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I Was the Algorithm Before Algorithms Then I Had to Start Over · Scott Pulcini — Transcript

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0:00and there was another time too. So I was
0:01telling you about this guy I used to
0:02trade against the other local, right? In
0:04990 you can look them up. You can find
0:05them in a second. He used to be the
0:06biggest market manipulator ever. And I
0:08mean illegal manipulation. He saw I was
0:10loaded up with 3,000 then he would start
0:12to push it in my face, push it in my
0:13face because at that time and he always
0:15would do it right around 10:15 and 12:30
0:17Central. To this day it's not that's
0:19where you I've thrown away millions of
0:21dollars. Do not trade at that time of
0:22day if you can avoid it, right?
0:24That that's my best advice for that too.
0:27Anyway, it was one day where he had he'd
0:29done it again. I lost like 400 grand and
0:32this is when Dr. Brett was there and he
0:33can he can validate the story. He was
0:36there. They had I was so pissed off. I
0:38was literally because they were in
0:40Chicago too, this firm. I was leaving my
0:43firm to go
0:44physically pummel this dude. That's how
0:46upset I was. I was going to go to the
0:47firm and this guy was going to get
0:49killed basically. Then this is why I was
0:51able to scalp as large as I I got to at
0:53that time is because there was no
0:54spoofing per se, right? Like it was if
0:56you saw 1,000 lot in the order book, it
0:58was a 1,000 lot. If you saw 2,000 very
1:00rarely was it spoofing. If it was
1:03spoofing, it was basically me, right?
1:04Back then spoofing was spoofing was
1:06legal. So I knew everybody's house
1:09number, right? So this the trade the guy
1:10that I used to go head to head against
1:12was 990 anybody traded back then that
1:14was exactly what I'm talking about cuz
1:15he ran the show. That guy could put on
1:176,000 contracts when I could put on
1:18three. He's one of the reasons I got
1:20knocked out of the game.
1:21I don't need to share names, but he was
1:24to this very day if I ever see him, it's
1:26not going to be pretty. But that's the
1:27moral of the story. It's like you can
1:28have the best edge in the world and they
1:30keep made it and all of a sudden the
1:32rug's pulled and it doesn't work anymore
1:34and you you need to find something else
1:35that works or you're out of the
1:37business. That is the biggest mistake
1:39that traders make. They skip trades
1:41because they feel like something is
1:43going to happen. That is the again, what
1:46did I just say? 80% of my feeling and I
1:48used to be one of the best feelers of
1:49the market out there, it's wrong I'm
1:51wrong 80% of the time. I'd see him buy.
1:52I'd see him put like a 500 lot in and I
1:55ping it. It's him. I'd have some orders
1:57resting. He was sweeping my orders. I
1:58would see it's him. I'm like, okay. That
2:00would do, he would drop it. All you'd
2:02see in the order book thousand,
2:03thousand, thousand, thousand out of
2:04nowhere. And then someone buys a
2:06thousand. Someone buys a thousand. I'm
2:08like, what the hell is this? I had to I
2:10mean, I knew what it was after a while.
2:11The guy was buying his own orders for
2:13himself, making it look like some
2:15somebody was buying a lot of orders, and
2:17then all these traders would jump on and
2:19say, oh, look at all this big money
2:20they're buying. And then it would run
2:22into his orders, kind of like the algo
2:23games now that they play. And then he'd
2:25have all his offers above. It'd run into
2:27them. He would beef up the bid, which
2:29was fine. That was the spoofing part. So
2:31he would cross his own orders, beef up
2:32the bid, force traders to chase it up.
2:34Then he'd get filled, and he just yanked
2:36everything, and the market was like a a
2:37big vacuum, right? So
2:39the the point is he was crossing his own
2:41orders, which is the most illegal thing
2:43you can do in the market.
2:45>> This episode of Chat with Traders is
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3:25>> Markets, speculation, [music] and risk.
3:28This is the Chat with Traders podcast.
