Let’s face it. No one has their best day ever, every day of the week. Whether you work in a factory, an office, at home, or on the road, there will be days when you just can’t get it together. And it’s the same for day traders. But a bad day at the office for a day trader has the potential to wipe out weeks — if not years — of work in a single trade. Warrior Trading’s Ross Cameron, an expert day trader himself, has seen days like this. Here’s what he says about how to handle them.
A Bad Day Can Come Out of Nowhere, Says Warrior Trading’s Ross Cameron
Trading, at its very simplest, is understanding how to pick a stock and doing it every day. To be a successful day trader, says Cameron, you need to build a trading strategy and stick to it. But that requires discipline. You need to keep a clear head and a steady hand.
“It’s one thing to learn the concepts of the market,” says Cameron. “But then there’s the emotional disposition — the psychology of trading. That really is the biggest challenge for every trader I’ve ever known, including me.”
By the psychology of trading, Cameron means the state of mind you’re in when you sit down to trade and how you will deal with the information that’s on the screen in front of you as the markets move and you’re poised to make a decision.
Traders need to understand their own minds, says Cameron, and check in with themselves at the start of the day to ensure they’re in the right place to trade.
“I learned all that through my own mistakes,” Cameron confesses.
Ross Cameron’s Dreaded ‘Red Day’
One of the first really big “red days” — when Cameron lost in the markets — was in 2019, on the anniversary of his father’s death.
“The biggest red day I’ve ever had since then was on my birthday,” Cameron adds, explaining that a bad trading day can come from both a negative emotional feeling or a positive one. “It is very easy to have your blinders on to the fact that trading on days like these can carry emotions — trying to make your dad proud or trying to make sure you have a really great day on your birthday. It’s certainly not a coincidence that some of the biggest red days I’ve had — record-breaker red days — were on days where, for one reason or another, emotionally I was not at the top of my game.”
Ross Cameron is someone who’s been day-trading for years, is incredibly successful, and knows himself well.
“And it can still happen to me,” he says.
The emotional response to having just experienced a loss, frustration, anger, or even elation over a birthday, can suddenly start a trader snowballing.
“This is why a rock climber — even with years of experience — still has a rope,” says Cameron.
There are climbers who like to be daredevils, of course, but they’re actually in the minority.
“Most experienced rock climbers use ropes because you need a safety net,” Cameron states.
On one of his biggest-ever red days, Cameron lost $275,000. It was a week after he had made about a million dollars trading Gamestop and other meme stocks — stocks that go viral due to online interest — during a period when the market was hot.
“I took all the parameters off my account — I took the rope off in rock climbing,” Cameron explains. “If you’re getting ready for something a little riskier — [for instance] you’re holding onto the cliff and you’re getting ready to jump — you need to let some slack out on your line because otherwise, you won’t have enough line to reach your point if the rope is too tight. Sometimes to step up and take some risk, you do need to let out the lines a little bit. But it was a mistake for me to take all the guardrails off, and I paid the price. [Day-trading] is just not a career where you ever really should get to a place where you can go without a safety net completely. Because in one day, you could have something really bad happen.”
Don’t Become One of the Sheep, Warns Ross Cameron
There’s another common reason why some traders have bad days. And that’s when they buy led by market sentiment instead of sticking to their trading strategies.
Trading is all about imbalances between supply and demand. And demand is usually created by a reaction to breaking news that a company has just filed great financials or it’s just won a big contract.
But there are other things that create demand, too.
“Emotion, fear, greed, excitement, the fear of missing out. That all creates demand,” says Warrior Trading’s Ross Cameron, adding that on the supply side of the equation is the number of shares available to trade. “We can see these moments of extreme imbalances between supply and demand. That’s volatility. That’s an opportunity.”
Successful trading really starts, says Cameron, with truly understanding the anatomy of those moments of opportunity.
“And once you understand the anatomy of those types of stocks, then it’s a question of: Where do I buy and where do I sell? And how do I manage my risk?” Cameron says.
But when you’re staring at the trading screen with your finger hovering over the buy button, it’s incredibly easy to get caught up in the moment and toss your trading strategy to the side, Cameron warns.
“You can know all the textbook stuff about trading, and then you find yourself in the heat of the moment, throwing it all out the window and making emotionally impulsive decisions,” he says.
At that point, you’ve broken the cardinal rule and become like other market participants who are trading based on emotion, fear, greed, excitement, and the fear of missing out.
But these aren’t useful trading strategies. And in the long term, they are not reliable ways to make money, says Warrior Trading’s Ross Cameron. Better to stick to your trading strategy and keep the guardrails on. Over the long haul, that’s what it takes to be a successful day trader.
