Notes for Chat with Traders, Episode 212

Episode 212 … Kristjan Kullamägi (76:09)

• Swede in his early thirties

• Started investing 2010

• Started trading 2011

• Full time from the beginning

• Focused 100% on trading, dropped out of college, didn't finish degree

• Worked as a security guard part time while studying ("mall cop")

• Started with $5,000

• Doubled his paper trading account in two weeks in May 2011 and was sure he'd get rich by that fall

• Lost it all

• Saved money for six months, tried again and again

• Blew up three or four times in first couple of years

• Blew up with $3,000 or $4,000 accounts several times

• Horrible experience to lose three years of savings when he was 21 years old

• But every time he blew up, he'd learn something new

• Started day trading but had no method, just went all-in on every trade

• Never bothered with Swedish market, no action, traded US market from the get-go

• Became profitable in 2013, two years after started trading

• Big moves take weeks and months and years to play out

• It's hard to catch a 50% to 100% move while day trading

• Learned about swing trading, gravitated to it

• In day trading, you're fighting near your entry all the time

• In swing trading, the stock can quickly move above your stop and stay above it for a very long time

• Realized swing trading more scale-able than day trading

• Liquidity and slippage a major problem when day trading microcaps and small caps, it's not scale-able

• Took a couple years to go from 95% day trading to 95% swing trading, wasn't overnight

• Control your risk through position sizing in swing trading

• Day trading more hazardous than swing trading, he believes

• Made his first million day trading, but everything after that has been swing trading

• In his first few years while losing money he was constantly depressed, "scarred for life"

• Felt unreal when he first started making money

• Realized if he could find patterns for swing trading like he had for day trading, he could scale up

• Day trading is a lot of effort, he was getting tired of sitting in front of computer from open to close

• He says he's a lazy person, doesn't want to work too hard

• Got swing setup ideas from stockbee and read William O'Neill's How To Make Money in Stocks in 2015

• Went through every single stock in US market and found all stocks that conformed to the pattern

• Just a breakout setup and variations of the setup he'd stumbled upon

• Built database by taking screenshots and saving them in Evernote of what the setup looks like

• It's all about pattern recognition, but he also looks at fundamentals

• Look for a breakout on the daily time frame

• Stocks move like stairsteps

• Leg higher, sideways, volatility contracts, range gets tighter, next leg higher, volatility contracts, range gets tighter, next leg higher, etc.

• Uses 10 and 20 day moving averages to trail a stop

• stockbee taught him that stocks move in momentum bursts

• The stronger the stocks, the better ... mid caps, large caps

• By strong he doesn't mean microcap pumps that move 100% in a day

• Look at the perfect stair step patterns in Tesla or Nio

• You want to be in the fast moving stocks

• Wants to hold stocks for as long as possible

• Sells 20-25% of position into first burst of the move, then it becomes "stress-free," no large loss possible

• When his account was smaller he did trade small caps and mid caps but now he's forced to trade large caps

• $150 million average daily dollar volume is now the cutoff for scans, two years ago his cutoff was $20 million

• Scans for biggest movers (strongest 2%) over the 1-, 3-, 6-, 12-, and 18-month time frames

• Wants a list of the strongest, most liquid stocks

• Looking for linearity, how orderly is the pullback following the burst higher

• After a burst, stocks pull back to 10 and 20 day moving averages, how do they act there?

• If you trade random setups, your results are going to be random

• Look for the relative strength winners, the stocks that hold up the best when the broad market declines

• Leading stocks are the stocks that go up the most and are the most liquid

• Leading stock don't go down when the broad market goes down

• You need an uptrending broad market for this method to work

• Fundamentals drive stocks at the end of the day -- big earnings and revenue growth

• If you know the story behind the stock, and understand the fundamentals, it gives you more conviction

• He enters everything at once, very aggressive, responsible for many "big wicks"

• He scales out, sells some into strength and trails the rest using the 10 or 20 day moving average

• He buys above the opening range high, first one minute, first five minute, or first sixty minute candle

• Always uses the low of the respective one minute, five minute, or sixty minute candle low for his initial stop [edit: or the low of day, whichever is lower]

• His win rate last year was 35% (2020), year before was 25% (2019)

• You have to get used to getting stopped out a lot using this method

• He often buys, gets stopped out, then buys once again minutes later

• He stops out without hesitation

• Once the ten day moving average catches up to his initial stop, then he begins trailing using the ten day

• He ignores intraday violations of the moving average, he only gets out on a close below the moving average

• In addition to his trailing stop, he has a hard "crash" stop in place [my term for it]

• He doesn't add to winning positions

• Treats adds to an existing trade as a new trade

• Strong stocks should hold up well during broad market declines

• Understanding trend and sentiment of the broad market are important

• Every time he gets 30 positions on, it marks a top (a proprietary indicator, he laughs)

• Swing trading is a low effort affair once you learn what to look for

• Doesn't know his average win versus average loss, doesn't sweat the small stuff

• It's all about small losses and big winners

• Most of his money comes from a few big winners ... maybe 20% of his trades are home runs, the rest break even

• He's addicted to trading, controlling himself is difficult, tends to over trade

• Many times he'll think something can't go higher and he just sells it, violating his trailing stop rule

• Every time he overrides or outsmarts his rules about trailing a stop, he screws himself, but he keeps doing it

• He has no problem taking a loss, this is not something he struggles with

• His position sizes and percentage risk never change, it's all relative to his account size

• He uses margin "quite a bit" ... but you have to "deserve the risk"

• He was reckless in the beginning, went "all-in" all the time, doesn't do that now

• People focus on the wrong things, lots of indicators instead of the price, just focus on price

• People mistakenly focus on other people's opinions

• Tune it all out, tune everyone out, just focus on the market and what the leading stocks are doing

• Go back and look at thousands of examples of the setups you trade, study what the broad market was doing then

• People master their setup but they haven't been able to scale their trading, still trading the same size for ten years

• Your size and risk should double as your account doubles

• Talking about points or dollar profits is meaningless, think in percentage risk and return instead

• He read all the Dan Zanger letters going back as far as he could back, studied obsessively in 2015

• His life hasn't changed much since he has made tens of millions of dollars

• Now he plays video games on his days off, doesn't study much anymore

• Politely and humbly thanks the host, Aaron, for the invitation to the show

• Twitter: @Qullamaggie

• Blog: Charts and Stories

• Twitch: Qullamaggie

• YouTube: Qullamaggie

Notes for Chat with Traders, Episode 204

Episode 204 ... Brian Lee (70:05)

• Lives in California

• Pro gamer for 10 years, "FLUFFNSTUFF" (Dota 2)

• Dropped out of college to become pro gamer

• Traveled a lot as a pro gamer

• Similar to being a rock star [but did he get laid?]

• Trading another competitive "sport"

• Pro gamers making multimillions now, but wasn't the case in his day (made thousands then)

• Fulfilled his dream of competing at The International (2013)

• Paper trading will warp you, no liquidity concerns, no emotions

• A lot of trader education is scammy

• Shorts microcap hard-to-borrows exclusively now, using a "mean reversion" strategy

• There's an edge to taking the other side of newbie long trades

• Size up your risk in a systematic way

• Started with around $30,000 (his gaming winnings)

• Refunded a couple times to stay over PDT (Pattern Day Trader minimum $25,000)

• Changed colors of bars in ThinkOrSwim to try to control his fomo, didn't work

• Built systematic entry method to defeat his fomo which has worked, no details given of course

• Took him a year to become consistent, learning the rules of the game

• Lost 50% of his gains when pot sector was in runaway mode

• Would revenge trade tickers and would average losers

• End of year two he lost all his profits, blew up his account which had grown to around $100,000

• Broker bought him in at the top when he lost it all, froze when he got margin calls

• Pro gamers used to taking a loss and being able to re-focus

• Fiancee told him after he blew up to get a job

• Without a college degree, he could only drive for Uber or work at Starbucks

• Father died later that year, left some life insurance money

• Mom let him re-fund account to bare minimum

• Started to take things super seriously as a result

• Implemented max loss rule, that's the thing that truly saved him

• Equity curve is now parabolic

• Wires out money regularly, treats it like a real job, hasn't sized up since reaching dream size

• Doesn't want to be a superstar

• Focused on small caps, screenshot 1 min and 5 min charts of all runners to find patterns

• Noted patterns and figured out where to enter, stop and target to come up with at least 3 to 1 reward to risk

• Connected with traders on Twitter who traded similar niche, met together on Discord after hours, collaborated

• Always pick someone slighlty better than you and someone slightly worse than you to maximize learning

• Loves trading trash stocks with heavy dilution, companies that need capital badly

• Companies release bogus public relation announcements, create supply demand imbalance

• Scales into front side of moves, then adds once supply comes in

• Plays reversion to a mean, exits there (examples of "means": VWAP, moving averages, some daily level, etc.)

