---
title: 'Learning from a Losing Trade'
source: 'https://youtube.com/watch?v=naLSUqLagsY'
video_id: 'naLSUqLagsY'
date: 2026-08-10
duration_sec: 795
channel: 'SMB Capital'
---

# Learning from a Losing Trade

> Source: [Learning from a Losing Trade](https://youtube.com/watch?v=naLSUqLagsY)

## Summary

This video is a detailed post-mortem of a losing day-trade on a stock (likely DE) where the trader shorted a 'day two' move that unexpectedly reversed sharply upward. The hosts analyze what went wrong, how to update the trading narrative when price action invalidates the original thesis, and how to minimize losses by recognizing strength early. They emphasize that even losing trades offer valuable lessons in discipline, risk management, and adapting to changing market conditions.

### Key Points

- **Trade Setup and Plan** [00:51] — The catalyst was earnings, and the setup was a 'day two' pattern. The trader planned to short a first move up, expecting a rollover, with a stop above 325. He was down about 16% of a stop, which he considered acceptable.
- **Unexpected Strength in Day Two Moves** [01:46] — The market showed unusually strong day-two moves, with DE and another stock (likely ROST) making powerful upward moves. This strength was surprising and different from recent patterns, invalidating the short thesis.
- **Discipline in Not Re-Attacking** [02:24] — The trader did not try to re-enter the short after being stopped out. He took a small scalp but then stepped aside, deciding to watch for a possible day-three setup instead of forcing the trade.
- **What Should Happen on a First Move Up** [03:06] — When a first move up occurs, a trader should expect a quick failure and rollover. In this case, the first move up to 320 did start to roll over, but the subsequent move up was so strong that it changed the entire narrative.
- **Learning from the Tape** [04:17] — The hosts discuss the importance of watching the tape to identify potential long entries, such as buying above 322 during a consolidation. They note that in hindsight, a long could have been taken risking 320, but the tape is the key to making that decision in real time.
- **Updating the Narrative** [05:42] — The trade did everything expected (first move into levels, failure, back below open) but buyers stepped up and pushed price from 316.50 to 324. At that point, the narrative must be updated to respect what the market is actually doing.
- **Cutting Losses Faster** [06:24] — Even if you can't flip to a long, cutting a loss from 16% to 10% of a stop saves you 6%. Recognizing strength early and being out faster is a valuable skill that improves over time.
- **Personal Improvement: Fighting for Price** [07:32] — One trader noted improvement in not giving in to FOMO. He waited for his original short level at 320 instead of entering 40 cents earlier, showing discipline in execution.
- **VWAP as a Key Indicator** [08:38] — DE broke VWAP and showed weakness, while ROST never broke VWAP and held above it all day. This difference was a key characteristic to watch for in day-two trades.
- **Minimizing Risk and Exiting** [09:47] — The trader lost only 3% of a stop instead of the full 10% risked. He realized that once VWAP broke, the trend was likely up, and he could have exited for a profit instead of taking the small loss.
- **Key Tape Area to Review** [10:27] — The hosts identify the 9:37 to 9:41 time window as crucial for understanding the day-two characteristics. They plan to review that tape to find better entry and exit points.
- **Flipping Bias and Risk Management** [11:34] — The discussion concludes with the idea of flipping bias when price holds above a key level (324) and risking to a prior high (322). This is a way to turn a losing short into a potential long, but it requires quick adaptation.

### Conclusion

The key takeaway is that even when a trade follows the plan perfectly, the market can change the narrative. The most important skill is to recognize that change quickly, update your bias, and minimize losses — or even flip to the winning side. Discipline and continuous learning from losing trades are what separate successful traders from the rest.

