11 years of trading lessons in one video... how I changed my life. — Transcript

Full transcript

1. 0:00I started trading in 2015. I've been through a  lot of ups and downs and I've won second place
2. 0:04in an official trading competition by DOS trader  public trading competition that took place and
3. 0:09the winners were invited to NASDAQ. I've also  been invited to the New York Stock Exchange
4. 0:14and I've been audited and interviewed by multiple  third party platforms including Business Insider,
5. 0:19NASDAQ, Forbes, Entrepreneur, and many other  reputable outlets. But I've also been through a
6. 0:24lot of setbacks in my trading career. Some of my  biggest trading losses have been publicly shared
7. 0:29on this channel. Recently, I've also published a  story on my life before I made it in trading. So,
8. 0:34what you're about to hear right now is 11 years  of trading knowledge in one 15-minute video. The
9. 0:40most important thing for traders starting out  is it's not the strategy. A lot of new traders
10. 0:44come in thinking that they need a strategy and the  strategy is going to solve all their problems. But
11. 0:48actually, the real thing is look at your financial  situation and clean it up as much as possible.
12. 0:53You really got to look in the mirror at yourself  and understand and be honest with yourself about
13. 0:57your financial situation. First, you need to get  your financial situation in order because it's
14. 1:01going to cloud your judgment on many things.  If you are behind in all your bills, behind on
15. 1:05your credit card bills, and your credit cards  have high interest. If you're in debt, you're
16. 1:09not going to be thinking clearly. When you go to  place a trade, you're going to be thinking they
17. 1:13need to make money right away and that money will  solve their problems. And this is the wrong way to
18. 1:17think about it because you can't think clearly in  how to make the best trades possible. For example,
19. 1:21back in 2015, I was just out of graduate school  and I got introduced to the stock market and I
20. 1:27started learning. When I finished graduate school,  I had a lot of student debt and on top of that,
21. 1:31I had a lot of credit card debt. The student  loans, it wasn't enough. It didn't cover all
22. 1:34my expenses. So, I put a lot of expenses  on these $1,000 or $2,000 credit cards,
23. 1:39maxed them all out. They would be accumulating  interest. It would be like a neverending cycle of
24. 1:43these credit cards having all that pressure as I'm  learning and I want to trade. In this situation,
25. 1:48you should not be trading with real money.  You should be working on getting knowledge,
26. 1:52working on your financial situation with the goal  of in the future being able to trade money. What
27. 1:57I did was I would drive Uber these small credit  cards that were controllable. I would pay them off
28. 2:02one by one. So they were on the minimum payments  first. You tackle all these smaller amounts,
29. 2:07one win at a time. All these small wins stack  up and another small credit card paid off. At
30. 2:12least I stopped the bleeding. There wasn't all  these crazy interest just building up in a never-
31. 2:16ending cycle. Your morale, your morale increases.  is like, "Wow, I'm getting somewhere. I'm being
32. 2:21productive. I'm taking care of this." Feels really  good. On top of that, I'm building good qualities.
33. 2:26I'm starting to wake up on time, see the market.  Here in the West Coast, it was 6:00 a.m. So,
34. 2:30I'll wake up 5:00 a.m., watch the market. I don't  got to trade it. I just watch it. Even if you're
35. 2:34in that situation like I was, you can still study.  You can still put in the time, but you cannot be
36. 2:39trading until you prove to yourself that you  are on the right path. You're developing into
37. 2:43a new person. You're developing new habits, new  routines. You're cleaning up your mess. And then
38. 2:48once you've done that, got everything in order,  then you can start to trade small size. Now you've
39. 2:53earned the right to trade. After you've developed  all these new good qualities, good routines. Now
40. 2:58you're thinking clearly to be able to trade. I'll  drive Uber 8 10our shift. As I'm driving Uber, I'm
41. 3:04studying. I'm listening to audiobooks. I'll take  breaks. I'll go to Starbucks and read books. So
42. 3:08I'm getting my life in order. So all these small  wins add up and I'm proud of myself. Like, wow,
43. 3:12I did that. It's just important to tackle all the  small stuff first and it'll boost your morale so
44. 3:17you're driven. You have this goal and you're going  closer to your goals. It's a really good feeling
45. 3:21as you're studying, as you're getting screen time.  Constantly working 1% better every day. You'd be
46. 3:26surprised after you look back after a 6 month  period, one year period. It's important that you
47. 3:30understand your situation. Everybody's net worth  is different. Financial situation is different.
