Hey everyone all right? Um, I'm gonna give folks a second to get tuned in here. So this is a live broadcast and uh, what I'm going to talk about in this video is holding losers too long. This is something that a lot of traders struggle with. It's something that I struggled with myself when I got started.

I did a poll earlier today when I was trading during the morning show. I asked people, you know what, what do they feel is their biggest struggle and holding losers too long was a big one So I thought I would come on and um, comment a little bit on that and um, so so two things. So as you guys are getting, um, tuned in, hopefully you hit the thumbs up. Hopefully you're subscribed to the channel.

If not, hit the thumbs up, subscribe the channel that way. When I do pop on and go live like this, you'll actually get the alert if you're subscribed that I'm live. So I see people tuning in right now and saying hello. So thank you guys! hi hi, how are you.

Yup, cut your losers short. Easier said than done. Uh, I'm going to show you some metrics from my trading during this broadcast. This is a right here.

a stretch of about uh, what? this was. 378 trades and during this period I lost 167 thousand dollars. Which is not an insignificant amount of money to lose. And this is important because it's going to talk.

This speaks to the topic today: holding losers too long. What you can see is that my average winners during this period of time four minutes long. My average losers in contrast, seven minutes long. So I was holding the losers longer.

and ultimately, you could see that right there. Ultimately, what that was doing. Um, was it was taking a bad trade, a trade that already wasn't that great, and just letting it go further against me. And as a result, my average losing trades were three thousand, Two hundred dollars.

Well, my average winners were only eighteen hundred bucks. So we would call this a negative profit loss ratio. Now, since I'm going to talk about sell my metrics, I do want to keep it in context. I think that that's important.

So for instance, um, where I sit right now since January 1st, 2017, I'm sitting right now at a net profit of about 8.39 million dollars. So if you're wondering whether or not I'm qualified to talk about day trading or to talk about metrics, I, I think that I am. This is a total here. and I'll um, I'll switch the view in a second.

But this is, um, let's see a total of 16 000 trades. All right. So the topic today is, why do we hold our losers too long And what can we do to change it? I'm going to run the intro and then we're going to jump right in. Okay, so you can see the full screen now of my uh, my metrics from this period of time.

Uh, the and this is now, Um, this is now from 2017. But if I go back to January 1st, 2021 to January 15th, which was the first two weeks of the year, that was when I had this negative profit loss ratio and took some of these really big losses. So one of the things that I have learned both through my own experiences and from working with students who are trading the markets from all around the world is that it is very, very common to have a negative profit loss ratio. It is very, very common to hold losers longer than you hold winners, and and just generally to hold losers too long.

And it all stems down to fear. And so to elaborate on that. What's happening when you're trading every single trade you take, you know, inherently it has the potential to be a winner or a loser. But when you take a trade all of a sudden it goes against you.

And it goes against you quickly. And you're down. You know? Let's say in this case, 2500 and you know that your average winner is only 1800. so you know you're already down more than you would typically make on a winner.

All of a sudden, there's this shift in mindset from just cut the loss, break out, or bail out, to hold and hope. The hold And hope. The hope is of course that it turns around because until you press that sell button, there's always the chance that it could turn around. Once you press the sell button.

the worst thing is you press the sell button and then it bounces right back up a moment later and you would not have taken the loss if you had just held it longer. And there are times when that happens and unfortunately that is the market giving you a positive reinforcement of a bad behavior. You get rewarded for really doing uh, something you shouldn't do which is hold and hope or even worse, average down on the trade and then how that rolls into the negative profit loss ratio because you're holding your winners too long. What is typically the case for most traders like myself and I can pull up.

I could pull up an example of a chart from today if maybe that's helpful. But what's very typical for me is you know I'll buy a stock at, let's say, whatever. Six dollars and my target is to sell half at 615, another half at 625 and the rest may be up to 630 640. So my average profit on it is probably only about maybe 20 cents a share.

All right. So 20 average winner. But if I get in it at six dollars and it drops immediately to 580, I don't stop out. I don't stop out because I think, well, it could come back up.

It's at 580. you know, as long as it holds 575, that should be okay. It'll curl back off 575, back through 585.95 will be back through Six for four. You know it's okay.

