What a crazy journey this has been, it still feels like a dream at times. Just 10 months ago I started this epic run with a tiny Tradezero account with $3800 in it, my last and final attempt to make it as a trader. I still remember that dark feeling I had at the time. All the money and effort I put into this and nothing to show for it over 3 years of endless frustration. The glimpses of success which gave me confidence were quickly erased with blowup red days. I found myself in this cyclical pattern, a roller coaster ride filled with the entire spectrum of human emotion.

Those closest to me advised me to stop, to give up my dream of becoming a pro trader. What they saw was a destructive behavior and a life spiraling out of control. What I saw was a deep passion, a burning desire to achieve my goal of millionaire trader status.

Thank god I didn’t quit!

People who have followed my journey have asked why things are different now. Why I am having such success when just a year ago I couldn’t even put together consecutive green months. And the answer is simple…

I remember my mindset when I tweeted that last May. I had just blown up an account and came to this deep realization. But I hadn’t fully internalized the message until a few months later. I think the reason this tweet resonates so well with other traders is we all know it to be true. We all know what we have to do to be successful in this game, yet very few are able to do it. Its the transition from knowledge to acceptance to execution of your plan, and it takes time to grow from one stage to the next. I was in the middle stage when I tweeted this and it took me half a year and another blown account to make it to the next.

Rewiring your brain to focus on execution over profits is one of the most difficult things to do as a trader. Money is such an emotional thing and its ultimately why we get into trading, that’s why we base our trading actions on P/L over execution. Once I started focusing on my execution more than anything else, my account grew exponentially. The tragic irony is most traders give up before they come to this profound realization. I can only imagine how many traders would have made it if they just kept going, kept ignoring the doubters, kept believing in themselves, because that’s exactly what it took for me to get here.

I look back at each stage of my trading career and realize how far I really was from professional status. At the time its easy to convince yourself otherwise, but the market doesn’t care for your delusions. Each trader has to pay a hefty tuition fee to the markets in order to learn and grow, there’s no shortcuts here if that’s what you think. People look at my success now and think how easily I can make an average salary in a few hours, while in the comfort of my home. But how many of them are willing to go through hell to get here? Every successful trader has many setbacks and realizations before reaching pro status.

Since my last blog post in late March, there have been even further realizations and new obstacles that come with sizing up and trading with a large account. As my profit cushion grew, so did my BP and ego. That is a very dangerous combination if left unchecked. I learned the importance of wiring money out of your account and resetting to a base amount in order to protect yourself. Rinse and repeating that process, over and over. Once you build enough of a cushion, you can consider sizing up another level. But you want to be extra cautious in this stage because the fall will be much harder if you slip.

Trading position dollar values over $100k is difficult in small caps and you need to piece in and out of positions to avoid creating a log jam in price action and avoid algo detection. Algos will track your block orders and try to bully you out of positions or take your fills. Hiding size and using multiple smaller orders is my technique to counter this. I no longer use hard stop losses or any orders that are sitting in the book. I only place orders when I want to fill, and they are never further than 10 cents from the market. When trading size you stick out like a sore thumb, don’t give algos/MMs any more information than they need.

Having the right broker is crucial when trading size in small caps. I made the switch from Tradezero to CenterPoint Securities in early May and never looked back. The difference in executions alone is night and day. Locate costs are a fraction of the cost and the platform is stable and lightning fast. Having direct access is a must if you are trading size. The ability to send orders to different routes is a complete game changer for me. I was so used to filling last at specific price levels, now I have multiple route coded hotkeys to give myself the freedom I need to fill size with priority.

As my profit cushion grew I noticed my execution dropping slightly. I wasn’t as strict with my sizing, entries, or covers. Its important to catch yourself slipping before the market does, because the latter will be much more painful. This is where keeping a daily execution log is critical, you will notice it dropping and can correct the issue before it spirals out of control. Tracking your execution early on will help enforce the concept in your mind until it becomes second nature. That’s the main difference between my trading now and 1-2 years ago. In the past I would allow stretches of poor execution to continue until I was punished by the market.

