions loose, I'm going to sit on my hands and I'm going to re. Allow myself to re engage and kind of refocus the right way and then get back in. Right? So that's something I would recommend doing. So now this is a perfect example of zero risk management, in my opinion. Right? Becoming super reckless. And this is a good example, right? And I'm not trying to use you as an example, but it's a good example for other traders to see that haven't really tried to understand this concept that without managing risk, one trade could really wipe you out, especially if you're trading options. Like, I can't stress that enough. If you're trading options, it's so easy for you to, you know, go into trades and keep adding and then blow your whole account. That's why if you're trading options, two things. If you're having this issue over and over again, please take a step away from trading options. Like I'm, like I'm trying to save you money. Don't touch options. Like it's very deadly at that point. Go back to stocks, manage your risk, get good at execution. And then once you do that and you start trading options with this, never go your full account in. If you have a 5k account, let's just Say, and you go in with options with 1000. And I don't think you should go in heavy. Even if. Let's just say you get super reckless and you're like, oh, my God, I'm gonna hold this until expiration. Okay, you lose 20%. Terrible, terrible. But I'd rather use 20% than adding more, building this potential position to 1k, 2k, 3k, 4k, 5k, 6k, or whatever the amount you can, and then lose all of it, which is what happened here. Now, a few good things about this is the fact that you were able to double your account in a month or two. Another good thing is you traded, you know, in February and everything February prior to this day was green. So in February was a tough month. So the fact that you traded well in February showcases you can trade. What happened is you just woke up on a bad day and you messed up. And this is where I talk about, you know, sleep. You know, sleep is very important. Now, if you sleep two hours or three hours, some people don't understand. Your focus goes down, your motivation and discipline go down. All these things start going down, and it becomes harder to stay disciplined. So if you ever wake up on the wrong side of the bed and you feel very, very down and you're like, I can't trade, or I feel tired, or I feel foggy, trust me, it is 10 times better for you to miss that trading day than to go in front of your trading computer and put out some trades. Because if you put out some bad trades, trading options, you could really hurt yourself. Now, how would I come back from this? Like I said, I would personally go back to each one of my trades, analyze them, the good ones and the bad ones. See what I can do. Maybe, I'm not saying this is the case. Maybe you got. You've been getting. Getting lucky. I don't think so. If you. If you. If you've been doing it for two months, three months straight, I don't think it's luck. I know some people traded for a week, triple their account, and then I'm like, hey, I think that's a little bit of a luck. And then they blow it. I don't think it's luck. Only because, you know, you've been doing it since December, January, February, three months, consistently growing your account, which is phenomenal. I think, like I said, one bad trade, adding more to that trade messed you up. Make certain rules, no matter what trade I'm in, I will never add more. Right? Because that whole concept of adding more, I think is people don't understand. Well, it's great. Add more. Phenomenal. Add as much as you want. But adding more is for long term. On good companies. You buy Apple at let's say $140, Apple dips down to 90. If you're a long term investor and you have cash and you know Apple's here, you'll buy more at 90, it goes to 70, you'll buy more at 70, you're going long. But now if you're trading, my thing is, if you're trading and you're buying something at $3 or $30 and your stop is at 27 and the stock goes to 27, don't say I'm going to buy more at 27. Because what happens is now you're mentally and financially more invested into that play and that play is probably not working out. So those rules have to apply. And like I said to come back, just reset. Go through your trades, create these rules that you really need to follow, print them out, put them in front of you and just, you know, understand. If ever going to tilt again, walk away. And if I ever build a position, never add more to my day trading position, especially when it is going against me. I don't care if everyone in the world tells me this stock is eventually going to go up or this option play is going to pay. If you're in a play, follow your plan and never add more. Especially when it goes against you. Right Next. Hey Umar, when it comes down to choosing our family of stocks to trade on a small account, 4 to 5k, what are your thoughts on going out of the money with more expensive options such as Amazon, Tesla, as long as there's high volume and open interest versus going at the money in the money on stocks that have way less expensive premiums. Look at the scalp weekly expirations. By the way, if you're scalping, the stock sometimes really has to make a move in that direction for your premiums to start moving. Keep that in mind. And you know, if you're scalping and the stock really makes a move against your premium, your premium could take a bigger hit. That's, that's something I would keep in mind. Now if you're scalping, I think at the money in the money would, would pay more and they would also, you know, move a lot better in my opinion. But looking at high volume and open interest when you are trading options, even if you pick in the money, at the money in the money, out of the money is very important because that's going to show you where is where. Where there's liquidity. Right. And you want to go after liquidity, especially trading options now, yes, in some situations that may work, but I think selecting out of the money options, you now have to be selective on what days you're going to trade Amazon, what days you're going to trade Tesla, because you won't be able to trade or touch them every day, in my opinion. Because if you trade out of the money, you know, options on Amazon on a day Amazon's flat or it's not showing momentum, you could really take a big hit because your premium is going to start decaying at that point. Like you're going to start taking a hit even if a stock is going in your direction slowly. You know what I mean? So the days you do have momentum in the market, there's a strong move up or strong move down. Yeah, you can play, you know, out of the money options just, you know, because of your account size, but you have to be more selective, in my opinion, on when to pick those and when not to pick those. Right.

