The Journey from a $26,000 Loss to a $500 Gain: Why I Was Away Since Mid-July

The Journey from a $26,000 Loss to a $500 Gain: Why I Was Away Since Mid-July

Trading can be an exhilarating and nerve-wracking experience, often filled with extreme highs and equally daunting lows. This is the story of how I turned a massive unrealized loss of $26,000 into a $250 gain over the course of just a few months—an emotional rollercoaster that not only tested my skills as a trader but also my mental endurance. I was trading a client’s account for almost a full year and was absent from my usual online platforms since mid-July, not because I was disinterested, but because I got entangled in one of the most challenging trading situations of my career.

The Beginning of the Challenge

It all started on July 15th, 2024, just a few days after the widely reported assassination attempt on former President Donald Trump. Markets were rattled, but something else caught my attention—something more technical. As I analyzed the NASDAQ on the six-month chart, I saw that the Relative Strength Index (RSI) had reached an alarmingly high level of 80. For those unfamiliar with technical analysis, an RSI reading above 70 often signals that a market is overbought, while a reading of 80 is a glaring red flag. I immediately told everyone in my WhatsApp trading group that this was an extremely dangerous level, and I advised them to step back, expecting a correction to happen soon.

As I predicted, the market did experience a deep correction that very day. Normally, this would have been a perfect opportunity to avoid losses by staying on the sidelines, but here’s where I made a critical mistake. The market reversed violently to the upside, and in a moment of emotional decision-making, I jumped back in too soon. I was frustrated at having missed the bounce and eager to recoup potential gains, ignoring the fact that the RSI was still in the 80s.

Entering a Dangerous Position

On July 17th, just two days after the initial correction, I purchased 500 shares of TQQQ (a 3x leveraged NASDAQ ETF) at a price of $83. At the time, I thought I was riding the reversal wave, but in reality, I had entered during a truncated 5th wave—an Elliott Wave pattern notorious for its unpredictability and volatility. The market quickly began to fade, and I found myself in an increasingly dangerous position.

Fast forward to August 5th, 2024. My unrealized losses had ballooned to $26,000. Watching the loss grow was excruciating, and my clients were understandably furious. I had to reassure them, predicting that the bottom was near. I had been watching the market closely, looking for a bottom toward the end of July, but the action was so volatile that it became frightening.

The VIX, a measure of market volatility, had spiked from 12 to 30, and I thought that was the peak of fear in the market. Boy, was I wrong! By August 5th, the VIX had skyrocketed to 65, a level unseen since the most chaotic days of the COVID-19 pandemic.

Calling the Bottom

Despite the mounting pressure and uncertainty, I was convinced that the VIX at 65 signaled a screaming bottom. I wrote about it in a Medium article, where I boldly called for the start of a massive rally. I also posted a second Medium article, predicting the end of a generational crash and the beginning of an 18-year bull market in the NASDAQ.

Sure enough, the market exploded from that point. The VIX dropped, and the NASDAQ began its upward march. The relief was palpable. However, my journey was far from over. After the initial surge, the market entered a Wave 2 correction, which sent the account balance back down. This time, the unrealized loss stood at $15,200. The NASDAQ dropped from 18,000 to 16,200, and I was back in a precarious position.

Managing Clients and Navigating the Wave 2 Correction

By this point, my clients were losing faith in me. They were furious that I was continuing to blog and post updates on social media when, in their minds, I should have been focusing solely on managing the account. It was difficult to balance my communication with them and my analysis of the markets, so I stopped blogging and ceased all WhatsApp communication. The pressure was immense, but I was certain of one thing: the correction was nearing an end.

At 16,200, I saw the RSI dip to around 34, a much more favorable level. I knew this was the bottom of Wave 2, and I predicted that the market would find support at the 0.618 Fibonacci retracement level of 16,000. I reassured my clients, though they remained skeptical. But once again, the market turned, and my analysis proved correct.

Averaging Down and the Final Move

In the depths of the Wave 2 correction, I made a risky decision to average down. I purchased an additional 600 shares of TQQQ near the bottom, bringing my total position to 1,100 shares. This move lowered my average purchase price to $76 per share, putting me in a better position to recover the losses.

As the market rallied, so did the value of the account. By October 16th, 2024, the account had swung from a $26,000 loss to a $500 gain. The relief was overwhelming. I sold the 1,100 shares of TQQQ at $76.49, locking in a small but hard-earned profit. After months of stress, sleepless nights, and intense pressure, I had finally navigated my way back into the green.

Lessons Learned

Looking back, this journey was as much about emotional resilience as it was about technical analysis. Here are some of the key lessons I learned:

1. Emotions Have No Place in Trading: My decision to re-enter the market out of frustration was my first and most critical mistake. Had I stuck to my initial analysis and stayed on the sidelines, I could have avoided much of the turmoil that followed. Emotional trading is dangerous, and staying disciplined is essential.
2. Trust the Technicals: Even when the losses were mounting, my faith in Elliott Wave theory and technical analysis ultimately guided me through the worst of the market volatility. The RSI, VIX, and Fibonacci retracement levels were invaluable tools that helped me identify key turning points.
3. Averaging Down Can Be Risky but Rewarding: Averaging down can be a double-edged sword. In my case, it worked out, but it could have easily gone the other way. It’s essential to have a well-thought-out plan when employing this strategy, as it increases your exposure to the market.
4. Communication is Key: One of the hardest aspects of this journey was managing my clients’ expectations. While I stopped blogging and communicating for a time to focus on the account, clear and consistent communication would have helped maintain trust and transparency.
5. Risk Management is Crucial: Leveraged ETFs like TQQQ are incredibly volatile, and trading them requires strict risk management. Although I managed to pull through, the experience highlighted the importance of position sizing, stop-losses, and understanding the risks associated with leverage.

Conclusion

The journey from a $26,000 loss to a $250 gain was one of the most intense experiences of my trading career. It tested my emotional resilience, technical knowledge, and ability to manage both risk and client expectations. The key takeaway from this experience is that even in the darkest moments, disciplined trading and sound technical analysis can turn things around. I’m grateful for the lessons learned and am now more confident than ever as I continue my trading journey.

So, after a long hiatus, I’ve finally returned.