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How To Trade Like A Multi-Millionaire with Tim Grittani — Transcript

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0:00What do you think that process is that
0:01helps people so much? Is it just taking
0:03a second look at something instead of in
0:05real time when the emotions and the
0:06adrenaline's going?
0:08And that is something that I do feel
0:10like I see a lot with multi-day
0:12breakouts. So, with this one, I had to
0:14try to get a little bit more clever with
0:16how I traded it.
0:21Hey everyone, and welcome back to
0:22another episode of Trading Takes. Uh we
0:25have a special guest and a special
0:27co-host joining us tonight. So, Stan is
0:29joining me for our episode with the
0:31long-awaited Tim Gritani. Tim, welcome
0:34to the show.
0:35Hey, thank you so much for having me on.
0:37Absolutely. So, Tim and I actually got
0:39to meet at uh Traders for a Cause in
0:41Chicago uh 6 months ago or so, and uh I
0:45think we really hit it off. We've stayed
0:46in touch, and you know, you know I've
0:48been wanting to do this episode for a
0:49while. So, I know I really appreciate
0:51you coming back on, and I know that
0:53you're, you know, easing back into the
0:54markets after some time where you've
0:56been, you know, kind of on and off and
0:58focusing on some other, you know, great
1:00uh life priorities, but now you're ready
1:02to get back into the market. So, uh I
1:04feel like we caught you at a perfect
1:05time for this.
1:06Yeah, yeah. Sorry for uh making you
1:08wait, but yeah, like when we talked in
1:10Chicago, I still wasn't really back, and
1:11I was like watching all this action from
1:13the sidelines, and when we talked about
1:15doing a podcast, I was like, "I'd love
1:17to, but I've got nothing to talk about
1:18right now." So, yeah, now that I'm uh
1:21getting back into the game a bit, I feel
1:23like I've I've got some things again.
1:25Perfect. Yeah, great things take time.
1:26So, um the the whole theme of the
1:29episode today, or what we really wanted
1:31you to do, uh cuz you've done many many
1:33interviews, a lot of people know you,
1:35you're a household name, especially in
1:37the the trading community, and I feel
1:38like you've been a big part of a lot of
1:40people's uh you know, journey really
1:42learning trading. So, what I wanted to
1:44do tonight was really uh take the
1:47audience through a discussion of how you
1:50would personally train a trader. And you
1:53know, you and I have talked about uh
1:54you've designed uh trading algorithms,
1:57and you've thought about like many of
1:58the variables that go into like an ideal
2:00trade setup, and you know, a lot of
2:02these things that are uh they require a
2:04lot of factors to kind of input. So,
2:07that's on like the trading algo side.
2:10But, if you were to trade a person, you
2:12know, which is going to be a different
2:14process than trading an algorithm, we
2:16really just want to see how you would go
2:18about that. So, we have a lot of great
2:20topics that we'll work through tonight,
2:22and uh we're excited to get going. So,
2:24uh are you ready to start talking about
2:25this, Tim?
2:26Yeah, absolutely. I'm ready to dive in.
2:29Great. So, kind of first things first
2:31is, you know, if how would you train a
2:34successful trader? And then to define
2:37what a successful trader would be, we're
2:39looking for someone who has consistency,
2:41we're looking for someone who has
2:43profitability that's able to be scaled
2:45up, and someone who's able to implement
2:47risk management, and so that not only
2:49can they keep those gains, but you know,
2:51they can scale up and trade safely. Uh
2:54so, would you kind of agree with that
2:55definition of Is that a successful
2:57trader, or how would you think about a
2:59successful trader?
3:00Yeah, I completely agree with uh pretty
3:03much all of what you just said in terms
3:04of uh consistency being, I think to me,
3:07the number one thing. Um
3:09you know, when I think a lot about like
3:10how would I want to train a new trader,
3:13I I try to reflect back on like how I
3:15handled it when I was first starting and
3:17the kind of things that I was doing. And
3:19uh consistency was really like one of
3:21the big turning points for me because
3:23with consistency comes confidence. And
3:26you know, I've I've had, you know, all
3:27kinds of ups and downs throughout my
3:29career, but I am a far better trader
3:31when I can, you know, step into a trade
3:33and feel confident about it. And, you
3:35know, not not necessarily confident that
3:37the trade is going to work every single
3:39time, but just confident that I have a
3:41plan, I trust my plan, I will stop out
3:43when I'm supposed to stop out, you know,
3:45going back to your risk management
3:46thing. Um and then I'll be okay, you
3:48know, if I lose. Sometimes setups don't
3:50work.
3:51Whether it's, you know, training a new
3:52trader or let's say someone has
3:54experience, someone has market
3:56knowledge, and they're they're looking
3:58for like a master class kind of, you
3:59know, training. For each of those
4:01situations, how would you really want
4:04someone that you're training to view the
4:07market? And what I mean by that is like
4:08is that through a lens of like pure
4:10supply and demand? Is it like the bulls
4:12versus bears? Is it, you know, learning
4:15the the different games that the
4:16different groups are playing? Like how
4:17would you you know, want someone who's
4:20mentoring under you to to view the
4:23markets in general?
4:25I think the most useful way to approach
4:27it is uh supply and demand. Just because
4:30that essentially is what affects how
4:31stocks move, right? Um so, when when it
4:35comes to the supply and demand, like
4:37I I like for example on longs, like, you
4:39know, I've always been like a buy high
4:41sell higher kind of person because I try
4:43to like pick spots, you know, like high
4:45day breaks or multi-day breakouts where
4:47I think they that's a spot where, you
4:50know, you might have quite a bit of
4:51demand because, oh, short sellers might
4:52be getting squeezed here and panicking.
4:54Or hey, you know, everybody like
4:56everybody knows high day break setup at
4:57this point, right? Like, you know,
4:59that's a pretty common place people
5:00would want to step in and try to buy a
5:02stock. So, you're going to get buyers
5:03from that kind of situation. Um
5:06so,
5:08where you have to kind of be careful
5:09with setups like that, and one of the
5:10things that like you you know, you
5:12mentioned the algos I worked on like my
5:14algos really lacked the nuance of play
5:16selection. Because, you know, you can
5:19you can look at a technical setup like
5:21that, you can think about the entry and
5:24the perfect spot to enter, but it's not
5:26factoring in the supply side of the
5:28equation. You know, like what might be
5:29overhead, what might get sold into you.
5:32And that's where things come into play
5:33like you know, reflecting on the
5:35long-term daily charts. So, you know,
5:37are there past high volume days where
5:39there's a bunch of people bagged from
5:40those days? Is there dilution? Things
5:43like that. So, um you know, when when
5:46you're a beginner trader, I don't know
5:48if that stuff matters quite as much
5:50because you're really trying to learn
5:52the basics, you're trying to learn risk
5:53management. And it's really important to
5:56get a solid foundation with that stuff.
5:58But then, you know, as you try to get a
6:00little more advanced, then I think
6:02that's where it's all about play
6:03selection and being able to recognize
6:05the complexities of every single
6:08situation.
6:10Yeah, and and Tim, would you say part of
6:12that that you know, the play complexion
6:16is
6:17essentially understanding that
6:20just because you know, for from a supply
6:23and demand standpoint, if you look at it
6:25on the chart, if you say pick a certain
6:28level,
6:29while it may look like a
6:31demand level, right?
6:33Higher low or or you know, previously
6:35tested, you know, double bottom,
6:37whatever, but
6:39it is still contextual into how that
6:41volume is distributed.
6:44Within
6:46within that actual move.
6:49I I think I understand what you're
6:50saying. Yeah, the the how it's
6:51distributed really matters. Like, you
6:52know, we
6:54we see these high day rejects all the
6:56time, right? Like, where you you have
6:59the high day break and there's just this
7:01huge surge of volume and the stock goes
7:03nowhere. Like, maybe just up ticks a
7:05couple of cents and then all of a sudden
7:06you get this death candle slam back.
7:09Right. Right, and then sometimes you
7:11have that uneven distribution where you
7:13look at the daily chart and it's a nice,
7:16you know, above average say 50 million
7:18print, right? Daily bar on the volume,
7:21but then you look at it intraday and 45
7:24of them are in the first 22 minutes and
7:27then it's
7:28All right, yeah.
7:29Right.
7:31Yeah, exactly.
7:31Yeah, and then it might might be one
7:33player, you know, making a big move
7:34versus multiple players. So, you know,
7:36you might have one person pushing
7:37500,000 shares of something and that's
7:39very different than, you know, in a
7:41natural market where many buyers are
7:43stepping in. So, yeah, thinking about
7:45supply, demand, and a way that, you
7:47know, kind of comes to mind for me is
7:48like each of those have layers and, you
7:51know, you have layers of supply coming
7:52from different places and you have
7:53layers of demand coming from different
7:55places. So, that's that's great to know
7:57that that's how you would want to, you
7:58know, really have someone frame the
8:00market just in terms of supply and
8:01demand and then, you know, being able to
8:04within that design a system and look for
8:06setups and everything. So, kind of going
8:08on to the next part is if you were
8:10training someone to, you know, manage
8:12your own money or just someone who
8:14wanted to refine their trading, what
8:16kind of system would you most likely
8:19recommend that they do? Would you have
8:20something very strict and systematic?
8:23Something that's more discretionary
8:24based on, you know, market conditions or
8:26something like in the middle?