3:33All right, traders, welcome to an
3:35exciting episode. They're all exciting,
3:37right? Chat with Traders. Today we got
3:39Scott Pulsipher. Now he's been trading
3:42for 25 plus years. He started in the
3:45What was it? The late 1990s, early
3:482000s. He was trading a lot of volume,
3:50guys. He was trading 10% of the E-mini
3:53S&P. Now back then that was 50,000
3:56contracts round trip a day. And
3:59at that time, like 2003, for example,
4:02$10 million he made. He was swinging
4:05swinging big. So, he had a gift of being
4:08able to process information. This is
4:09something I want to talk to him about.
4:11And somebody very famously wrote about
4:13him, Dr. Brett Steenbarger, who many of
4:15you know, top trading psychologist.
4:18Uh, Scott Pulsipher was featured in that
4:20book, Enhancing
4:22Trader Performance.
4:24Uh, want to dive into that, but his
4:26story really is going to resonate with a
4:28lot of us. It's really a rags to riches
4:31to rags to riches kind of story. I mean,
4:34perhaps we don't trade 50,000 contracts
4:37a day, right? So, we don't we're not
4:39similar in that approach, but I want to
4:41discuss with him how to level up
4:43in our trading, how to size up from one
4:46contract to 10 to 20 to 50,000, 100,000.
4:49No,
4:50but it's important. And a lot of the
4:53conversations I've I've had with guests
4:54on Chat With Traders has been, you know,
4:57getting through a level of discomfort to
4:59find that success. If you're if you're
5:01trading
5:02in comfort and complacency, it's hard to
5:05level up and and grow to the to the
5:07trader that you want to become. So,
5:09Scott's always been a scalper, by the
5:12way, high frequency trader. He's always
5:13done this. I want to talk to him about
5:15that. The edge has changed, but Scott
5:17has not. So, Scott, I'm going to stop
5:19rambling. Let's let her rip, tater chip.
5:21Scott, how are you? Welcome to Chat With
5:22Traders.
5:23>> Great. Thanks for having me, Kevin.
5:24Appreciate it.
5:26>> [snorts]
5:27>> So,
5:28for the our audience, the traders that
5:29don't know Scott, tell us a little bit
5:31about your journey. I mean, it's been
5:33over 25 years in the making. What has
5:35been consistent? What has changed?
5:39>> Uh, well,
5:40[laughter] nothing's changed, but
5:41everything has changed.
5:44Yeah, I got in the business, you know, I
5:45worked at um Chicago Board of Trade for
5:48about 4 years. I was in the uh you know,
5:50I was an arb clerk. If you could ever
5:52see the movie Trading Places, the hand
5:54signal stuff, like that was me uh
5:56working for a broker and
5:58uh extremely stressful job at the time,
6:01but it got me battle tested for trading.