I'll hold it, or if it drops down to 560, I'll think, Well, I'll at least see if it holds the half dollar because the half dollar is 5 of 550 is typically psychological support. So I'll give it to 550 and then it hits 550. And I say, well, but the view app is 5.45 so I'll give it another couple cents. If it holds the V web and gets right back above the half dollar, then I'll be fine.

And then I cut the loss at 535 as it breaks the V1. And just like that, I've lost 65 cents a share, right? I got in at six dollars and I'm stopping out at 5.35 Whereas if I had, uh, had a winner on it, I would have only made maybe 20 cents, maybe 25 cents a share. And so it creates this negative profit loss ratio where your average losers are bigger than your average winners. And from a mathematical standpoint, it is very hard to be profitable when your losers are bigger than your winners.

And so one of the things that of course I do for our warrior pro students in our class is we break down risk management and we talk about the metrics of a successful trader. If you can understand the metrics of a successful trader, then you know what you're striving for, right? You know what to look for. And so when we talk about risk management, one of the things that we talk about are profit loss ratios. We talk about it pretty extensively because if you don't understand a profit loss ratio, you don't understand how to put statistics in your favor to make it a little bit easier to be successful.

And so in other words, if you're trading where your average winners and your average losers are exactly the same one to one, you need to be right 50 of the time to break even. And that, of course is before commissions, right? That makes sense. That's that's straightforward enough. Okay, well, um, how about when you, um, risk uh one? Let's see, when you and your winners are only one dollar, but your losers are two dollars or two to one.

So your winners are 100, Your losers are 200. Which was exactly the case right here, right? My winners were 1800, my losers were 3 200. So I basically had a inverted profit loss ratios. It was negative.

Okay, so in that, let me pull this back up. Let me pull this back up. I would have needed to have been right 67 of the time just to break even. Of course, we know I lost.

My accuracy during that time is 54. The fact is 67 accuracy. So let's look at 2021. As a whole, I've been averaging 68, right? Uh, well, this is 2020.

Uh, and 2021. Uh, Actually, this is. this is weird. This is 20 January 2020 through January 2021.

But in any case, so 4.4 million dollars net profit? 68 Accuracy? You know. So if you're trading on a negative profit loss ratio, you really are setting the bar very, very high for yourself. And that's not what you want to do. You want to set the bar low.

You want to make it easier to be successful. So what you would then strive for would be to risk 100 to make 200. Right now, that may not be something you always achieve, but when I'm looking at a trade, I ask myself, do I have the potential to double and profit what I'm risking And if I don't even have that potential, I don't even want to take the trade. So I at least need that potential.

It doesn't necessarily mean it's going to happen, but I need that potential. So this was a stock that I traded today, so let's see so on this one. For instance. Um, my entry on this was right down here and this was, uh, I'm sorry.

My entry was, um, was right. It was right here. So this was an entry off this yellow ascending support trendline and it's a little bit of a complicated uh setup, but it's a momentum set up. So my entry was down here at about 10.65 What was my stock 1050? It was at the half dollar.

So I set my stop at 10.50 which meant I was risking 15 cents. You know what? My target was 11 bucks if and back of mine was a break of 11 10. And this popped up to 11 1103 and I got my two-to-one profit loss ratio on that. The risk versus the reward.

This was a good trade. We had another one uh gwh today, this one, uh, earlier this morning. Some pretty big momentum on it as you'll see so on this one. First one minute candle to make a new high right here.

All right. So that was 16.75 So for instance, on a stock like this with an entry of 1675 stop would have been 16.50 Again, the half dollar. And because the high a day was 1719, that was the target. A retest of the high a day which is a nearly two to one profit loss ratio almost 50 cents.

but it ended up going all the way to 18.. So when you trade the right type of stocks, you're more likely to have stocks that exceed your your profit loss ratios in terms of your your base target. But this is something that's really important to be aware of. So um, what I wanted and I wanted to make this kind of a a short video because uh, what I have for you guys, I want to give you a link where you can watch a two-hour session that I hosted with my trading coach and with four other profitable traders.

So it was five of us and my trading coach. We were all sitting on a call. We were talking about this very issue. So this is a two-hour long.

It's like a trader psychology session and these are things that we do on a pretty regular basis. Uh, for our Warrior Pro students. So I'm going to give you a link where you can check it out. Let's see.