• "Haymaker" ... running price up thousands of percent, make sure shorts get bought in

• Most people who try what he does get blown out because they revenge trade, have no max loss

• Best supply comes not just from dilution but also from bagholders (people stuck long the stock from higher prices)

• Find companies that are toxic by nature ... same underwriters involved in all dilutions

• Can identify style of play by underwriter involved, different tricks employed

• Find broken charts that are full of spikes where all the gains are instantly given back

• Uses calculator in Excel, inputs stop and target and generates optimal entry based on risk reward

• Doesn't want to set stops too tight or too loose [Goldilocks principle]

• Uses a couple different indicators to trigger him into the trade

• Very patient, he maximizes moves ... average winner is six times his average loss

• 26% win rate on per trade basis because he cuts a lot of starters

• He's confident to put on a trade every time because he understand his average win to average loss ratio

• Every trade is a drop in the bucket, doesn't think about trades individually

• Won't reveal his custom indicators, but does say he takes what the average trader looks at and uses that against them

• Does not look at level 2 when putting on a trade, he just enters and sets stop and target

• Normalize your trade outcome by betting a consistent amount

• Find a goal number where you are slightly uncomfortable and use that as your R

• Scale risk down when you're losing, scale risk up when you're winning

• You have to feel like you deserve your gains

• Once you're really comfortable with the amount you are risking, then you can move up a level to slightly uncomfortable

• Will double risk on trades that he's super confident on, the A+ setup, but....

• Most of his trades are the same bet size

• Trades you don't take full size on, if you win, you won't feel good about it; when you lose, you're tempted to add

• Beginner traders vary bet sizes wildly day to day so their results make no sense

• His starter position is very small, secondary signal says take full size, tertiary signal says add to winner

• Doesn't get emotional when small starter goes against him, he's instantly able to cut it

• Feels he has enough experience now to be a bit more discretionary about exits (targets and stops)

• If it's pushing higher midday, it's likely that he's wrong ... time of day is key

• With his starter, it could be a 0.5R loss, so he can make many many attempts with 6R average win

• Built his own way of understanding average true range for small caps

• Figure out how much range there is, how much "meat on bone" to target, can then set stop appropriately

• Waits patiently for price to get to target, or "close enough," never takes partial profits

• Doesn't want "decision fatigue" of exiting and re-entering over and over

• Doesn't carry positions overnight ... fees too high, 7x overnight locate fees, interest, plus gap risk too great

• Hit his dream risk amount in January 2020

• Increased his R by one every month this year

• If your risk is too tight, you're constantly going to stop out

• Don't force the range, take advantage of it ... you can't do that with a short time horizon

• He doesn't have tight initial risk, he has wide initial risk, then tightens stop as price goes in his favor

• Three things you must have:

1) max loss, a failsafe that will keep you from fighting something into oblivion

2) systematize your entry and exit so you can measure how you are doing

3) normalize your risk, very small R in the beginning, give yourself time to make all the mistakes you need to make

• Once you are consistent, you can start to scale up; money made later will be many times your early losses [assuming you find an edge]

Blog | YouTube

Twitter: @BrianLeeTrades

Notes for Chat with Traders, Episode 198

Episode 198 ... Christina Qi

• "That's a really great question."

• Went to MIT

• Dormmate staked $100K by rich kid roommate at Harvard, made $40K with it

• Didn't like environment/culture (hazing) at place she interned (Goldman), wanted to start her own place

• "No thought leader in the space."

• "That's a great question."

• Had no money, no credibility, no connections [except for MIT/Harvard]

• Raised venture capital, built all technologies from scratch, create operational side

• People invest in people at the angel/seed stage

• Raising money for the fund another matter, you need numbers, backtests at least

• No one has ever seen a bad backtest

• "What's interesting, Aaron, is that...."

• "That's a good question."

• HFTs changed language post-Flash Boys to "low latency trading" or "electronic market making"

• Their highest trading volume this year (2020) was 7.1 billion shares in a day

• They don't buy order flow

• Took two and a half years to build the system

• Felt like a fraud up till launch, no track record

• Everyone at domeyard was called a partner, free food, unlimited vacation ... all bad ideas, naive mistakes

• Giving people too much choice is a bad thing

• On average, recently, they do 2,500 trades per day ... could be 25,000 depending on environment

• Holding periods are microseconds to hours (latter called mid-term strategies)

• Flat at end of day, always

• "Good question!"

• One losing day can wipe out 29 days of profits

• They mainly trade futures and forex, not equities

• Aim for 1-3% of average daily volume of the products they trade

• They try to predict market a few seconds out

• Mainly use order book market data

• Half life of a strategy could be one to three months

• "That's a really interesting question."

• Trading strategies are constantly being monitored by humans, tweaking the code

• They don't play the hardware game ... next year there will be a new FPGA after all

• "That's a great question."

• Not many HFT firms that were around a decade ago are still around

• Can't talk about returns, considered marketing

• Also works on a project called databento

• domeyard dot com is a suspended webpage?

• Twitter: @christinaqi

Notes for Chat with Traders, Episode 184

Episode 184 ... Mike Mangieri (72:20)

• Met Mike Katz in 2000

• Applied for back office job at firm where Mike Katz was trader/broker

• Partners of firm had falling out, a new firm needed to be formed with Gary Roth providing capital

• Did all the grunt work with FINRA to get new broker dealer approved

• 2008-2009 world comes crashing to a halt

• Firm acting as a broker mainly at this point ... more and more redemptions

• Moved from being a brokerage firm to a proprietary trading firm

• 12 years later they're still standing

• Market went from two exchanges to totally fragmented

• Needed to understand all the new routes

• Doesn't talk specifically about how much capital they had or have

• Original partners: Gary Roth (deceased), Mike Mangieri, Mike Katz

• Looked for recent college graduates as new traders

• 2012-2014 got up to 20 to 40 traders, that was the sweet spot

• 30-40 traders in total at Seven Points now, including branch offices

• Seven Points not run like a factory, they build relationships with their traders

• Mike Katz trades and Mike Mangieri handles regulatory things, paying bills, etc.

• Calls around to the traders to see if their heads are right

• Easily watches risk / buying power / positions for all 30+ traders on a single monitor

• Halt risk is a constant worry at the firm

• Twitter has screwed up a lot of traders

• "Tell people I'm a dentist" (not a trader)

• Mangieri makes fun of Twitterers talking about the "process," that it's OK to blow up

• Youngsters follow rooms, "I short low floats, I use the pre-market high, I use that as my risk, then I short against there" .. always the same script

• Twitterers don't take ownership of their losses

• Twitterers standing in front of their Ferraris, laptop out at the Sistine Chapel

• "I killed it in the morning, so I flew to Italy for the weekend ... Asshole"

• Daily lockout numbers of $300 to $3,000

• Your Twitter friends are not going to write out your rent check

• Trading is the side hustle of guys who run chat rooms that have hundreds or even thousands of subscribers

• Everybody can hit a 90 mph fast ball in the batting cage, it's a different matter when it's coming from the mound

• Losses make you doubt everything

• There's a domino effect when you're losing money

• People get in a panic state ... I have to make it back as soon as possible

• You forget good news in 30 seconds

• You have to have a life outside of trading, otherwise you'll burn out

• Don't be on social media all night after being on there all day

• You can't live and breathe trading, you will burn out

• Figure out the max loss that you can take without sending yourself on tilt before things get dark

• You need someone in your life who holds you accountable for your losses

• Your mentor should not be trying to sell you a DVD

• Lockouts at Seven Points are very low

• Struggling traders are sized down quickly

• Trader A is comfortable trading 5000 shares... give him 7000 shares and he goes haywire

• You can only get a little bit bigger every day ... you can't double it overnight

• When you push the size on people, it'll screw them up

• Position size does not equal penis size

• No one wants to see a paper trader anymore ... don't try to apply at any firm if you haven't risked real money

• "I short low floats" ... why? They all regurgitate the same thing

• Don't be a one-trick pony

• You have to find people who fit in at the firm .. one bad apple ruins the bunch

• "I don't want to sit next to this guy."

