Monday, October 10, 2016

Secret Trading Leak: Your Winning Trades Will Crush You

What if I told you that your wins are your biggest trading problem?

That's right, wins are what hold average traders from moving past break even to profitability. Most traders focus on their losses, completely ignoring the real problem.

The hardest trading leaks to identify and correct are the one that masquerade as wins.

You see that 65% win rate and feel good about yourself, then wonder why you are not crushing it. So you review your past 100 trades and analyze every single loss in search of that trading leak that you'll correct, magically turning you into the second coming of Jesse Livermore.

Unfortunately that's not how it works, even though that's what just about everybody does (no wonder 95% of traders fail).

So you want to trade Jesse Livermore?

Then fix your wins.

Every losing or break even trader I've ever worked with made a fatal flaw: he or she did not know how to win. That 65% win rate is deceptive. It often means you are either micro-managing your positions by cutting your wins off early, or you are winning less than you risk, creating a negative reward to risk.

Now go back and analyze every single win and ask yourself these three questions:

1. Did I stick to my initial plan (assuming you had one)?
2. Are my wins bigger than my losses?
3. Did I exit at the right time?

If the answer to these questions is "no", then you've got some work to do.

You must figure out how to win big, even if that means lowering your win rate. Remember, winning traders care about profitability, not win rate.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at

Wednesday, August 10, 2016

The Shocking Way That Winning Trades Blow Up Trading Accounts

You may have just crushed it with your biggest winning trade of the year, but you still do not know how to trade.

That rush your feeling means it was a bad trade.  Good trades are not exciting. If this trade was your biggest win of the year, you probably committed a cardinal trading sin.

A few big wins doesn't make you a big elephant
Common big win trading mistakes (and their mental trigger) include:
  1. Taking on too much risk (greed).
  2. Gambling by holding through earnings (FOMO-fear).
  3. Traded too big for your account size (greed).
  4. Piggybacking somebody else's trade without understanding the trade (fear and greed). 
There are many more trading leaks but these are the ones I see my students make over and over again.

There's a pattern at work here that ultimately leads you to blow up your account. Trust me I know because I have done it twice (see my story and listen to there interviews here and here).

The patterns goes a little something like this.

Fledgling trader (actually I also see way too many seasoned pros do this too) gets an idea from a member of the twitterati. Her rules allow here to risk up to 1 percent of her account, but this trade looks too good and she envisions the big gain. She uses all of her 25K account for this one trade and ends up risking 10%.

Earnings are three days away and again she imagines blow out earnings. While her rules tell her to get out of the trade before earnings, she fears missing out and gambles the entire position.

The trade worked and her account is now at 33K. She does this 10 more times and after a wild ride she's doubled up to 50K.

You think you are the shit. Best damn trader this side of Wall Street.

Thoughts of quitting your job fill your head. The two week notice is ready and your playlist has "take this job and shove it" on loop.

As any degenerate gambler knows, eventually your luck will run out.

You WILL blow up your account.

You do not know how to trade.

Before that happens get your stuff together and learn.

I'm here to help.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at

Sunday, July 31, 2016

Market Speculator Weekend Review

Me, Myself and BullsonWallStreet
While the market consolidated for the 12th straight day by week's end, I took profits in 3 swing trade positions (LABU, AMBA, EXAS) and entered EXAS, FCX and UGLD. That's active for such a tight ranging week. Holdovers ERX and TWLO continue to churn. See Full Results (2016 +45%)

Over on the BOW blog, a review of the $LABU trade and the $4800 Gold trade.

Enlightening article in the Huffington Post about BOW and Kunal's development as a trader, "Entourage" lifestyle, hard work and our mentoring/trading relationship.

Day trades
Very active intraday trading week, as earnings season gives us plenty of gapper opportunities. My favorite trade was this $FCX pre-market trade.

The one handed concert pianist will make you feel like you aren't doing enough!

I could have watched John Oliver and Jerry Seinfeld talk and make comedy for hours.

As Ichiro approached his milestone 3,000th hit, ESPN's feature highlights his pursuit of mastery though habits and routine that easily apply to trading.

I expect a market breakout or breakdown this week, and have potential trades for either eventuality.

I am teaching two bootcamp classes at BOW this week. If you are a member, don't miss it. Last bootcamp was a big hit.

Expect more posts on BOW's blog and don't forget to sign up for the Free Weekly Swing Report.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at

Friday, July 08, 2016

How to trade the news with this top secret foolproof plan

Looking back, Brexit was a big deal. Definitely the biggest deal since the banks collapsed in 2008. Think about it. The 5th largest economy in the world left the European Union. What the heck is Google, Amazon and Netflix going to do now?

The stock market guru's over on CNBC told us to pull our money out of the market right now. It's going to be financial armageddon.

Now that it is two weeks after Brexit let's take score of just how far we have tanked.

The S&P 500 is down a whopping . . .er . . .what . . .wait a minute. This can't be right. TC2000 tells me the market closed higher than it's pre-Brexit level. This must be a malfunction in the software. Let's head on over to and get the right data. Nope, not working either. Let's head on over to . . . .

Ten more sites confirm that the market closed higher than it's pre-Brexit levels.

The sky is not falling.

This does not make sense. I read all the headlines, attended global economic seminar and a book on the European Union. This news was supposed to make the market tank!

Where did I go wrong, and what is the lesson from all this?

Okay, here it is (I am giving this to you for FREE).

A foolproof plan to effectively trade the news.

Wait for it . . .

Follow the price action to the news, and not the media/pundit overreaction to it.