8:28Something in the middle, I think. I
8:29mean, it also just depends on the
8:31individual and their situation. I mean,
8:33if you're if you're a small account
8:35under PDT, like I mean, you you really
8:37got no shot at short selling, I don't
8:38think. Like you you
8:40First of all, you got the major hurdle
8:41even finding a broker where you can get
8:43shares most of the time.
8:44Um so, that already limits you mostly to
8:46long strategies. And so, if you're a
8:48small trader and you're trying to think
8:50about long strategies, like you've got
8:52to go where the volatility is. Like that
8:54that's what grows a small account,
8:55right? Like you're not going to grow
8:57your account scalping 1% moves over and
9:00over again. Like you need to be in the
9:02ones that have the chance of, you know,
9:03the big
9:0450%, 100% runs, that kind of thing. And
9:07that doesn't mean you swing for the
9:08fences on every trade, but um you just
9:10want to know that that kind of
9:11volatility is even possible.
9:15Yeah, and I know that when we talked
9:17about, you know, you designing some of
9:18your algorithms, that that was a pain
9:20point where it's like you can have
9:21something that's designed so well for
9:23one market condition and then the market
9:25conditions change and the algo just
9:27doesn't work anymore. And so, having the
9:29ability to have that discretion to
9:31fine-tune things and constantly be
9:33adapting to it, that's just uh key and
9:36that's really what allows people to move
9:38to where the edge is. And, uh, I'm sure
9:41Stan has some comments on, you know,
9:43edge, but I think we're both curious
9:44about, you know, where does edge really
9:46come from, and how do you look at edge
9:48in the market? And Stan, what would you
9:50add to that question?
9:52Uh, uh, I think I think that that uh,
9:55you know, as far as
9:56finding edge, uh, and then
9:59being able to scale that edge as well.
10:03Right. And and the ability to scale, I
10:04think really comes from, you know, the
10:06liquidity being present in the play.
10:09Um, I like, you know, I I got my start
10:11in OTCs, and it was it was, uh, you
10:14know, back then it was a lot better than
10:16it is now, but, um,
10:18you know, there there was a period of
10:19time, I think, right around 2013 or
10:212014, whenever the big pot stock boom
10:23was, when all of a sudden the SEC steps
10:26in and halts all these OTC pot stocks,
10:28and then just OTC volume was gone. And,
10:31you know, I I had no choice, I had to go
10:32over to listed stocks, because even
10:34though I still felt like, oh, I have
10:35some OTC edge, like, where's the
10:37opportunity every day? It's just not
10:39there, because even if I can enter in a
10:41play that like looks like a halfway
10:42decent chart, I'm not getting any size
10:44behind it.
10:47Right.
10:47Yeah, 100%. And then, with on the topic
10:50of, you know, a trading system, would
10:53you lean more towards, uh, a long-based
10:55system or a short-based system? And
10:57let's say it's someone who's, you know,
10:58in the middle, they're not a not a
11:00beginner, they're not an expert, it's
11:02someone, you know, say they have a
11:02$100,000 account or $50,000, they have
11:05some market knowledge, you know, and all
11:07all things being equal with their
11:08personality and everything, what would
11:10you naturally want to guide someone
11:11towards?
11:13I would probably guide people towards
11:15short selling, which is it's kind of
11:17funny to say, because, you know, I've
11:18spent the last few years mostly away
11:19from the market. Uh, when I've stepped
11:21in to trade here and there, it's been on
11:23the long side, because I don't want the
11:24stress of, you know, accidentally
11:26putting myself into a squeeze situation
11:27and getting stubborn. Um, like I I
11:29really completely avoided shorting for
11:31the last few years,
11:32and I've been trying to ease my way back
11:34into it. But I feel like when it comes
11:38to you know finding edge I think that it
11:40is a lot easier to find an edge on the
11:42short side and it goes back to that
11:44supply demand imbalance where you know
11:47you can get the technical picture in
11:49your favor where you get a stock with a
11:50nice overextension.
11:52Ideally you can get that overextension
11:53into a level where there's warrants or
11:55some kind of convertible debt or maybe
11:57this company has a big ATM that you know
11:59they're just waiting to use until the
12:01backside of the move. So
12:04I I really like situations like that
12:06where and we see them like again and
12:08again the small cap junk gaps and runs
12:11every day. Seems like every day there's
12:12a 100% gapper.
12:14So with with the short side for me I've
12:16always viewed it more as like okay be
12:17patient wait for the trade to come to
12:19you you know and then you know once that
12:22runner has run out of steam
12:24you know you you jump in there risk high
12:26a day that that's typically is where I'm
12:28risking is high a day and if there's
12:30dilution even better. Whereas with longs
12:33I feel like that's more of a guessing
12:35game. Oh which ones are they going to
12:36support? Which ones are going to have
12:38that next leg up like even even with a
12:41lot of the longs where I buy on higher
12:43day breaks there's still that element of
12:45is this going to go 10% and stuff or is
12:47this going to go 100% after hours?
12:51So
12:52with with the shorts you know a lot of
12:53them you know that they're coming right
12:55back down where they came from but with
12:56the longs it's it's a lower it's a lower
12:59odds but I think a better risk reward
13:01situation.
13:03And I mean Stan that's right in your
13:05wheelhouse so yeah please.
13:07Yeah I was just going to say I think
13:10as far as the you know on on the long
13:13versus the short side
13:15you know the way it's perceived as when
13:19when one of these especially in small
13:20caps land right when when you have a big
13:23run it it starts that that clock and you
13:26know it's only a matter of time, but
13:27this is where timing comes in is as you
13:30know what's next or where it's going to
13:32end up, but
13:34not necessarily on your timetable,
13:36right? It could squeeze a little bit
13:38higher or if they create a market, now
13:40it's linger, you know, it's it's there
13:42for 5 weeks and you know, or or 8 weeks
13:45instead of four, etc.
13:47Uh
13:48Mhm.
13:49something that that, you know, at least
13:50on my side that I've that I've noticed.
13:53And when I like what you said about it,
13:55you know, it doesn't necessarily have to
13:57happen on your timetable because like
13:58you know, like we're we're seeing one
14:00today, uh QAH, where that thing has, you
14:03know, tens of millions of convertible
14:06notes ready to dump it like 35 cents and
14:09last I saw it was $3 after hours. Like
14:11it's
14:12you know, like it's just massive squeeze
14:14and massive games right now. And uh you
14:17know, you you that's why I think that
14:19like the first thing, like I said
14:20earlier, like you've got to have stop
14:22losses. You've got to know how to get
14:23yourself out of a trade that's going
14:24against you because if you can't respect
14:26the technicals of a chart, like your
14:28your lifespan as a trader is limited.
14:30Right. And on that note, um
14:33you know, how important would you say
14:35the stock selection is as you're guiding
14:38the the new trader?
14:40Um
14:41I mean, I I do think that's important,
14:43especially if you're, you know, talking
14:44about somebody under PDT where you need
14:46to wait for the very best setups. Um
14:49like you know, when when it came to me
14:50and stock selection, you know, as I
14:52would pop in every now and then the long
14:54things, um you know, I was looking for,
14:57you know, the ones with the least
14:58dilution, the ones with the lowest
14:59float. Um I typically came in for when
15:02sectors were hot. So, you know, like all
15:04the AI stocks are running, all the oil
15:06stuff is running back when the
15:07Russia-Ukraine war started. Like those
15:09were times I would show up and I wasn't
15:11trying to trade every single one of
15:13them. I was I was looking for the ones
15:14that I thought really could catch the
15:17most of volatility and have the best
15:19odds of having a a move that held up. Um
15:22you know, I I what comes to mind also is
15:24recently we had those monkeypox stocks
15:26running. Uh you know, you had GEOVX and
15:29um
15:29I can't think of the ticker now, but I I
15:31know the one that went to nine. Do you
15:32guys know what I'm talking about?
15:34Uh there was uh VRAX and SIGA.
15:37Yeah, yeah, VRAX. Like those two when
15:40the run was first starting had
15:41practically no dilution whatsoever. They
15:43had small share counts. Um like there
15:46there was a lot to like And then, you
15:47know, they had hot sector news. And
15:49then, the other two were APDN and TNXP.
15:52And uh I mean, APDN that had, I think,
15:56something like 17 million warrants at
15:58$2. It did still make it to three
16:00eventually. But that was a lot more um
16:03limited of a run than uh you know, we
16:05saw with GEOVX and VRAX. And TNXP, I
16:09mean, the the I think it was a Monday. I
16:11think they gapped over the weekend or
16:13something. But that the morning that
16:14TNXP gapped up, it had like this brief
16:17squeeze, and then I think it dropped at
16:21least 50% off of its highs because it
16:23just had hundreds of millions of shares
16:25to dump from a massive ATM.
16:27So, you know, like if you if you want to
16:29be a trader who shows up and tries to
16:31trade a sector, or really this can apply
16:32to any kind of, you know, day one gapper
16:35or whatever the hot stock of the day is.
16:37Um you know, just like that right there
16:39can show you like how important
16:41fundamentals are to the move.
16:45Yeah, and so I there's a couple things I
16:47want to touch on with what you just uh
16:50brought up. So, in regards to trading
16:52systems, you mentioned the short side
16:53being usually a higher probability type
16:56of, you know, uh trading system is more,
16:58you know, short focused because many
17:00things do round trips. But in exchange
17:02for that higher probability, you have
17:04increased risk because the ones that get
17:06away from you can really uh get away.