• Guy who slams his keyboard constantly, he's probably going to have to go

• They put the new traders on demo at first, massive amount of journaling in TraderVue

• How do I find liquidity in this stock? What route do I take?

• Not a lot of hand-holding today

• Have to tell people even though they're hard working, they have to go

• Trading, whether at home or in an office, is a very high turnover business

• Most common problem is that people are too afraid to trade

• People take tiny gains because they're afraid

• People won't stop themselves when they're on tilt, you have to stop them

• Trader who has a new rule every day to prevent himself from doing something -- has has to go

• Used to be a million prop firms that used RealTick ... not the case anymore

• Twitter: @MMangieri34

Honor Thy Stop

Another great Chat With Traders episode, this time with Nishant Porbanderwalla, a prop trader with Kershner in Texas … lots of great bits, especially his insights on patience and confidence, you should listen to it all closely, but this was my favorite bit:

“I spoke with a senior trader and he said if you have a stop, you respect your stop and get out. If you still like it, take some time, and get in again. I learned that the hard way.”

The original text from Buzzy:

View fullsize

Click to enlarge

Notes for Chat with Traders, Episode 171

Episode 171 -- Stan Gluzman (77:46)

• Doesn't trade the close anymore

• The close used to be his go-to time, but not anymore

• Doesn't hold overnight

• Biggest position on by 9:45 AM, trades around core until 11 AM, usually flat by noon

• Things are mispriced in the morning, but fairly priced by noon

• Forgets tickers shortly after he's done trading them

• Aaron mentions Stan's CLRO trade from morning of recording

• Looks at VWAP

• Tries to short near top, covers half on washout, re-shorts the next pop, covers wash, etc.

• All chat rooms watch the same stock, pump it multiple times throughout the day

• Trading full-time 4.5 years, another 1.5 years part-time before then while in college

• Started in 2013 when in college, made 30% on a $5 stock in two days, "bitten by the bug"

• Started studying trading on his own while still in college, joined chat rooms, bought DVDs

• Locked himself in his room and "started blowing up accounts" in 2014

• Realized he needed to be surrounded by professionals, joined prop firm in 2015

• Was a breakeven trader when he joined the prop firm, before accounting for commissions

• Undercapitalized, so commissions made him a net loser despite breaking even on trades

• At prop firm he first learned how to scalp for half a penny trading millions of shares

• Read on a forum that a good prop firm doesn't take your money, no capital contribution

• Seven Points Capital office right next to his college

• Seven Points doesn't require capital contribution, charges no commissions

• Seven Points wanted people who were teachable and passionate about trading

• Advantage of being prop trader versus retail trader: "like working out in a high-end gym with a personal trainer versus working out in your backyard with buckets of water"

• In prop you're trading other people's money, not your own, so no psychological pressure

• Routes are important, has access to ten dark pools, six aggregators, plus all the exchanges

• Have to figure out how to jump the queue by figuring out which dark pool is actually buying or selling

• Has 150 (?!?) hot keys set up

• Most used hot key, "F2" short the bid [I laughed]

• Uses scroll wheel to select position size

• Mike Katz was his first real mentor

• Mike Katz always keeps his eyes open, in the right places at the right times, on his toes

• Red two days in a row? Try to figure out the error

• When losing money, he sizes down, divides his daily lockout dollar loss by four

• Got his first paycheck five months in at Seven Points Capital, been sizing up ever since

• 2015 his first full profitable year

• In 2016 he traded 260,000,000 shares, more than a million shares a day scalping [no commissions key?]

• First time he lost $1,000 was a shock, but as he sized up, it became a regular sized hit, no longer hurt

• In 2016 he would take advantage of inefficient algorithms, "short the offer, cover the mid"

• In 2016, Sprint (S), Sirius (SIRI), Ford (F) were ticker symbols he'd trade: high volume, small range

• Short the offer, saw offer was about to lift, would cover the offer or cover at the bid once it flipped up

• 96% success rate doing the kind of scalping, but that was 2016, can't do this anymore

• Can gauge "Book Pressure" by watching the tape

• Algos didn't care about book pressure, it would just execute at some regular interval

• Could spot the algo because the same price and quantity was printing at a regular interval

• Midpoint is price between bid and offer, there is "invisible" liquidity there, "peg to midpoint"

• BYX is his preferred route for the midpoint

• "Can't get the bid, go for the mid"

• Crappy little penny stocks are volatile and retail-driven, small order sizes, not scalpable with size

• Switched from scalping stocks like Sprint to scalping SSR (short sale restriction) stocks

• Using his superior routing skills, he could short SSR stocks at the mid as they fell

• Most people are at the offer or the bid, they don't even know about the mid

• Gives example from his SSR trading that day: one gain was five cents, other gain was 35 cents -- "scalpy"

• SSR strategy just a tool in his toolbox now, the edge has sort of disappeared

• Small-cap stocks gap up and fail, a "fader" [no mention of locate fees, alas]

• Small caps are volatile, full of dumb money: newbies plus true believers

• Also trades big cap stocks on earnings days

• Small cap stocks gap up for a lot of reasons, usually a press release

• Uses gap scanner, filters by float and market cap, less than 100 million share float, usually under 20 million

• Uses multiple entries and multiple exits ... this is the secret to his success

• Takes 1/4 position at point he thinks is the top, if wrong he just loses 1/4; if he's right, he adds as it falls

• Scalps half his position and holds half for the all day fade

• If he thinks he's right, and a big bid appears, he'll smash the bid

• You'll never pick the top or the bottom, you always have to scale in and out

• Give yourself room to be right

• If stock drops sharply, will take off a quarter, drops sharply again, will take off another quarter

• After every sharp drop he covers, then re-shorts the bounce if it happens

• Has a set risk amount on every trade that he's willing to lose

• When he doesn't follow that set risk amount, "gets stubborn," he takes his biggest losses

• "Do you want to make money, or do you want to be right?"

• Tracks performance of his setups: size of float, size of gap, time of topping out, pre-market volume, etc.

• Has created "money box" ranges where he expects stocks to top out or bottom out

• Visualizes the "money box" on his charts

• Learned how to code to create the "money box" visual indicator on his charts

• Stocks that continue to squeeze up are outliers

• Tries to line up fundamental reasons, tape reading, basic technical analysis, on every position

• Learned about volume forecasting from AllDayFaders

• Idea is to forecast volume to predict if price will fade or squeeze during the day

• Unusual demand leads to squeezes

• Stan doesn't want to get a job, so he trades for a living [chuckling]

• June 2018 he had a red month, it was rough, he pulled a lot of all-nighters

• Learned a ton from JTrader, who helped him get through June slump

• Mike Mangieri encouraged him, had his back despite the losses

• NYC is expensive and the weather isn't great, so he left for Florida (also taxes too high in NY)

• Set up Ft. Lauderdale office with Krishna Joshi

• Has three other traders on the desk in Ft. Lauderdale, plus one studying for his license

• New traders shadow him for a couple of weeks, can figure things out more quickly that way

• Records his screen every day, posts it to group intranet so colleagues can study

• Eliminate mistakes, don't repeat the same mistakes

• Being fearful when entering a trade is a mistake to be worked on

• Sized up in 2018 and wasn't as consistent as 2017

• Goal for 2019 is to find balance between taking full-size positions and not shooting for home runs (holding too long)

• Added many new setups to his toolbox in 2018

• "If the market changes, I will adapt."