Now my internal barometer is so fine tuned and etched into my brain that I don’t track it anymore, I just do it out of instinct. Its muscle memory at this point, similar to Jordan shooting blind free throws. I can just feel when my execution is dropping and correct myself instantly. I’m not immune to breaking rules, i’m still human after all, and fall to emotional impulses like FOMO from time to time. The difference is the frequency and magnitude of those rule breaks has decreased significantly compared to my past trading tendencies.

One of my students recently asked me if I feel like I’ve “made it”. I was reluctant to say yes because I know from past experiences that you are always one mistake away from blowing up. One stretch of bad luck coupled with a lapse of judgement and you can wipe out your account in a flash. My confidence as a trader is the highest of my career, but I constantly remind myself of what can happen if you let that become overconfidence. I will never assume that I am smarter than the market just because of my track record. Any successful trader knows they can be wrong at any given time. That’s why i’m constantly trying to improve and refine my edge and execution. A traders growth never stops.

I still respect risk and protect my capital against black swans and periods of extreme outliers in system performance. I may use wide stops but I never jeopardize my account for a single trade. If the market is going to beat me it will have to be over a long period of time.

At this stage of the game its all about preservation. Remember what got you here and stay as focused as you can. The profits will continue to snowball and your world will open up. Only now can I finally say all the growing pains were worth it. This is quite possibly the greatest feeling I have experienced in my 32 years on this earth. From the lowest of lows to feeling on top of the world in 10 months. That’s the power of trading and compounded bankroll growth. That’s what we all dream of as traders.

My plan going forward is to continue to build my profit cushion with the size i’m currently trading. I’m very comfortable with this range now and have been executing well for months. As that cushion grows, it will become even easier to deal with the drawdowns as they represent a smaller percentage of my overall profits. This stage of trading is what we all strive for, consistency, conviction, and confidence.

Q/A:

I wanted to thank you all for the input on twitter and great topics for discussion.

I distinctly remember my frame of mind in the early growth stages of my account, back in Nov/Dec. I had a quiet confidence I could do this before actually achieving the goal. The reason for this was my unwavering focus on execution. Despite all the losses and blown accounts, I had this sense of optimism and that helped me during drawdowns. I just kept reminding myself that its part of the process. If you focus on the long run, then today’s loss doesn’t seem that bad.

My main strategy is shorting parabolics, stocks moving up in a short period of time. I’ve recently added gap up shorts to my arsenal and its been a great success. I use trade ideas exclusively as my scanner. As far as filter settings go, this is depending on your goals as a trader. The only way to find out what works for you is to track the data and over time it will become apparent what settings are ideal for your strategy. Alot of guys ask for my scanner settings, and it would be a disservice to them unless they understand WHY those filters matter. How will they have any conviction in them during drawdowns? I recommend using an excel database and track at least 300 tickers and make conclusions based on that.

Scanner settings wont make you profitable, only execution will.

Top ticking is not an exact science. Even when I take an entry I have no idea if its the top or not. I just go with my criteria and take the trade, no hesitation. Ways to increase odds of a top tick are lvl2/tape reading and key resistance levels on the chart. During a parabolic squeeze, if you see the tape speed slowing down at resistance levels, coupled with hidden selling or stacked offers on the lvl2, that will give you added conviction to enter the position. If you want confirmation before entering then I would recommend waiting for a shift in the tape/momentum or hit a lower high and risk HOD. Even with all these tactics, top ticking is simply a guess, but an educated one.

My stops are quite wide as you guys know. Usually between 60-100% from my entry. In my experience, the wider the stop, the better. The reason for this is to increase your win% and expected growth and compounding factors as much as possible. A high win rate strategy is the best for exponential bankroll growth. See my previous blogs for a detailed example. I’ve also introduced a max dollar loss on a position, so If I decide to size in heavier than normal, I will lower my stop to respect that dollar amount.

Im reaching the maximum position size I can comfortably take in these lower liquidity small caps. When its a higher volume play I size in a bit more when the opportunity presents. Transitioning to mid/large caps is a possibility in the near future but will need to gather a large database and ensure the edge will be sufficient. At the moment I have no problem banking 100-200k per month and can do that without over leveraging myself in low volume pumps. I would like to build a cushion for a year or two and then consider my options.

