My Worst Trading Day This Month Broken Down Step-By-Step
In a Nutshell
Trader lost $7K on a Micron short by breaking his rule of entering with more than 50% of target position size before confirmation, driven by overconfidence after a $14.9K winning day. The critical error was adding to the short at $857-860 without reversal signals, exceeding his $100K pre-confirmation limit and getting stopped out multiple times. Core lesson: calculate maximum shares affordable before confirmation each morning, maintain strict position sizing rules regardless of market volatility or recent wins, and reset mindset with smaller sizes after losses.
These notes were generated by AI and may contain inaccuracies.
The month of July concluded with one of the best trading days and one of the worst trading days occurring in the same week. The decision was made to share the biggest loss rather than the $14.9K winning day from Wednesday because the mistake made and subsequent adjustments provide more value to traders getting started.
The short position taken on Thursday was in Micron. The day began in the green with a small long position of 25 shares taken at market open. This position was closed when Micron became overbought after rallying 10-12% from the lows at 7:05-7:10. The rationale for the subsequent short was based on Micron being significantly overbought after the dead cap bounce, with negative sentiment present in chip stocks over the previous two weeks.
Micron was gapping up with no news change, though positive earnings from another company had excited the market. Amazon and Apple earnings were scheduled after Thursday's close, and the Japanese central bank was set to announce rate decisions on Friday. The carry trade situation was anticipated to unfold. NASDAQ was monitored on a secondary screen to gauge position sizing aggressiveness. Micron rallied significantly after market open, with position building done gradually by adding 10 shares at a time.
The critical error occurred when adding to the short position at overbought levels without confirmation of reversal. The approach shifted to scalping from highs to lows, but momentum remained strongly bullish. When the stock made new highs after pullbacks, additions were made despite the adverse direction. The average short price was approximately $857-860, with risk managed at 1.5-2% while targeting 15-17% downside based on previous lows.
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