2020-2025 Recap
Alright. We're back! I hope everybody has been profitable and well. I’ve never stopped trading, just picking my spots few and far between when time allowed in the background. Now finally in a position to jump back in with the community and be more present. I realize I'm probably largely speaking to a new audience, a lot can change over 5 years. So if you're one of the OGs, you'll hear some familiar things. If you don't know me, nice to meet you, and I hope you find my ramblings helpful in some capacity.
Interacting with the trading community has always been one of my absolute favorite parts of the game. I learned so much this way when I first started out 15+ years ago, and I have always made it a point to try and bring that full circle and offer any input I could to those early in their journeys, and the whole reason I started this blog to begin with many years ago. So I'm very excited to get back to that, and my DMs are always open @DGTrading101 on Twitter. X. Whatever.
(Skip to the second half of this post if you don't care about my business ventures over the past few years.)
So I'll pick it up at the end of the last post (can't believe it's been 5 years), where I mentioned I was focusing on diversifying my revenue streams and getting involved in business. I've bought a few commerical properties to start a real estate portfolio and passive income there, but the main active revenue change I made, is I purchased a Fast Casual restaraunt in March of 2020. Actually a hilarious time to get into a business, that was basically D-Day of Covid. Ironically enough it was very fortunate timing, because it's located on an extremely busy main thruway in the center of town with a lot of other restaurants, and they all had to shut down obviously. But as a fast casual spot with almost no sit down dining, we were grouped into the essential businesses category and got to remain open. So all that business from the shut down restaurants had to go somewhere, and financially Covid year 2020 was one of our best. Not the way we drew it up, but I'll take it.
I had essentially zero prior restaurant industry experience, and this opportunity was one that just kind of fell into my lap and was too good to turn down. So I said fuck it. And we did it. So for the past 5 years, I've immersed myself in learning everything possible about that business and the industry. The only way to do that properly, is 100% hands on in the trenches. I've got a whole new respect for anyone in the foodservice industry, it's utter madness and all you people are crazy. Enjoyable, rewarding, and never a dull moment, but madness. My days were very hectic and chaotic, long, unpredicatable, and I had absolutely no stable set schedule to dedicate time to both the markets and my business on a regular basis. And if you're not following the markets religiously, seeing how trends are changing, what's hot and what's not (espeically in the smallcap area which is my focus), you're asking for trouble. One week sub 500K float shitbags are going from 2 to 30 every morning, another week .40c names are trading hunderds of millions of shares a day, then its AI headlines, bitcoin treasury headlines, whatever. A never ending carousel of nonsense. But if you're not on top of it and prepared, there's no point even being there, for me at least. Plus, even if I could sit down in the morning for an open, there was no guarantee that I could be there long enough to get involved in anything meaningful and be able to watch it throughout the rest of the day. So primarily due to that was the main reason I chose to step away from everyday trading, I just wasn't "plugged in" and my attention and focus were required elsewhere.
Fast forward to today, the business is doing great, I've finally stepped back and hired a full time GM to run my day to day operations, and like the wave of a magic wand, got my life and my free time back, which feels fantastic. We never hired a manager by design in the past, because I needed to learn everything inside and out myself first. The last 6 months in particular have been most transformative, onboarding the new GM, getting the staff on board and comfortable dealing with a new authority figure, re-organizing responsibility, and eyeing plans for the future. We've focused 100% on mechanizing the business as much as possible, getting the staff to run more autonomously, and developing a replicable business plan to expand. So also very happy to say that my partner and I just purchased property in the next town over, where we will break ground next month and begin building a brand new mini-mall, where one unit will house the 2nd location for our restaraunt, and the rest will be leased out for commercial use.
If you are currently looking for commercial space for your own business, I can't stress enough how important it is to try and own, not rent. For commercial specifically. The building our flagship location is currently in, we rent. And it drives me absolutely batshit crazy. You're at someone elses mercy constantly, they can see how you're doing, and raise rent if you're doing well when it comes time to renogotiate, and in a worst case scenario at the end of your lease term, you can be removed if your landlord feels like it. It's rare if things are going well, but that's always on the table, and all the Goodwill you've built into that location is never safe, which is far from ideal. I don't want anyone else in control of my destiny, ever. So we made it a non-negotiable point when searching for our second location that we would have to own it wherever it ended up being, and we will never rent again. And that will the be the case for all future locations moving forward. Always try and own if you can. Sometimes it's not an option, either logistically or financially, which is understandable in which case do what you have to do, but if you've got the choice, always try to own commerical.