• Twitter: @ciocanatrader

Notes for Chat with Traders, Episode 168

Episode 168 ... Anand Sanghvi ... "Sang Lucci" (95:20)

• Prop trading model doesn't make sense any more, commissions too low

• Prop trading firms now sell education

• Prop firms take the other side of their own (poor) traders' trades

• Recently moved to Puerto Rico

• Live there 183 days and get serious tax breaks

• No federal income tax, no capital gains tax in Puerto Rico [really??]

• Sales tax in Puerto Rico is 11.5%

• Island living very expensive though... everything is imported

• Ton of crypto guys in Puerto Rico, waiting to take gains tax-free [gains?]

• Crypto guys are now all "distraught"

• Electing to mark-to-market is important if you're an active trader

• Trading under a business entity, you can deduct a lot of things

• Pay the $500 to set up an LLC if you are seriously active

• Had a hedge fund, had a couple of bad months, biggest investor pulled out, shut it down

• 95% long options strategy in the past

• Looking to set up a new hedge fund in Puerto Rico, with less risky strategy, more automation

• Trading strategy has changed completely in the last three years

• Now he's 60% short options, 40% long options

• Knows immediately if he's wrong when there's momentum

• No momentum then you are in la-la land, no idea if you're right or wrong

• Theta -- time component to options pricing

• Trades NFLX, AMZN, NVDA (etc.) options

• Used to be up a million in a month, then down 500K the next month, returns were too volatile

• Holds things for one, two, three days max

• Has traded options on the same stocks, the Usual Suspects, since 2010

• AAPL options are so thick you can put 250K position on and take it off in minutes

• You need portfolio margin to get more creative

• Right now he's swing long TSLA ... long March 2019 400 strike calls

• Sells short-dated TSLA calls against his core position to collect income

• Follows his instincts ... has been trading for over a decade

• If your trades are too short-term, you're going to get shaken out

• There's a fine line between following your instincts and being stubborn

• Instinct tells you to get out, but you're too stubborn to get out

• Where are you trying to go with your $5,000 account?

• Hedging allows you to stay alive until volatility returns

• Find what strategy works for you and when it works for you

• BTFD "buy the dip" worked for six years in a row

• Trying to make your losses back -- that's how people go to zero

• Your instinct will try to save you but you'll be stubborn and ignore it

• Find ways to hedge your life and who you are as a person -- guard against depression

• Figure out how to protect yourself from yourself

• If you hold options till expiration, "the shit's going to zero"

• There's a fine line between conviction and recklessness

• If you're too attached to a position, you won't be able to cut it

• After 2007, high frequency trading changed everything

• All markets are emotional ... all auction markets are the same

• Retail traders can't make any money because they're too emotional

• Retail traders know they suck but they have no solution

• With automation, you're only as good as your code

• [He sounds like a profane Jim Cramer, not just the voice, but the pacing ... it's fascinating]

• Interesting idea about using facial recognition technology to save you from yourself

• You have an app on your phone that saves you from yourself

• [Segment from 1:16:50 to 1:17:20 made me fall off chair laughing … “your daughter’s mother”]

• Script stops you from trading the same ticker repeatedly within X amount of time

• You need to create a behavioral profile of yourself as a trader, like Facebook has of you as a human

• Multi-level marketing thrives in places where people have no opportunity and they're ignorant

• Most people can't stick it out until they make it trading, it's too difficult, they quit (and who can blame them?)

• Website: www.sanglucci.com

• Twitter: @sanglucci

Notes for Chat with Traders, Episode 87

Episode 87 ... Tom Sosnoff (60:58)

• Aaron recommends Sosnoff’s Ted Talk

• Caddying 18 holes is called a "loop"

• Jimmy Rocko, his caddy master, grifted him out of all his earnings, cheap life lesson

• Current generation way too risk averse

• Current generation has too much student debt, makes them scared

• Take risks when you're young ... it's common sense

• Risks usually aren't efficiently priced

• Graduated college in summer of 1979

• Wanted to work for a lobbyist but couldn't find job

• Worked for Drexel Burnham right out of college, fall of 1979

• "Bullshitted his way" in

• Pre-Milken, he was long gone before the collapse of Drexel

• Gold and silver exploding then

• Stepped on floor of CBOE and knew that's where he belonged

• National Semiconductor (NSM) pit, first words to him: "f-ck you!"

• Trading floors: all alpha males, strong egos, independent, grifters -- fit his personality

• Spent 20 years on the floor of CBOE

• 3-5% of the people they hired made it

• He just got lucky and made it

• Only instruction to trainees was "go make some money"

• Couldn't outsmart anyone so tried to outwork them

• Made enough money so he could build ThinkOrSwim

• The only way to make money with options: trade small, manage profits, sell options naked

• All about creating a statistical chance of success with options

• No such thing as a quantitative model that can beat the markets

• Market making models (and HFT) can beat the market, but that's it

• The world prices everything perfectly -- no free money, no edge out there

• Derivatives overprice for fear, take advantage of this opportunity

• Sell high implied volatility

• There are people who make money, but they're outliers

• Can't steal money from your customers anymore, this is how people used to make money

• Be product and strategy agnostic, all your focus is on liquidity

• Manage your winners, forget about your losers

• Learn all about implied volatility, learn how to sell premium

• Price is not mean reverting, but implied volatility is

• He's on pace to do 10,000 trades for the year (2016)

• Start young and start small and learn

• If you can order a pizza, you can trade. It's not rocket science

• 100,000+ tastytraders [not sure what this means? active viewers?]

• Markets 35 years ago were inefficient

• Individual investors today at no disadvantage to professionals -- fees, technology the same, only know-how different

• Trading psychology is 100% bullshit

• We make people feel good about their lack of know-how

• People aren't successful because they don't take the time and the commitment to be successful

• Industry makes money by managing other people's money

• There's no psychological element to blackjack or even poker (it's all mechanics, playing by the book)

• He stood in the same two foot spot for twenty years in the pit

• Saw the hurricane coming and wanted to be the first one out

• Scott Sheridan his partner ... hired great technologists to build ThinkOrSwim

• Hired smart people to execute their vision

• He didn't see his family for ten years while building ThinkOrSwim

• Built a great company and product

• Didn't want to sell ThinkOrSwim, but it was a public company and TD bought them out

• Sold ThinkOrSwim for $750MM

• Went to CEO of TD Ameritrade and told him he wanted to leave

• Built tastytrade, which is a media company, profitable since Day One

• In order to trade for a living: you need capital and need to know what you're doing, stay small

• His biggest revelation was that he was trading too large ... got smaller, got successful

• Eight hours a day of live content on his website every day, tens of thousands of hours archived

• Website: www.tastytrade.com

Notes for Chat with Traders, Episode 164

Episode 164 ... Nick Fabrio (84:10)