17:08But it kind of in general, a short
17:11biased trading system is one that is
17:13typically focused on mean reversion. Uh
17:16would you agree with that?
17:18I would, yeah. Mhm.
17:20And then on the opposite side, when
17:22you're talking about a long bias trading
17:24system, and that's kind of like you tend
17:26to focus on that, you know, in your
17:27day-to-day life from what I know now,
17:29does that deal more with what you would
17:31say would be trends instead of mean
17:33reversion? So, like the monkeypox uh you
17:36know, sector, the AI sector, you
17:37basically have a flood of capital going
17:40into a certain amount of names, and
17:42those names you're looking for low
17:43dilution, low share count, and basically
17:46there's very little supply, and you have
17:48a whole bunch of demand going in there,
17:49and that causes that. So, would you
17:51agree that that's more of a trend-based
17:53system rather than mean reversion?
17:55Right, yeah, trend-based and just also,
17:57you know, trying to anticipate the
17:58continuation of momentum.
18:01Yeah, and so one of the drawbacks of
18:03having a system uh like that, just like
18:05how there's a, you know, drawbacks to
18:07the short bias system, is that one uh
18:09they those sector trades are always are
18:12not always around in the market, and I I
18:14think that, you know, we all can
18:15recognize that, that you might have a
18:17couple of hot sectors a year, and if
18:18that is someone's like only kind of
18:20system, then they might have long
18:22periods where they're not doing a whole
18:24lot, and I look that can be, you know,
18:26frustrating for someone who's looking to
18:27be a consistent uh trader. So, e- you
18:30know, whether someone's more long biased
18:31or short biased,
18:33both have benefits and drawbacks, but I
18:35mean, obviously you you have both
18:37trading systems. So, is is that what you
18:39would really want for someone that
18:41you're training to try to develop a
18:42strategy both long and short, or would
18:44you really have them just focus on one?
18:47If I was training somebody, I'd want
18:48them to focus on one at first. Um I I
18:50really think there's a lot of power to
18:53really putting all your focus into just
18:55one or two setups.
18:57You know, just find find a couple things
18:58that you're most comfortable with, that
18:59you're best at, and that's where you
19:02dedicate your time, and that's where you
19:04start building the consistency. I mean,
19:05that that was exactly the path that I
19:06took, and then it was almost like once
19:09those plays became second nature, and I
19:11didn't have to, like, you know, think so
19:12hard about them or stress so much when I
19:14was in one of those trades. That was
19:16kind of my moment where I said, "Okay,
19:17time to start branching out." So, I
19:19started off with, you know, like, back
19:21in the OTC wild days, I was buying new
19:23promotions, I was buying OTC multi-day
19:26breakouts. And then, I mean, that was
19:29probably for 6 months. I was just doing
19:30those. And then, from there, I said,
19:32"Okay, now I want to start trying to buy
19:34panics." And then, from there, I said,
19:36"Okay, now I want to start shorting
19:37selling these things cuz they're all
19:38zeros." And you know, you I just added
19:41one thing at a time, you know, as I kind
19:42of had the mental capital for it. Um so,
19:46the like, I I blew up my first $1,500
19:48because at first, I was trying to do
19:50everything. I was trading like eight
19:52different strategies, and I sucked at
19:53all of them. So, uh it really was just
19:56that narrowing in that helped me start
19:58getting that consistency and getting
19:59that confidence.
20:01So, for a trader, I would absolutely
20:02say, you know, start with just one or
20:05two things. Um again, I think it's
20:08probably a little
20:10Well, if you have the capital, it's
20:11probably easier to start on the short
20:12side, but um most people, I think, would
20:14probably start on the long side.
20:16And then, you just want to look for
20:18setups that, you know, you'll have
20:20opportunities almost every day.
20:24Yeah, and I know that that's really the
20:26mindset of, like, what prop firms do,
20:28too, cuz if they're if they're training
20:30someone, if a prop firm is training
20:31someone, their first goal is to make
20:33that person, you know, kind of pay for
20:35themselves. And if they can, you know,
20:37at least have one strategy or something
20:38where they're bringing in a couple grand
20:40a month, then that basically pays for
20:42that employee. And so, taking that same
20:44idea into the retail world, um you know,
20:46we don't have someone overseeing us to
20:49to really, you know, drill that into us
20:51that, you know, focusing on one setup at
20:53a time until you can become, you know,
20:55pay pay for yourself, basically, or at
20:57least be break even or starting to make
20:58money. And then, once you master a setup
21:00like that, um you know, moving on to
21:02something else. And Stan, I I feel like
21:04this is something that you're big on
21:05because
21:07I feel like a lot of people don't do
21:08that because either one they think it's
21:10tedious or two they feel like it takes
21:13too long. It takes, you know, three or
21:15six months to learn a setup and really
21:17get after it. And that seems like too
21:19long of a time just focus on one thing.
21:21Uh, you know, how would you how would
21:23you think about, you know, someone
21:24having the patience to really, you know,
21:26stack one of these on top of the other?
21:29Yeah, I I mean
21:31I think it kind of goes back to what
21:33what Tim was saying and and that is
21:36um being able to focus on one at a time
21:39allows you to
21:41truly explore its depth of a strategy.
21:46Instead of trying, you know, seeing
21:47something and trying it and then giving
21:49it a couple weeks or a month and I'd
21:51even go to say three to six months for a
21:54one particular strategy may not even be
21:56enough. You may need it even need
21:58longer. There are certain strategies
22:00that I still trade to this day. Yes,
22:03they have modified and morphed a little
22:05bit because it's required as the market
22:07changes and adapts.
22:09Uh, but it has always started with one
22:11and and
22:14being able to focus on one, right, not
22:17looking for the shortcut uh, will build
22:21the right
22:22foundational blocks that then later on
22:25allows you to take leaps instead of
22:28steps.
22:29But if you skip that foundational block
22:31it it's going to be very diff, you know,
22:33difficult as as you progress as a
22:35trader.
22:36Right, you're going to be missing some
22:38core components.
22:39Um, and I think, you know, some ways to
22:42battle that some it's just don't think
22:44that this is a, you know, overnight
22:46success type of thing or or something
22:48that even if you've been trading for a
22:50year, two, three years and and and
22:53if you're not consistent yet, that's not
22:55necessarily a measure of of of success
22:58or a measure of progress, right? You
23:00know, consistency is where we're trying
23:02to
23:03get to, but it takes time.
23:06And the more you can focus on one thing
23:09at a time, the easier it gets as you
23:13come up against the next obstacle.
23:16And then, Tim, kind of to echo that, you
23:18know, if someone is developing a trading
23:21system, they're looking for setups, you
23:23know, let's say they're focusing on one
23:24thing at a time, how active would you
23:27assume that they would be? Would you
23:28think that there's trades almost every
23:30day or only a couple times a week? Or
23:32how how would you think about that?
23:35Part of that would depend on market
23:36environment, I think, for sure, and just
23:38what setup they're going after. But, I
23:40think it would be pretty common when
23:42you're at the stage of only having one
23:43setup. I I would not be at all surprised
23:45to have one or two days a week where
23:47there's no trades. And I think that's
23:49totally normal, and I think that's kind
23:50of where the successful traders are
23:53weeded out from the ones who don't make
23:54it is the ability to actually sit on
23:56your hands and not take a trade all day.
23:58Um because it can be hard, you know, and
23:59you're in these chat rooms, you're on
24:01Twitter, you see all these people
24:03celebrating their wins for the day cuz
24:04no one ever loses on Twitter, and you
24:06just want to be a part of it.
24:09Absolutely. Um okay, so someone has a
24:12system, let's say it's a long bias
24:14system, and they're looking for, you
24:16know, trends, or they have more of a
24:18short bias system, and they're looking
24:20for more maybe mean reversion types of
24:21trades. What else besides, you know,
24:24like a general bias or lean goes into a
24:27trading system? Does that, you know,
24:29involve mapping out your position
24:31sizing? Does it map out, you know, what
24:33is the expected value of a certain setup
24:35uh before, you know, in doing that paper
24:37trading before they start doing it with
24:38real money? Like, when you're designing
24:40or when you're training someone uh to
24:43basically develop a trading system, what
24:45comes to mind for you?
24:48Yeah, so position sizing uh I'm glad you
24:50touched on that cuz I think that's huge.
24:52Um
24:53like one one of the biggest things that
24:55I do in my trading, and I think a lot of
24:57traders do is they have a a set dollar
24:59risk. So, you know, you'll have traders
25:02who they they get in a trade and they
25:03just want to, you know, say, "Oh, I'm
25:05only going to risk 1%." Or, "Oh, I'll
25:07just I'll just buy 1,000 shares every
25:09single time I'm in a trade." And then
25:10they wind up with these like wildly
25:11different risks.
25:13Um for me, I I have always taken a risk
25:16first mentality when I get into trading
25:18or at least when I'm trading my best I
25:19do that. Sometimes I do slip into trying
25:21to think about, "Oh, how much do I want
25:22to make?" And then I do dumb things. Um
25:25but like risk first for me is like,
25:27"Okay, let's say I want to risk $1,000
25:30per trade."