## Transcript

real quick um so catalyst was uh earnings and the setup was a day two um i was looking for a first move up something i've really through on my plans and so last friday i was talking with kyle valance and i just
little bit accountability until i get a group going and so we're kind of working together just so i can follow through on my trades and today it didn't work out and i'll go over that but something i'm really happy is about is that i followed
through on my plans today my first my plan was to shorten their um and start i think i was going to be dead and start i think i was going to be dead wrong over 325 and i was um i'm down
about 16 of a stop which is okay with me but um we had this first move up and i thought we'd get kind of a rollover like a typical day too but something that we saw today with a lot of these day twos is just really
strong really strong moves up i mean we had a d-e-r-o-s-t really haven't seen that type of strength in day twos lately yeah
and we just we just haven't and this is i mean look at this day two move this is a really strong day two move um and if we pull a borrow at t2 i mean that's another really strong those are just the two that i was looking at um and it
didn't work out but i think the setup is still valid for but we just had a real strong i mean this was an atr move in what 30 minutes on this and something that else that i did i
think i did really well with that i didn't sit and try to attack this again i did have a short scalp up here because i thought with the cues and the market rolling over but it didn't even roll over when the market was so um that's
cautious enough and then we just stopped buying into here and so i just said i forget about it i'll watch it tomorrow for a possible day three set up but for a possible day three set up but um that was all that i took today so
about it with uh you know previously because i shorted back with the strength the strength is surprising so you know it's one of those things
information of what can happen and really like if we go a little more granular like what should happen on that trade when you get that first move up what should happen you should see a pretty quick fail
i i didn't think that first move the first move up lower like the one almost into 320 right wasn't that like kind of our first level on those yeah 320 was yeah so i was kind of thinking like man couldn't that be like
um and it started the rollover didn't it i yeah it did and then even lost v wet but then this move overview up was just it was a real strong move and it's just so different wasn't it yeah it was very
very different and i bet you if you look at the charts of that and then uh the gme i i sort of remember gma trading a little more of a consolidation versus a these are things that you want to learn from i think because they're
you know like as soon as you see that move it's sort of a boy hands off on sort of thing right because like we have our levels but it's that sort of price um or it can give you a lot of information
about the potential of the tradition so do you see an opportunity like where would you have possibly flipped long on this you know that's where i asked i asked the diffuse guys to uh you know they had the tape on it and so i kind of
want to watch the tape because i just i took the shirt off like that's it right i got blown out of my short and that's fine that happens see the tape
and figure out like hey on this tape like is there a spot to get because maybe you're seeing buying above 322 well that's a really uncomfortable right but that's about the only consolidation
watching it you could you know kind of make that change and make that trade but i don't i'm with you i don't necessarily see exactly what i needed to see in order to
so it's tough too as i said obviously in hindsight you can maybe try to get into that 322 kind of consolidation period risking that 320
area because look it holds above the resistance area for the prior day like resistance area for the prior day like cleanly at that 322 right like so ultimately is going to be the deciding factor on really seeing where because
updating the narrative with it like you had the first move into the levels that we were looking at you had the failure you had it go back below open price view up everything that you were looking for for a rollover but buyers automatically
stepped up and jeff like you mentioned buyers ultimately just went from 316.50 up to 324. so i think at that point that's where the update the narrative is updated and maybe the only thing that i'm seeing is maybe above the 322 area
risking down to 320 but that's where the tape i think is gonna have to come in and really see what we can find um for actual kind of spots in my opinion and look maybe it's not even there's there's a spot in this one but even if
you're better about like okay instead of losing tour you said you're down 16 of a one six yeah yeah so even if there's a way to cut it from sixteen percent down to ten percent well you saved yourself six
of strength right it's not always about being able great long but it is about you know kind of learning from this experience because the part that's so unique about this trade is it did exactly what it was
supposed to do and then that trade just changed damaging ones because sometimes i don't change the narrative right i get the short off at 320 and then all of a sudden it's like 323 and i'm like yeah
it's probably a better short but like over time if you can do a better job of or i need to do a better job of making sure i'm updating the narrative to respect what's actually happening
the tape's trading and everything and if i'm doing all that stuff then i'm putting myself in a position to win right and it may not come in a long but it may come by just recognizing it being out faster like that's
recognize and be out faster i think one thing that i was looking at just giving my my feedback as well um just based off kind of like evaluating or reviewing how i traded it personally i thought for me
like it was i saw improvements because for me like what i've seen over the past like couple weeks now is that especially on these first moves up i i look to see too quick and so for me i was really
trying to to fight for that price today like we we did have that at 9 31 we had like we we did have that at 9 31 we had that move up to like 3 19 59 and i was down and i was looking i was like shoot like do i get into it do i get into it
keep on waiting i'm gonna fight for that price that 320 level was where i was originally looking at to get short um so i did see the improvement for me being able to withstand i guess you can say that that fomo kind of um
thought process of okay maybe i missed my fill by 40 cents like do i try to get like a little sooner how do i go but i didn't end up waiting i fought for that price i got in that 320. i think overall one thing about what we were looking at
is that between like the day twos um yes de did show that it did like it had the of v-wap whereas uh ross never even broke v-wap it did have a pullback but it never it sustained a move above v-wop and held
the whole entire time whereas de was showing that weakness characteristic of it being able to um actually break v-wap as well i think for me so overall like i was only risking uh ten percent of uh of a
stop on this i ended up losing only about three percent of a stop i i was once we saw that we ended up breaking bebop we made a new low but we were reclaiming once we broke through v wap i ended up
new high i ended up getting filled right around the 322 area at 9 42 so i think for me like i did minimize that that risk um so i saw improvement for there but instead of actually letting the full stop go like against me
and the amount of risk i saw the potential that okay i realized that this think for me i only losing three percent on it like i'm happy with that um but i think overall is that
once we ended up breaking v-wap there at 9 40 i think could have just said okay this could be basically that trend and actually hit out for for a profit instead of trying to to take that three percent loss on it realizing that that
we weren't basically able i think if you look at it um 3 17 50 right around there um so the way that it looked back you only had a pullback basically about a
dollar below that and then ultimately just had a full trend for the day so i we talked about with with jeff with the tape is going back to that i think that right around in between like that 337 to 341 kind of really
dive into that part of the tape itself um because that was really showing like where the actual characteristics of the of the day two were going to play out but ultimately did not so i'm that's one of the key key places i'm going to be
looking at for the tape is that 937 to 941 area but i think overall is um looking back at it next is like uh for me i was saying if this thing's holding above 324 that was where my thought process was i was wrong with the trade
so i think for the improvement once we actually did break that 324 level i'm not too sure how because like jonathan said maybe i guess the risk that what you could have said is that you look for a pullback from maybe like
320 ford holdings um like for me when you get the first move up into like that 325 area as you can see you can you're holding 324 and you can risk to the high the prior high of the day of that 320
uh 321.84 which was the prior high at 9 41 once we actually broke so maybe get a pullback holding above 324 risking down to 322 basically for that high so i i'm kind of reviewing it is looking for
basically that that flip of bias basically looking to to see how how to yeah and that's for both you guys i think you both get this because this is an example of a trade that gave
you what you wanted and that it didn't work and neither of you are down more than 25 of the stock okay now you're even down 20 of a daily stop and these can be the trickiest trades because they give you everything you're looking for
work and that's or they do work and then they don't work and that's a really really challenging thing to have happen in trading but it does happen a lot
how you respond in that situation really says a lot about where the direction and click our subscribe button so you don't miss any of the videos they're community and please take the time to add your feedback
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