I'm going to paste it right here and I'm going to put the link. I'm going to put it on the screen so you can just take a look at it. So I want to give you guys a chance to download, uh, and stream this this episode. So this is, um, straight from the Warrior Pro class.

It's a video. So the way we've set up the class is for those that aren't familiar. We've got our Warrior starter course and then we've got the pro class. And in the starter course, I've actually got the curriculum right here.

So in the starter course, the starter course is 15 chapters long and chapter 14 is traitor Psychology. So in chapter 14, that's when we bring in Ted. Ted has been my trading coach for a very long time since I began trading. and that's where he comes in and he talks about the fact that success in trading is probably 50 skill and 50 mental.

It's up here. I mean, it really is so important to get into the right headspace, the right mindset. So recognizing understanding, emotions, and trading, learning, uh, the stages of learning to trade, the strategies to support your best trading, meditation, mindfulness practice, and then in the pro class, we come back to these topics. We have, uh, chapter 17 where I have interviews with profitable traders.

So these are students who have their profitability badge. We've got three, i think three interviews here with students who have million dollar badge. uh, have verified a million dollars of profitability. We have one that says 750 000 a couple at around 500 000 and um, that was when we decided to have this session with Ted.

So I think you guys will get a lot out of it. I think you'll enjoy it a lot. I can sit here and talk about traitor psychology and the sort of mentality of holding losers too long and selling winners too soon. Really? until I'm blue in the face and I don't mind talking about it for a few more minutes or asking some questions from those that are tuned in.

But I really encourage you guys to stream that episode uh, that I've recorded with um, Ted and then four other students on holding losers too long. I think it's really going to be a big, um, eye-opener for you because the fact is, we know that most traders lose money and I've already said this. you know my results are not typical. Most traders lose money and we have to figure out why.

And one of the things that is very common is holding losers too long. So uh, there was a question about whether I ever got into the habit of holding losers too long, like holding holding stocks for multiple days and things like that. So for me and this, everyone's different when they start trading. But for me, when I got started, I didn't have a lot of money in my account and I was often trading on, uh, on leverage.

So when I was using leverage, I couldn't afford to hold on leverage overnight. And many of you guys know that you can trade on leverages for day trading, but you can only hold on very small amounts of leverage overnight. and I just never felt comfortable holding on leverage overnight. So for me, it forced me essentially to close my positions at the end of each day.

You know, occasionally I would get into a trade that I would hold for a couple days. It was very rare, it was not common, and it was not successful for me, which is why I really stopped doing it. But some traders who have larger accounts will fall into this habit of getting into a trade and it starts to go down and say oh well, I'll just hold it and see if it comes back up and again, that's that fear, It's not wanting to lock up a loss and move on to the next trade. It's holding and hoping.

So when you start holding and hoping you start doing that on one position, then two, and three and four, you know. Next thing you know, I mean just for example, um, this stock Ccxi I'm sure there's you know, some people out there who might have been holding and hoping. Look at this drop from 48 all the way down to nine dollars a share. you know And I'm just saying like for instance, let's say you took a trade on it.

I don't know, you know around here and it didn't bounce and you thought I'll just I'll just kind of turn this day trade into a swing trade. Well next thing you know, you're putting yourself at an enormous amount of risk because the longer you hold it, the more you expose yourself to the potential that bad news comes out. And that's exactly what happened on this one now. Biotech pharmaceutical companies, especially ones that are doing clinical trials.

These ones are especially risky to be holding overnight. But it doesn't mean that some traders don't do it, it's holding and hoping it can be very, very powerful. And next thing you know, you've thrown all uh, discipline and common sense out the window and you're averaging down. you're holding overnight and potentially you're putting you know your whole account at risk.

So I think that's something that you wouldn't think. it's possible to have one trade blow up your account or end your career. and yet one trade mismanaged where you average down and you hold and hope and where the loss gets bigger and bigger and bigger. You know I mean that can be the one trade that that ends and it's not worth it.

It's not worth it to let that happen, so you never want to empower one trade with the ability to blow up your account or end your career. And ultimately, that means getting really good at cutting your losses. So in that session of course, which I hope you guys stream, you'll hear five different points of view on cutting losses quickly. It's it's something we all have to learn how to get good at.