• Wanted to be a doctor
• Started working at a casino, 4 AM to midday
• Working in a casino is depressing, everyone's losing
• Sold cars after that, was pretty good at that, lasted a year
• Started frozen yoghurt shop, hard work, paid off debts, sold out, 23 yo then
• Retail is horrible, too much competition, frozen yoghurt is "optional" [discretionary spending]
• Doesn't regret yoghurt experience, learned a lot 
• Got job at something called Wholesale Investor. Boutique broker. Not high pressure sales
• Willing to take a risk, it's in his nature
• "Bryce" turned him onto trading, back in 2010, 2011 [Bryce Edwards]
• Learned a lot of from Bryce and others in chat room he was in 
• Replaying stuff on Spark? [no idea what that is ... it's this]
• Did year abroad studying in US
• Started with $10,000. Lost $300 in first month, second month made $800
• Added $10,000 more in second month once confident
• Built account up to $65,000 within five to six months (January 2016)
• Only traded stocks between 30 cents and $3
• One tick is a full cent over $2, half a cent under $2, and then lower from there
• Would risk $50 a tick on his highly confident trades, $25 a tick on less confident ones
• Scalping when he began
• Watches market all day long even though he is in trades briefly
• Only focused on one setup at first
• Always been fearless about losing money, unlike most people
• Been trading full time now just under three years
• 2016 on exchange to US, didn't trade as much
• Scalper trading off catalysts, news
• More comfortable short than long
• Average holding time is ten to twenty minutes
• Wishes he could hold for at least an hour
• He's holding when he should scalp, and scalping when he should hold, working on this
• Comes in each day with a watchlist, filters through looking for candidates
• 40 stocks on his watchlist at the open, many charts open on Spark 
• ASX opens by alphabetical group, two minutes apart [odd]
• Earnings news, contract wins ... these are good catalysts
• From 7 AM to 4:10 PM he's in front of the market
• Received a cease and desist letter from GetSwift(?) after posting four page report on Twitter
• 20 cent IPO went to $4.50 and now it's back at 35 cents
• "Rubbed him up the wrong way"
• Took his information to the AFR [whatever that is ... it's this]
• In a thick book, he'll risk $500-$1000 a tick
• Peruses the AFR [whatever that is ... see above]
• Learned about Daily Report Card from Austin Mitchum
• Internalize what you're doing right and what you're doing wrong
• Trying to grade his setups in the moment now
• Sizes by tick value and liquidity, how much protection he has in the book
• Fair bit of spoofing in Australian market, algo activity, bid propping common
• Recent Cobalt Blue Holdings trade was an A+ short for him
• Illiquid stock, so good opportunity for a move, took a large sized trade
• Got out within 20 to 30 minutes, but should have held longer
• He is critical of himself, always room for improvement, a bit of a perfectionist
• Does all his trades manually
• Only uses mental stops, something else he has to work on
• Does everything off the cuff, all feel based
• If something goes against him, he gets out
• If a trade does not work right away for him, he'll get out
• Scratches lots of trades
• Gets in and out in one go
• He's an adrenalin junkie, if position not large enough, he loses interest
• 70-80% of his profits happen in the first 30 minutes to an hour
• Trades Australian market from Texas
• Mean reversion "wallet padder" trades, "income" trades
• Recently crossed $1MM in trading profits mark... after two and a half years
• Has financial freedom but doesn't really care about the money, doesn't spend it
• Bryce's mentorship was key, learning curve greatly reduced
• "Nick is a freak" ... trading a game that suits his personality
• Strengths: cutting losers quickly, "learn to lose," unaffected by losses, doesn't fight losers
• Weaknesses: shorts too much, looks for reasons to short with obvious buys, doesn't relax enough
• Plays reversals to VWAP
• Not really a charting guy, more of an order book guy
• Internet failures really "grind his gears"
• Has no dollar loss limit for the day, he just grinds back
• Lazy about doing daily report card now
• Advice for amateurs: having a mentor is key, focus on doing one thing and doing it well, size up
• People who aren't passionate aren't going to make it, you have to live and breathe it
• Trading isn't a path to freedom, it's a path to prison (in front of the screens) [I'm chuckling]
• Trading isn't stimulating or interesting to many people, yet they still try to trade and wonder why they fail
• Trading isn't a job, it's just enjoyable
• Don't over-plan starting, just dive in, immerse yourself
• Let the smart people do the algos [or people who think they're smart; Nick is clearly smart :-)]
• Paper trading is the worst thing you can do
• Risk $1 a tick at first, don't even cover commissions, but *never* paper trade
• Read Bella's books, they're awesome
• Trading is like poker ... 95% psychology, 5% skill
• Trying harder to hold longer ... at least an hour
• Twitter: @longhorncapital

Notes for Chat with Traders, Episode 95

Episode 95 ... "Adrian" (70:28)

• British? Accent hard to understand
• "My missus works away from home"
• Professional sailer for 18 years, lots of races
• Fishermen as "opportunistic pirates"
• Early 40s, what do old sailers do?
• Bought systems off internet, paid for poor quality trading courses
• Found the common link among profitable traders was their approach to the business
• Wasn't making progress trading while doing a side job, realized he needed to focus full-time
• Wife supported him when he went full time to learn how to trade
• Took 18 months after that to get profitable
• Couldn't make a living since he was undercapitalized
• Wife believed in him and he believed in himself
• Have to go down the dead-ends to realize they're dead-ends, not avoidable
• Tracked his trades very closely
• Found he had random trades that gave him random stats
• Found he had large number of errors that if eliminated would hugely improve results
• Found if he followed his rules and eliminated errors, he would be slightly profitable
• Now uses Volume Profile to take trades
• Trades German bund primarily, secondary market in DAX, used to trade Eurostoxx but stopped
• Intraday trader: big picture: hourly, intermediate picture: 15 mins, executes off of 3 min chart
• Didn't have enough capital to trade off the daily charts
• Discovered that no pros traded forex, all retail pikers there; pros all traded ES or Bunds, etc.
• Keeps a lot of stats on the markets he trades
• Discretionary trader, couldn't code his system up
• Has a checklist before he takes a trade
• Always risks approximately the same amount of money in each trade
• Uses Volume Profile to place his stops
• Knows stats on things like "gap fill" or tests of Point of Control (POC) ... what percentage of the time is the gap filled or POC tested?
• How far "offside" does price go before the gap is filled? He tracks these stats
• Uses Linnsoft's platform InvestorRT and their language to keep the stats
• Starts looking at weekly charts, marks levels, does same with daily, determines bias
• Then looks at hourlies, judges trend, marks levels, places where price will test
• Does same with 15 minute charts
• Is it trending or in balance? (volume profile language)
• Always looking at levels where he expects it to test
• Key thing is being honest with yourself when you do your trade reviews
• People don't like to admit that they "made a tit of it"
• Marks his charts end of day where he entered and exited, things he missed
• On weekend he reviews all the daily charts from the past week
• Grades all his trades and grades all of his days ... then reviews them
• "Why did I do shit?" ... fear of loss and fear of missing out are the two big things
• Score: Is it in my trade plan? Playing to win or not to lose? Was he patient, how he was feeling, all recorded
• Also tracks his intuition, what did his gut say? Scores this too
• Spends 20 hours outside of market hours reviewing his trades every week
• The mental side goes hand in hand with your trading edge
• Trading like any sport: you have to practice for hours, can't just jump into the ring and box
• Preparation as important or more important than focusing during market hours
• Website: takingonetradeatatime.com
• Twitter: @adeyf69

Notes for Chat with Traders, Episode 162

Episode 162 ... Mike Bellafiore (69:12)

• Runs prop trading firm, SMB Capital, established 2005
• Partner is Steve Spencer
• Stages of becoming a trader: 
• First stage: consistency; second stage: size; third: breadth; fourth [missed it]
• Put your trades in TraderVue to measure your results
• Foundation: Is it a good stock to be trading? Is there news?
• Need passion for trading, and a really solid training foundation, and perseverance
• Big winners at his firm all trade differently
• You need to discover your niche by experimenting
• Recommends reading Carol Dweck's book, Mindset
• Period of historically low volatility hard for traders, no opportunities to make money
• Had to develop trading strategies that make money in low volatility market
• Then when volatility returns, be able to switch back to old methods
• Have to be able to adapt when conditions change
• Post your daily trading report card (consistency, sizing, etc.), not your daily P&L 
• Austin somebody in Sydney is a great role model for a daily report card, follow on Twitter
• Daily routine: did you sleep well, did you exercise, did you review your charts after the close?
• Agrees with Blair Hull that all great things are created by teams, not individuals
• Archive different trades: e.g., the breaking news trade (like MTCH on FB news day), tag it in TraderVue
• Build your playbook, know the setups that you trade well
• Joint venture with Kershner Trading Group, for some scanning technology?
• Make $4000 a month consistently [cube farmer salary], then increase your size (dollar risk) little by little (up 20% a month)
• Have $1000 of dollar risk per day, risk 20% on one trade ($200), self limited to five trades a day
• Don't go from risking $1000 a trade to $5000 -- jump too great, get bigger gradually
• Don't think about making a million dollars, think about making $1500 a month
• First step in progress is to lose less, next step is to breakeven, then $1500 a month, then $4000, then $10000, etc.
• Takes three years to start making money even if you have the best resources (technology, coaching, plenty of capital)
• Keep plugging away, go from 20 yard line to 30 yard line
• Twitter: @MikeBellafiore