Next question by Steve. And then we have two more questions and I will end it there. Steve. I've been having trouble reading the tape and reading strength behind breakouts. When scalping options, I often get caught in false breakouts. I enter too early or and get caught in a pullback or I miss moves entirely because I'm unsure of the strength behind it. And by the time it moves, I don't want to chase. So I sit out. Any help on how to overcome this would be greatly appreciated. First thing to do to read the tape or, you know, analyze your trading performance or behavior. I would go through your trades, right? No, before going through your trades, I would start recording my screen. When you start recording the screen, start looking at the tape, then understand the basic fundamentals. I don't know if you went through the part in the course where we cover the tape and we're making more videos on that. I actually have the videos. I just got to upload them on the new course that I promised you guys. That's going to be structured, but that's going to cover more and more. And there's more videos of me taking on trades this week, in the last week that I have to upload as well. That kind of showcase a live example of tape. Right now, besides tape. The second thing is that I kind of want to touch on is looking at volume, looking at overall strength. You want to see that the relative volume arval. Right. Is what you'll see on a Lot of platforms is at least 1.5 plus on some name. What that means is that the relative volume for that stock at that exact moment is a lot higher than usual. So if a stock's R Vol is even 1, 1.5 is okay. But you know, if you really get 2 or 2 plus, I think that's phenomenal. If you get that going on a stock and it starts making a move, you see market is holding or market strong, that stock can really start picking up. Now if you see arvol is under 1.5 and it starts going towards a nice area and you see the market's flat, there's a high chances of fake outs or high chances of inconsistency in the moves. Right? So those are two things I would really focus on. But go back to trades. Look at the trades you've taken and understand that see, hey, was, was volume at that point higher than usual? How is the market doing? And then also screen record your trades, say okay, what, what did I see? What can I learn from? And that's after getting the fundamentals of reading tape reading level 2 identify. Sometimes we get a bid flush. The bid gets flushed very hard. Being able to read that and pick up, that isn't going to take a day or two. It's going to take a lot of screen time and being able to pick up sorted components and adjust to that. Right.

