Pete trades a small cap stock (DO NOT READ THIS POST)
Hello reader, why are you here? The title says DO NOT READ THIS POST. Hit your back button now. This is meant to be a private post. I give you zero permission to see what goes on in my mind when I decide to trade small cap stocks. I promise you there's nothing to learn. If I find out anybody is referencing this post in any social media vehicle--I don't give a fuck if it's a spam URL in a Chinese dating app 10,000 miles away--I'm quitting the internet permanently and deleting every trace of my writing. Don't you fucking dare re-post this. Turn back now. Final warning.
Anyway. I've been small-cap sober for many months now, up until last week when I decided to trade some oil-driven small caps--specifically RBNE and USEG. There isn't a lot to say about them but I thought I did well with them to make $2500 total, on the short side. RBNE I lost a tiny amount but I did things that made sense, whether they worked or not. Just small ball trading, no big deal. Or so I thought.
So then today, I thought okay... I'll try my luck trading this SRM. Maybe. I mean, I didn't have any real take on it pre-market, it was just something to read and react to for small size. I'm just trying to see what I can get going, as a trader who's struggling to stay plugged in.
I had the right idea. I let it show me that the opening break attempts were going to fail and then when it went under $5, that was my signal to short any kind of bounce maybe a 1 point stop maximum (probably lower most of the time). It should be a high probability trade and I just want to close it out before noon. So it bounces to $6 and I'm short 5.75 avg. Then within the next 30 minutes, it goes to 4.30. There's almost zero time spent in drawdown. Good play Pete.
Except it didn't go to 4.07. That was my price to get flat and wash my hands of the trade. I wasn't married to it. So I've only covered 1/3rd on the bid. I got a quick move. It doesn't quite reach where I need it to go. I didn't think $4 was that unreasonable, I thought there was a good chance I'd watch it on my phone hours later at $3. Ultimately, nobody ever knows what is the bottom.
Here is where the trade becomes Pete's calamity.
BTW, do you want to how I define a Pete's Calamity? It's when the trade warps beyond the initial approach/idea/execution and becomes a different monster. Usually driven by emotion. I'll try to give a loose example of one property of making a trade a calamity. If my core position on the clean part of the trade is 3000-4000 shares and then it's grinding back up with a WTF bounce and I'm up to 10000 shares trying to trade around a core... and my PnL on the red side is expanding in magnitude further than its range when it was green/easy/clean... that's a calamity brewing.
So SRM goes back to $5. I'm re-shorting and I'm only trying to scalp the range. I do this all the time on large caps and I rarely get punished. It's just something I do. I try to short 4.97 and cover 4.77--shit like that. I notice it the tape just keeps fucking around and not letting me have the bid by pennies every time. That's a sign of internal strength. Meanwhile, I'm still of the notion that, even if big picture this makes a new high, strength won't play out in a straight V-shape from $4.30. I should get some relief dips, right?
Welp, I did not. V-shape max pain bounce, that's almost exactly what happened. It went from 4.30 to 6.40 in a bee-line with no "lower high" made and I got absolutely fucked. Turned a $4k winner into a $7k loss. I actually kept trying to bid out.... 5.30... 5.50.... 5.80.... just praying for a dip that makes the loss a little forgiving. Then I fatfingered a stop and got out at 6.27. Then it went to 5.50 right after that. That shit pisses me off because if I just waited a few minutes, I'd have got my bids hit and I'd been even on the day (I was up 2k on some other small trades). I know, it's fucking meaningless but in the heat of the moment, it feels like the difference between mentally "winning" or "losing" the day and feel satisfied by 4pm. Puking the 1min tick highs without that actually making the new high above the morning range is kinda terrible. That being said, it's clear that I turned the trade into a calamity and now it's time to eject, right? Whatever, being down 5k shouldn't phase someone who's plenty of capable of making 50-100k in a day on the right setup. Just LET IT GO, Pete.
Well, that's what makes it a calamity. It keeps going. I keep it going. I don't know why. I think I feel offended or violated by having a bad exit on what feels like a low probability v-rip (can I show my work and back up this statement with data? no.) It's not necesarily being wrong on the total trade idea. I don't give a shit about this SRM in the long-run. I just wanted to win the day so I keep the dance going.
SRM for the next hour? or so, seemingly tries to break above $6 a million times but it cannot hold. I make an idiotic attempt to re-short about 2/3rds my max size at 5.80s and hold a position for some kind of range resolution to the downside. My goal is to cover that washout and maybe break even on the day. I'm thinking maybe these false moves over $6 can give me a stopout of the longs before it actually does breakout... yeah, that's a terrible trade thesis. I audibly say to myself multiple times...
