5 Day Trading Mistakes & Fixes — Full Breakdown & Transcript

[00:04] >> [snorts] >> Been with us for I think 8 months at the time. He's up $400 on the day. It's a solid morning for him, right? Three good trades, three good trading decisions.

[00:17] trades, three good trading decisions. And then I watch him make five mistakes in the next 2 hours and it cost him $970. By 11:30 a.m., by like noon, right? He's down $570

[00:30] Now, here's the thing. These weren't random mistakes, they weren't bad luck, they weren't unusual market conditions. They were the same five mistakes that I see traders make every single day.

[00:45] If you're losing money intraday, I guarantee you're making at least three of these right now. But in this video, I'm going to show you the five mistakes that we see on the desk at SMB Capital that are costing you $500 or more per

[00:59] day. And we're going to show you exactly what they look like in real time. fix them, right? Because it's not enough to say, "Here are your mistakes." We're going to talk about what we've learned to fix them.

[01:13] Today. So, let's go. I'm Jeff Holden, I'm the head of trader development at SMB Capital. And over the last 20 years, we've trained more than 300 professional traders, right? And I've personally reviewed over probably 50,000 trades

[01:27] program. But here's what I've learned. 90% of traders who are stuck, who are breaking even or losing money month after month, are making these same five mistakes. It's not 10 mistakes,

[01:44] five mistakes. It's not 10 mistakes, it's not 20, it's just five mistakes. And the brutal part of it is most of them don't even realize that they're making these exact mistakes. Here's how I know, right? A few months ago, we had

[01:59] pulled all this data, right? We did this experiment. We pulled 20 traders from our program. All of them stuck. All of them frustrated. All of them working their tails off with the hope that they were going to break through. We had

[02:14] their data. We had their stats. We had actually the video logs of them trading. But we asked them individually, "You go ahead and do your analysis and "You go ahead and do your analysis and tell me what's your biggest problem."

[02:27] You know what the most common thing they said was? "I need a better strategy." Or "I need to find better stocks." Or "I need faster execution." Wrong. Wrong.

[02:41] Wrong. Right? We pulled all of their trade logs. We ran all the analysis. We actually trading, what their screens look like, all that stuff. We found 19

[02:53] out of 20 of these traders were making at least three of the five mistakes we're about to talk about. And all almost all of them were making mistake number two. We fixed the mistakes, not the strategy,

[03:08] not the stock selection, just the mistakes. We focused on this intensely mistakes. We focused on this intensely with them for 60 days. 60 days later, 16 of those 20 traders were back on track. Same strategies, same stocks,

[03:23] different execution, and most importantly, they built a skill that is infinitely repeatable. It eliminating execution errors. That is the golden ticket to so much growth in trading. When you can

[03:38] eliminate execution errors, some of the things we're going to talk about right now. Here's the deal. If you're losing money day trading, it's probably not what you think. It's probably one of these five mistakes, or maybe more. And

[03:51] the good news, every single one of them is fixable today. Right now. So, let's Number one mistake, holding runners, open runners after

[04:04] 10:30, right? Mistake number one, this is the biggest account killer I see. Holding runners past 10:30 a.m. And here's what it looks like, right? You get into a stock at 9:40, beautiful setup. Let's call it a 90 EMA

[04:16] continuation trade, right? Tape looks great. Stock runs. You're up 40 cents, 50 cents, two bucks, whatever, right? And you think, "Wow, this thing's going to go like really go crazy. I'm going to hold." 10:15 comes around, stock's still

[04:30] looking relatively strong. You're up a pretty good amount now, right? 10:30 hits, stock starts to chop. It pulls back. It pulls back 25% of the You're like, "Oh, okay, I'm going to hold," right? Pulls back 40% of the

[04:47] because now you don't really have a plan. By 11:00 a.m., you finally get out after it's flushed VWAP, right? You just gave back like 70% of the entire profit that you could have captured on that

[05:00] trade. Now, why does this happen? Because you're not respecting intraday momentum windows, right? Let me show you what I mean. Here's the reality of intraday momentum. And this is data.

