I Lost 5K in the Past Two Days Trading 1 NQ

How it happened, and what I'm going to do about it

Please note: this isn’t a cry for help or a sob story. I’m not at all asking for your condolences, nor do I expect them. I’m asking instead for you to listen to my story. I hope you can learn something!

Let’s get started by talking about what professional trading is, and most definitely isn’t! Yay!

Exhibit A:

Exhibit B:

This was Monday and Tuesday respectively. Real money. Money that’s gone. Money I don’t have anymore. This article is a story of success, pain, rage, and everything in between. All I can hope is that this story can help you as a trader, and hope that it is somehow part of my path to becoming a profitable trader. Hint: it’s not all bad news! Let’s get started to where this part of my trading career began…

Coaching with Retail Capital

In August, I had an opportunity which to me seemed like a dream - a coaching hour with Retail Capital!

I’ve looked up to Retail for quite some time, amazed at his scalping technique on MNQ / NQ, which he’s now refined and become even more impressive, in my opinion. I also highly recommend his Substack, The Statistical Edge - he really includes a huge variety of topics - trading stories (the good and the bad) as well as the psychological side of trading, to the statistical and coding side of trading.

He also showed me that all trades, no matter how simple or complex, ultimately fall into two buckets: trend continuation, or trend reversal. He recommended also that I get away from all trading rooms, recommendations, or really anything trading related. What I remember most is that he said I need to find “what speaks to me”, and that trading is already hard enough as it is, so you as a trader want to build a system that is the most simple but at the same time least frustrating to you as a trader. He also told me my systems and decisions must come from me and me alone. This point was ultimately the huge game changer for me. More on that later on.

Also hearing encouragement from him on certain points of my trading style was super motivating to me, who still feels like a complete noob. And I can’t help but feel that I’ve let him down the past few days…

Passing Apex for the First Time

After my coaching with Retail, my trading confidence swelled to new levels when I reached an astouding 23 day win streak for the end of August and all of September up to that point - something I’ve never even come close to in acheived in my trading career. I really felt like a market wizard. Part of this win streak was passing my Apex 50K account: acheiving 3K in profits in just 7 days without hitting 2.5K of drawdown. I really felt like I could do anything. I gladly payed the $160 lifetime fee for the account, thinking “this will be the last time I’ll have to go through these annoying Apex challenges!”

3 days into trading the performance account, I blew the account, trading the morning of FOMC, using a super tight stop in extreme chop:

Looking at this makes me sick… I mean, this isn’t trading. At all. I even caught a $100 scalp on that first 5 minute candle and was up $500 total on the day… Hint: easiest trade here was a 2:1 short below the open level. Would have payed almost immediately.

The lesson I learned here was setting a stop too tight is actually poor risk management; it’s in fact NOT protecting your capital, it’s giving it to the market. Lessons learned the hard way…

After blowing my Apex account, I didn’t even take a day off! I began trading my real account the very next day (last Thursday), with these two trades:

The first one a stop out papercut for -15p (-$300), and then finally the short that stuck: a really nice IB low break for 50.75p ($1015!). 35p booked, or $700! I felt: “wow, I really can do this! That Apex blowout was just a fluke!”

Then, on Friday, I traded the simulator account quite lucratively, where we had a normal extreme day I filled with shorts and longs all around. Those trades looked like this (noted still struggled in the morning with a huge drawdown, not good trading):

with P/L:

That’s when the spiral started: Screw Apex, screw their trailing drawdown rules and boring challenges, I’m going to trade my own account, and make everything back and MORE in just the next few days!

If warning bells are going off in your head, you’re a better trader than I. Regardless, I decided I was finally a master trader and I would start trading 1 NQ in earnest on Monday….

On Monday, I was up over $1000 on a short during that heavy break in the EU session, but watched the V shaped recovery hit my breakeven stop. “No problem, a breakeven is nothing to the gains I am used to!” I said, then began trading in the chop, trying anything to get that $1000 “back”. Here, I instead lost $1000 - exactly the opposite of what I was trying to do. In RTH I did catch a nice OR breakout, but this was stopped back to breakeven on a bottom tick wick in B period. (This later would have anyway been stopped much convincingly in C period). After that incredibly frustrating wick stop out, I was trading every move up or down, just trying to catch something, not trading my system at all. Within minutes, I hit my max defined stop of 3K and got locked out of my account.

Then yesterday (Tuesday): I had a great short in London premarket, and then flipped long on yet another V shaped recovery. Before I knew it I was up $1200 before RTH even started! Sounds great, right? That’s when I realized, I was trading on my sim account the whole morning! First frustration of the day - and if you’re a trader, you know these hiccups stick around for quite a while in your subconcious. On the real account, I did catch a nice 15p long still.

I realized in the simulation account, with trades I just “tried”, and left and forgot about because I was so over focused and micromanaging my live account, I fared infinitely better, so much so that the gains in that account would have erased the losses on my real account…

Really, I mean what type of trader has this P/L in their real account:

And this P/L on their sim account, ON THE SAME DAY:

What Needs to Be Fixed

There’s a silver lining to all this: by now, I’ve identified my main weaknesses:

• Removing profit targets and going for a “big break” / thinking I know way more than the market, or am “smarter” than the market

On every single one of my recent NQ trades, as soon as the trade started going in my direction (when I started getting up to $700, $800 in profit), I would either slide my profit target further and further away to non-realistic goals, or remove my proft target entirely, and start looking at the 4 hour or even daily for new and wonderful (read: day dream) targets. But markets, especially NQ, rarely move in one direction for durations longer than even a half hour, and I don’t even have the skillset currently to know how to swing trade! Imagine a 50p winner, i.e. 1K, just falling back to 0. That’s what I’ve been doing. This is a stupid amount of money to make in a single day, and I was throwing these opportunities away, watching my profit fall back to breakeven. I’d forgotten one of the most import addages of trading:

The goal of trading is not to be right. It is to make money.

