Daily Recap: Lessons Learned from a Challenging Trading Day

Today wasn’t my best day in the market, but it was a valuable one in terms of learning. My trades didn’t go as planned, and I ended the day with a small loss of $16.75, bringing my account balance down to $895.80. Despite the setback, I gained some important insights, especially regarding the importance of trading with a solid catalyst and knowing when to take profits. Let’s dive into the details of today’s trades.

First Trade: BURU

My first trade was on BURU, a stock that saw a rapid ramp-up without any news backing it. In hindsight, I should have avoided this trade. Without a strong catalyst, the likelihood of BURU returning to its high of the day was slim. I entered at $2.37 with a 10-cent stop loss at $2.27. Unfortunately, the stock quickly reversed, and I was stopped out at $2.26, resulting in a loss of $19.29. The lesson here is clear: trading stocks without news or a strong catalyst is risky, as they often fizzle out as the day progresses.

Second Trade: DGLY

My second trade was on DGLY, which had a slight gap up in the premarket and a new catalyst driving it. There was definitely potential in this stock, but I wasn’t able to fully capitalize on it. I entered the trade at $2.50 with a 7-cent stop loss at $2.43. I closely monitored the trade, hoping for a 2:1 risk-reward ratio. The stock came close but didn’t quite reach my target. I eventually moved my stop just above break-even and got stopped out at $2.51, netting a small gain of $2.45.

In retrospect, I could have taken profit at a 1:1 ratio instead of holding out for 2:1. Additionally, entering the trade earlier in the day would have offered a better risk-reward opportunity, potentially leading to a 3:1 profit. I’m still working on refining my strategy for when the price doesn’t hit my 2:1 target, particularly when to move up my stop loss or lock in profits earlier.

Overall Reflection

Today was a day of learning and growth. I made a couple of mistakes that I can correct moving forward. First, I need to ensure that when trading a stock that has declined during the day, there’s a strong new catalyst or sufficient volume to push the stock back up. Second, I’m still figuring out the best way to manage my profits. One idea I’m considering is moving my stop loss to the low of the previous 15-minute candle as the price moves up. I believe this strategy has potential and could help me lock in profits more effectively.

Despite today’s loss, I’m optimistic about the lessons I’ve learned and how they’ll help me improve my trading in the days to come.