[05:12] intraday momentum. And this is data. This is not opinion. We analyzed 5,000 This is not opinion. We analyzed 5,000 momentum trades over the last 12 months. Stocks that ran more than 5% in the first hour, and here's what we found,

[05:24] right? 73% of those moves made their high of the day before 10:30 a.m. 89% of the of them made their high before 11:00 a.m.

[05:36] a.m. Only 11% of all the stocks we analyzed, first hour runners, made new highs after 11:00 a.m. Why? Well, this lines up across all these stats that we've studied for markets, for individual

[05:51] equities, for sectors because after 10:30, after 11:00, that's when momentum 10:30, after 11:00, that's when momentum tends to die, especially from the open. The first 30 to 60 minutes of the session, it's price discovery, and then

[06:05] you have that urgency, right? That's when you have FOMO. That's when retail's chasing. That's when institutions are executing their size. But after 10:30, that urgency tends to fade, and the volume tends to dry up, and the algo

[06:17] traders step in, right? The options market makers sell against it. The stock starts to chop. And if you're still holding through that, you tend to just give back profits to people taking the other side of the move. Let me show you

[06:29] one of Marco's trades, right? This is the thing that started this whole video off. The ticker was Corweave. It was a day two gap up into resistance. You enter short at 9:42 at 91 bucks. Stock goes down to 85 by 10:30, right? He'd

[06:45] way, but he was sitting there and literally saying to us, "This looks like it's really going to crack. This looks like it maybe is going to be an all-day fader." He had this data that he was like, "If this just fades all the rest

[06:59] of the day, think about how much money I'm going to make, right?" But as he's telling us this, a clock's going off in my mind, and I'm like, "Marco, it's 10:15, man. Let's let's start to think about taking it." And

[07:11] he's like, "This is This is really weak. It's really going to unwind, right?" Then the stock pops to 86, moves a buck against him, right? He sees a seller, and so he's like, "Oh, I can really hold this trade now. I see that seller. This

[07:23] is really going to roll over, right?" By 11:00 a.m., the stock's back up to 88. By 11:30, the stock's back up to 90. Now he's literally just frozen. But his self-talk, it's it's it's all just based on his open P&L.

[07:38] He was telling himself, "Well, my stop's break even anyway, and if it really goes, it's really going to be great. But at 11:46, the stock round tripped on him, and he got stopped out. He gave back eight points.

[07:51] Eight hard-earned points that he should not have given back. And what's worse is he needed a really good momentum trade, but he didn't respect the momentum window, and then he missed the turn, and then instead of

[08:03] have done, had he covered his short and then just waited for a simple backside trade, he gave it all back on that old short idea, right? So, here's the rule, and this is non-negotiable. If you enter a momentum trade in the

[08:18] If you enter a momentum trade in the first hour, your target exit is before 10:30 a.m. Period. Not 10:35, not 10:45, but 10:30. Why? Because statistically, you're fighting the fade after that. Now, does that mean

[08:34] every stock dies at 10:30? Of course not. Some keep running. But those are the exception, and exceptions don't make you profitable at first. The the right to know when it's an exception. Let me tell you about a

[08:48] trader on our desk, S, right? S has been with SMB for 2 years. For 18 months, S was stuck, break-even trader. Some months maybe up 500, some months down 500, basically spinning wheels, right? Pulled all the trade logs, we ran all

[09:03] the numbers. Win rate was like 62%. It was good, right? Average winner, 43 cents. That's pretty solid for an average winner, right? Average loser, 19 cents. But here's the kicker, right? 38% of her

[09:19] winning trades turned into losers or turned into small winners. Simply because she had held past 10:30. Let me say that again. 38% of her break-even trades because she held too long.

[09:33] All right, let's go out and calculate the cost. Over 18 months, she was giving back like $14,000 in profit fade by holding past that momentum window. $14,000 for somebody who's up or down 500 bucks

[09:47] a month, right? So, we simplified it. One rule, non-negotiable. First hour, exit before 10:30. No exceptions. First week, she completely hated it.

