Notes for Chat with Traders, Episode 158

Added on by C. Maoxian.

Episode 158 ... Phil Goedeker (62:01)

  • During earnings season, small caps don't run
  • Wanted to make big money before his 30s, didn't want to do a lot of schooling
  • Only two routes: real estate and the stock market
  • Opened first brokerage account as sophomore in college with $3,000, lost it all
  • Studied everything he could, but couldn't find any consistency
  • Next summer's earnings of $3,000, lost it all during junior year
  • Didn't have patience to buy and hold
  • Finally discovered short selling as a senior in college
  • CAFE ("Host America") went from $5 to $15
  • He shorted as much as he could
  • CAFE was halted for a month, he was scared to death
  • CAFE opened at $5 from $15 and he made $15,000 [CAFE delisted in 2005]
  • Started shorting overhyped stocks exclusively during senior year
  • Turned $5,000 into $1,000,000 between August (2005?) and May (2006?)
  • He went all-in on every position he took, no rules, would just hope for the best
  • Graduated with an accounting degree, but knew he'd never be an accountant
  • Lost $500,000 by August (2006?) ... was "clueless"
  • Got scared, took $400,000 out, put it in the bank, kept $100,000 for his trading bankroll -- 22 years old
  • "Well hell"
  • Every month, whatever he made from the $100,000 trading stake, he'd put in the bank
  • Went next three to four years making half a million dollars a year -- 25 to 26 years old
  • Studied all the big winning stocks on a yearly, monthly, weekly basis -- till he was "blue in the face"
  • Drove a Hummer H2
  • He went through everything, every mistake, every high, every low
  • Never had another job other than day trading since sophomore year in college -- 13 or 14 years now
  • Wanted to make $30,000-$40,000 a month with his $100,000
  • Had one losing year in his late twenties when he strayed from his old style
  • Went back to his old style (shorting small caps) and went back to making big money
  • "Well hell"
  • Tried his best to eliminate his big losing trades, "cut his losses faster"
  • Increased position size on his golden setups and cut losses faster -- had even better years
  • Late 2017 had some golden setups: HMNY from $2 to $37; RIOT from sub-$10 to $46 -- "hype bubbles" [charts below]
  • Only plays from the short side
  • Momentum names are manipulated, low float (less than five million shares), press releases to pump them up
  • Cryptocurrencies are the same -- low float plus hype
  • Halt risk a major concern on these plays -- need to be cautious on the long side
  • Timing the shorts is difficult -- shorted 100,000 shares HMNY from $8.50, got out in high $9s -- took the loss
  • Starter size (5,000-10,000 shares) in positions -- goes against him, he takes the loss; goes with him, he adds
  • Never starts a short and looks to add higher ... never adds to a losing position
  • Day three of a parabolic move should be a winning entry, but who knows, it often isn't
  • He gets extremely aggravated entering the positon -- takes a lot of small losses
  • Pays a lot of attention to volume -- only looks at price, volume, and VWAP
  • Big drops on heavy volume is one of the main things he looks for
  • Bases his stops off the chart ... tries to find support and resistance levels on chart
  • Find your niche as a trader ... find out what you're good at
  • Parabolic set-ups are what he's good at ... puts all his money behind those trades
  • Timing the crash of these parabolics is the difficult part
  • So excited when he sees a parabolic set-up, he can't sleep at night
  • 75-80% of his trading income comes from shorting the parabolic moves
  • Multi-day versus multi-week versus multi-month runners
  • The higher it goes, the more conviction he has, the larger his position size
  • Gotten lazy because he has two kids now
  • Every year, prints out charts of all the stocks that are the year's biggest low float winners, all "pockets of air"
  • Every single one of them has crashed
  • Adds to his winners as they collapse, "slamming that bid"
  • He might hold a winner for weeks on end
  • Only overnight risk he has is a Press Release
  • Mentions ETRM from 2016? [now delisted]
  • Mentions KBIO ... stock went from $2 to $10 or $12 then went to $40 [now OTC]
  • Seen a lot of traders blow up holding low float shorts overnight
  • Wait for the backside of the move, "backside" is after it has exhausted itself [no clear definition of "backside" given]
  • Slams the bid over and over and over again... he definitely moves the stock by doing this
  • 95% of traders fail because they lose money [Ummm] ... they don't have their niche [OK]
  • Find out what you're good at and perfect it
  • Take it slow, take it in stages as you increase your position size
  • Has seven or eight brokers now, essential if you're short-biased
  • If you're long-biased, only need one broker
  • In order to short the stuff he's shorting, the broker has to have shares available [tell me about it]
  • Low float stocks -- most brokers don't have shares available
  • If one broker has the shares as easy to borrow, no need to look to his other brokers
  • Getting the locate is everything, without multiple brokers, you won't be able to play the low float parabolic game
  • Locate fees and fees for holding overnight vary from broker to broker
  • Locate fees and overnight fees are extremely high -- will take at least 10-15% of your gross profits
  • He was long GBTC, didn't realize it wasn't marginable, when it dropped he got a large margin call
  • He has traded beside other good traders who have blown up ... 5-, 10-, 15-year veterans who made one or two mistakes and they're gone
  • "You get stubborn and you're done"
  • Make sure you have a backup plan ... his is buying farmland in Missouri, then rents it to farmers
  • If he blew up tomorrow, he couldn't get a job because day trading is all he has ever done
  • He has owned a lot of rental properties and it's a "big pain in the butt," "nightmare tenants"
  • "Well hell"
  • Hired property managers to deal with tenants, then he had to manage the property managers (another nightmare)
  • Farmland, he can't touch the money, and it doesn't take away from his market focus
  • Farmland: zero stress, zero time, zero maintenance
  • "Thank you, sir."
  • Twitter: @Ozarktrades
 HMNY, Daily

HMNY, Daily

 RIOT, Daily

RIOT, Daily