Notes for Chat with Traders, Episode 20

Added on February 21, 2018 by C. Maoxian.

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

Movies Watched -- Norman: The Moderate Rise and Tragic Fall of a New York Fixer (2017)

Added on February 19, 2018 by C. Maoxian.

118 minute running time so at least 18 to 28 minutes too long. A weird one, I fast forwarded from 20 minutes in. Casting a gentile like Richard Gere (a Methodist who converted to Buddhism no less) to play someone named Norman Oppenheimer is nearly as mysterious as casting Steve Buscemi as a rabbi. Anyway, that aside, it is a sad story, the tragic end is not an understatement.

The Jewish macher as someone lovable ... (macher from maker, a person who gets things done, but it does have the negative connotation of "fixer") ... he's not shady so much as he is a cipher ... a nobody desperately trying to be somebody ... these are sad ideas. Maybe if it had been 90 minutes long, I could have watched it at normal speed and enjoyed it, but no, it's overly long. Yellow rating.

Notes for Chat with Traders, Episode 65

Added on February 19, 2018 by C. Maoxian.

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:

Adapting to changing markets (trends, volatility, people participating all change)
Building on strengths (day traders are good at fast thinking skills and pattern recognition; investors are slower, deeper thinkers)
Cultivating creativity (seeing the world differently from others, seeing opportunities others don't see)
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

Movies Watched -- 20th Century Women (2017)

Added on February 18, 2018 by C. Maoxian.

118 minutes long so at least 18 to 28 minutes too long. Set in Santa Barbara in 1979. Annette Bening is a 55-year-old single mother with a 15-year-old son ... she's sort of a Bohemian Mom, doin' the best she can with a teenage boy, which isn't very good. She chain smokes which may explain why she looks older than 55 (Bening is in fact 59). She has a couple of boarders in her house, and they form a sort of weird "family." I fast forwarded from 20 minutes in.

There are some funny scenes... the "family" and some hippie friends watch Jimmy Carter's "Crisis of Confidence" speech, at the end of which someone says, "Wow, he is so screwed," which made me laugh. At the dinner afterward, the pretty punk tenant (Greta Gerwig?) leads the group in saying "menstruation" together, which I found amusing. But there's no way I could have sat through two hours of this at normal speed. Yellow rating for Boomers and very early Gen-Xers (say, pre-1965 Gen-X). Anyone under 40, or especially under 30, would hate this nostalgia piece.

Dick Brody wasn't thrilled and got out his thesaurus: "the banalization of its meditative, nearly collage-like sense of memory." Melissa Anderson nails it in this brief review: "a trip back in time in which era-specific talismans substitute for genuine thought. Though big feels glut 20th Century Women, even emotion seems ersatz."

Movies Watched -- Mudbound (2017)

Added on February 17, 2018 by C. Maoxian.

135 minutes with seven minutes of end credits so it's still over 30 minutes too long. Depressing and a tear-jerker. You know something horrible is going to happen the whole time (1940s Mississippi, after all), you have a sense of doom, you know, oncoming tragedy. Female star is Carey Mulligan and her funny ventriloquist dummy face. She's talented and has gotten a *lot* of work in recent years. "Mike Ehrmantraut" plays the villain ... always makes a good bad guy.

The movie wasn't badly made, it's just overly long (Rex said it should be called Stuck-in-the-Mudbound). The atrocities committed by racist white men not that long ago shouldn't be forgotten ... but it isn't entertainment. They tried to end it on an upbeat note, but it's still painful to watch. Yellow rating.

Sharing a smoke.... little nod to Michelangelo (The Creation of Adam)

Movies Watched -- Wonder Woman (2017)

Added on February 16, 2018 by C. Maoxian.

141 minutes with 10 minutes of end credits which means that it's only 30 to 40 minutes too long. The trouble is the backstory takes a good 30+ minutes, the whole Princess Diana of Themyscira, Daughter of Hippolyta thing. There are so many of these comic book superhero movies now because Gen-X has taken power from the dying Baby Boomers, and these are the movies Gen-X wants. The formula is to lighten the ultra-violence with some comedy (including a big dick joke), and it largely works here.