Notes for Chat with Traders, Episode 70

Episode 70 ... Jeff Davis (76:31)

• Grew up in farm country two hours north of New York
• [Sounds like a two pack a day smoker]
• Didn't go to college
• Worked for US postal service, in processing center, night shift
• Voracious reader of magazines and newspapers at work
• 30 years old then [late 1990s?], married, had baby and mortgage
• Wanted to be his own boss, attracted to day trading
• $25,000 minimum to join an LLC trading firm
• 1999, Harbor Securities, firm blown up by one trader [not him]
• Didn't matter since he'd pretty much lost all his money anyway
• Saved more money, went to Bright Trading next
• Passed series 7, sat on a desk in the city, surrounded by traders
• Worked night shift at USPS, day traded during day, slept on train [wow]
• Was breakeven at Bright
• March 2000 he went full time [how about that timing?]
• Learned how not to lose while at Bright
• Learned how to short
• At Bright, you picked one stock and specialized in it
• Trade with the specialist, not against him
• Most of his problems were mainly him
• Made money in the morning, gave it back in the afternoon
• Sep. 11, 2001 last day of trading at office at Bright (next to Towers)
• Afterwards traded from home, lonely and hard but also good
• Guys who focused made money, people who didn't adapt were gone
• Got Lyme Disease, got sick, couldn't trade ... inspired him to automate
• You can't fiddle along with trading, bad things happen in life so you have to seize opportunities
• Exchanged his mentoring with a programmer who coded up a "tape reading tool"
• In 2005, Russell re-balance provided a lot of opportunities, he saw this
• His brother also a computer programmer, wrote a program to take advantage of index rebalancing
• Found programmers who also traded, they understood what he wanted
• Should have learned Fortran and Cobol in high school but didn't
• In his early 50s now, wouldn't even think about learning how to program now
• If you're in your 20s, definitely learn how to program, or find someone who can program for you
• Avoid the rabbit holes
• If you're searching for edge, you're definitely going to go down some rabbit holes (curve fitting, etc.)
• Nobody has ever run a bad backtest
• Trend following hard to do when you have a 30-40% win rate, people give up
• Nothing out of the can is going to work for everybody [or anybody]
• You have to work hardest on you .. your psychology
• Your strategy has to fit your personality
• He has now achieved "mature simplicity" ... it's not what you add, it's what you take away, less is more
• Find something where you can get size on, where you're confident
• You're in a risk business, you don't want to make a salaryman's wage
• His algorithm is now trading the S&P futures
• Mean reversion strategy -- most days are range days
• Range prediction algorithm -- knows probability of daily range, will fade spikes
• Yesterday's high or low is hit 88% of the time
• VWAP is the target on most of his trades
• When price gets away from VWAP, that's where he gets interested
• Range is a well-kept secret (Cooper, Crabel, Raschke have done lots of work on it)
• Be aware of "market regime" even though you're day trading
• Everything he does is based on Average True Range
• For example, a 22 handle move will revert at least 5 handles 70% of the time
• People can't stick with their systems
• Automated systems with tight stops don't work -- then you fiddle with the stops
• Old traders just do the same thing in the same way every day
• When you're trading right, it's boring, it's just execution
• Throw away what the crowd is doing
• So much trading wisdom from the past ("the trend is your friend") not relevant for day traders
• Don't be a hamster on a wheel
• You have to stick with your system, only possible if it fits your personality
• "Averaging is groping for the top or bottom"
• He doesn't scale, he just goes all in [scales out in two pieces however]
• He never chases
• If nothing sets up, don't push the button
• Picture a pool filled with sharks, that's what you're jumping into to make money
• Overtrading is the downfall of most failing traders
• Many are operating on tilt, jumping from strategy from strategy
• Always knows what he's risking, structured identically, dollar loss pre-determined
• No slippage on his stops in SP futures
• Traders always rode in last train car in case of derailment [always thinking about risk]
• Good traders are not jacks of all trades, they specialize
• Your strategy has to be about getting size on, otherwise there's no point
• "Single digit midgets"
• You get confidence from specializing
• Two regimes: expansion and contraction
• Tracks range of one minute SP to make sure his stop is "outside of the noise"
• He went from having tight stops to having wide stops -- to protect him from himself
• He knows the percentage of the time his wide stop will get hit -- he never fiddles with it
• With tight stops, he'd be liable to fiddle with them
• You need to be able to trade your system without feeling the urge to fiddle with it
• Once comfortable with strategy, with your stops, your dollar losses, then you can build up your size
• Exits in two pieces: first piece getting him 2.5 points on average, gets instant gratification, lets second piece take its time (averaging 7 points) 
• Two to one win rate on his mean reversion trades [1R losers, 4.75R winners]
• He's out there to help people, esp. persistent guys who don't lose money but don't make big money
• Day trading is not a hobby, not an action junkie thing, it's a business, take it seriously
• Says some kind things to Aaron in parting
• Twitter: @Shaq48_Trading

Notes for Chat with Traders, Episode 20

Episode 20 ... Kunal Desai (65:15)

• Likes Costa Rica, it's like "Jurassic Park"
• Dad is an engineer, always dabbled in the stock market, "the worst trader in the world"
• Graduated high school during the dot com boom, everyone was a day trader
• Opened first account with "buyandholdtrading.com"
• Looked for ideas at MSN Money, Jim Jubak
• Lost all his money in less than a week during dot com bust
• Lost all his money again in Global Crossing, Nortel Networks, Lucent Technologies bust
• Had years of this kind of up and down disappointment
• These losses taught him how to be resilient
• Met Paul Singh online
• Indian people love to get free stuff from other Indian people
• Desai had knowledge but no trading methodology
• Had to corral what he knew and make a cookbook, systematize his knowledge
• Build routines to build a trader
• How do you size your position? You have to have a method
• People freeze when they have a loss, deer in headlights, can't get out
• A-ha moments come from competence and then repetition, practice time
• Competence plus screen time, you begin seeing things clearly
• People give up or blow up before they get requisite screen time
• Takes thousands of repetitions, simulated or live or trade reviews, to reach a-ha moment
• Took Desai *years* to get profitable
• Paul Singh, veteran trader, passed down his knowledge to him 
• Took another year before he said, yes, I can do this forever
• How long do doctors and lawyers go to school before they make a buck? Years! Trading no different
• Desai trades momentum stocks, a trend trader, both long and short
• Read William O'Neil, made sense to him, better matched his personality than Buffett buy and hold
• Earnings breakouts the most powerful thing he has seen in trading
• Good daily chart an absolute necessity
• Earnings surpises are the best, people rush in
• High relative volume makes patterns very clean
• Being a generalist will not make you money
• Master one or two things, better than knowledge of 20 or 30 things
• Mastery takes the thinking out of a trade
• Once a stock gets in play, you trade it both long and short, keep it on your radar
• Must understand your own personality, what you're comfortable with, what fits you
• If you're uncomfortable, you're not going to trade well
• Find something that you "vibe" with
• He can't tame himself, he's a wild, aggressive man and accepts that
• He has max loss on his trading account, $2,000 a day is his max ... stops trading at -$2,000 mark
• Live to fight another day
• When you see the market well, push it
• Give back rule: if you give back half your gains, cut yourself off
• He experiences FOMO a lot, worse for him than taking losses
• "You chase, you die" -- condition yourself to know this
• Market gives you endless opportunities, "on to the next one"
• "Skills are cheap, passion is priceless" ... don't get into trading for the money
• People without passion give up at the first sign of trouble
• Long, rocky road to trading success ... need passion to get through it
• It takes years and years and years before you make any money
• You can't date, you miss weddings, birthday parties, etc.
• You have to work like a dog, long hours, huge cost
• Desai had desk job while he was learning how to trade, he was obsessed with trading though
• His successful students all have incredible resilience
• "Oh shit, this is going to be hard." People quit.
• People get frustrated and give up, even with the simulator
• Once people start live trading, their money is on the line, they go to dark places, the resilient make it
• Lots of talented people just give up once they get knocked down
• You are not trading chart patterns, you are trading your hopes and dreams
• Can't learn how to trade when you need the money from trading
• Every good trader is in good shape, no fatties, "get your pump on"
• He needs to trade with a beach view, helps him maintain his perspective
• Whoever you are, it will come out in your trading, get to the root of it
• Everbody knows the patterns, everybody knows what to do, but only 1% can actually do it
• bullsonwallstreet.com (est. 2008)
• You need a mentor, a community, to learn how to trade
• "My man!"
• Twitter: kunal00