6:03And then uh you know, I I had a close
6:05friends
6:06from college and high school that were
6:08there and then a guy from the Board of
6:09Trade started his own trading firm
6:11called King Street Trading at the time
6:13and one of my buddies I begged him for
6:15you know months to get me a job there I
6:17wanted to leave the floor and you know
6:20then I knew that's where trading was
6:21going the electronic
6:23side of things so
6:24he finally got me in there and I started
6:27at this trading firm and back then it
6:28was the Wild West like there were no
6:30there was no education there was no
6:31nothing it literally was just it was
6:32like you know half [clears throat] in
6:34the pit half on the screen and it was
6:36literally guys were in the Nasdaq they
6:38were putting like orders offers 100
6:40points apart you know bids and offers
6:42and they were getting hit on both sides
6:44that's how crazy it was at the time so
6:47guys were making money and
6:49so I wanted to get in there and
6:53that was an edge in and of itself having
6:54a spread that wide
6:56>> yeah it was ridiculous I mean you
6:57literally a monkey could have done it
6:59right so that's what gave me motivation
7:00too I saw some of these guys that were
7:02making money and you know a few of them
7:04weren't the brightest bulbs in the box
7:06so it's like okay well these guy these
7:08guys can make money I know I can make
7:09money right so then I I was all gung ho
7:11I sit down my
7:12first very first day trading I lose 2500
7:15bucks trading one lots and that's
7:16scalping one lots that's very very very
7:18difficult to do right at 12:50 a tick
7:20you got to lose a lot to to lose 2500
7:23bucks so I basically like almost got
7:25fired for my first day cuz I think my
7:26limit the limit for new trader was was
7:28too rance or I had already violated that
7:32they just fired someone for doing the
7:33same thing I think just
7:36that they didn't fire me after that very
7:37first day and I went another two months
7:40where I didn't have one winning day ever
7:42not one so about to get fired again
7:46and then I went away on a fishing trip
7:47and read the book
7:49reminiscences of a stock operator you
7:51know written in the early 1900s
7:54which [clears throat] is still you know
7:56it's still prevalent today as far as the
7:58the trading psychology and everything
8:00else so I read that my buddy who who is
8:02the one who got me the job at the firm
8:03he told me to read it so I read it came
8:05back
8:07and the 911 happened and
8:09they shut down the markets for a week
8:11and I wanted to I I wanted to do
8:12something I was I was about to get fired
8:14so I'm like I got to try to figure
8:15something else so I went to start
8:17trading the German DAX overnight
8:19uh just to try to find some kind of
8:20hedge and I started seeing some stuff in
8:22there and German DAX was like you know
8:24do you think NASDAQ's wild that thing
8:26was like all over the place so but I
8:28started seeing some tendencies and when
8:29they when the stock market futures and
8:32stuff opened back up about a week later
8:33after 9/11 I started implement what I
8:35learned in the German DAX and the E-mini
8:37S&P and all of a sudden like the light
8:39light went on like I just started seeing
8:40these tendencies
8:42[clears throat] especially like with the
8:43first in first out game back then there
8:45was thousand lots up right so I can put
8:47my order in and I
8:49I didn't know exactly where it was in
8:50the queue like you can see today with
8:51the CME NBO data you can see exactly
8:53where you are in the queue back then I
8:54would know like I would get in and I'd
8:56see thousands pile up on on top of me
8:58where I and then I know I filled I was
9:00wrong you know I thought I was going to
9:02they just turned around and and peel out
9:04on the on the remaining size that move
9:06>> How did you know they were not spoofing
9:08though those orders?
9:09>> Well cuz spoofing that that's the thing
9:12that then this is why I was able to
9:13scalp as large as I I got to at that
9:15time is because there was no spoofing
9:17per se right like it was if you saw a
9:19thousand lot in the order book it was a
9:21thousand lot if you saw 2,000 very
9:23rarely was it spoofing if it was
9:25spoofing it was basically me right back
9:27then spoofing was spoofing was legal
9:29right and there was another guy from
9:31another firm that was a even bigger than
9:33me uh but spoofing was not illegal back
9:35then meaning you know you could put if
9:38you didn't have intention to trade you
9:39could put the thousand lot in and I do
9:41this game all the time right I would
9:42like I did say I get long I'd buy a
9:44bunch and then I would just stack the
9:46order books with anything I had left you
9:47know I could trade up to 3,000 contracts
9:49at the time so I say I buy a thousand
9:51and I put I'd stack like 500 500 500 and
9:54make people like you know even though I
9:55didn't really have intention in trading
9:57it I was just trying to scare the market
9:58in in my direction that's called
10:00spoofing right if you have no intention
10:01of trading it so again it they didn't
10:03outlaw that till 2007 2008-ish
10:06um but
10:07I used [clears throat] to play that game
10:07all day long but back to your question
10:09you know in the in the order book,
10:11if you ever want to do a webinar, I can
10:12actually show you some screenshots of
10:14what the order book looked like and
10:15orders in there and stuff. But,
10:17um the orders were real. So, that that's
10:20how I was able to scalp so large because
10:21if I jumped up and bought a thousand,
10:23I'd look below me and I'd see 2,000,
10:253,000, 2,000, 2,000, and I'm like, okay,
10:27if I'm wrong, I can peel out on these
10:28guys and I mean I have very little risk,
10:30right? So,
10:31that's why it was a viable thing to do
10:33back then and but nowadays it's
10:36I love how you're conditioned and
10:37immediately say what about the spoofing
10:39because that's all it is now, right? You
10:40can't rely First of all, it's a bunch of
10:4250 lots and 20 lots up in the E-mini S&P
10:44when it used to be thousands, right? And
10:46even if you see a big order in there,
10:47most of the time it comes to that price
10:49and it just they just pull it, right?