25:32Um that means that, you know, if I'm
25:33buying a stock at $1 and I'm risking off
25:36of the 90 cent level, I can only buy
25:3910,000 shares because that is, you know,
25:42with a 10 cent stop, that would get me
25:43to my
25:45$1,000 loss if I'm wrong. So, it it
25:48always starts with that. It's It's
25:50before I even enter, I know, "What's my
25:52risk level? Like where on the chart do I
25:53want to cut if this goes wrong?" And
25:55then, "How many shares can I take based
25:58on how close to that level am I or how
26:00far away from that level am I?"
26:02Um
26:03And then sorry, can you remind me of the
26:04original question for uh
26:06what else I had to touch on there?
26:07Yeah, yeah, just in like in the topic of
26:10trading system, you know, position
26:12sizing and you know, obviously risk
26:14management are part of that and you
26:15know, what are the other things that
26:16come to mind with a trading system and
26:18when you're if you were teaching someone
26:20to develop one?
26:22Yeah, I mean, obviously you you want to
26:24figure out your entry and exit signals,
26:27um
26:27which is something that I've always been
26:30I feel like better at the entry signals
26:31in my personal trading and then with
26:33exit I tend to uh struggle a little bit
26:35especially on the long side.
26:37Um
26:38Like just today I I had a nice round
26:40trip where I was I went from up 60K to
26:43making uh 6K I think by the time I
26:45locked it in. So, that was that was
26:46great. Um
26:48But, you know, it was also a failed
26:49breakout, I guess.
26:50Um but yeah, like it like you you
26:54started off by saying like, you know,
26:55you you have to have a lean and uh yeah,
26:57I think that's very important. I think
26:59that can come from very simple data
27:00tracking, you know, just like if if you
27:03want to short a gapper, for example.
27:05Um, I mean, you can you can build these
27:07really basic simple stat sheets just
27:09tell you like, hey, you know, stocks
27:11that have gapped up
27:12100% or more or 200% or more or whatever
27:15number you're looking at. Um, you can
27:17look back years at that data and just
27:19see like what's the percent chance of it
27:21closing, you know, below its open. You
27:23know, something as simple as that. Um,
27:25so give just to give you a bias on
27:27whether you should even be long biased
27:28or short biased out of the gate.
27:30And uh then you you do want to try to uh
27:35build something that will give you a
27:36little bit more specific of an entry
27:38than just, oh, I'm just going to short
27:39it open because, you know, if you just
27:42blindly short it open, well, what
27:44happens if it squeezes 50% before it,
27:47you know, turns around and goes red?
27:48Like, do you really want to hold it down
27:50and move on the short side? I I sure
27:52wouldn't.
27:54Yeah, and that is something that, you
27:55know, Nate is really
27:57uh just a total master at of like, you
27:59know, really getting good entries on
28:02things and especially on the short side,
28:04waiting for something to exhaust out, to
28:06fail, and then to retest and confirm
28:08that it's it's done and you're basically
28:11hypothesizing that you're on the
28:12backside of the move now instead of the
28:14frontside of the move. So, for you and
28:17if you were training someone, what makes
28:19for an ideal entry, whether you're on
28:22the short side or the long side? Is it
28:24really just waiting for a spot that for
28:27various reasons, whether it's supply and
28:28demand, is abnormally sturdy and you're
28:32using that as your risk level or how do
28:34you think about an ideal entry?
28:36Yeah, so from the short side, uh I am a
28:38lot like Nate where I'm I'm looking at
28:411-minute charts. I'm looking for a hard
28:44failure on a 1-minute chart, you know,
28:45compared to previous pullbacks. And then
28:48typically I'm looking for some kind of a
28:49bounce to get short into and then just
28:51risk it off the high of the day. Uh that
28:53is traditionally how I've entered in the
28:54past and then, you know, as that chart
28:56develops as the day goes on, there may
28:58even be opportunities to add and move my
28:59risk level down. But I'm usually the guy
29:02who's adding into strength on the short
29:04side but after the top has been put in.
29:07Uh with longs, I feel like uh those
29:09entries are a little more clear-cut
29:11because um again, you know, breakouts
29:14are just you know, waiting for the
29:15breakout level to get breached. So it is
29:17you know, it's almost like it's right
29:18there on the chart for you and you you
29:20like you could put in a stop limit order
29:22and just, you know, walk away and just
29:24like, you know, if it breaks, you're
29:26going to fill. If it doesn't break, then
29:27the play never triggers.
29:29Um
29:30I guess the other thing that I I have
29:32been working on with longs lately is I'm
29:34trying to, you know, get better at
29:35buying during consolidation.
29:38But then that comes back a lot to play
29:40selection because so many of these will
29:42consolidate, look like they're curling
29:44up, and then just eat it.
29:46And uh I put myself in way too many of
29:48those over the past few months. That's
29:50probably been my biggest struggle since
29:51I've gotten back to trading is uh just
29:54massively overtrading consolidation, you
29:57know, trying to, you know, probably just
29:58FOMO, you know, just wanting to be a
29:59part of the next big move and be a part
30:01of it earlier so I can get more size.
30:04And uh you know, my play selection has
30:06been terrible. And uh the kind of things
30:09I would use for play selection are sort
30:10of things we've talked about already,
30:12you know, just uh looking for dilution,
30:14looking at what the float is, looking at
30:16the long-term daily chart, and are we
30:18above key levels? Are we below a bunch
30:19of key levels?
30:21Um
30:22If If I think about some of my biggest
30:24wins since I've gotten back on the long
30:26side, um they have all had news on their
30:29side. Like like where it's it's actually
30:32like pretty legitimate significant news.
30:35Uh like SER V with uh the uh
30:39Nvidia stake or uh I mean I I guess you
30:42could kind of argue how um
30:44how meaningful the BOF news was about
30:46earnings, but like, you know, like
30:48saying that you have a 600% increase in
30:50your revenues, like that's that's never
30:52a bad thing.
30:53Um so,
30:55it it's yeah, it's when I when I can get
30:57myself in those situations where it
31:00seems like there's at least like news
31:02that reads really well or a sector
31:04behind it, like that really does help
31:06me, and those are probably the ones I
31:08should be more focused on.
31:10And and buying during consolidation, uh
31:12the way I like to do that is kind of
31:14it's kind of similar, you know, I I I
31:16want to look for higher lows. I want to
31:18see, you know, maybe the stock pulls
31:20back, that's a low, rebounds,
31:22consolidates for a little bit, and then
31:24breaks that rebound high, even though
31:26that that rebound high is not the high
31:27of day. Um and then I can just risk it
31:29off of whatever the pull low was, or
31:31maybe the consolidation period.
31:33Um
31:35where I get myself into trouble again
31:37is, you know, like buying things like,
31:39uh
31:40I can't remember what the ticker was
31:41yesterday, but I remember that, you
31:42know, like whatever press release they
31:44put out was like meaningless. It was
31:45like, "Oh, we've gone ahead and begun
31:48work on the next stage of our trial like
31:52for our drug." And it's like, that's
31:53just
31:54typical, you know, like company
31:56operations. Like, why did you even put a
31:58press release out about that?
32:00And, uh of course, I bought that twice
32:02during consolidation and lost both
32:03times, you know, so it's
32:05it's uh it's an it's something that you
32:09probably need to
32:11uh
32:11I mean, you could track it, honestly.
32:13Like, you know, you you can build a
32:14spreadsheet of the day's best runners
32:16and what was the news. Um that's an easy
32:18thing to copy paste over, so there's
32:20there's a lot of things you can do to
32:22try to uh
32:24help with the play selection side.
32:27And, Tim, something that you brought up,
32:28you talked about, you know, key levels,
32:30and Stan, this is something that you're
32:32very focused on, too. So, you know, how
32:35Stan, how would you
32:37try to get the information from Tim of
32:39like you thinking about key levels or
32:41you know how would you guys think about
32:43that you know if again Tim if you're
32:45using the view that you're training
32:46someone to trade would you want them to
32:48be using key levels and yeah Stan what
32:50about key levels should people know?
32:53Yeah I think
32:54um
32:55the main thing about key levels is is to
32:58understand that
33:00a key level does not necessarily invoke
33:04action. It could
33:06but it doesn't necessarily mean that you
33:08have to do anything. It just means
33:12this is an area where if something were
33:15to happen there's a high probability
33:17it's going to be around this area.
33:20Um so you know that's the first thing
33:24that I keep in mind with key levels and
33:26that helps with being stubborn once
33:29something doesn't work. Uh because then
33:32I'm no longer trading what I intended to
33:34trade originally anyway because I
33:35shouldn't be up here or I shouldn't be
33:37down here by this time right? Um so I
33:40think that's the the first thing for me
33:43when it comes to key levels
33:45and then and then the next thing is they
33:47are
33:48a little bit of a lagging indicator.
33:51Right?
33:52Um because they you know if you go let's
33:55say off like a double top key level or
33:57something it's not truly a double top
33:59until until you have that breakdown
34:01below you know below the support then
34:03you know. But I mean
34:05for every one that you you assume it's a
34:08double top there's 10 examples where it
34:09no it just goes right through.
34:12And and it never looks back.
34:14Um so I think you know keeping that in
34:16mind as well as if if I'm trading around
34:19key levels I'm willing to exchange
34:23a little bit of
34:25average
34:27for
34:28a little bit more conviction perhaps
34:31because now I have something
34:33to base a risk off.