[09:59] She watched and only focused on the three stocks that kept running after she But, the second week, she started to see it. Two of her trades had faded pretty hard after 10:30, and she was already out.

[10:12] She was locked in the profit. Third week, it finally started to kick in, right? The statistical edge isn't catching the last 20% of the move. It's catching the last 20% of the move. It's in taking the middle 70% and getting out

[10:25] before the fade starts. 60 days later, S's break even at averaging now, pretty good amount a month, right? Same pretty good amount a month, right? Same strategies, same stocks, one rule, exit

[10:38] before 10:30. And here's your fix starting tomorrow. If you enter a trade between 9:30 a.m. and 10:00 a.m., set an alarm for 10:25. 10:25. Start scaling out or exit entirely, or

[10:55] at least move a stop way up there, so you're going to get stopped out. No exceptions. No, but this one looks strong. No, I'll give it 5 more minutes. strong. No, I'll give it 5 more minutes. 10:25, exit strategy enacted. And then

[11:08] results. I almost guarantee you're going to add 300 to 500 bucks a month fix. Mistake number two, and this one's so painful. This one sneaks in and it undermines so much good work, and most

[11:23] people aren't even aware of it because it shows up in three different ways. This is one mistake that shows up in three ways. Ouch, right? Honestly, this whole video should just be about this mistake because it's so common and it's

[11:36] so deadly. But that data from our little experiment mattered. Even though this one is the most dangerous one, right? This is just a simple mistake and I'm going to say it

[11:48] probably even skip this portion of the video. Don't. Adding to losing positions is mistake number two. Now, there's a core idea here, but there are two twists

[12:00] within this as well. So, let's lock in because this one runs deeper than most traders realize. When we had run our experiment and we reviewed trader behavior, this was the mistake that triggered the most

[12:12] defensiveness. Not curiosity, not ownership, defensiveness. When traders would walk in, they would almost fight us on this point. They would literally say, "I don't do that." That's not me. I don't

[12:25] average down, right? And we'd pull the lots. We would actually watch the tape with them of their trading. We're sitting in this room watching tape of eight traders trading and one trader literally said to me,

[12:39] "Did you edit that video? I can't believe that's actually my trading." That's how sneaky this mistake is. And here are the three ways that this shows up. Here's the obvious one, right? Averaging

[12:53] down. You buy a stock at 10 bucks, you plan to risk to 985, stock drops to 990, you think, "Oh, it's just a dip. I'll add a little bit here, right?" You get a better price, same stop. How much am I risk am I really adding, right? This is

[13:06] the most basic version, just averaging down. Here's the truth, though. The problem's not the add, the problem's the mindset. You're not making a calculated way out of a bad situation. The outcome does not matter when you've done that.

[13:22] You increase the risk without the trade earning it. That's the most straightforward one, but let's get to the sneaky one, right? You're adding without the EV expanding. So, here's the situation. You enter a

[13:35] trade, right? The stock just kind of flatlines. Maybe it ticks a little bit in your favor. Maybe it tries to go, but actually never confirms your thesis. And then it pulls back a little bit and you're like, "Oh, if it goes now, it's

[13:48] really going to work. So, let me add, right?" You justify it even by saying, "I'm not averaging down. I'm actually getting better prices in in my favor. This can still work. And if it works, it's going to work out really well."