Getting a little sidetracked here, but one last thought on this topic. If you're looking to get into real estate, in my personal opinion, stay in the commercial lane. Some people get lucky and never have problems, but owning residential units on a small scale is often a royal pain in the ass. I don't need Jimmy, Johnny or Julie calling me that their toilet is broken, that the upstairs tenant is being too loud, or that they're going to be a little late on rent this month. If you're good with all those phone calls, more power to you, you can make a few bucks there. But other than that residential isn't a very appealing option without a lot of money, a lot of units, and property managers. Which is a whole other business unto itself at that point. So I chose commerical. It's much cleaner, you get higher quality and more reliable tenants, longer leases, triple net leases, and it's just way less of a headache. Not to mention the way banks value commerical real estate. It's based off a calculation of operating income on the property, not the property value itself. Commercial leases tend to be much longer than residential leases, inherently much less risk and turnover than residential leases, and this lends itself nicely when it comes time to deal with the banks, should you need to. You can bring that long-term lease to a bank and discuss cash out refi terms, allowing you to pull typically around 75-80% of the bank value back out of that property now, which is most, if not all of the original purchase price of the unit assuming it was vacant when you bought it. And then you can go out and do it again with your original capital back in hand, and with a tenant paying your refi mortgage, utilities and the property taxes. I'm simplifying this to give a general idea, lot of variables, finding good deals on quality property in quality locations and securing long term leases isn't a cake walk, and there's not a lot of those out there so you have to do quite a bit of work and searching to find them, ideally targeting emerging growth areas for better deals versus already established areas, but they are out there. And that's the general formula to starting a commercial real estate portfolio with multiple units, and a relatively small amount of starting capital. Discussion for another day if we run out of trading material lol.
Other than that, life is good. Business is good. My beautiful fiance and I are expecting our first, a baby boy, in January. All is well there too, and that's about it. Thank you for coming to my Ted Talk about nothing to do with trading yet, and the reason you probably follow me, so without further ado, let’s get back to trading.
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Here's how Friday ended for me. I've never been a PnL person, and after this you won't see another one unless I have a good reason to, and a lesson to go along with it. I've posted occasional green ones and red ones on this blog in the past, doesn't matter, but it's always with the intention of a lesson. Never a "hey look at me!" with no context. There is always someone doing 2, 3, 5, 100x more, or less, than you. Always. Who cares. I've always believed PnL is a silly thing especially for new traders to focus on and see all over Twitter all day long. All it can do is mess with your head and perception of reality. What matters is those arrows on the charts, understanding why they are where they are, and your mental headspace. That's what I like to see, execution arrows WITH context (or else why bother even posting?) and open discussion about the mental side of the game. That's useful, helpful information. That's what plants seeds in traders minds that can actually grow into something constructive. Be useful and add value to the conversation, otherwise STFU. And that's what I'll start posting a lot more of.
1RB is a Cobra account, I've been with Cobra for...sheesh I don't even know how long now, I was one of their first clients way back at inception, and I've never left. They've always treated me well, always helpful and readily available, and just a solid group of people. I don't advertise for them, I am not and never have been paid by them for anything, this is just an unsolicited broker mention because I think they deserve it and I'm very happy with the service. They're based out of Texas, and a few months ago one of their reps David went out of his way when travelling in my direction to personally stop at my restaraunt, drop off a ton of merch and say hello. I thought that was pretty cool, definitely didn't have to do that. So yeah, that's all I'll say about Cobra. If you're looking for a new broker, give them a try, highly recommend and good people. Shout out to David and the Cobra team, love you guys.
So. SGN nothing to talk about barely touched it, ABVE I'll discuss briefly but not much to say there either outside of some general guidelines for approaching names like this, and then FTFT and INKT I'll post up the charts and go over my thought process throughout.