10:50So, these algos just are running the
10:52show in most of these markets most of
10:54the time, right? So,
10:56um but yeah, that's
10:58that's what I
10:58>> you were recording all this data back
11:00then cuz you just mentioned you can show
11:02me a lot of those orders and I know Dr.
11:05Brett Steenbarger was saying that about
11:06you as well. You were all in. You were
11:08recording everything and studying at
11:10night. I mean is that what gave you an
11:12edge above everyone else at that time?
11:15You were all in.
11:17>> Oh, absolutely. So, that's why he asked
11:18if he could put me in his book cuz his
11:20book is about
11:22it's about elite performers across the
11:25industries, right? Like there's a
11:26Michael Jordan excerpt in there and like
11:29violinists and ballerinas and stuff like
11:31that, like people that excelled and got
11:33to the top of their field. So, that's
11:34why it's not just about trading. It's
11:36like what did these people do to to make
11:38it, you know, to be elite.
11:40So, he he you know, he obviously saw and
11:43knew what I was making and then he you
11:44know, he started to see like what my So,
11:46at the time I literally would just take
11:47a video recorder and put it over my
11:49shoulder and I just video recorded every
11:51single day and then I'd go home and I'd
11:52watch it and because it is a big poker
11:55game, right? And back then it was even
11:56more of a poker game because you can see
11:58counterparty who you traded with. So, if
12:00I traded and jumped up and bought a
12:01thousand, I can see immediately was it a
12:03local down the street like what they
12:05call them locals, the guys that like I
12:07was, like I was in the market all day
12:08every day. That's a local. Or was it
12:10paper like
12:10>> How would you see that?
12:12>> Because when [clears throat] you trade
12:13>> into them, you see their house number.
12:14So I knew everybody's house number,
12:17right? So this the trade the guy that I
12:18used to go ahead and had against was 990
12:20anybody traded back then knows exactly
12:22what I'm talking about cuz he ran the
12:23show. That guy could put on 6,000
12:25contracts when I could put on three.
12:26He's one of the reasons I got knocked
12:28out of the game.
12:29Uh I don't need to share names, but he
12:30was uh
12:32to this very day if I ever see him, it's
12:33not going to be pretty. But anyway, I
12:35could see him and I could see like for
12:37instance, if I would jump up and I buy a
12:39thousand, I would see it was him and
12:40like, okay, I I know his tendencies.
12:42Here comes the poker game. If I jump up
12:43and buy a thousand and I'd see it was a
12:45house I've never seen before,
12:47it's like, okay, I better get out of
12:48these. I don't want to mess around this
12:49person this this this firm could have
12:5110,000 more behind him, right? So I
12:52don't want to mess with this guy. I
12:54don't want to mess with this firm. I'm
12:55going to wait till it's just locals and
12:56then I can screw around with them, play
12:58the poker game type of thing. So you
13:00were able to see all that information
13:01and shockingly they pulled it, right? So
13:03I guarantee you the big the big houses
13:05didn't want that information out there
13:07to see me because, you know, they're
13:09they're they're to make money. They make
13:10money by commission. They're going to
13:12listen to whoever their biggest
13:13commission players are. So they pulled
13:15that data so I couldn't see that anymore
13:17and that was just kind of the start of
13:18the whole
13:19um my edge just disappearing, right? And
13:21that that's the moral of the story. It's
13:23like you can have the best edge in the
13:24world and they keep made it and all of a
13:27sudden the rug's pulled and it doesn't
13:28work anymore and you you need to find
13:30something else that works or you're out
13:32of the business.