I need to sit patiently for either my stop or my profit target to be hit, and then wait for the next setup. Repeat forever.

On to my second major problem:

• Overtrading in general, but overtrading in chop especially

This one is the most expensive for me. In chop, or otherwise undecided price action, (also in very slow price action) I start getting extremely emotional, shouting at the market, thinking I am “just trying to figure out what the market is trying to do”. Really, that’s exactly the time I should be stepping back and waiting until it is clear! Or better yet, set the trade and walk away. It can sometimes take hours, especially in the overnight session, for a 50 point move to occur, and staring at a non moving screen is extremely frustrating.

Losing this 5K finally got it through my stupid head: my best trades (and my best trading days) are when I’m looking at the 30 minute chart casually, and just saying immediately, with no hesitation: “oh, that’s a long”, or “oh, thats a short”, putting on the trade, and coming back an hour later to (often) see that my profit target was met. Note that there is also a third case: looking at the 30 minute chart, and seeing that there is no trade! Granted, the ability to “casually look at the 30 minute chart” and decide whether long, short, or no trade, has taken months of heavy study of hundreds of RTH sessions, and remember, you want a trade that has +50%. If you can find those with a 2:1 R:R, that’s all you need to be profitable over time. Don’t overly complicate something that is already psychologically extremely challenging.

Other Tidbits and Takeaways

• Both a stop loss AND a take profit orders are there for you to book both loss and profit respectively.

Setting a stop too tight is like giving your money away to the market; likewise moving a profit target to unrealistic levels is like giving away YOUR free money BACK to the market. I recommend a simple 2:1 ratio in a range makes sense for your market combined with the time frame you like using.

• Remove all social media and distractions.

I’ve overly guilty of this as I really feel at home and like the great vibes of many traders on Twitter. Plus, I’m working and trading alone the majority of the day so it’s kind of a social crutch for me to go there. However, what I can say is that my 23 day streak was only a result of deleting all telegram groups, stopped reading all of it, as a part of Retail’s advice, and it helped me immensenly.

Trader Therapy & Rehab

I realized these past few days I am overdoing it. My personality is like this; when I get into something, I really get into something. But recently, it’s been too much: I’m at my screen from 8:00AM all the way until 10:00PM (I live in CET timezone), with a small break for lunch around noon and sport in the evening. I think I’ve forgotten why I started this journey all along, and from experience I know that’s never a good sign.

It’s time for some therapy and rehab, so I’m going to take up SPX0DTE’s 100 trade challenge:

Here are my own rules which I’m applying to the challenge:

• 1 MNQ

• 25p:50p risk:reward - this means my risk or “R” is $50, my reward, i.e. profit target is $100

• 4 trades allowed per day: EU / London premarket or morning, EU / London afternoon, RTH OR breakout / morning, RTH afternoon (G period or later)*

• Each rulebreak incurrs 30 minutes of cardio or weight training, and rulebreaks will be logged

*Small update here: I think its fair, that if a trade hits 2R still within a given period of the day, I am allowed to look for another setup, and take that trade if the RRR is there. This could lead to 5-6 trades per day.

There will then be exactly 4 outcomes to every trade, WITHOUT EXCEPTIONS:

1. 1R LOSS

2. BREAKEVEN - I have my autobreakeven set as soon as 1R is reached

3. 2R WIN

4. 1R WIN - very rarely, if I don’t see enough continuation on my trade, I will move the stop to 1R - and this only if I have seen the trade pass the 1.5R ($75) threshold

On a day like yesterday, where I crushed every call with this style of trading with about 7R (!) ($350), I could be back on schedule to make my 5K back within just 2 weeks!

No more sloppy trades, no more FOMOing, no more tilting. It’s time to become a professional about this - I have to; I don’t have the cash or emotional reserves left to do otherwise.

With my new rules and system, I’m eager to start collecting data in a proper way. You can follow along if you’d like, where I’ll be documenting every trade:

https://docs.google.com/spreadsheets/d/1Iji_Wqjrir95992S4jIrXxTaOHx3HYXX1qz1Qa2RqMs/edit?usp=sharing

I need to do this in public because I don’t trust myself to do it alone anymore.

In Conclusion…

There is only one way to trade (for me) from here on out: dispassionate, detached, and using my technical analysis models to pick a direction - or none, if I there is no edge in the data. I think I can finally see the light at the end of the tunnel, but it is now completely up to me to get there. It’s finally time to throw in the towel on this childishness and become a professional. I have to do this now because I can simply no longer take the pain and financial loss of doing anything differently.

Thanks for reading this far. I hope this post can help you avoid all the pain that I’ve experience and had to learn the hard way over the past few days… but perhaps it’s something every trader needs to go through on their own.

P.S.: I really enjoyed writing this post, and enjoy writing this blog in general. I’ve missed it, and hope to be back writing more often (to keep my eyes off the charts!)