ABVE in particular on Friday, first of all it's a Friday, the worst possible day to dig your heels in anywhere. But it was the obvious top watch of any momentum trader that day. But with massive volume and all eyeballs on it, you're just asking for the pinball action, which is exactly what we got. I hunt for unidirectional movement, I'm not a pinball wizard. Although I do like The Who. ABVE I barely got started into the open dip and almost immedately bailed because I was hoping for higher out of the gate - on these high profile popular momo names, whichever direction it starts off at open, is almost always the wrong direction at first lol. So I figured that was going to end up holding soon, which it did. And after that I came to my senses and said let me not even do this right now on a Friday, anywhere between $3 and $4 I had zero beat on it for an edge, choppy random .50c moves in seconds both up and down, if you were trading it you'd have had to be in and out often and timed correctly to see any solid gains, and that's just not my style. I'll never be the guy with 500,000 arrows all over the chart. That's crackhead chaos behavior and you need rehab in my opinion. If that's your thing, you'd probably excel at residential real estate management, as you clearly do not mind a steady stream of bullshit. Just kidding lol. Good on you if you can make it work. To each their own, do your thing, million ways to skin a cat in this lovely game. However couldn't be further from my personal approach. I prefer patience, quality, minimal buttons, and letting correct things work. So with that said, let me tell you exactly how I did not do any of that on FTFT Friday (LOL), other than the minimal buttons part.
FTFT. So I was awake early, borrowed some shares around 5:30AM when I saw the rebound starting to hold. I had some feeler orders out around the 4 - 4.20 area waiting to get filled and never did (also expecting if those filled, probably a move to 5 for final adds), however it never happened, and I proceeded to just stare at it and watch the carnage the rest of premarket down to $2 at open with 0 shares, as it never offered another good entry point after the 4 retest fail. Lovely. So now, I am a little annoyed. Pulls a little open dip and rip with solid volume that got pretty convincingly rejected, I thought. So after that 2.80s move failed at 10am and got slapped back down, I thought it was done and shorted it, thinking I could get away with a little slow fader off to back down into 2 bucks for .40-50c later in the afternoon. You can see my entries there, this is far from a typical entry for me normally, and far from optimal. I think part of the reason I even gave it a shot, is because I was still a little aggravated from not getting my $4 fills in premarket and missed a good one, and wanted to force something to happen. My avg was around 2.45, and as soon as that volume came back in shortly before noon, in the back of my head I already knew I was wrong. Should have been out on the 2.80s break the second the volume didn't subside. If something breaks a resistance level on strong volume, and that volume doesn't slow down in the next few candles (usually within 15-20 mins you'll know) after that, theres a very, very good chance...that you are very wrong. And this time was no different. In fact in this particular case, not only did it not slow down, it built up more, even worse. Best move here? Shouldn't have chased and entered at all after missing my original entry idea at 4 premarket. Second best move? Cover into 2.90s as soon as I realized the volume wasn't going away. Instead I waited until 3.40, and it cost me as it should have, deserved every bit of that. Takeaway lesson: Just because you borrow shares of something, does not mean you have to use them. If you're aggravated or emotionally charged in any way when in a name, take it off your screen, you're not thinking clealry. And the most important message of all, one I know very well and just didn't execute here, is that more times than not doing absolutely nothing at all is infinitely more lucrative than trying to make something happen. When I was comptemplating entering that trade, I could have gotten up, drove to Mohegan Sun and put 10K on black, lost, and drove back home, or I could have walked outside and lit 10K on fire for fun just to watch it burn and see the pretty colors, and both of those options would have been more lucrative than what I ended up doing. Silly analogy, but think about it lol. Pretty stupid huh? Hey, it happens. Don't force suboptimal ideas, and pay attention to volume - because when it comes in at a key level and doesn't go away very shortly after that.........guess what?
Next.
So for this one, everything I just preached above, I practiced this time, and the end result was exponentially better. Lets walk through it.