Notes for Chat with Traders, Episode 65

Episode 65 ... Brett Steenbarger (59:20)

• Read The Fountainhead by Ayn Rand as sophomore in college
• Thought psychology could be used to make people do their best
• University of Kansas grad school, late 1970s, political psychology degree
• Trading his avocation, psychology his vocation -- parallel interest
• The Psychology of Trading, his first book, written in 2000
• Victor Niederhoffer, a friend and mentor, encouraged him to write a book
• Teaching at Syracuse University medical school at that time
• Chicago trading firm hired him away to work for them full time as trading coach 
• Market makers he was working with didn't use charts or fundamentals, just the book (DOM)
• Pro athletes still work with coaches even after they've made it; same is true of pro traders
• Markets change, traders need to evolve
• Identify and build upon strengths
• Now he works with several hedge funds and financial firms as a consultant
• Market volatility expands and contracts, traders need to adapt to that
• Separate logical from psychological errors -- correctly identify that first
• People are more sensitive to losing money than making money
• Become exquisitely aware of your habits -- build self-awareness
• Observe yourself, then re-channel yourself
• He has four cats
• Revenge trading comes from frustration, you want to make it back
• Be aware that you are about to revenge trade, step away from screens, calm down
• You can't change something you're not aware of
• Commonalities of successful traders:

1. Adapting to changing markets (trends, volatility, people participating all change)
2. Building on strengths (day traders are good at fast thinking skills and pattern recognition; investors are slower, deeper thinkers)
3. Cultivating creativity (seeing the world differently from others, seeing opportunities others don't see)
4. Developing best practices (and turning them into best processes)

• Best practices: how you generate ideas, manage positions, manage risk and reward, review your results
• Trading Psychology 2.0 is his second book
• You don't have to motivate yourself to eat breakfast, it's just routine
• All your best trading practices should also just be routine, no motivational sticky notes on monitor needed
• Repeat what you do every day until it becomes a routine ... all about repetition
• Make the most of your competencies
• Work around your weaknesses
• Steenbarger knows he can't make markets, cognitively and emotionally he's unable to make rapid decisions and process lots of information
• Steenbarger himself suffers from cognitive overload easily, needs to be able to reflect
• Steenbarger tried to trade full time and absolutely hated it because he wasn't working with people [I'm the opposite]
• Uses guided imagery to have traders imagine hitting their stops, losing money ... but staying calm and controlled
• Effective goal setting requires a specific plan, a day to day plan
• A goal without a plan is a wish
• Not a fan of monetary goals -- performance anxiety is real
• P&L front and center (the outcome) will mess up your processes
• Better to look at improvement ... month to month, not just P&L, but risk-adjusted P&L
• Make friends with loss and failure ... your losing trades teach you things, what changed? 
• Embrace the mistakes you make, ultimately how we become better is by learning from mistakes
• Don't think about your results in dollar terms, think in percentage terms 
• Hard to take risk and make good decisions when you think you must succeed 
• Make sure you have something in your life that's more important than trading
• Trading shouldn't be the major part of your life ... you need to be balanced
• Traders with longevity have some source of satisfaction separate from profits
• A fascination with the markets themselves could be that source of satisfaction
• Website: traderfeed.blogspot.com
• Twitter: @steenbab

Notes for Chat with Traders, Episode 158

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

RIOT, Daily

Notes for Chat with Traders, Episode 10

Episode 10 ... Tim Grittani (52:48)

• Finance major at Marquette

• Learned that he didn't like finance

• Was into poker and sports betting in high school

• Opened account with ShareBuilder(?)

• Started randomly buying and selling 30 cent stocks

• Lost half his account within a couple of weeks

• Joined Tim Sykes' "Silver Package"

• Blindly followed trade alerts from "gurus"

• Had emotional trouble once money was on the line

• Hiding his P&L helped him become less emotional

• Went full time after six months of struggle, $1,300 in the hole

• November 2011 (?) back to breakeven

• Made a new mistake, learned something new every day for six months

• Learned to focus on a couple main set-ups

1. OTC Pump and Dumps

2. Buying multi-week or 52-week breakouts

• Frustrated with listed stocks because too many factors affecting stocks

• OTC stocks trade in a world of their own

• Learned to understand promotions run on OTC market

• Promoters have email lists with thousands of people on them

• Understood all the connected promoter websites, subscribed to all of them

• Would try to act on emails he received as fast as possible, beat the crowd on the spike up

• Would also buy breaks of daily highs on the pumped stock

• Fine line with fraud regarding stock promotions

• Learned liquidity all important

• Began short selling promotions instead of buying them

• OTC promotions would get halted and would re-open weeks later down dramatically

• OTC market dead until marijuana stocks ran in 2014

• Began short selling listed stocks in the same way he shorted OTC promotions

• When he sees patterns forming, he knows what to do

• His edge is his experience

• Spends 15 minutes every night putting together the next day's watchlist

• Lost $290,000 on a single trade, LAKE, 9.90 entry, October 2014 (chart below)

• Refused to cut his losses when mis-timed his entries, would always look to add higher

• Before LAKE, trades would always work out for him in the end, developed a bad habit

• LAKE experience taught him to cut losses

• You need the right broker for your trading strategy

• SpeedTrader best to buy OTC promotions back then

• Only trade liquid, volatile stocks

• Identify and focus on your niche

• Traded only two OTC set-ups (new promotions, breakouts), nothing else

• Trade charts and price action only (not hype)

• Everyone knows OTC stocks are garbage, but just as many listed stocks are also garbage

• Never hold and hope

• Cut losses intelligently, not necessarily quickly

• Base stops on chart, not some preconceived dollar or percentage amount

• Figure your size from your risk level ... dollar risk is constant

• "Trade the ticker, not the company" -- a Nate Michaud saying

• Couldn't live without a market scanner -- how he finds his plays

• Top percent gainers with dollar volume requirements is his main scan

• Hasn't read any trading books, but interested in trading psychology books most

• Don't waste your time following trade alerts or mimicking trades

• Just make your own trades, win or lose, figure things out on your own

• Be mindful about volume and liquidity -- avoid thin stocks

• Blog: tradetheticker.blogspot.com

• Twitter: @KroyRunner89

Notes for Chat with Traders, Episode 69

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

Notes for Chat with Traders, Episode 32

Repeat guest ... first heard him on Episode 66, listened out of order. 