34:35I may not have caught the top exactly or
34:37right at that key level, but now I can
34:40use that same key level and say, "Okay,
34:42now this is different. Before we were
34:44approaching it, now I have more
34:45information behind it, and now I can
34:48actually make a decision."
34:52Yep.
34:52And Tim, do you think about that in a
34:54similar way or what comes to mind, you
34:56know, with key levels for you and how do
34:58you use them and how would you want
34:59someone else to use them in trading?
35:02Yeah, I really like what he said there
35:04um with regards to exchanging some
35:06average for, you know, additional
35:08confirmation because
35:10um you know, like for example, if I am
35:14looking to
35:15short a stock that is rebounding towards
35:18its high a day,
35:20I don't necessarily want my goal to be,
35:22"Oh, let's enter this blindly into this
35:24strength right here as close to the risk
35:27level as possible." Because um like he
35:29said, like we we've seen so many charts
35:31where it just blows straight through.
35:33So, I really might want to wait for that
35:35pullback and additional confirmation.
35:37And, you know, yeah, my risk reward is
35:38going to be affected a little bit, but
35:40my win rate is going to go
35:42way way up as a result.
35:44Um so, yeah, I mean like key levels to
35:47me, I I really I really am big on like
35:50high a day, low a day.
35:52Um and I think that a lot of what
35:54happens in between is noise.
35:56Um I I try not to let a lot of the
35:58choppiness in the mid-range of the
36:00charts shake me out. Um that that was a
36:02big lesson for me when it came to uh
36:04transitioning over to listed stocks
36:06because, you know, maybe I would get
36:08into a short kind of up near high a day
36:10near a key level, and it wouldn't break
36:12down right away. Uh you know, it would
36:14just consolidate, go sideways, and it
36:16would look like one of those situations
36:17where, you know, it it could break
36:19either direction, and you just don't
36:20really know. Uh but, you know, I've
36:23sized myself in at that point for a
36:24trade where I have a set risk. I am I'm
36:27in a favorable risk reward situation and
36:29I just want to let it play out because
36:31if I'm the guy who just gets scared and
36:33says, "Oh, I'm just going to cover this
36:34here and just take a few cents of share
36:36while I'm green." Or "Oh, I'm I'm down a
36:38little bit and like I can't stomach
36:39that. I'm just going to take it off."
36:41You know, I'm no longer trading my
36:42setup. Now, I'm just kind of randomly
36:45exiting because of my emotions.
36:47Um whereas, you know, the setup calls
36:50for me to have that patience and see it
36:52through till the end of the day in a lot
36:54of cases.
36:55Um so
36:57I kind of lost my train of thought on
36:58where I was going on that, but uh
37:01Yeah, like Oh, yeah. Yeah, just not
37:02getting scared out during the chop and
37:03having having the patience. Um that that
37:05that was a big turning point for me with
37:07uh getting better at the listed stocks.
37:09Long as as long as I get out when my
37:10risk is hit, that's all that matters.
37:12We hope that you're enjoying this
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37:43become a member. Now, back to the
37:44conversation.
37:46Yeah, so I'm kind of on that topic of,
37:48you know, exits and, you know, even
37:51scaling in and out. You I know that you
37:53mentioned that with when you're short
37:54selling, you will scale in. So, you
37:56might, you know, put a starter in for
37:57something, watch it fail, retest, you
38:00know, reject, and then, you know, start
38:02to scale in with that. Um do you also
38:05scale, you know, into positions with
38:07longs or is it more one entry and
38:09multiple exits? Or how do you think
38:11about scaling both short and long?
38:13Yeah, so I don't know if I would really
38:15use the term scaling for what I try to
38:18do just because um the way I think about
38:20scaling is uh like if you only want to
38:22put on half risk at first and then put
38:24on more when you're more sure. And I've
38:27never liked that approach because I just
38:29want to I just want to put it all on at
38:30once. So like if the setup is good
38:33enough for me to, you know, begin
38:35trading it, I want my full-size risk
38:38because what happens in a lot of cases,
38:40and this is actually something I went
38:41through for a long time before I figured
38:43out how badly it was affecting me, is
38:45you know, if if you are only taking that
38:48small starter,
38:50um
38:52and then like maybe adding like as it
38:53goes against you a little bit or
38:55something, you're only ever going to be
38:56full size on your losers. And your
38:58winners may only be partial size.
39:01I I did that to myself a number of
39:02times. So when I when I'm building into
39:05positions, the way that I think of that
39:07is
39:08you know, I pick my entry spot, I risk
39:11my, you know, $1,000 off of higher day,
39:14let's say, and then my ad comes when I
39:17can move that risk level down.
39:19And moving that risk level down, then
39:22that allows me to, you know, maybe maybe
39:24I want to make my risk so that I'm break
39:26even off of that new risk level. Or
39:28maybe I want to make my risk so that I'm
39:30still risking $1,000 off of that new
39:32level.
39:33But it gives me an opportunity to add
39:35shares while keeping my dollar risk
39:36consistent. And I think that the term
39:39I've heard for that is pyramiding in.
39:42Um where you know, you you can really
39:44increase the reward you can get if
39:47you're right while, you know, your max
39:49loss is always going to be just your
39:51typical one hour loss.
39:53That that's kind of what happened to me
39:54with that long this morning actually. I
39:56was I was in BBLNZ
39:59or whatever whatever that fake breakout
40:01this morning was. I already forgot the
40:02ticker exactly. But I was in it from
40:05yesterday. I had kind of anticipated a
40:07bit. I was in from 220. And then this
40:11morning as it was breaking out past the
40:13280 multi-day breakout, I was I was
40:15putting on ads but only as I felt like I
40:18could use new risk bubbles. So, like
40:20right out of the gate this morning, I
40:21was saying, "Oh, 230's in my risk, so I
40:23can I can already add dips like
40:25semi-aggressively because when I entered
40:27the 220 position yesterday, I was
40:29risking off of two."
40:31Um so, I went from having this uh 45,000
40:34share overnight position to being long
40:3775,000 shares with a 250 average. And
40:41even though the trade failed, you know,
40:42I I I kind of sized myself in in a way
40:44that I didn't even lose. Like it was it
40:46was a complete failure of a breakout,
40:47and I still made 6K. So, it uh
40:52it is, I think, a little bit more
40:55advanced than beginner traders need to
40:57worry about. Um I think beginner traders
40:58maybe should be more just concerned with
41:00the initial entry and just, you know,
41:02trying to get out at your target or at
41:04your stop. But, I think it's a uh
41:07powerful tool as you uh go along in your
41:09career to uh you know, increase R in
41:12some situations.
41:16Yeah, absolutely. And, you know,
41:18something that you mentioned in there uh
41:19maybe not directly, but, you know, range
41:21anticipation is such a key factor in,
41:25you know, selecting a setup. And, you
41:27know, the part of the reason why
41:29something like uh short-selling
41:32can be, you know, more predictable and
41:34more profitable, you know, sometimes
41:36although you have increased risk, is
41:37that many times you have uh something
41:39that has gone parabolic, it's up 100%,
41:41200%, and the range that you're
41:44anticipating it trading is many times,
41:46you know, half of that move or, you
41:47know, all of that move uh given a a time
41:50period. So, whether you're on the short
41:52side or the long side, how would you
41:54want someone that you're directing to
41:56really think about range anticipation,
41:59and where do you get the most uh in
42:01certain setups?
42:03Um I mean, as far as like range
42:06anticipation, I think, you know, you
42:08just you kind of get a sense of that
42:10from tracking. And just, you know, I I I
42:13I
42:14think one of the biggest reasons I was
42:15successful was because
42:17I tried to keep Excel sheets and log,
42:19you know, situations as I saw them
42:21because, you know, situations repeat.
42:23So, you know, as as I would like log
42:27multi-day breakouts back in my early
42:29days,
42:30you know, like one of the things I was
42:31paying attention to was, you know, how
42:33far did the breakout run? Like what what
42:35kind of possible reward could I
42:37typically expect on these things if they
42:39really work?
42:40Um and yeah, I think I think data is is
42:44the best way to go for that because, you
42:45know,
42:46things don't have to exactly repeat,
42:48but, you know, his I think history
42:50rhymes is kind of the saying I've heard.
42:54Yeah, so like when you were building
42:55your initial, you know, kind of trading
42:58setups or other things, you were
42:59tracking lots of data, but, you know, to
43:02even begin tracking a setup, do you
43:04think that it's worthwhile for someone
43:06to try to, you know, track and kind of
43:08create a new setup or should they be
43:10looking at, you know, proven setups and
43:13just learning how to master that since a
43:15lot of the data is, you know, fairly
43:17constant and it's already out there?
43:20Yeah, I mean, when you're first
43:21starting, I don't think there's anything
43:22wrong with seeing what other successful
43:24traders do and testing it for yourself.
43:27I wouldn't blindly accept anything that
43:29anybody says. I really uh
43:32do think there's a lot of power to doing
43:34some of the tracking yourself, but,
43:36yeah, make make it easier on yourself.
43:38Um
43:39like I I did not invent multi-day
43:41breakouts. I did not invent afternoon
43:43breakouts, you know, like that was that
43:46was something that I learned from Nate.
43:48I learned from Tim. I learned from, you
43:50know, all these guys who came before me.