48. 3:35For example, I started in my 30s with nothing.  That's different than someone that's starting in
49. 3:40their 20s already wealthy or they're just in  college and they have no bills, they have no
50. 3:44baggage. Everybody's life situation is different.  Everybody's coming from a different place. I was
51. 3:50digging myself out of a hole, so I understood I  had to clean up first. If you're coming in with
52. 3:54extra responsibilities, like a family, kids, even  a dog. You can't be comparing yourself to someone
53. 3:59that's in their 20s that comes from a family that  has millions of dollars. They blow up, nothing's
54. 4:04going to happen. See, for me, if the little bit of  money that I had, if I blow up, no one is coming
55. 4:07to save me. When you look at other people on the  internet where you're learning from them, you have
56. 4:12to always keep in mind that you are in a different  situation and you have to be really honest with
57. 4:17your situation. Can't compare yourself to other  people that you don't know anything about. I
58. 4:21had to be very cautious early on and I could not  afford to make mistakes like I might not be able
59. 4:26to come back. I'm struggling to live as it is. If  you're going through similar experience, maybe you
60. 4:32resonate with this. with someone that parents  can give them 50 grand if something happens. My
61. 4:36parents couldn't give me 50 grand. Everybody's  risk tolerance is different. Everybody's amount
62. 4:40they're putting on the trade is different.  And it's all depends on how you're coming
63. 4:44in. Not only your net worth, but also all your  responsibilities. Imagine if you have kids putting
64. 4:49the college funds to trade. If I have a big loss,  not only do I feel it, it affects my whole family.
65. 4:56So, this advice is so important because when  I first started trading, I thought I'm really
66. 5:01smart. I have a masters in architecture and I  was like all I need is a strategy. Just teach
67. 5:06me the strategy. I'll make money on with this.  If it's real, I'll make money. I realized soon,
68. 5:10not long after, I'm like, this is going to take a  lot of work. I'm going to have to clean up my life
69. 5:14completely. I can learn strategies, but I can't  be trading these strategies until I have all this
70. 5:18cleaned up. You come in with all this confidence  that you can do it. If you don't realize that,
71. 5:22you're going to be trading with real money. you're  going to have real setbacks and it's going to be
72. 5:26hard to move forward because you lose 30% of your  account or some big portion of your account early
73. 5:31on. You're just going to be devastated. It just  destroys your morale and then you're not going
74. 5:35to want to study. You're not going to want to  put in the work. Let's say you have a family,
75. 5:38your wife thinks you're gambling, but you're  putting the savings that you had to trade with,
76. 5:42now you're just losing it rapidly. You have to  come in with the right mindset. This is going
77. 5:47to take a while. This is a skill. This is a  high performance job. It requires you to be
78. 5:51thinking clearly. It requires you to be calm. It  requires you to know a lot of knowledge. If you
79. 5:56have all these other things going on in your life  that are affecting your behaviors for trading,
80. 6:01you need to address them. It comes down to being  able to make the best decisions possible when the
81. 6:06market is on with the sizing with risk. As you're  studying and getting better with the information
82. 6:12and getting the skills, you have to work on a  lot of self-development. We as retail traders,
83. 6:18we are taking all the risk. We are not trading  like some hedge fund where you're trading someone
84. 6:23else's money. They provide a risk manager for you  and they give you the system to trade. We don't
85. 6:29have that. We are our own risk managers. We are  trading our own money, our own livelihood. We are
86. 6:34in charge of everything. My second biggest tip  that I can give you is risk management. And my
87. 6:39definition of risk management is going to be a lot  different of what you hear from others. A lot of
88. 6:43people will teach you that you should risk one R  or two R or percentage of your accounts. The way I
89. 6:48see risk is at this point in your trading career,  what you can recover within 2 or 3 days. Whatever
90. 6:54you can recover within 2 to 3 days. Whatever that  number is for you, you really have to know. You
91. 6:58really have to do a deep reflection, look in the  mirror, and be really honest with yourself what
92. 7:03that number is. When I started, my risk is going  to be what I can recover within 2 or 3 days of
93. 7:07driving Uber. I felt confident that I can recover  within a few days as well. If I have a loss,
94. 7:11I can recover that in two or three days. You know,  if everybody has their stop at the same level,
95. 7:16for example, if if everybody stops out, let's  say, at the pre-market high and this person, Guru,
96. 7:21the leader of the group, has a $10,000 loss limit.  And then the other, the smaller trader has a
97. 7:25$500 loss limit. You see other people do it  on the internet. They're risking 2% of their
98. 7:30account and you're risking 2%. First of all,  the $10,000 max loss of the leader of the group,
99. 7:35he's going to feel that differently. Maybe  it doesn't even matter to him. He has so much
100. 7:38money coming in from the services, doesn't even  matter for him. Now, the person that loses $500,
101. 7:43he has a small margin account just like I did  and has to drive for five days in Uber to make
102. 7:48that back. It's completely different. And he has  no other stream of income to come in and support
103. 7:52that. Cuz if you take a big setback, you're not  going to want to wake up in the morning and study
104. 7:57more. You're going to suffer and then you're going  to want to escape more than actually put in the
105. 8:01work. You don't have to have a major setback to  find this out. A lot of times the lesson is not
106. 8:06worth the cost. You want to get the lessons at  small cost or no cost. That's why find out what
107. 8:11that number is for you within 2 to 3 days where  you can recover comfortably. If we lose sight of
108. 8:16that, this is how you see traders snowball bigger  bigger size while not fully understanding the risk
109. 8:22that they're putting themselves into something  were to go wrong. How much time would it take
110. 8:27to recover this? It's something all traders go  through. I've been through it myself. Our account
111. 8:31size are changing all the time. Our net worth  is changing all the time. Our life situation is
112. 8:36changing all the time. So remember, it's where you  can recover within two to three days. That's why
113. 8:40it's important to trade small in the beginning or  just paper trade, watch, get screen time. That's
114. 8:45how you're going to be able to grow. Just like  the professional traders at a firm, they don't
115. 8:50trade live money right away. They shadow other  professional traders. They're given a blueprint.
