Lovely cover of the seminal A-ha song from my youth by the great Rachel Price and her band of hipsters:
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
OTC Pump and Dumps
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
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
TV Shows Watched -- Peaky Blinders
Watched season one and enjoyed it.
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
Updated Bitcoin Targets As It Continues Lower
The Times Ain't Forgotten
No good live version on YouTube so I'm forced to embed this ... Jason Isbell's album The Nashville Sound has several tracks that I like, which is remarkable. I'll feature the others in time. This song was written shortly after the booboisie elected T___p.
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
Already Told Jesus Everything I Know
No good live version so I'm forced to embed this ... great song.