43:52And then I I kind of put my own little
43:55personal twist on it in a way, you know,
43:57as I went through my tracking. Like, you
43:58know, like like my the example I always
44:00go to is that with breakouts, you know,
44:03I always had heard the saying, "Oh,
44:05resistance becomes support." Which I
44:07took literally. Like, oh, if the stock
44:09has a $1 breakout, it should hold a
44:11dollar perfectly. And, you know, then I
44:13learned like, oh, that's not the case.
44:14Like, dips down to like 95 cents are
44:16actually really common. So, the reason I
44:19figured that out is because I tracked a
44:20bunch. And like after like eight botched
44:22breakouts, I was like, okay, wait a
44:23minute. I need to play wider risk. And
44:25then all of a sudden I was winning at my
44:26breakouts.
44:30Yeah. And I feel like, you know, being
44:32able to just watch that in real time was
44:34super important. I know like Stan, you
44:36do those uh midday sessions where
44:38basically when something's coming up
44:41or something's moving, you'll trade them
44:42or talk about them live. And I think
44:44that that's super key for like people
44:46who are learning or needing to see that
44:48in real time. And maybe we'll pull up
44:50some charts a little bit later on and we
44:51can go through a few examples of some uh
44:53trades that you've had recently, Tim, or
44:55some concepts. Um but Stan, on the topic
44:58of kind of like uh continuous learning,
45:00tracking data, uh you know, Tim is a
45:02wealth of resources here. So, what would
45:04you want to know if you were mentoring
45:06under Tim uh for some of those topics?
45:10Well, I think
45:11um
45:12one one thing that I would would, you
45:14know, like to know is the
45:17the frequency of change of that data,
45:20right? As in
45:23I pull the data today and then I go
45:26about my day, I learn my setup, um
45:29and then 6 months down the road,
45:30something happens, right? The market
45:32shifts.
45:34Uh so, essentially, you know, how
45:36frequently would one have to
45:38keep updating their data in order to
45:41stay to stay current without getting
45:44some drastic results every time they run
45:47their
45:48you know, run their query.
45:50Right. Um I mean, I can kind of speak to
45:53what I did historically. And you know,
45:55historically, even though I did like my
45:57spreadsheets and do my data, I probably
46:00did not do things in a statistically
46:02significant way. Um but you know, it
46:05still was enough to like help me, which
46:06was great.
46:08Um so I would I would typically, you
46:10know, go through my tracking, develop my
46:12setup, say that I'm comfortable with it,
46:15and then I would just kind of release
46:17myself into the market, and then I would
46:19just, you know,
46:21I'm there every day in front of it all
46:23day, so I think that I was kind of
46:24picking up on some of the nuances
46:25without even really realizing it. Um but
46:28there would come periods of time where
46:31all of the sudden, you know, things just
46:33did not work as well as they had been.
46:35Like I'd take a few losers in a row,
46:36like it would just be like, "Hey, why
46:38why aren't these things fading anymore?"
46:40Cuz a lot of times I was shorting. And
46:42then it really would just be like go
46:44right back to the drawing board and
46:45start tracking it again, and kind of,
46:48you know, like I I would I would just
46:49ride it as long as it was good. And then
46:50as soon as I ran into a little bit of a
46:52speed bump, I would go back and start
46:54tracking. And uh we're so fortunate, you
46:56know, now that there's there's so many
46:57great services out there for um you
46:59know, getting data and getting a lot of
47:01data all at once. Uh cuz back back
47:04in my early days, that wasn't really
47:06there. Um
47:07and it was it was a lot of like trying
47:09to remember, "Oh, what were the
47:10runners?" Like let's go back and, you
47:12know, look at all these old charts, and
47:13hopefully I catch them all. Whereas now
47:16you really can just like build these
47:17scans like on a site like Spy Keep, and
47:20uh you know, just get a list generated
47:22for you in 5 minutes.
47:24Mhm.
47:25Right. Yeah, and then Tim, something
47:28that you've said in the past uh in, you
47:30know, old interviews is when you've
47:32described, you know, you were you were
47:34tracking data, but not necessarily in
47:36like an expert, you know, statistically
47:38significant way, but you said it still
47:40helps. Kind of anything that you do,
47:42whether that's annotating your charts,
47:44saving charts, you know, building
47:45watchlists, uh you know, doing uh Excel
47:49sheets, you know, what do you think that
47:50process is that helps people so much? Is
47:52it just taking a second look at
47:54something instead of in real time when
47:55the emotions and the adrenaline's going?
47:58Yeah, I really do think that it's that.
48:00Um you know, I I
48:02I operated with a much clearer head
48:04outside of market hours, that's for
48:05sure. Um and when I didn't have money on
48:07the line and have to worry about, you
48:09know, oh, do I have a stop loss in on
48:11this or uh you know, is this move a fake
48:14out or not? You know, like all all kinds
48:15of distractions. Uh
48:17I try to do data work during market
48:19hours sometimes even now and it just
48:20like it just isn't happening cuz I can't
48:22focus on it whatsoever.
48:24Um so, yeah, like when when you put in
48:25that extra time outside of market hours,
48:27it it's it's it's just it's just more
48:28screen time. It's more chart review.
48:31Like it's
48:32Yeah, it's it's like how, you know, all
48:34the great, you know, NBA, NFL, whatever
48:37sport players, like they spend all this
48:39time studying tape.
48:41Like, you know, like any extra work is
48:43going to help give you more edge.
48:47Yeah, 100%. So, you know, and now I'd
48:50like to kind of walk through, let's say,
48:53you know, we've talked we've talked
48:54about so many great topics and things
48:56that are going to help traders of all
48:57levels to really, you know, uh you know,
48:59craft and build a framework that they
49:02can use to actually, you know, trade.
49:04So, let's say that someone that you were
49:06training is like, "Okay, I've listened
49:08to this now." What would you want a day
49:11in their life as a trader
49:13who's being trained by you to look like?
49:15So, like what does that start with? Does
49:17it start with having a system,
49:19knowing your specific setup, and then
49:21scanning for stocks
49:23that basically fit that, and then
49:25planning your entries, planning your
49:27exits, the the risk management, like
49:30what would it look like for you?
49:32Yeah, so uh
49:34I I would say
49:36their workings to start the night
49:37before. Like night before, run a scan,
49:41build a watch list. Um like a scanner is
49:43a must. Like I use scans. I I love
49:45scans. I think that it's very easy to
49:47use. Um not that costly, but like even
49:50if you don't want to pay for a scanner,
49:51you can just look at like Finviz top
49:53percent gainers and that's for free.
49:55It's you know it's 15 minutes delayed
49:56during market hours, but uh
49:58there there's no excuse not to have some
50:00kind of scanner at this point. Um and
50:02then yeah it's build a watch list the
50:03night before. Um I would always kind of
50:06categorize it you know like by setups.
50:09So like what do I want what stocks am I
50:11watching for what potential setup
50:12tomorrow?
50:13And you know I build out a couple
50:15general plans, you know like oh hey
50:17here's today's 150% runners. So what's
50:20my plan if it gaps up? What's my plan if
50:22it gaps down? Um because I probably
50:24wanted to be playing it either way.
50:26So then next morning, you know I I was
50:29never a wake up at 4:00 a.m. guy. I know
50:31some people are and that's awesome, but
50:32you know I was I was a uh show up to the
50:34market around 8:00 a.m. guy.
50:37And then it was you know let's let's see
50:39what's happening. Let's see the stuff on
50:41my watch list already, let's start
50:43there. Let's see what direction the gaps
50:44are going, let's adjust those plans.
50:47And then let's open up a scanner again
50:49and let's see what the new gappers today
50:50are. So I'm I'm always looking for like
50:52where's the momentum.
50:54And uh then I was
50:57you know part of that watch list part of
50:59that plan it really like you said it is
51:00like hey where's my ideal entry? Um what
51:03what kind of
51:04loose target might I be expecting in
51:06this situation?
51:08A lot of times I didn't like setting
51:09hard profit targets. Like I would like
51:11to try to kind of let the market action
51:13guide me.
51:14Um but
51:15but yeah that's definitely part of it,
51:17you know thinking about what are you
51:18looking more more so the entries was my
51:21thing. Like where do I want to enter
51:22this trade? Like what am I looking for
51:24to get in short or to get in long?
51:27And then it's just you know glued to the
51:28screens all day, you know keeping half
51:30an eye on the scanner.
51:31Um I would typically have to prioritize
51:34on the busy days. I could really
51:37I could really actively trade about
51:39three or four things at a time. Um and
51:41anything more than that was getting a
51:42little bit too greedy. So
51:44on the busy days part of the watch list
51:47process was like what are the best ones?
51:50You know, I was there for some of the
51:52COVID stocks and like my god, those are
51:54some long watch lists on those days. And
51:56it was like you know, if I was if it was
51:58a day where I was long biased on much of
52:00the COVID stocks, then how do I
52:01prioritize those? Which ones have been
52:03trading the best volume so that I could
52:05you know, possibly get the most size
52:07without suffering huge slippage.
52:09Lowest floats, the cleanest charts, you
52:11know, things like that would help me
52:13prioritize.
52:14Um and and then you know,
52:18I'm just locked in all day. Like it was
52:20it was part of the reason I kind of
52:21wanted to step away for a while and got
52:23kind of burned out was because I just
52:24would not leave my screen.