Super small float, easy to borrow, and very strong volume all day. To make matters worse, the news catalyst was so astronomically stupid and overblown on clinical trial data pertaining to just one patient, that's correct, one. Shorts are salivating from the get-go, that's evident. So right off the bat, we've seen enough of these in the past to know that its generally not a good idea to step in front of it anywhere in the early part of the day, where shorts are still bright eyed and bushy tailed, willingly lining up at the slaughter house doorstep. If you were watching it all morning, it was showing all the signs of becoming an issue. Never ending bid refreshes and soaks, constant new leap frog orders relentlessly and methodically forcing it higher with no relief. So the early session is never an optimal time to be involved on the short side on one of these, so knew to avoid that. Next on a name like this, when the steady volume pumping in doesn't wade at all, getting involved midday during the lull is an even worse time to try. Momentum names norotriously slow down midday and the opportunity to capture gains on the short side decreases significantly. Lots of sideways stuff, boring stuff, and traps, before showing eventual true colors later in the day, in whichever direction . Midday, strong volume, nowhere near the lows, and you're short? You're probably gonna have a bad time. So I'm watching this thing through lunch lull, and all the sudden at noon the volume amps back up through 50. Previous high from the morning was in the 59s, so at this point, it's a very safe assumption to say "here we go, next leg and see ya through previous highs to 60s soon." Which it did, low 60s, dip, 12:30 rolls around, volume picks back up again, and off to the races. What I'm starting to notice now, is each time it squeezes to a new high, it packs a little less of a punch and the range shrinks. That’s important to note. First round at open you got a $40 move north. Next round at noon, a $20 move north. Third round at 12:30, a $10 move north. You see the pattern forming. It's losing steam. Which makes sense, by this point it's getting so far out of hand, so many shorts have either completely blown up, lost so much they don't know what to do, or just given up altogether. One other very important quick thing to note, does the losing steam trend mean it it's going to die soon? It absolutely does not. It does mean it's getting more likely, but absolutely nothing has to happen. They can start it back up at any time, and it could have gone bell to bell to new highs. You should prepare for anything. But the reason I chose to enter there at 1pm, once we broke new highs with less range for the 3rd straight time, is that statistically speaking, I saw a declining momemtnum trend forming, and the price action is telling me the odds are moving in my favor now on the short side. That's all we're trying to do here on a daily basis coming to the market, not a single soul (other than Nancy Pelosi the greatest trader on planet earth) knows what's coming next any given hour, all we can do is take the information we do have in front of us, try and make some sense of it, and attempt to put ourselves in high probability situations with a sound risk management plan to go with it. Over and over, thats all we're all trying to do. So I felt that was starting to happen, and decided to get involved. I didn't definitively know anything, I just felt for the first time all day, the odds were swinging in my favor now. I started with an avg just under 70, and it was working well, with a big washout candle sub 60 that unfortunately got gobbled right up around 1:30. So that caught my attention, did not love that, and now my thoughts kind of change from "Alright think I got the top" to "alright here we go they just got everyone again, Round 4" . Retest, fail, then hold around 2:30pm, and that hold made me decide to take profit for the time being, with the thought "I guess we're goin back for more and to try and take out the 72 highs. That was again a safe assumption based on the prior action. So I waited for that, and then got invovled again shortly after 3pm, with the same thesis as first time I tried it, "every time this breaks new highs, the overshot/squeeze/chaser range north shrinks, and a little more steam is coming out. So this last time, it's either going to completely fail after squeezing to new highs, or hold again and head towards 80. So if that move continuted into the high 70s towards 80, I would have bailed, this isn't one to "wait around and give it a few minutes" lol, and I believe if it did push up again towards 80, they would have just ran it bell to bell. But fortunately, it played out as I had hoped. I decided to be super patient on the exit for a couple reasons. One, there's just a general stigma with ETB names that run, people think they'll just hold and squeeze higher forever, "everyones trapped". But in all reailty, by this time of day thats either completely true, or not at all. So once it failed and wasn't really coming back with any strength and those bids weren't constantly refreshing anymore like they had been all day, I was in no hurry to leave. Everyone waiting for the end of day ETB super squeeze that wasn't coming. Gave it as long as I could and got it from 73 to 53. Really the only way to accomplish a nice win on the short side that day, was by doing absolutely nothing for 95% of the session. It's been the case my entire career, doing nothing until there's actually something to do - that usually never lets me down. And when I stray from that, I lose.
So here, super nice way to end the day. Never crazy size. Just not worth it on these, or low float massive range names in general, you're asking for it. I had 2000 shares max at any given time, never more. Barely pressed any buttons at all, never biting off more than I could chew with size, never freaking out or in trouble, and that equated to an almost $40,000 gain. With 2000 shares. And doing nothing for 95% of the day. That was really the main point of even showing this PnL, to reiterate that you don't have to do a lot to make a lot, if your focus is on quality and not quantity. This goes for any name too, regarding size. The actual amount doesn't matter, it's how you're feeling mentally and emotionally that does. If you've got a positioin size that has you on the edge of your seat worried any sudden movements are gonna send you over a cliff or ruin your day, you've lost before you even started. Being 100% even-keeled and logical throuhgout the entire process is the only way to create any consistency or longevity in this game. I hope this was helpful. Maybe more detail than necessary, but just trying to rack my brain for every possible thing I was thinking about while monitoring this all day, and why.
Alright, that's it. I will continue to post these chart recaps when I can. Anytime I execute something really well, or really poorly, I'll throw it up here with thoughts/analysis and an honest assessment that hopefully you can take something away from and apply to your own journey.
Glad to be back, see you out there, and happy trading.
- D
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