As I’ve sized up, the odds of a partial fill and wasting locates has increased. To counter this I like to locate half my intended position as the stock is spiking and wait for prints to hit the ask before accepting them. This way you can fill a partial and if volume dries up or it tanks, you don’t waste money on unnecessary locate fees. I have a general rule of 2% max for locates. So for example I wouldn’t pay more than .06/share on a 3 dollar stock. I will make exceptions if other factors are on my side however.

Trading multiple setups is a problem alot of new traders have. Its easy to get overwhelmed with information when you are starting and the temptation to trade 5+ setups is very high. We all think more setups = more returns. But less is more in trading. Focus on 1 or 2 setups and absolutely master them before adding others to your arsenal. Only after 3 years of shorting parabolics exclusively have I added gap up shorts. I’ve reached a point where I can focus all my energy on gappers and not sacrifice anything with parabolics due to my experience level with them.

Having a backtested strategy is one of the most important things a trader needs to have. Not only to provide you with an edge, but also to give you the conviction to stick with that edge during inevitable drawdowns. You need to track the data in excel and have at least 300 tickers in your database before the edges become apparent. I track everything you can think of from float, market cap, shares outstanding, short float%, insider%, institutional ownership%, 200 day SMA/EMA, open, high, low, close, volume (dollar, absolute, relative, average), VWAP, SSR. The more info the better! I highly recommend learning excel formulas so you can determine the edges yourself, many free guides available online.