[14:00] But, here's the key. The stock is not behaving exactly how you want it to behave. And if it's not behaving exactly how you position. It's not red in P&L yet. It's not worse

[14:15] price than you had before. But, no confirmation equals a losing trade. So, let me ask you. Show me on this chart where the expected value expanded in your favor. Where did the probability of this trade improve? Where

[14:31] did the payoff improve on this chart? improve on this chart? It didn't, right? Price alone has zero relevance to expected value. Let me say that again. Price alone has zero

[14:44] relevance to the expected value of the trade. And in this case, you didn't add to a winner. You actually tried to finance a mistake. That is so detrimental because it's just as bad as averaging down. You're just

[15:00] averaging down with the expected value not going in your favor. Let's get to the third one because this is the most dangerous of the three. It's the one that this got the trader to say, "There's no way that's actually me,

[15:14] say, "There's no way that's actually me, right?" Reentering the same bad trade. That's just averaging down, right? You're enter you're reentering the same bad trade. You took a trade, you get stopped out, 3 minutes later you're back

[15:27] in the same trade and you're telling yourself there's new information, but there isn't. It's the same trade. It's the same idea, the same lack of confirmation, just more time and unfortunately for most of us more hope

[15:41] that we put into it. If the new information does not improve the trade, you're in the same losing position. And every dollar that you put back into that, you're showing you don't value capital the way you think you do, or the

[15:56] way you tell yourself you do, right? All three of these are the exact same mistake. They're all averaging down. They're all adding without confirmation. They're reentering without a new trade, right? These are all three, averaging

[16:12] down, adding without more confirmation, and reentering without a new trade. You are just increasing risk while the expected value of the trade is not improving. That's it. This is the simplest way to recognize

[16:28] that. If every trade you make the expected value isn't better, then you are making this mistake. And here's the fix. We tried a ton of different solutions, right? There's only

[16:41] one that worked consistently. You are only allowed to add when the You are only allowed to add when the trade is already working and confirming your thesis. That's it. It makes all this super

[16:54] That's it. It makes all this super binary. Before every add, before every click of a button, you have to ask what new information improved this trade. level? Was it the tape? Was it the structure?

[17:10] Would I take this trade fresh? Would I take it again right here? If the answer to number three is no, the ad is illegal. You're not losing because the trade didn't work. You're losing because you

[17:24] increased risk when the trade didn't deserve it. Elite traders don't add because they want to be right. They add because the market proved them right.

[17:37] Mistake number three. And this is the one that separates amateurs from professionals, right? If you're trading with out tape confirmation. And here's what it looks like. You see a chart set up.

[17:50] You know, bear flag, bull flag, VWAP bounce, opening range breakout. It looks perfect. You enter, but you enter based And then this is what can happen. The stock immediately goes against you. Stop

[18:03] out. Took a loss, right? And then you look at the tape after the trade. And you realize that the tape was screaming, "Do not take this trade." There were no sweeps. The bids weren't

[18:18] stacking. The offer was absorbing every single buy. All the signals were there. You just didn't look. We actually just had this happen today. There was a trader that had set all sorts of price alerts in this stock.

[18:32] "I'm long." He didn't even look at the tape. He'd We're sitting there. The first thing we did was look at the tape. The stock had spread out by 30 cents. And then the stock then the spread

[18:46] started collapsing. And then it spread out again. He's sitting there staring at the chart saying, "This is going to go." And we're sitting there looking at the going to go." This is the difference between a 50% win

[19:00] rate trader and a 70% win rate trader in any given strategy. The chart just gets you in the game, right? The tape tells you if you should stay in the game or if you should just back off. And let

[19:14] Here's the data. And this is from our internal SMB Capital database. We tracked two groups of traders over a period of time. Both groups traded the exact same setups, right? They traded day twos and

[19:29] they looked for hitchhikers. They looked for second chances. And then they looked for backsides. Group one entered based on chart signals

[19:42] only. They didn't look at the tape, right? We didn't even really focus on want to go to the reading the tape meetings, whatever." Fine. Group two required tape confirmation before entry. If there was no tape signal, there was

[19:56] no trade. The results were fascinating, right? In The results were fascinating, right? In group one, 54% win rate. 1.6 risk-to-reward ratio. Your average monthly return was decent, right? Group

[20:09] monthly return was decent, right? Group two increased their win rate up to 68%. They had better risk-reward ratio. They were making more money. There was a big gap, almost a 14% gap in

[20:24] their win rate alone. And a huge percent gap in their monthly And a huge percent gap in their monthly returns just because one was looking at focused on the chart. If you look

[20:36] around, every experienced trader is staring at their level two in time and sales around the time of entry. Why does it work? Because the chart just shows you where price has been. But when it comes down to execution, the

[20:51] tape shows you who is in control right now. you if there's a buyer or seller at the breakout level. The tape does. You can see it. You can see the bid stacking. You can see the

[21:04] buyer. You can see an offer refresher. You can see that seller, right? And if the tape says there's a seller in control, you don't take the chart almost immediately because it's probably going to fail.

