Episode 69 ... John Carter (66:34)

Sounds like a down to earth guy, clearly another old pro.

Loves the short side
Starts the year with a $180,000 account with goal to turn into a million
Very aggressive trader
Been actively trading for 25 years
With experience comes patience
Difference between successful and unsuccessful traders is patience
Patience to wait for the set-up, patience to hold winners
If you get emotional and chase, you mess up your mindset
Opportunity cost of chasing is huge
18-year old working at mall in cookie store, making $4 an hour
Saved up $1,000 over the course of a summer, bought call options on Intel
Made $800 in a week from those call options, he was hooked [what if he lost?]
Dad read Investor's Business Daily
Wired as a risk taker
Three times where he built up 10K to 100K with crazy position sizes
Then lost it all by trying to go from 100K to 1,000K
Mark Douglas' books helped a lot
Stopped trying to make a million dollars
Appetite for too much risk vesus too much fear
If you're too fearful, you can't make a living as a trader
Made 100K a year in the corporate world, figured he had to make the same if he traded full time
People who are too fearful wait for confirmation and that's the exact time you should be taking profits
Became friends with Mark Douglas
Douglas' insights into the markets and human mind were key
You should think probabilistically while you're in a trade -- anything can happen, no emotional attachments
Most people try trading for two years then give up
He used early trading profits to buy rental property
Later sold rental property to have bigger trading stake
Took him eight years of frustration to learn how to trade
Average trader with right tools, it should take two years to learn how to trade
How do you react when you have money on the line? Calmly take action or deer in headlights?
People need to find their sweet spot
Types of trading: day trading, swing trading, investing
Nearly impossible to overcome commissions when day trading
Impossible to know what's going to happen three months out
Two days to two weeks is his sweet spot
Looks at 30 minute charts, that's the lowest time frame he'll look at, NEVER looks at five minute charts
Markets pop then consolidate
Cut his teeth on stock index futures
Big options trader on individual stocks
Old traders have "three set-ups and four markets" and care about nothing else
You don't do the same trades all the time -- depends if the market is bullish or bearish
You can be long, short, or flat
Flat is one of the best positions -- mind is neutral
"Don't piss away your chips" -- be patient
One or two days a month of focus are all you need with larger than normal position size
People who trade to alleviate their boredom piss away their capital
To become a good trader, you have to master exits (both stop losses and targets)
Options are priced for "expected moves" -- exit at dollar move that's priced in by options
Huge fan of Fibonacci extensions: 1.272 odds of getting there good (take bulk off), odds of getting to 1.618 much lower
Options nice because you can define your risk easily, you can only lose what you put up
Selling options is fun too
Mistake that novice options traders make is looking for cheap options
Out of the money options are designed to suck people in and expire worthless
If you're bullish on something: buy an in the money call and sell a put credit spread (expires worthless)
If you're bearish on something: buy an in the money put and sell a call credit spread (expires worthless)
Greeks are a distraction to him, he never looks at them
Favorite set-up: "Squeeze" -- Bollinger bands are inside of the Keltner channels
Bollinger band contraction eventually leads to range expansion
He never looks at a chart for more than a split second
Best set-ups are obvious instantly ... don't stare at it and force things
All set-ups should be simple enough to explain to a twelve year old
Any more than three indicators on a chart is too many
Wins and losses are randomly distributed ... you need a large sample size to come to correct conclusions
Easy to get lost in indicators, price is the most important thing
January 2014, (14 15 16, he can't remember), big TSLA trade [it was Jan. 13]
Likes to track short interest ... TSLA at 40%
TSLA had been down ten, suddenly up five
Bought 100 call options of TSLA at $6 (account was $1.5MM)
Ended up adding and adding, built up to 1000 call options in TSLA [half the account?]
Trade went against him a little, so he took a shower, trade stabilized
Sold half into close, half into next morning's gap up -- made $1.4MM
No more million dollar day trades since then for him
Everything came together ... takes guts to hold on to those concentrated positions
When things happen that shouldn't happen, people are on the wrong side, big things happen
Get on the other side of other people's pain [I like it]
He likes three or four large positions to 18 small positions
Don't shotgun, be patient and focus
When he was young, he wanted to make that one big trade
When you're older and more confident, you have your skills and you get patient
Anyone who trades for a living has developed confidence despite constant uncertainty
Get comfortable being uncomfortable
www.simplertrading.com
1000 members in his gold-level chat room
Twitter: @johnfcarter -- infrequent twitterer