52:26Uh so I'd be in front of it from like
52:288:00 to 4:00 every day and then uh you
52:31know, the the the life change of going
52:33from no OTC after-hour trading to all of
52:36a sudden I've got to monitor these
52:37stocks until 8:00 p.m. to make sure
52:39nothing puts out a press release and
52:41screws me over. That was
52:43that was a lot. So uh
52:46you know, the trading day really is just
52:47for trading mainly. Um
52:49if it was a slower day, I would try to
52:51distract myself with like a movie or TV
52:53show on one of my screens so that I
52:55don't overtrade and do dumb things.
52:57Uh and then at night, it's uh you know,
53:01maybe it's it's day to work if if that's
53:04the phase you're in.
53:05Maybe it's just building a new watch
53:07list.
53:08Um but
53:09you know, like
53:11a lot of my time away from the screens
53:13still was thinking about the market. You
53:15know, thinking about what are what are
53:16the plays for tomorrow? What might I
53:18want to do? What are like you know, just
53:20it was just constantly going through my
53:21head. It was like a
53:23it's like borderline obsession, you
53:25know?
53:27So I I would hope to see that in
53:28somebody that I was teaching. Like
53:30they're they're not there because they
53:31have to be there. They're because like
53:33they are addicted to the challenge.
53:36Yeah, I think to some extent it does
53:37require
53:39that scary obsession.
53:41Right? Because you're
53:44you're going to fail so many times.
53:47Uh
53:48and and if you're not obsessed about it,
53:49it's going to be
53:52not you know, not genuine every time you
53:54get back up. At some point you're going
53:56to burn out and and walk away.
53:58So, I think that obsession is required.
54:02Mhm, absolutely. Yeah.
54:05Definitely. And then Tim, when you were
54:06kind of just walking through what a day
54:08in the life would look like, I mean
54:09that's it's so similar to what you know,
54:11anyone who trades either professionally
54:14or does this you know, a lot, that's
54:16it's the same kind of thing that they're
54:17doing. It's what we do at Investors
54:19Underground by putting out you know,
54:20watchlists, you know, looking at the the
54:22action during the day, looking for your
54:24setups and it's all just very similar.
54:26And I know that you you used to be in
54:28Investors Underground especially in the
54:30early days and there's actually a funny
54:31story that you told me at Traders for a
54:33Cause about how back when you were still
54:36I think working at Progressive or
54:37something, you were um you know, in
54:39Investors Underground but you were doing
54:41free trials and you kept trying to sign
54:43up and Nate emailed you and yelled at
54:44you and was like, "Join or don't join
54:46but stop doing this." So.
54:49Yeah, it was like it was something along
54:50the lines of um I I went to do a free
54:53trial and then I uh
54:56I I can't remember why but I was like,
54:58"Oh wait, I actually can't be in the
54:59room during market hours." So, I
55:00canceled it right away. And then I tried
55:02to do another one and then my summer job
55:05uh State Farm, yeah, they they had
55:07software that blocked the website so I
55:09could not be in the chat room on my
55:10office computer. So, I canceled again
55:13and then the next time I tried to sign
55:14up, yeah, Nate Nate chewed me out a
55:15little bit.
55:18And I know that you and Nate go back a
55:19long time now and you guys have been
55:21friends and uh you know, you've talked a
55:22lot. So, uh could you share just a
55:24little bit about you know, what you've
55:25learned from Nate and uh you know, how
55:28is that relationship been over the last
55:29what, 10 you know, 15 years?
55:32Yeah, um I mean
55:34I I I like my earliest memories with
55:37like Nate's stuff is um
55:39back in the day he would do free scans.
55:42So like it was it was part of my daily
55:43routine. It was read Nate's scan, see
55:45what his thoughts are. And it was it was
55:48really interesting reading his scans and
55:50his thought process on all the tickers
55:51because uh like you know like I I stole
55:53I stole trade the ticker not the company
55:55from him. Like I was I was like I love
55:56that saying that's mine now. Like
55:59um just the you know the
56:01focus on the technical side and you know
56:03price action rules all. Doesn't matter
56:05how crappy the news is, it doesn't
56:07matter how potentially diluted the stock
56:10is like if the
56:11if the stock is still on the front side
56:13and still bullish like get the hell out
56:15of the way.
56:16Um and and reading a lot of his scans
56:19with uh just him talking about like
56:22you know like he he always referred to
56:24like oh they might try to support it or
56:26they might do this. Like the the whole
56:27like oh wow like stuff is really like a
56:29lot more manipulated than I thought. Um
56:32so it was it was really cool to see his
56:33perspective on that. Um but then like
56:35what I what I really remember and
56:37appreciate from Nate is uh early in my
56:40career after I had like my first like
56:42major major day where uh Fannie Mae I
56:44made like over 200k in a day on that. Um
56:48you know I'm sure I posted about it
56:50somewhere and like word reached Nate.
56:53And like I don't think I even knew that
56:54like he had my phone number at that
56:55point. But like you know he found a way
56:57to like reach out to me and he's like
56:58congrats on the huge day man. Now like
57:01don't get cocky. Like wire some out.
57:03Like be be safe. Like you know he was
57:05he was like they're looking out for me
57:07cuz I was still you know like 22 or
57:09whatever I was and uh he probably
57:11thought that I was like you know going
57:13to just yolo it into the next play.
57:17Yeah, I feel like Nate is known for
57:18showing up at those key moments uh for a
57:20lot of traders whether it's after a big
57:22win or you know even people who've had
57:25massive losses and he seems to really uh
57:27you know reach out at those important
57:29times and I know that a lot of traders
57:30have said that it's made a big
57:32difference for them. So, that was great
57:34to to hear some of that. And so, Tim,
57:36before we wrap up, uh could we pull up a
57:38chart or two and then just go through
57:40maybe an example of a long setup and an
57:42example of a short setup and then we'll
57:44wrap things up for the viewers.
57:46Okay, great. So, this is an example of a
57:49long trade setup. So, Tim, please walk
57:51us through this, you know, kind of using
57:53what we've talked about uh in the
57:55discussion so far. What was your thought
57:57process? What was the setup? And how, if
57:59you had taught someone else to do this,
58:01would you want them to approach it?
58:02Sure. So, yeah, this is uh this is BOF
58:05and uh I'll pop you over to a daily
58:07chart really quick. Just giving you an
58:09idea. So, BOF had been a runner that um
58:12you know, not pretty much no dilution,
58:15pretty low float. Um they had had news
58:18that read as very bullish. Um I think it
58:20was like a revenue increase of 600%
58:23year-to-year or something like that. So,
58:25it had a lot of factors that I liked on
58:26the long side. And um you know, I did
58:29trade it a bit early in the pattern, but
58:31the part that I want to talk about is
58:32the multi-day breakout, where this had
58:34now run for 3 days um and then on day
58:37four,
58:39what we had was
58:42the break past this key level, which
58:44would have been the two the 266 high set
58:48on August 29th. Now, that morning uh the
58:52problem with BOF, and remember that the
58:54key level was 266, is that uh if you
58:58would wait until market open, it opened
59:00down near two in the 230s and then just
59:03kind of spiked straight through. And
59:05that is something that I do feel like I
59:07see a lot with multi-day breakouts. So,
59:09with this one, I had to try to get a
59:11little bit more clever with how I traded
59:13it. So, when this was gapping up
59:15pre-market and it set a pre-market high
59:17of 245,
59:19uh that was a level that I judged to be
59:21close enough to that 266 multi-day
59:23breakout to make it worth a buy, because
59:26I was thinking if this opens up in the
59:27market uh like right at open and breaks
59:29past 245 after this couple hours of
59:32consolidation,
59:34that high of day break could very easily
59:36lead into the further spiking and the
59:39the break past the multi-day level of
59:41266.
59:43So, when the market opened, I bought it
59:45right at 245 as it broke past the
59:48pre-market high. And my risk level, I
59:50was using this dip low right here. So,
59:53this was down at 217.
59:56So, I was able to size in about 30,000
59:58shares because I wanted my risk to be
1:00:00about $10,000.
1:00:02And I, you know, I figured there'd be a
1:00:05little bit of slippage if I did wind up
1:00:07having to sell this at a 217 breakdown.
1:00:10I figured I'd probably realistically
1:00:11exit more like 210. So, hence my 30,000
1:00:14share size.
1:00:15Now, BLF, I I kind of botched this one
1:00:18unfortunately because, and I'll go to a
1:00:191-minute chart now,
1:00:21as this was running in the morning, um
1:00:26I I just kind of got impatient and
1:00:29started selling. It was It was emotional
1:00:31sells. I wasn't letting the chart tell
1:00:33me to sell. I was thinking to myself,
1:00:35"Oh, I've been on kind of a bad run
1:00:36lately. Oh, it'd be nice to lock in some
1:00:38gains." And so, I just kind of peeled
1:00:40off pieces randomly where I sold some
1:00:42randomly up near 280 because, you know,
1:00:46just wasn't going up as fast as I would
1:00:47like. And then I sold a little bit more
1:00:49up near $3, you know, just because like
1:00:52there was there was no real reasoning
1:00:53behind it.