One of the things I've said over the years is that being a successful trader isn't about making more money. it's about losing less money. So I bet you know every single one of you in here who are streaming and thank you guys again who have tuned in. Hit the thumbs up button.

I really appreciate that every single one of you here you know you. You think about the path to profitability and you might think, oh, the path to profitability is I just need to make more money. Well, you know I need to have more winners. What if I'm just thinking out loud.

What if you were able to reduce your losses? What if you were able to reduce your average losers by 10 15? Now, if you don't know what your average losers are, then that by itself is I suppose a problem because you don't know what you're benchmarking yourself against. But right now with my average losers at around sixteen hundred dollars or based on that period of time is around sixteen hundred, Um, if I could reduce those by 10, that would be that would be a step in the right direction. If I could reduce them by 20 or 30 percent, that would be huge And that would absolutely translate to making more money. At the end of the day, it wouldn't be because I was focusing on winners.

It would be because I'm focusing on cutting my losses quickly. cut the losers so you have to be so brutal, just totally ruthless. no attachment. These are stocks and doesn't matter how big the company is.

Doesn't matter if you're talking about Facebook. if you're talking about, you know Facebook right here. I mean, this is a significant drop right from the high of 378 down to 317. It's a 20 pullback, you know.

So I mean at a certain point. You got to say all right, I don't want to keep holding this now. It depends what your cost, basis is and everything else, but it doesn't matter how big the company is or how small it is, you do not want to hold and hope that's not traded. Trading is getting in, getting your profit, and getting out.

So today's a day where, uh, I did make some money. Uh, I got myself up about twenty thousand dollars. Which was good. I mean, not a phenomenal day, but a decent green day And I'm fine with that.

And most likely I left a fair amount of money on the table. I left money on the table because I stopped trading at 10 Am. Now I know that because this stock after 10 A.m ended up going higher. That had I kept trading it, maybe I would have been able to make more.

But on the other hand, if you've hit your daily goal, if you've made some money, well, when is enough enough? take the money off the table because every time you keep trading, you're exposing yourself to the risk of getting caught in a flush, to having one of those days where you go from up 10, uh, 20 grand and you give back half and it can happen. It can happen to the best of us. This is a false breakout right up here and it's a pretty dramatic one. So right there false breakout went up to a high of 29 and then drops all the way down to 26.

That's a three-point drop, you know. And then it flushes here down to 24.. if you got caught in that and then you were holding and hoping it's back at 22, it hasn't even gotten back to the high from that entry there. Now at that moment, that entry might have made sense.

It was a bull flag. It was relatively strong, but if it doesn't work, you just got to let it go. You got to be just ruthless. Cut short.

that's it. I'm done. I'm out. So trading is definitely a career of discipline.

It's not easy. Their discipline is not something that you'll just learn and you've got it forever. It's something that you constantly have to to focus on. So it's a muscle and you've got to keep exercising it and keep trying to keep it sharp and strength strengthen.

I mean, you just can't let your guard down, You let your guard down, and that's when you get complacent. That's when you get sloppy, and that's when you start taking losses. And I say all of that. Having done all of that, I've been there.

I've had red months. I've had huge red days. I mean, I've gone through it. So uh, and I thank you guys.

Um, who are tuning in? We've got some Warrior Pro students who are tuning in. I appreciate the comments you guys are making about the classes. Our goal is to provide you with a holistic education. Uh, I want to give you some financial literacy so you better understand the equities markets.

Uh, we obviously are focusing on day trading. specifically. The Warrior Pro class is our flagship course. It includes the starter and then goes into my day trading course and it's extensive.

This is a extensive course. There's a ton of content here and this is for people that really want to learn the ins and outs of my strategy and you will learn the ins and outs of my strategy. This is not a course or community where it's just videos of me bragging. or it's just a, you know, one little Pdf seven page Pdf handout.

This is a lot of content and this has taken years to compile produce and create. So we launched The Warrior. Um, this. This first version of the day trade course was released in 2000.

I believe it was maybe 2015.? Um, this book I taught. Uh, I wrote in 2015. this book has had a day trade. so uh, for those that would like to get a copy of this book, if you register, uh to my workshop, you'll be able to get that.

I can give you the link here to this page. If you click right here to register for a free class, you get a copy of the book. So you guys are welcome to do that anytime. Free copy of how to day trade when you register.