116. 8:55I actually started out as a long trader because it  takes more money to be able to short. I had less
117. 8:59than a margin account with Interactive Brokers  before I had the margin account, $500 account,
118. 9:04cash account. All you can do with the cash account  is go long. Even though I knew there was pump and
119. 9:09dumps to short, in the meantime, I was practicing  going long because it was very low risk. And I
120. 9:14would buy such small positions and I would try  to experience from the other side long the best
121. 9:19I can. That was good practice. I was learning  everything about shorting. I know how longs feel
122. 9:25in a trade. When I'm short, I know how shorts feel  in a trade because I've been there. I've been in
123. 9:29both sides. I've experienced it. So this advice  has worked great for one of my top students that
124. 9:34I'm mentoring Cameron. So Cameron when he started  he was just longing while learning what I have to
125. 9:40say about the shortselling side. He was absorbing  it as a long trader like a sponge open mind. He
126. 9:46knows how I started on the long side with a $500  account. He has such good enthusiasm the whole
127. 9:52time. He shows up to all the webinars. He's ask  good questions. He journals all his trades. He
128. 9:57has daily report card. He's doing monthly reviews  with me. Eventually, a year passes, he opens up a
129. 10:02short selling account. He has all this knowledge.  He's doing everything right. I want to highlight
130. 10:06with Cameron that he also had no rebuttals.  Just followed the blueprint as it was just an
131. 10:11absolute sponge. Coming in with that mindset is so  important because there's some traders that come
132. 10:16in, they think they know. With my top students,  especially someone like Cameron, he comes to my
133. 10:21trading office, he calls out trades, he learns,  we discuss trades in the city club right across
134. 10:26the street. We have breakfast there, then we come  back to trade. We review trades afterwards. I love
135. 10:31opening my doors to people to students of mine  especially that are just live and breathe this
136. 10:36stuff just like I do. And my students are  literally shadowing me and that's how they
137. 10:40grow. These days, tools are so essential. When  I started out, everything was kind of a mess as
138. 10:45far as trading tools. But now in the age of AI,  we have more tools than ever, more good tools.
139. 10:50For example, I use Ask Edgar to find out hidden  dilution and deep dive fundamentals, especially
140. 10:56in small caps. We have dilution tracker as well.  So now we can cross reference for scanners. I use
141. 11:01trade ideas filtering stocks out. I can block out  all the Chinese stocks, all the Asian stocks, all
142. 11:07the Israeli stocks. We can really leverage this  stuff to work for us if we have the knowledge.
143. 11:11First, you have to prove to yourself that you  earned the right to trade with good tools.
144. 11:15When you're ready to take your trading to the next  level, I really recommend using a reliable broker,
145. 11:20a trusted broker like Cobra, Cobra Trading.  Cobra has a rebate route that I love to use.
146. 11:25RB25 saves me a lot of money on rebates. They  also provide a lot of tools with Cobra Prime.
147. 11:31Most of the tools that I mentioned such as Ask  Edgar, Trade Ideas, Dilution Tracker included,
148. 11:37and it saves a lot of money on cost. Great broker,  great service, great people. I love Cobra. So, now
149. 11:43that I've highlighted the most important lessons  coming from my experience, if you want to get into
150. 11:48the trading strategies I use, the pre-market  rules, the stock selection, the pre-market
151. 11:52scanning criteria, click this playlist over here  to learn everything for free. Like if you resonate
152. 11:58with this video and subscribe to this channel.  I'm David Capablanca. See you on the next one.