If you are trading without an edge, let me know how I can help you. We'll talk about the BOW Swing Service(up 30%+ in a tough 2016 market) and free educational posts and videos, personal one-on-one mentoring or just shoot the breeze and get you pointed in the right direction.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at

Wednesday, July 06, 2016

The 7 Words You Must Tell Yourself Every Morning

I was once a gambler, but now a trader.

I once blew up a 200k account within a matter of weeks. Up until that point, I thought I was a trader. I opened up a trading account during the last stages of the roaring 90s internet boom. For a while things were great. So great that I almost left graduate school at 23 and did move into a high rise penthouse apartment foolishly thinking that after a few months I had made it as a trader.

Morning rituals are said to lead to success. Here was mine:

I'd get up 10 minutes before the market open. Maybe brush my teeth but definitely turn on CNBC. Grab a napkin or whatever else there was to write on and jot down whatever stocks they were talking about. That was the day's trading list and I'd jump in and out of stocks from these "well researched" lists. Depending on my gut feel, sometimes I'd be out in a few minutes, sometimes a few weeks.

Rule number one in my foolproof plan was to always hold when a stock tanked, because stocks always bounce back quickly no matter what! It wasn't until a little bit later that I'd find out this rule only applied in the wacky internet boom.

Some days I'd lose a little, some days a lot. Other days I would make insane percentage gains. At the time I didn't realize doubling up the trading stack in one week was not normal. In just a few months the minuscule 5K stake had turned to $200,000 and I was living large.

Until I wasn't.

In a few weeks it was all gone, along with my dreams. My dad, who has taught me more life lessons that I can count (like when he hit the 9 year old me with a baseball), told me something I'll never forget.

Go to a casino son because you are not investing, you are gambling.

There is a fine line between investing, trading and gambling. Investors search for value. Traders search for momentum. Gamblers hope to get lucky and search for the next fix.

I was once a gambler.

Over fifteen years later, my morning ritual has changed. I now get up at 4:30 am sharp. I meditate, exercise, read and listen to a little sports talk radio before I get my work day started. Once I am ready to start my research before the trading day begins, I say the following 7 words:

Trading without a strategic edge is gambling.

This sentence has become part of my morning ritual. A habit. It has kept me from making god knows how many bad trades.

Now the fix is not the trade, but the search for the edge before the trade. I no longer allow the emotions of a degenerate, namely fear and greed, to guide me. No more micro-managing and fear-of-missing-out. All because of 7 simple words.

If you are trading without an edge, let me know how I can help you. We'll talk about the BOW Swing Service (up 30%+ in a tough 2016 market) and free educational posts and videos, personal one-on-one mentoring or just shoot the breeze and get you pointed in the right direction.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at

Tuesday, June 21, 2016

How most traders trade without an edge and don't even know it

There are two mistakes most traders make when building a basket of trading setups.

1. They trade setups without and edge.
2. They trade the setup in the wrong market.

Your trading "edge" gives you a reliable idea of how much you can expect to win with your setup over time. A well tested setup gives you a a predictable probability rate.

This seems counter to my article titled "the fallacy of backtesting".

It is not.

While I find backtesting in the way most do it a waste of time, it is not because the past is not reliable. It is because most do not backtest correctly.

Most backtests plug in the parameters of the setup and test over a given period of time. This type of unrigorious testing is worthless.

To properly test a setup you must account for how a setup reacts to different markets.

A common trading cliche is that 70 percent of a stock's move is related to the market and it's sector.

If  gold is getting crushed odds are so will the gold related stock you are trading, regardless of the setup.

I wouldn't touch a breakdown short setup in a ramping market.

So you decide to test breakdown setups going back 7 years. I'm willing to bet your stats for this setup will be horrible, considering the market has gone up over that time frame. You'll think the setup is worthless and discard it.

However, now test for that setup when the market is below it's 50 day moving average and you might have something.

Never forget how important the market and sector is to the stock you are trading. As a swing trader, you are not just trading stocks and setups. You must be in tune to the market and sector you are trading.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at

Friday, June 03, 2016

Smart traders profit from the wisdom and delusions of the crowd

Crowds can be wise, but also manic and delusional. An astute trader learns to differentiate between these two extremes.

When there is diversity of opinion, the crowd is a force. The parts think independently, but private judgements combine to join as one powerfully wise collective.

Unfortunately this intellectual juggernaught will not last forever.

At some point diversity gives way to homogeny. Diverse thinkers conform to the will of the group. The smartest person takes the lead, which leads to less variance of opinion and acquisition of knowledge. The group no longer leads, but follows with irrational cognition as crowd psychology takes over the group.

The group is now set up for "popular delusions" and "madness of crowds".

Bubbles form that inevitably pop.

We have seen this play out for centuries. What startsas wise investing turns into a mania. Examples are too numerous to list, but here are a few:

  • 1700s Tulip Mania: at one point tulips were more valuable than gold
  • 1700s South Sea and Mississippi Company Bubbles: These companies were with more than 80 times all of the gold and silver in France.
  • 1927 Florida Housing Bubble: A 2 bedroom condo in 1926 cost as much as a large luxury home in Miami today (4.5 million *without* adjusting for inflation)
  • 2002 DotCome Crash: Nasdaq lost 78 percent of it's value in 18 months.
  • 2009 Housing Bubble and Credit Crisis: Credit and housing mania leads to 50 percent loss in the market in 18 months.
In all of these instances, what started as smart, logical and prudent investing trends gave way to the insanity of the crowd.

Your job as a trader is to identify when wise crowd logic gives way to delusion.

If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up at