[21:16] Here's what tape confirmation looks like. And these are the four signals we teach. Signal one, size on the offer thinning, right? There's a big seller that was there, but now they're getting cut through. Signal two, sweep orders,

[21:28] right? Multiple price levels getting cleared at once. That's usually institutional buying or big big players buying, right? Signal three is bids stacking. Big size appearing on the bids during pullbacks, right? That's

[21:41] supportive buying. That's looking for continuation to the upside. And signal accelerating. Trades happening faster. There's urgency that's increasing. When you see three of those four, the tape is confirming your

[21:54] chart setup. When you see one or zero, the tape is always saying wait or don't size this up. And here's the key, the tape is usually right. There's a trader here on our desk. It's been trading here for, I don't know, quite some time. When

[22:08] they joined SMB Capital, they were a decent trader, break even, some good break through and had really good chart reading skills, but could not really identify what was happening on the tape. When we

[22:24] worked with them, we found every chart setup was being taken the taken the exact same way. There was no filter for confirmation. Setup appeared, took it, right? Chart trade appeared, took it. The result, half of the trades

[22:39] were immediately going against them because the tape was saying don't take this. And they weren't listening, right? There was no trade without at least two tape signals, two of the four we just talked about.

[22:53] There was a lot of concern and a lot of debate, but the reality of the situation is by using those tape signals, you were avoiding bad trades. That's it. That's it. You're avoiding the bad

[23:05] The trades with tape confirmations are good trades. The trades without them were just bad trades, right? There is something to be said about eliminating mistakes. That's what this video is all about.

[23:20] Trading without the tape is a big mistake that you can avoid, that you can eliminate. Mistake number four, and this one costs traders a lot of money because you don't protect your profits, right? If you ignore three red bars in a row

[23:35] after a strong move. And here's exactly how this plays out. The stock's running, right? You have five green bars in a row. Green bar, green bar, green bar, feels great, right? And then you get

[23:49] your first red bar. And then you get your second red bar, pullback. Maybe I'll get some more out of this. And then you get your third red of this. And then you get your third red bar, consecutive red bar.

[24:03] You have to be very careful here because what happens next tells you so much about what's going to happen in the trade. You have to see that third red bar high get taken out immediately.

[24:15] If it doesn't get taken out on the next bar, you need to be exiting your position because you're going to give back 60% of your profits on the next two bars. Those three red bars are the momentum

[24:28] you're going to give back too much profit every single time. If you see those three red bars, you have to make a trading decision. If you don't, that's not trading, that's hoping. Here's the rule. The first three

[24:43] hoping. Here's the rule. The first three red bars after five or more consecutive that is your signal to make a trading decision. You just draw a line at the top of the next bar, of that red bar, and if it breaks that, you can stay in.

[24:57] If it doesn't, you have to reduce size. You don't have to exit the entire trade, but you should be taking some profit off into the next up move because momentum is shifting. The buyers are fading. The sellers are stepping in. And if you wait

[25:10] too long, you're going to give back all of the profit. That three red bars is the indication. It's that canary in the coal mine, and it's telling you the environment is probably changing. Pay attention.

[25:24] Mistake number five, and this really is the most costly one. I've said it about I made this mistake today, right? And this is the one that keeps good traders from becoming great traders or even good traders from becoming great in that

[25:39] moment, which is all you need to do. If you're not taking profits at like. You're in a trade, stock's running, you're up three to bucks, $3.50, but the stock's approaching a resistance level. Prior high, it's a

[25:55] whole number, it's it's it's some really important area, and you think it's going to break through. I'm holding for the breakout now. But then the stock hits resistance, and it just fades.