Now for some folks, you'll think, Ah, Ross, I don't need to register for another webinar. I've seen a million of them. I already know how you teach. I understand, I just want to jump in and we love to have you jump in and you can become a student.

Today we'd love to have you join us so you can check out the strategy page and you'll be able to see the curriculum for the starter for the pro. And these classes are streaming so you can watch them anytime. and then during the week we have, uh, the chat room of course open Monday through Friday where uh, I'm live trading in the mornings and then we have mentor sessions every day right now so you can come in and ask questions and things like that. but in the meantime, uh, I encourage you.

Uh oh. and this is actually right here. Um, this is the episode holding losers and averaging down a special two-hour session with Mike and some of the other mentors. So we had Mike.

Uh, we had Roberto, Danny, myself, uh, Selena. I thought Jess was on that call, but maybe not any in any case. So that's uh, what you guys are gonna get Uh, today just as a sneak preview and you can stream that right now. And if you like that and you enjoy this little video and what I've talked about today and you've checked out some of my other episodes videos here on Youtube and you want to take the leap and become a student, we'd love to have you and at the very least I hope if you enjoyed the video you hit the thumbs up.

So why don't I do? Um, a five minutes of Q A answer some questions that folks have. Thank you Scotty! Avail says I trade every dollar like it's a million dollars. It really helps. That's interesting.

Um, I. One of the things that I've said is that if um, if I don't feel confident taking full size, then I don't want to take the trade at all. So I it's in other words, You know sometimes people say oh, why don't you just take a start or why'd you just take a small position And if I don't feel comfortable taking full size and there's something about the stock that doesn't meet my criteria, there's something about it that just doesn't isn't good enough. Maybe it's the spread, Maybe it's the volume.

Whatever it is, and that by itself is a reason not to take the trade at all. So if I focus just on equality trades, just on stocks where I can take full size, I will do better. So I don't focus Susan on percentage gains. Some traders may do that.

I don't. I focus on, uh, the dollars per share. So I look at the average winners. You know it's It's a different way of looking at it and it's not that one's right or one's wrong.

Usually just you would choose one or the other when you trade lower price stocks. This can be tricky because you could have a lower price stock and I see some traders mentioning costs Koss. So this stock has gone from 1580 to 1888 here in like three candles. So I mean this is a could be a very big percentage move.

Uh, gwh was up at one point like 150 today. So those are big percentage moves. Uh, But then there might be other days where you're ending up trading something like Gamestop and so the same percentage that you might get on one wouldn't likely realistically translate to uh, the other. So I focused just on uh, on average gain or average loser in dollar amount.

So um, Yog says for someone who doesn't who only has a little money um, for trading and can only trade once a day, what's the ideal, uh, cut loss? So this is a tricky one because if you have a small account, let's say you've got like twenty five hundred dollars and you're trading with Td Ameritrade, so you can only take one trade a day. That could be a challenge because you feel like, well, I don't want to get in and then two seconds later sell it for a loss only to watch it bounce back up. That was my one trade of the day I only got. I can only get one trade of the day, so my opinion on that is.

I mean it's really the same if you focus on the best quality setups. Yes, there will be times where you get in and you do stop out right away and that's it. That's your one trade of the day and it might go back up. But if you're focusing on really good quality setups and you know those because you've studied the strategies that I teach, or you've developed your own strategy, whatever it is, then you're going to be better off.

You're going to be better off. your accuracy will be higher focusing on better quality setups, And you know when it comes to success. There's a lot of things that factor into a trader being successful and one of the big ones, which is why this is so, um, relevant here is emotion. And that's why I had Ted do that traitor psychology session with us.

It's there's a huge component that's mental and so something that I've noticed um among our students who have become successful and we don't track the success of all of our students. At whole at large, we don't have access to their broker statements because we're not a broker, so some students voluntarily share with us how they're doing and that's fine, but we don't know as a whole how students are doing. There's no way we could really know with certainty. But one of the things that I have found among the students who have been successful is that it's typically those and this is very frustrating.

It's typically those who don't need money who make the most money. Now, what the heck is that about? They don't even need the money and then it just falls into their lap. And what that tells me is it's about the mentality. People that are trading that don't need the money don't put this pressure on themselves that they have to make x amount by a certain date, to pay a mortgage payment or to pay a student loan or whatever the case is.