Gal Gadot, wow, talk about the ultimate Jewish Princess. She's amazing -- tall, beautiful, great bod, sexy non-native English speaker accent. I could just watch here alone on screen for 141 minutes. Evil Germans ... who tires of German villains? Dr. Maru's face mask was well done. Matt Damon-ish guy playing the American hero (the Americans are always heroes). Hollywood movie so they throw in an Injun, a Moroccan (with fez!), and a goofy Scotsman (with kilt!) for the Sesame Street PC thing.

It wasn't terrible, but it was just so long, and filled with CGI bullshit that I hate (looks more like a videogame at times than a movie), and the formula is tired. I can't recommend this, other than just watching it for Gal Gadot, who definitely deserves your very close attention. Yellow rating at best.

Movies Watched -- The Meyerowitz Stories (New and Selected) (2017)

Added on February 15, 2018 by C. Maoxian.

112 minutes so at least 12 to 22 minutes too long. I hated this. Watched it on Netflix so I couldn't fast forward. Talk talk talk. Screwed-up family. Whining adult children ... Adam Sandler playing a "serious" role -- always a bad sign ... Ben Stiller, ditto ... and there's Adam Driver from Girls again, that guy gets roles non-stop even though he can't act.

What could have interested me here was an exploration of religion... were all of Dustin Hoffman's wives (incl. Emma Thompson, Candice Bergen) gentiles? Were all his kids half-Jewish? Did Judaism play any role in their upbringing? Sandler's beautiful daughter is obviously a WASP, did Sandler marry outside the faith? There was not a word about any of this. His daughter makes shocking artsy porn as a freshman at Bard -- isn't that cute?

Selfish Baby Boomer dad, now a doddering old guy, screwed-up kids, who cares? If Dustin were in the hospital for two months, who paid for it? Would his healthcare plan from Bard pay for all that? Some of it was sort of funny, but not really. I suspect I'd hate every movie that Noah Baumbach makes.

Full red, avoid this movie.

Update: Meyerowitz lawyers contacted me to take down the screencap. This makes me hate Baumbach even more.

Movies Watched -- The Salesman (2017)

Added on February 14, 2018 by C. Maoxian.

In Persian. 125 minute running time so at least 25 minutes too long. This was depressing. It was made by the same guy who did About Elly, which was also depressing, and A Separation (which I really liked). Iranian society appears to be screwed up ... I guess it's mainly an Islamic Republic thing (the "clerics' clamp," as Tony Lane put it) ... sacred versus secular / traditional versus modern, etc. All the same themes the guy explores in all his movies (marriage, money, the State), but he's also interested in examining humiliation and revenge here.

What interested me was how poor Iran looked, it reminded me of 1990s China ... terrible construction quality, ugly fixtures, cheap everything -- just depressing. I'm not going to talk about the story at all, since it's a little complicated -- it's a sort-of thriller. The movie starred some stunning Iranian women of Instagram, same as About Elly (same lead actress). Beautiful women. Can't recommend it for a general audience, but my capital A.R.T. art readers will like it ... gets a yellow rating.

SPOILERS: (I don't think any kind of sexual assault happened ... he stroked her hair, thinking she was Ahoo, and when she turned, they both freaked out and she fell and cracked her head open. He panicked and left. There was no rape. Any real "violation" never occurred ... it's just in her husband's mind.)

No Better To Be Safe Than Sorry

Added on February 13, 2018 by C. Maoxian.

Lovely cover of the seminal A-ha song from my youth by the great Rachel Price and her band of hipsters:

There are few songs more quintessentially '80s than Norwegian band A-ha's "Take On Me." It's a synth-heavy power ballad accompanied by a high-concept music video, checking all the boxes that defined the pop music of the decade.

Notes for Chat with Traders, Episode 158

Added on February 11, 2018 by C. Maoxian.

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

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