1:00:54And
1:00:56I I don't like to talk with too much
1:00:58hindsight on charts seeing how it wound
1:01:01up, but with with plays like this, I
1:01:04always talk about I want to let the
1:01:05chart guide me with my exits. And we
1:01:08talked earlier about waiting for hard
1:01:10cracks and failed rebounds to sell. And
1:01:14we we're talking about that from a short
1:01:15seller's perspective, but I think it can
1:01:17also be really useful from a long's
1:01:19perspective as to when to exit the
1:01:20trade. Now, the first real crack of any
1:01:24significance, I think you could say that
1:01:26we had, would be here from 348 down to
1:01:30315. Like, that was maybe a little bit
1:01:33bigger of a pull than any of these
1:01:34previous pulls. And then, of course, up
1:01:36here at high of day at 411, you know, we
1:01:39we cracked fairly quickly down into the
1:01:41360s. So, about a 50 cent retrace in
1:01:44this case. Now,
1:01:46you know, I'm not saying that I should
1:01:49have would have could have held
1:01:50perfectly until 411 and then waited for
1:01:52this crack, but, you know, ideally,
1:01:55that's what I would do is I would wait
1:01:56to see some real weakness on the chart
1:01:59and then be the person selling into the
1:02:00rebounds after that weakness.
1:02:03Yeah, absolutely. And this is just such
1:02:05a great example of, you know, a
1:02:06multi-day runner, a breakout holding
1:02:08higher lows, and then you can see that
1:02:10when it starts to speed up, it gets
1:02:12extended off of VWAP, it has that crack,
1:02:14that rebound. So, it's really whether
1:02:17someone is a long bias, there's an
1:02:19opportunity there. And then, you know,
1:02:21we'll get into a more short setup, you
1:02:23know, in a little bit, but this in
1:02:24itself could have also been a short
1:02:26opportunity, you know, using that same
1:02:28kind of strategy where it's you're
1:02:30waiting for something to speed up, for
1:02:31basically to exhaust out, to fail,
1:02:34rebound, retest, and then confirm that
1:02:36it's down, too. So, in a way, you almost
1:02:38have part of a long and part of a short
1:02:40here, but this is a great example of a
1:02:42long using a lot of those things that,
1:02:44you know, you talked about where it's
1:02:46you were long bias. So, if someone had a
1:02:48long bias system, this could be on
1:02:49watch.
1:02:50You basically had a setup, you were
1:02:52looking for it to break that uh
1:02:54pre-market um highs and that had been a
1:02:57key level over the last couple of days.
1:02:59Maybe you had some shorts using that uh
1:03:01to kind of, you know, in to anticipate
1:03:03the fail, and then when it's, you know,
1:03:05going past them, they get squeezed out,
1:03:07more demand is coming in, uh and then,
1:03:09you know, scaling out along the way. I
1:03:10know that it wasn't uh perfect, but
1:03:12trading never is, but you still had a
1:03:14successful trade on this. It might have
1:03:17not have gone perfectly, but would you
1:03:19say that, you know, when it was all said
1:03:20and done, this was a worthwhile trade?
1:03:23Oh, yeah, it still wound up being a a
1:03:25solid win. It just was disappointing
1:03:26because I knew that I had, you know,
1:03:28made some silly mistakes on it.
1:03:31Yeah, and I I think that's good that
1:03:32people know that, you know, trading is
1:03:34never going to be perfect, and if you
1:03:36have a good system, good setups, you
1:03:37have margin for error where you don't
1:03:40have to be right every time, but, you
1:03:42know, you can still have a good process
1:03:44that over the course of, you know, 50 of
1:03:47these trades, you're going to be net
1:03:48profitable, uh and then you've tracked
1:03:50that data to to back that up. Is that
1:03:52correct?
1:03:54Mhm, yeah, that is.
1:03:55Okay, so now we have an example of a
1:03:57potential short setup, uh and this was
1:03:59on WINT. So, Tim, could you take us
1:04:02through your thought process uh with
1:04:03more of a short setup?
1:04:05Sure, and uh yeah, this one is kind of
1:04:07funny cuz uh it the the daily candle in
1:04:10question right here is on September 4th,
1:04:12and it really doesn't look like anything
1:04:13all that special on the daily chart. You
1:04:15know, like it's not, you know, the huge
1:04:16extended chart you're used to seeing.
1:04:18Uh but WINT, a little bit of the history
1:04:20here is that this thing had something
1:04:22like a 500,000 share float or below, and
1:04:25it had a a bit of run back in July and
1:04:28early August, and then it had this big
1:04:32red candle kind of out of nowhere on
1:04:34September 3rd. And the reason for that
1:04:36is that they registered a bunch of
1:04:39shares that they were going to sell, um
1:04:41so dilution. And I believe it was uh I
1:04:43can't remember exactly what form the
1:04:44dilution was in, but I know that it was
1:04:46a lot of shares, and it was in the low
1:04:48threes and mid threes.
1:04:50So, um they they registered the shares
1:04:53on September 3rd, if I remember
1:04:54correctly, and then the morning of
1:04:56September 4th, it became effective,
1:04:58which meant those shares were then
1:04:59eligible to be sold into the open
1:05:01market.
1:05:02And uh the morning of the 4th,
1:05:05I believe this was a no news gap up. It
1:05:07just randomly gapped up, even though,
1:05:09you know, all this dilution was all of a
1:05:11sudden present that hadn't previously
1:05:13been there. And
1:05:14uh
1:05:15for this I you know, because of that
1:05:17dilution and because of the random gap
1:05:19up for no real reason, and then because
1:05:21of the fact that this had had all kinds
1:05:24of pre-market weakness after that
1:05:25initial spike. I mean a 650 spike with a
1:05:28fade down to low fours. I mean that is a
1:05:31pretty hard fade in my opinion. So uh
1:05:34when this thing was rebounding up
1:05:37uh the remainder of pre-market, it was
1:05:38very much on my watch because on my
1:05:40watch list because I was thinking that
1:05:42hey okay we got a stock here that's
1:05:44about you know, 60 or 70% above its
1:05:47dilution levels. And uh it's already got
1:05:51a pretty clear risk level up here at 650
1:05:53for me to play off of the pre-market
1:05:54highs.
1:05:55And uh I I have known through my
1:05:57tracking that you know, that the
1:05:59pre-market ones that have the really big
1:06:01hard dips like this do not have nearly
1:06:04as good of odds as coming back and
1:06:05breaking the new highs as the ones that
1:06:07you know, have the gentler dips and hold
1:06:10a little bit better.
1:06:11So I felt like I had a number of factors
1:06:13aligned here. I liked the technical
1:06:14side. I liked the fundamental side a lot
1:06:17and I liked the fact there really was no
1:06:18news. So right out of the gate this
1:06:21thing was a short target for me. And uh
1:06:24just in the first minutes here when uh
1:06:26when it opened up and it started spiking
1:06:28up towards 580 and uh you get this big
1:06:31800,000 share candle. It didn't really
1:06:33go very far and then it started to fail.
1:06:36I just jumped in right away. Um I
1:06:38believe I shorted about 11,000 shares
1:06:41from 560 or maybe it was low 560s was my
1:06:45average. Uh so you know, 11,000 shares
1:06:48you math it out off of the 650 high and
1:06:51there you go. That's $10,000 risk again.
1:06:53And because I knew about the dilution in
1:06:56this, because I didn't feel threatened
1:06:58by any kind of news, and just because it
1:07:00was so damn weak, it was a very very
1:07:02easy patience hold for me on the short
1:07:04side. So I got my entry short. Um I
1:07:07would have absolutely added bounces if I
1:07:10had gotten bounces to add into, but you
1:07:12know, this thing was pretty bounce-less
1:07:13all day.
1:07:14And I wind up covering
1:07:17my first piece down here in the low 320s
1:07:21when it was basing for a while because
1:07:23you know, that was down about the level
1:07:25where the dilution was at. And then we
1:07:27had further crack sub three and it kind
1:07:30of went over under three a few times. I
1:07:32took off the rest. So, that was um
1:07:35That was a very nice That's probably my
1:07:36best short I've had since I got back to
1:07:39trading and short selling again.
1:07:42Excellent. And just you know, so many of
1:07:43those things that we talked about with
1:07:45you know, you know, you had your short
1:07:47system kind of in play for this. You had
1:07:49a bias on something that was up on
1:07:51basically no news. It had increased
1:07:53supply due to the offering. You had a
1:07:55level to risk off of off of the open.
1:07:58You had the statistics behind it to show
1:08:00the range anticipation and then you
1:08:02really had a strategy for an entry and
1:08:04then you had a strategy for an exit. And
1:08:06so, it really just pieces together
1:08:08everything that we've been talking about
1:08:10and it's just great to see how that you
1:08:11know, plays out in real time.
1:08:14Well, this has been great. Tim, thank
1:08:15you so much for your time for really
1:08:17walking people through how you would
1:08:19train them if you were their mentor or
1:08:21their you know, trading coach. We've
1:08:23covered a ton of topics and I think that
1:08:26people should watch this video multiple
1:08:27times, take notes and really see what
1:08:30they can implement in their own trading.
1:08:32So, Tim, thank you for coming on and
1:08:34Stan, thank you for co-hosting with me.
1:08:37Yeah, absolutely. Yeah. And and Tim,
1:08:40great to see you and uh
1:08:42Thanks again for your time today.
1:08:43Yeah, thanks again for having me on
1:08:44guys. It was a great time.
1:08:46Thank you for tuning in to this latest
1:08:48episode of Trading Ticks. Don't forget
1:08:50to hit the like and the subscribe
1:08:51button. And if you enjoyed this
1:08:52conversation, please check out some of
1:08:54our others with some great traders.
1:08:56Thank you for watching.

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