They're able to focus on just the skill and the hobby and the enjoyment of learning about the markets. They can take it very slowly, or some of them are comfortable taking more risk and they can take that risk. And they don't have this whole second layer of evaluation when every when they're taking every single trade which is, how will this help me pay my bill this week? you know, Am I going to be able to keep my account above 500. am I going to be able to keep it above 20 000 or whatever the account is.

That stress creates a a really huge amount of pressure, and while it's true that some people under pressure succeed, I think what's more common, especially in trading, is that with that pressure, you start trading from a place that's more and more emotionally fueled. So all of a sudden, every trade starts to have the ability to make or break your week or your month, and every trade is either validating that you're going to be okay. you're going to survive, you're going to make it, or is calling into question whether you'll survive, whether you'll make it, and when your back is up against the ropes like that, it's very hard to think clearly. anytime you have a loser, you start to immediately think, wait, does this mean I'm not going to be able to survive Does this mean I'm not going to be able to pay my bill at the end of the month and then that invariably is factoring into your decision of do I cut the loss or do I hold it and hope it turns around.

So, I think that the success rate of Uh traders and we know it's it's poor is probably in some way correlated to wealth, uh, distribution. In general, the people that are more wealthy will tend to be more successful, and people who have less money will tend to be less successful. And that's that's based on just just an opinion. It's based on a fairly small set of data, and it doesn't mean that there aren't people that totally buck the trend who are very wealthy and then lose money, or who are, uh, very poor, and who do very, very well.

So for me, when I got started trading initially, was about supplementing income and living in Vermont at that time, I really didn't need to make a lot to be successful in what I determined to be successful. So for me, 100 a day, 200 a day, That was fantastic. That that would have been like me doing really well. There's other people out there that 100 200 today isn't even gonna make a dent.

They need to be making a thousand a day or something like that. And so then of course the bar is set higher. So for me with the bar set lower, having a year where I made 30 000, I was happy with that. A whole year making 30 000, I was happy with that.

I thought that was good progress. Now when I ended up having years where I made six figures, I thought that was great too. But my bar was set lower. I did get myself into a position where I was up against the ropes.

I did not have other sources of income. I was spending money on credit cards for cost of living and I was just barely paying my minimum you know, my credit card payments and I knew that I couldn't draw money out of my trading account to pay bills. So at that time I was paying bills from my trading profits like right from the account. So I might write a check for a bill and I I knew that by the time that check cleared, my account would be back below 25 000.

So I had like three days until they cleared until they received the check in the mail to get my account up another 1500 and that created a lot of stress. A lot of pressure when I had a lot of stress, and a lot of pressure. That's when it was most important for me to focus on the basics, focus on the setups that I was the most confident in, and trading less, not more. And then once I began to develop some confidence from trading less but generating profits, That's when I was able to start adding in more strategies and start trading more actively.

And it didn't mean that I didn't hit bumps in the road after that, because of course I did. but that was a big. That was a big turning point for me. So anyways, I just wanted to share that with you.

I hope this has been helpful. I really encourage you guys to go ahead and watch the two-hour special. you can the link. You'll be able to watch it later so you can.

You don't have to watch it right now. You can save it and watch it tonight or tomorrow. Whatever. Whatever's good for you, That's fine.

I think you're going to get a lot out of it. I hope you really enjoy it. And uh, I hope that some of you guys, uh, come over and join us at Warrior. Trading in the chat room.

I love being on Youtube, but as always, um, in the chat room, Youtube has a broadcast delay. Of course. You guys probably know that Youtube in our chat room we've got basically no delay and we have all the classes so I'd love to have you guys come over and check it out. I hope you do.

And I thank you for tuning in here today for the special live broadcast. So as I um, end it, I'll ask again. I hope you've hit the thumbs up. I hope you're subscribed to the channel next time I jump on and uh, go live.

You'll get a notification if you're subscribed to the channel. And I'm going to put up my disclaimer again as a reminder that trading is risky. My results are not typical. All right.

So given that most traders lose money, you should assume you'll lose money and only trade with money you could afford to lose. And when you start trading, you should trade in a simulator. Don't put real money on the line until you first proven profitability. Take it slow.

All right. And with that, I will see you guys. Uh, tomorrow morning. Okay, I'll see you then you.