Episode 32 ... Dan Shapiro (68:43)

• Grew up in Brooklyn
• Lacked direction in life
• Generic Trading / Carlin Equities (1999-2006),  sold to RBC [in 2007]
• Borrowed money from neighborhood loan shark
• Ron Shear at Generic Trading hired him
• Met Mayer Hoffman, great prop trader (made hundreds of millions)
• Did well during dot com boom
• Would just buy the dips and did very well
• Dot com bust and 9/11 changed everything
• Didn't make any money for two years
• Incredibly depressed, would sob himself to sleep
• End of 2003 started making money again
• People trading off their iWatches while on vacation on social media (it ain't real)
• "Here's the deal"
• Grew up poor in Brighton Beach, mom a manicurist, dad a waiter
• Tasted success trading during dot com boom, had no Plan B
• If he didn't succeed at trading, he would have killed himself (he's serious about this)
• No highs, no lows to trading, it's just work
• Wife told him he'd have to get a real job
• Make $100 a day first, then go from there
• Stocks trade in intervals, like steps in a staircase
• Stocks go from supply to supply and demand to demand
• Most stocks are not trade-able
• Most traders have no patience and no bankroll and no education
• Looks at 60 minute pivots
• Figure out who the hell you are
• Where emotional buyers meet technical sellers: the supply zone
• The more hands you play, the quicker you'll figure things out
• He'll only be 6'2" if he puts on his wife's 4" heels -- be realistic
• Figure out what not to do
• How do you mentally stay afloat? Turn off your P&L
• The more emotional you are about a trade, the more you'll mess it up
• Don't walk away from the table when you're dealt pocket aces
• Trade the set-up, not your P&L
• Can't take trading to heart, you have to have a sense of humor
• The revenge trade does not work, ever
• You can't cry your money back to you
• A lot of traders can't accept defeat
• Lose the battle, not the war
• The market takes your money and your confidence
• You don't lose your confidence, it gets transferred to another trader
• Don't let things snowball, get a massage, go to a sauna, do something nice for yourself
• Listens to Sade to get depressed which makes him angry which makes him a better trader
• Makes his money as a swing trader in a trending market
• Dumb money trades in the morning and smart money trades in the afternoon
• Will keep a good runner overnight
• Treat trading like a business, it isn't fun
• You don't serve filet mignon on a paper plate
• Mayer Hoffman, Jason Lieber -- they'd tell you if you were trading like a putz
• Hoffman taught him there's no such thing as overbought
• "Whatever goes down, should go lower"
• Price action dictates everything, opinions don't matter
• Don't fight price action
• Turn off social media, read good blogs instead, old vets
• Every trader he knows has blown out, including Mayer
• He never sells dreams, only reality
• Don't think you're alone, keep your head up
• "The rich people don't live in Times Square"
• Twitter: @DanShep55

Notes for Chat with Traders, Episode 157

Repeat guest, formerly featured in Episode 119

Episode 157 ... Alex @TAGRtrades (62:23)

• Wife takes care of their new baby (four months old)
• Hasn't had a full night of sleep in four months
• Child care $30K a year so doesn't make sense for wife not to stay at home [only in 'murika]
• December 2017 his best month to date
• Bitcoin / Blockchain mania at end of year 2017, he was able to catch that
• MARA, DPW, RIOT his main plays ... sympathy plays
• He would buy the one that was still red when the other two turned green
• Lots of liquidity, easy to trade size since exits so easy
• June 2018 will be five years of trading full time
• Have to know what are the leaders and laggards in a sector
• He knew when to back off, take the foot off the pedal, this time around
• When friends and family contact you for advice, it shows the end is near
• One or two days a month was where he made the bulk of his gains
• Equity curve looks pretty when stretched out, but if you zoom in it looks choppier
• Compounding is the key
• Only one day this year with zero trades, but quite a few with only one or two trades
• Stocks that he trades are low float, under $10 ... lots of liquidity issues
• Makes errors, then doesn't correct them, tries to wriggle out, problems snowball
• Trying to be better about 1) market preparation; 2) holding longer; 3) getting bigger 
• In order to get bigger, you have to get better [great saying]
• Liquidity issues are huge when your account size gets bigger
• Lives in central time zone, market opens at 8:30 AM
• Starts looking at market about 90 minutes before the open
• Develops watch list night before -- stocks to watch
• Puts 12 charts on the screens at once
• Looks at daily charts for support / resistance levels
• Following the right people on Twitter is important for getting news
• Pays for two news services, squawk boxes (TradeXchange, Benzinga Pro); worth the money
• He's in favor of journaling, but doesn't do it as much as he used to
• He's not a big spender, seeing himself down $2-3K in a trade still painful
• When he has a big day, he doesn't celebrate
• Still risks same percentage per trade (max 2-3% loss) as in the past
• Has no confidence in his swing trading ability yet
• People say he's just a long-biased trader in a giant bull market (to put him down I guess?)
• Now he's 85% on the long side, 15% short side
• Short trades are 1/20th the size of his long trades
• Never adds to his short trades, takes one shot
• Watches top ten most volume names closely
• Uses finviz.com to scan ... under $10 stocks, trading 2.5x average daily volume (whatever the default is)
• Great charts don't matter if the volume isn't there
• Looks closely at all the charts (20-30) from scan above
• Low float, hot sector, high short interest, good chart setups
• Knows top five and bottom five from his list
• Always starts with the daily chart, only looks back 20 days for high / low resistance
• Then looks at the hourly chart for support / resistance
• Uses 3 minute chart to enter trades
• Looks for flag and pennant patterns after a breakout
• Uses VWAP on every single chart, but doesn't overanalyze it
• VWAP gives you a quick basis of where the average person stands
• Adds 200- and 50-day moving average to charts as target levels (since other people look at those levels)
• No longer scales into trades, he just goes all in now, max risk from single entry, one shot
• Quickly takes profits on a piece, then slowly scales out the rest (1/5th his size left at final target, e.g. 200-day MA)
• Self-discipline all important, be flexible, make adjustments
• New traders see one mold, try it, it doesn't fit them, they give up or lose a lot
• Be flexible instead, find what fits you
• Twitter: @TAGRtrades

Notes for Chat with Traders, Episode 156

Episode 156 ... Michael Katz (59:45)

• Has three kids, two boys and a girl
• Started in markets, late 1990s, then in his late teens, during internet boom (born 1980?)
• Opened first account with a couple thousand dollars 
• Blew up a couple of accounts early on
• Discovered equitytradingonline ... Gary Roth
• Seven Points Capital (Mike Mangieri, Gary Roth, Mike Katz) started as execution firm
• Started trading "parity" on NYSE 
• Parity: buy on the bid through the floor broker, could easily scratch the trade, "risk free"
• Getting good locates is a key edge a prop firm can provide [don't I know it!]
• Scalping with size in high volume stocks within $5 to $20 range
• Trades 50 million shares a month
• Uses hot keys
• Scales in and scales out
• Has 15 different set-ups, each with its own rules
• Descending triangles in low-cap trash names that have flown ("Flying Pigs") ... look for a lower high
• Enters within the triangle, enters the break of the triangle, enters the retrace to base of triangle
• ECN rebates don't make much difference to his P&L 
• Trades eight to ten names on any given day
• Will swing trade ... if it's green and it's working, he'll keep it; then exit rules come into play
• The best trades start working right away
• Whatever is gapping, he'll notice it
• Uses scanner to find intraday setups: volume, volatility criteria
• Watching volume important to him
• Recommends Anna Coulling's book, A Complete Guide to Volume Price Analysis
• He looks closely at Volume Profile
• Consistency is what differentiates great traders from lucky ones
• Need a clear and definable edge
• Avoid large losses, scale back when you're not performing well
• On the other hand, scale up dramatically when you're feeling in the zone
• Always knows where he's getting out before he gets in
• Amateur traders just hope for the best, never even consider their exit when wrong
• Risks a fixed dollar amount on every trade
• Sizes his positions based on stop price and fixed dollar loss, determined in advance
• If he breaks his rules, he sizes down, slows down, takes a day off
• Rule breaking very important to pay attention to [recognize when you're going on tilt]
• Taking losses quickly, which most people can't do, itself is an edge
• Reading order flow, observing patterns, also both edges
• Big fan of journaling
• Sports, trading, poker are all the same: you have a game plan, you execute during the game, then review the tapes afterward
• Over time you develop a trading method
• He still loves watching trading videos on YouTube, seeing what other people do
• He's willing to learn from everywhere he can, then makes it his own
• Can't imitate someone else's method, only yours will work for you
• Establish rules for each set-up
• Surround yourself with good, smart people who can mentor you
• Be careful because there are false gurus and DVD sellers out there looking to take advantage of you
• There are great traders on Twitter (mentions SmashTheBid) who are under the radar; seek them out
• Katz says some kind things to Aaron in parting 
• www.sevenpointscapital.com
• Twitter: Michael_Katz11