As of now I like to keep a base level in my account and then grow it to a predetermined level, wire out and repeat that process. I would only recommend this type of account management after you have sized up considerably and compounding isn’t really an option, at least in small caps. Smaller accounts under 100k I wouldn’t wire out anything unless you need it for living expenses, just leave it in there and keep compounding. I leave enough in my account to trade on busier days, but not enough to be dangerous if I get stubborn or reckless.
Money in your bank account is much safer than your trading account.
I go over execution in my previous blogs, but its so important that I wont pass an opportunity to discuss it further.
Execution% is specific to each trader. To me its strictly trading based. Did I take the right setup and entry? Did it meet all my criteria? Did I size in correctly? Did I cover/stop out at the right price? I only factor things that are in my control. Things like good/bad luck or broker/internet/other issues I don’t deduct any points.
Everyday for me starts at 100% and I can only lose points by committing conscious errors.
Entered too soon? deduct 5%.
Sized in too heavy or averaged up? Deduct 10%.
Took a non system entry? Deduct 25%.
Got stubborn and held a loss? Deduct 50%.
Piked out and covered too soon, leaving profits on the table? Deduct 10%.
The percentages are subjective and based on what you feel is important. Make your execution% personalized. Some guys like to include things like eating or sleeping well. Others like to journal their state of mind before trading. Anything that is important to your trading should be included and tracked. This way you can catch yourself slipping before the market does it for you. Poor execution isn’t always swiftly punished by the markets, sometimes you can get away with it. Its better to be aware of it before a blowup occurs. Very few traders track their execution, they are too busy staring at their PL. Rewire your brain to place more importance on execution and watch your bankroll grow!
Before I went full time as a trader, I worked as a pharmacist for 9 years and was a professional sports handicapper for over 10 years. I noticed my edge in sports declining over time as the sportsbooks became sharper and more efficient. I also wore out my welcome with many sportsbooks as they refused to take my action. I knew I had to branch out to a different realm where I could use the skills I learned over a decade long career, and trading was it.
That analytical background made the transition to trading much easier. I was very comfortable with statistics/probability theory and use of excel to design templates and formulas for tracking and backtesting. Everything you need to learn is available online for free. Put the work in and the results can be life changing!
I still work part time as a pharmacist as a change of pace and to keep a healthy balance. Trading exclusively can put alot of pressure on yourself to earn an income and may affect your execution in a negative way. I highly recommend having other sources of income even as a full time trader.
This is a difficult thing to overcome, and the main reason why 80% of traders quit within the first year. The amount of time and energy that goes into a successful trading career is likely more than you anticipate when starting. Its very difficult to jump into trading and become profitable initially, yet most traders expect just that. The perception is that you can join a chatroom, buy some alerts, and bank easily all while on the beach. When you come in with those expectations, you will feel disappointed when you realize it doesn’t work that way. I think more traders would be successful if they put the work in before trading live and have more realistic expectations. Truly mastering any craft takes several years, why should trading be any different?
If you really want to succeed at trading, then no amount of setbacks will keep you from achieving that goal.
We all enter this realm with grandiose dreams of riches and freedom. That desire is what kept me going through all the drawdowns, all the blow ups, all the emotional swings. I always knew I would be a successful trader and I didn’t care how many setbacks it took before I got there. This is my passion. If you want to be a pro trader bad enough then it will become your reality. Never give up, never listen to the haters or doubters. This journey is long and hard, but the results can be life altering.
Having a good support system was crucial for me. Trading is a mentally, emotionally and physically demanding career. The roller coaster ride of emotions will take a significant toll on you. Having someone in your life that you can count on to be there in your darkest moments to lift you up, and to celebrate with on your milestones is priceless. Trading can put a strain on your personal relationships and you need someone who understands and respects that we traders are wired a bit differently than the rest. Chose wisely boys…
With my system, big drawdowns are inevitable. I use very wide stops and a small percentage of the time, I will have to eat a big loss. As my profit cushion has grown, the drawdowns don’t sting as much, however when you are growing a small account, it can be devastating. I recall early in my journey I lost half my account in a week, going from 20k to 10k while taking a few max losses. It wasn’t from poor execution, it was simply part of my system. It was the first time in my career that I was completely unaffected by a loss. I had fully accepted the fact that drawdowns and max losses are a part of it and there was nothing to do other than keep grinding and executing my plan. This was the moment where I knew I had it. If a 50% drawdown this early in my journey didn’t phase me, then nothing likely would. Throughout my career it was always the max losses that I couldn’t deal with. I would always fight them and try to make the loss back or turn it into a winner. That approach is very dangerous because in most cases it will work out, but eventually you will run into something that wipes you out.
Part of having an edge in trading is respecting it and applying it properly. If you get stubborn or average a loser, you are effectively sacrificing your edge for short term results. That’s absolutely the wrong focus. If i’m going to blow up, the market will have to beat me over 100 trades, not 1 or 2.
July was the first month in this journey where I had to really focus and execute my plan perfectly. It was the first time the market conditions were very difficult for my strategy and it under-performed as a result. Statistically it was one of the worst months my system had since I started tracking it in 2018. Times like this are inevitable in a long trading career, no matter how large your edge is. Its easy to get tunnel vision and think you are never going to win another trade again. Its easy to lose faith in yourself, your trading abilities, and your system. Even after growing my account to over half a million dollars by that point, I still felt some doubt in my mind. This is perfectly normal. We are human beings, not robots. And we live through the emotional roller coaster of our equity curves on a daily basis. We sleep with it on our minds, we constantly dwell on it and think how we could have avoided the loss. But the answer is, you cant! No trader can avoid randomness, bad luck, or extreme outliers. These are facts of life and the probabilistic nature of trading. The real issue is that we as humans weigh the negative part of the spectrum more heavily than the positive side, we remember the drawdowns so distinctly, while quickly forgetting the huge winning streaks.
This is where you need to keep a long term perspective and focus on what got you here. People doubted my strategy and claimed I wasn’t able to adapt to market conditions when July came around. I didn’t see it that way. I saw it as a negative outlier and short term variance in my systems performance. I knew eventually I would see the opposite end of that spectrum. So all I did was put my head down and kept on grinding, kept executing my plan. I didn’t change a thing! The only way I could have that level of conviction was from the massive database I had amassed over the years. Without that I likely would have tweaked things or maybe gave up on the system all together.
The end result was putting up my best month ever in August and catapulting my equity curve into the elite Millionaire Trader Club.
Sincerely,
Kris Verma