How I Lost $30k Day Trading
Not A Success Story
Today’s newsletter is the first of many. This newsletter will be dedicated to documenting the trades, strategies, and thinking I have throughout my time trading. Full disclosure, I am not an expert nor am I “consistently profitable”.
Today’s letter is about how I started and the revenge trading that blew up my account but somehow, I decide to stick with this trading thing.
I started day and swing trading in 2015 and I was mainly doing this on Robinhood. I had anywhere from $200-$1,000 in my trading account at the time and I would make some money and lose some but nothing significant. I learned about stop losses, setting alerts, a little bit about options and how to play within the PDT rule for having less than $25k in my account.
It wasn’t until 2022 that I decided to take things seriously and start trading every single day to learn and find my “edge”. I had $4,000 in my account at the time, and I would make 1 day trade each day for 3 days then I would have to wait until next week to be able to day trade again. I was starting to make money, I made $50 - $200 a trade and generally only won. I did the research and mapped out stocks with high volume and were moving premarket and either scalped the trade right at market open, or I set support and resistance and bought only when the price bounced from either. This method was working so well and I was consistently winning and making money…The only problem? I had such a small account that my wins were not very significant. So, what did I do? I took out a loan…
That’s right ladies and gentlemen, I took out a $24,000 loan so I could day trade without restrictions. All because I couldn’t be paitent and slowly build my account.
I had a plan to make sure I cashed out and paid off the loan if my account balance went below $25,000. Which gave me roughly a $5,000 cushion since I had around $5,000 of my own money at the time. Full proof plan, right? Wrong.
The day I started day trading, I ran into issues. I traded the 1st trade like I always did and I made money! But i wasn’t restricted by the PTD rule since my account was over $25k. So, I started trading more that same day. The problem? Well, I didn’t have a strategy for that. Nor did I have a system in place for how to trade after the open or in the afternoon or powerhour and literally anything else other than scapling pre-market gappers and trading based on movements at support and resistance. So, I lost money but only in small amounts…at first.
The first month of trading with a loan I made 124 trades and lost $4, 338! To give you some context, before I took out the loan I only made about 20 trades a month. I did terrible and technically I was suppposed to quit and payoff the loan so I wouldn’t have a loan that I would have to pay with money from my day job. Did I quit? Nope.
The 2nd month I made 153 trades and lost $335.
On month 3, I made 40 trades and lost $5,036! But this month was different. Why? On the 2nd day of this month, I lost $11,000. In. One. Single. Day. I was livid. How could I let myself lose so much in one day? I contemplated quitting the entire day. I took the rest of the week off to decide if I indeed wanted to continue day trading…and worse yet, how am I going to get the money back to pay off the loan? After a five-day break, I decided that no matter what happens I am going to learn how to day trade. So, for the next 15 trading days I traded smart and only on setups I knew. I cut my losses short and resisted overtrading. By the end of the month if we don’t count the $11,000 loss, I would have made just under $5,000. It would have been my 1st positive month, if only I buckled down sooner!
August rolls around and I feel like i know what I am doing. I can make it happen. I did it in July, it only took a huge loss for me to do so. August was month 4 and I made 57 trades and lost $5,497…I thought I figured it out? What happened? I have been losing every single month. I can’t keep this up.
In September, month 5, I made 34 trades and made $792!!! My 1st positive month! Was this it? Did I have it figured out? Am I a day trader now? I can’t quite pay the bills with that but it’s better than losing money.
October rolled around, month 6, and I made 28 trades (mainly because I was under the PTD rule now) and made $1,500! Another positive month and this time double my last month! I was starting to feel good. Then November hit…
On month 6, I made 26 trades and lost $866. Not great. Very disappointed. Let’s make it back next month.
Month 7 of trading with a loan, the last month of the year, I made 25 trades and lost $2,255…This means I lost $17,535 in 2022. My account balance sat at $6,937 because in addition to the losses I also had to withdraw funds to pay the loan each month!
January of 2023 rolls around, month 8 of trading with a loan, and I made 25 trades and made $4,050! My 3rd ever positive month! I felt good.
Feruary of 2023, month 9, and I made 24 trades and lost $1,434…My account balance sits at $7,983 after losses and withdrawing loan payments but in March is when everything falls apart…
March of 2023, month 10, I made only 5 trades this month and lost $7,000. A seven thousand dollar loss. My account balance was now under $1,000. I couldn’t use my trading account to pay off the loan anymore. I had to use the money I was making from my day job to pay the loan. Thank goodness I didn’t decide to quit my day job…
I was devastated.
I stopped trading.
I deleted tradervue.
I stopped logging into my tdameritrade account, and I focused on growing my YouTube channel about fishkeeping. At the end of July 2023, I was moentized on YouTube but I always had the urge to look up past companies I traded, to read CPI reports, check interest rates….to trade.
I didn’t make a single trade until August 29th, 2023.
It was SPY 0.00%↑ and I am up $58.33 cents. I never decided to quit trading after losing just about all the money in my account 6 months ago, but I knew I had to take a break. So, after 6 months I am coming back in and this time with the knowledge of where I went wrong and hopefully with the mental strength to follow my plan.
After 10 months of trading with a loan, I have a ton of data and what I see is that I mostly won but the losses that I had were outrageously high. One or two losses would take out all the winngings I made in the entire month. I coudln’t cut my losses. Since I “couldn’t” lose because I had a loan, whenever I was in a losing trade - I. Couldnt. Cut it. I stayed in with the hope that I would make it back, that it would trun around. It took 10 months of trading and 6 months of “being on break” to figure out that if a trade doesn’t work out right away, then it isn’t going to work out an hour later or into the next day unless I get lucky. And luck isn’t sustainable.
So, ladies and gentlemen, I am back in and this time I am going to have a daily loss and set a stop loss on every trade (I hope). Wish me luck, remind me to set my stops, and follow along on my trading journey. I’ll be documenting it all here.
Cut your losses,
Andrew @CLT_Trades