Next. Hey Umar. My second account is coming to an end. Been trading options every day for almost two years. I meet, I meet up every single day and I can't find my zone. I do not hesitate to execute a trade. Can't find momentum. Do you think I should take a long break? Because I know if I come back later from a break, I will still repeat the same mistake and blow my account again. I have journaled my trade on and off because I've hit, because of the hit. I've been taking over time in my account. I'm total down 10k in two years. Okay, Harris, I messaged you. Do me a favor like I told you, send me your trades. Send me a trade log. I want to upload it in tradezilla and, and some trades that you've taken. When you do send them to me, send me your game plan on them. Send me a thesis and I'm gonna post them somewhere here. And I want to kind of dive into this because I spoke about this before. A lot of traders I know have been going at it for years or months and whatever and they don't really see progress and sometimes they're not seeing progress because I think they're not applying things. Not that they don't know. Right. So I know some traders that know what to do, but the moment they get in front of a computer screen and they're ready to execute, everything they know kind of goes out the window or they're all over the place or they have an underlying objective or agenda and it just kind of messes with them. So Harris, do me a favor, like I said, send me that. And by the way, did you also, did you, I don't know if you completed everything in the program, you went through everything. Also, if you, if you have the game plan, if you have an edge or you know what your edge is or you trade a certain style or not. Like these are questions I need to know. Like I messaged you, so let me know. And you know, I kind of want to put that data into Tradezilla and see what we can come up with. Maybe we come up with something interesting. Maybe if we do, it could also have to a lot to do with just readjusting your approach and strategy. Right, last question. I hate Umar. My struggle is to execute. I have a plan. I build discipline in every aspect possible. But when it comes to execution, I hesitate. Despite some A plus setups, what would you recommend to really detach from being afraid to be wrong. Okay, last line in the question. Very interesting. Right. I think that's very important. That has a lot to do in my opinion. Ego, because I, I went through that too. But I want to talk about different components of this question and I'm going very deep in questions because I really want, I'm going very deep in my answers because I really want to cover, cover the answer in a way where it can answer multiple people that are watching. Right. So executing on trading is very hard. And I've even tweeted about this and posted about this. Anyone can draw up a chart and say, you know, if this does X, Y and Z, this is a place to buy. If it does this, this is a place to sell or short. Not hard. Anyone can do that. The hard part of trading is, you know, number one, obviously analyzing something is great. I don't think that's hard. I think everyone can do that with time and practice and everything. You get to that phase. The hard part is actually executing and adjusting to the market and bringing yourself to that point to say I'm going to execute on this because it makes sense and responding in high pressuring environments. Right now this happens to everybody. I don't even traders that have been trading for 20 years. They don't execute like I had this week. I had two or three good trade setups that really aligned that I didn't execute to my full capacity. And what happens is just to give you guys a little walkthrough, what happens is when you go through that or when I go through that, you know, afterwards it's like, oh man, if I just did this, I could have made 10 grand, I could have made 15 grand, I could have made X amount. And it's like, okay, now what? Right? In the past, I would be like, oh, I missed this trade opportunity. I wish I executed. Then my confidence goes up because I knew I called it out. And then when the next trade kicks in, I execute on that and I take on more size and I lose money on that. That's why when that does happen, first thing is you gotta let go. Like, like this is just overall advice. Like, if you go into a trade, you make money, you lose money, whatever you do, forget about it. I don't care how good you did on the trade, I don't care how bad you did on the trade. Take what you can learn from it, but everything beyond that, forget about it. For example, you take, let's say, basketball players, right? Like good basketball players. Let's say you take Kobe Bryant, right? Rest in peace to Kobe Bryant. But let's say you take Kobe Bryant. And he's even said this a million times. If he's going and he's taking shots and he's like, oh, for 20, he's going to keep going and taking a shot. But if he keeps thinking, oh, I'm 0 for 20, the next shot he's going to take is going to mess up, right? He's not going to make that shot. There's a lot of instances if for people that are basketball fans, he's been 0 for 20 or 0 for 15, and then it's time for the game winning shot. He takes the game winning shot and he makes it. And a lot of people would say, well, why would you take the game winning shot? You were 0 for 15 or 0 for 20. And how did he make it? He was like missing everything. Yeah, that's because when he took the shot, he's not thinking about this, but if he was thinking about this, boom, he would mess up, right? So that comes the same component comes to trading, right? If, let's say in basketball you make 20 out of 20 shots, it's very easy for you to say, I'm so good, I hate everything. And then you don't follow