[26:07] You give back a dollar, two dollars, whatever it is, because you had hoped for a breakout instead of taking profits at the obvious spot. This is trading on hope instead of probability, and it kills your consistency because what what

[26:21] happens is you then go back and make a different mistake. Let's look at the resistance levels, and this is something most traders don't understand. Resistance exists because sellers are there, right? By definition, that's what

[26:35] approaches resistance, you're approaching a level where sellers are waiting. Now, sometimes the stock does break through. The buyers overpower the sellers. Most of the time when that happens, you're going to look for a pull

[26:49] in and a consolidation before that breakout happens. But most of the time if it's run right into that resistance, the first test of that resistance fails. price is going to reject off of that level.

[27:02] Now, if you took like 5,000 intraday trades with stocks approaching identified resistance levels, here's what we're going to find. Your first test of resistance, 68% of the time that resistance is going to

[27:15] The price is going to bounce down off of it, or it's going to fade. The second test, only 54% of the time it holds. The third test, 42% of the time it holds. So, on the first approach to resistance, you've got a 68% chance that

[27:30] the stock doesn't break through or won't break through. But, here's what most traders do. They try and hold through the resistance hoping that it's the 32% And then when it doesn't happen, they don't manage their risk, they give it

[27:43] all back, right? Here's the rule. When your stock approaches a clear resistance level, take profits. Or at a minimum, take partial profits. You don't have to exit the whole position, but you should be reducing size at obvious resistance

[27:56] spots. Why? Because the probabilities say it's first test. And if it does break through, you can always reenter. But, at least you locked in profits in the high probability rejection zone.

[28:09] That is trading probabilities. That's not trading hope. When a stock is approaching a clear resistance level, exit 50% of the position 10 cents before the level. If it does break through, you still have

[28:23] 50% of the position. You can always add back. But, if it rejects that level, at least you've locked locked in profits in the optimal spot. If you do this and you track it over 90 days, it's going to be fascinating to

[28:35] see. Same entries, same stocks, just one change. Take profit in resistance instead of hoping for all the breakouts, right? So, before you enter any trade, identify the nearest resistance level, whether it's a prior high, whole number,

[28:49] then write it down, put it on your chart, and then put an offer up there stock gets within 10 cents of that level, make sure you're out. Don't wait to see if it breaks, just take the profit. And if it breaks

[29:04] through, great. Re-enter with the other half or add it back after it pulls back in and gives you continuation. But, at least you're taking half off. Do this for at least 100 trades and track your profit per trade. I bet you you'll see

[29:17] an increase in 40 to 60% of your per trade profit just by doing this. Let's bring this home. Five mistakes, five fixes. Mistake one is holding runners past 10:30. Mistake two is averaging down.

[29:41] Mistake four is ignoring the three red bar momentum shift. And mistake five is not taking profits at resistance. Okay? Here's the thing. You don't have to fix all five at once. In fact, you really

[29:55] shouldn't. You should pick one. The one that resonates the most with you. The one that you know that you're doing. Fix that one first for the next 60 trades. Track it, measure it. I guarantee fixing one of these mistakes will add 300 to

[30:09] 500 bucks per month to your P&L. And if you fix all five, you'll add a lot more. That's the difference between a struggling trader and a profitable trader, consistently profitable trader. Not strategy, not stock selection,

[30:23] execution discipline. Here's what I want you to do. Right now, go to the comments, tell me which mistake you're making. Be honest. No judgment here. And just say, "I'm making mistake number X." And then commit. For

[30:37] it. We'll check back in in 60 days, and we want to hear the results. Also, if you want a deeper breakdown on tape reading and how to identify those four confirmation signals, we're going to be

[30:50] week. If you found this video valuable, hit subscribe. We try and post something like this every single week breaking down real execution mistakes that keep traders stuck. All right, that's it. Go

[31:03] fix one mistake, track your results, and we'll see you in the next video.