This is not a short. This is AWFUL trading.
I should not being doing this. I'm just trying to maybe get lucky.
You're gonna be the biggest dipshit ever when you 2x your loss.
Why do I ever trade small caps when they put me on such massive tilt and have me stuck in calamities over and over??? I never feel in control over what will happen.
I stop out over 6.20 when the range tightens and resolves to the upside. I'm down 11k. Stupid as fuck. Holy fuck I'm an idiot. Another calamity to remind me why I retired from trading small caps. I made a lot of money shorting small caps in 2020-2021 trading, I never gave back my profits, it slowed down and my habits got worse, and I quit before it became something worse.
Here's the thing about these calamities. I sit in this negative emotion for like... hours. Sometimes I even battle these stocks multiple days, trying to win some imaginary battle in my head. So much of it starts from this small feeling of being "wronged" by an algo for 5-10 cents. I keep thinking I deserve a certain move and I earned it with good trading, and something ridiculous happens, and I let it become a -50k loss monster that wipes out the last ten carefully traded +5k gains. I do this madazian type mini-martingaling trying to fix shit and bail myself out and it's bullshit. I know all that and it haunts me. The calamities are so prolonged, with so many small individual mistakes, and mindset errors... and I don't know how on earth I could possibly untangle it all. I wish it was just one simple mistake like "oops, should've just got out on reclaim of $5, easy peasy!" It's so many things.
And at some point, there was this critical point of no return where I went to that emotional battle ground TOO MANY TIMES to the point where I got jaded and I decided I'm never going to work hard again. Because fuck trading. Fuck it all. I'm never going to try to figure any of this out. I'm never going to review my work and review my mistakes and try to do better. The pain and stress is just at such a high boiling point, the only thing that ever made sense was to shut off my computer, put it behind me, and try to decompress. And then that answer evolved into just flat out quitting--don't trade small caps ever again. I don't want to put any energy into trying to figure them out. I think there's a theoretical answer out there but I no longer have the energy to chase it. All I had was the ability to do the same shit again and hope it works out and as a hyper-rational person, I understood that I was basically indulging in madness at that point. So I stopped. Too many calamities, all the time. 25 year old, 30 year old Pete could battle through it. All those days trading depressed and pissed off, he could do it, make 100k, flip the mood upside down. Then suddenly, I couldn't handle it anymore. 2023 was shit. Good PnL, which can be a short-term band aid for my mood, wasn't propping me up anymore. Calamities every day. Felt like I was actively choosing unhappiness. I would look outside my window thinking about the distance to the ground.
Anyway, that's my little rant. BTW, did the calamity end there? No.
At $7, I have quick thought that drives me to action without any deliberation, like a reflex.
$7 gets $8 easily on this
and like that, I got long 10,000 shares. Within like 126 seconds, I sold almost everything to make $4000. Didn't even give it a chance to go to $8 and help me break even. Then it goes to $8. LOL. I'm such a loser. I entertain thoughts that I could long small cap breakouts one day. It makes more sense. It's less stressful.
The only issue is procedural memory. I pike out my best buys too often. When I flip bias during a calamity, I have shit results and I'm too aware of that. So too many mental factors work against me and although I think I theoretically have the ability to eventually work it out, I don't actually do that in reality--again, it's the jadedness/bitterness/fatigue at play, long-term. If I can come to a conviction point prior market open on a breakout play, I can make plenty of money--like I did on the CRWV trade. Real-time decision making on a whim is a different story--I don't trust myself anymore.
I scalp it a couple more times on the long side. Pretty sure it's going to $10 but I'm a chickenshit. I make $6500 overall. All-in-all, I'm just down 3k today. In the context of making over $30k last week, that's not really that bad. It just feels bad because deep down inside, I know I put myself in that bad place again--the place where I vowed I'd never go back.
I can't fucking believe I'm bullshitting around small caps again, WTF?!?!
BTW, believe it or not, I'm not actually writing all this to vent my angst... I currently don't feel that bad. If I did, I wouldn't have the energy to write and you'd catch me at the bar stress-eating burgers and doom-scrolling my phone. I'm actually writing all this to document that last part. Buying SRM. There's something there I think. I know I can get long on these plays and catch those easy 3 points. I'm close. It has to come from a better place. Just a matter of if I want to do it or not. Maybe, maybe not, maybe go fuck yourself if you're reading this.