your routine. You don't follow the way you shoot. You don't think of a shot, the same possible way you shoot over five guys guarding you, whatever the case may be. And now you miss a shot, right? And that's when you get ahead of yourself. So in trading, whenever you take a shot, whenever you take a trade, you gotta let go. You gotta let go of that trade. You gotta let go no matter if you made. I don't care if you made $100 million of trade, because there's people that made 60k off a trade, and in the next 10 trades, they give it all back because they got on their high horses. After 60k, there's people that lost 1k on a trade or 20k on a trade, and the next few trades, they made it all back, right? So the trade you take now, number one, let it go. So I don't know if that's a problem you're having, Vincent, but if that's the case, let every trade you go. You take a trade tomorrow. Cool, I made a 500. I made 5,000. Next trade, I'm not even going to think I made 5,000. Not even think I lost 5,000. Whatever. Obviously, stay in your risk limitations. But now, going on to stage two, after you, forget about that. Take the lessons. Now. You have to understand from this component of, you know, being wrong, because I dealt with this personally for a very long time. I had a very hard time honestly disconnecting from being wrong. It wasn't even about making money. It was about, oh, damn, I can't be wrong. I need to add more. I need to be right. I tweeted about it or I posted on Instagram or I told my friends or I don't want to look wrong. Let me tell you something. In trading, it's not about being wrong. It's about how you manage the times you're wrong and how you manage the times you're right. In simple terms, that's what it comes down to, right? And this goes back to what I said in the beginning. I know people that have a 40% or a 30% win ratio and they're super profitable. And I know people that have an 80 to 90% win ratio. They're right eight to nine times out of their hundred trades and they're still losing money, right? So that goes to show you that it's not about being right or wrong. It's about having a system following that system, in my opinion. And once you follow that system, you consistently execute that trading system. Within the market context, within the market conditions, whenever those setups make sense. And I spoke about this in the last video I posted. If you guys have not checked that out. So it's very, very important to keep these core components together. Now. You are going to have days where you don't execute and you mess up. That's normal. I've had days like that. And. But like I said, it's about forgetting that and moving on and not saying, I didn't execute. I need to execute on the next trade because I know execution is a big thing. And then it also comes down to maybe your size is too much. You're putting out way too much size and that size is affecting you psychologically and you're afraid to lose that money. Or maybe the money you're trading with is not money you can afford to lose. That's another problem that people have and they mess up in trading. So it comes down to that. Maybe, you know, go down to your risk aspect. Okay, I maybe put 20k, maybe I put 2k. Maybe you need that 20k in three months for college or you need it for something. If that's the case, you're always going to have execution problems because you're going to be afraid to losing money and afraid to being wrong. Or it could have a lot to do with, you know, the risk you're putting out on each trade is way too much for you, which is okay. For some people losing $100, like, oh, my God. To other people, this is like, okay, I'll test the waters. You know, vice versa. For some people losing $1,000, oh my God. But in some accounts, in some situations, a thousand dollars is like, okay, let me test the waters with this and feel out the market. So it depends on you. But don't try to replicate what someone else is doing. Oh, man, he or she's risking 2,000. I need to risk 2,000 to do what he or she's doing. No, no, no, no. Do what works for you. Do what's alongside your plan. Do what's alongside your account size, your risk tolerance and all those things. Right? So take that from there. And like I said, if you're having a hard time, size down and that's that. All right, so I'm gonna end it there. I know I have a second.

Trading struggle 2. Trading struggle 1. I mean, I'm gonna make a separate video because this video right now ended up being about an hour long. So I don't want to make a two hour long video. So I will update that on another video, and I will answer everyone else's questions. If you didn't post your questions, guys, I am going to make another one that's going to be called Trading struggle number three. You guys can post that. I will try to do this. Depending on how many questions, you know, we get on the. On the forum on a weekly basis, I'll probably do it once a week or, you know, once every two weeks. I just want to see how many questions we get. And then we're gonna upload everything here. So if you guys do have questions, these are gonna be timestamped. Just search for those questions. If you see something similar, watch it. If it's not answered, just kind of say like, hey, I saw the video, and, you know, I wanted to go a little bit deeper. This is my situation. And for the people that I asked to send me their stuff, send me their trades. Loren, you being one of them.

And Harris, Harris, I already messaged you. Let me know. And even on the next one, if you guys want to go deeper and you have deeper questions or deeper problems as a trader, let me know and we'll take it from there. With that being said, thank you for tuning in on the video. I will see you guys next time. I hope this was super, super helpful.