13:33>> In enhancing trader performance, Dr.
13:35Brett Steenbarger actually discusses
13:38perhaps one of the mistakes made was
13:40expecting like the old market to return
13:43uh versus kind of adapting, you know,
13:46with it. So how important is it do you
13:47think then to adapt
13:50with the market? He actually gives a
13:51really good analogy of uh Nolan Ryan.
13:54Preserve the underlying strengths and
13:56find new ways to express them.
13:59And maybe that's why he brought to you
14:01the I mean, he's the one who mentioned
14:02this
14:03MBO data, right? Recently too you which
14:06cuz you're not really trading entirely
14:08different, right?
14:10>> Uh no I am. I mean, I'm not I'm not a
14:12short-term scalper. I have I have a
14:13certain trade called the reversion
14:15trade, um
14:16where I'm looking for these MBO data,
14:18these which is the most powerful thing
14:20I've ever seen as far as an edge in the
14:22markets. And talk about an edge that is
14:25that it's has lasted. This has been, you
14:27know, almost nine years and running that
14:28I've been trading this edge. And it's
14:29it's this data that this enhanced data
14:32that CME released
14:34that shows these iceberg orders. That's
14:36the big money putting in their orders.
14:38They have to They hide their orders and
14:40so they just have to display a certain
14:41certain percentage of their order,
14:43right? So say if they want to buy a
14:44thousand in the order book, it just
14:45looks like there's there's a hundred lot
14:47there, right? And the total depth of the
14:48market. Then it comes down, it gets
14:49traded into it, then the other 900
14:51populates. That's why it's like running
14:52into an iceberg, right? Why do they do
14:54that? For the same reason that I got
14:55knocked out of the game. These algos, if
14:57they see the size If someone comes in to
14:59drop right now, if someone comes in and
15:00drops a thousand lot in the E-mini S&P,
15:02these algos will front run that order
15:04trying to make that that big entity
15:06chase. So the game is they see the big
15:08order, they put in offer offer offer
15:10offer way above, and then they front run
15:11the order trying to make this entity
15:13chase it into their offers, right? So
15:15that goes on all day every day. So
15:17that's why these big firms are using
15:20these iceberg orders, right? So
15:22um
15:24>> Okay. But that's similar to even 25
15:27years ago, you were finding the big
15:29money, like you said, the ID. Now we
15:30have this idea. We know he's got the
15:32money, so we kind of want to step out of
15:34the way of him. So it's a similar game,
15:36right? But now we have
15:38the algos kind of involved where you had
15:41so much edge in processing all this
15:43information,
15:44it I mean, that's the edge, right? That
15:46kind of goes away with the algorithmic
15:48trading, but you're still identifying
15:51where the big players are. I mean, your
15:53volume is the most important
15:57part to you, right? It's less indicators
15:59for you and studying I noted Are you in
16:01a trade right now?
16:02>> [laughter]
16:03>> Yeah. I just got out of some. So I got
16:04to buy short crude, long Nasdaq. So
16:06that's fine. I'm I'm used to This is all
16:08I do, right? I do my trade room and I'm
16:10always on web alerts.
16:11>> It was green, right?
16:12>> Yeah. But if you you're going to hear
16:13noises, you're going to hear my fills
16:15and you're going to hear bookmap. We
16:16call him bookmap Bob. He he actually
16:18announces when there's a step by event,
16:20so you might be hearing that on these on
16:21this webinar, so I apologize in this
16:23podcast, so.
16:24>> As long as you're green, then I say
16:25okay. But
16:26>> Always. I don't I don't think I've ever
16:28done red action. [clears throat]
16:29Just kidding.
16:30>> [laughter]
16:30>> So but volume is mainly what you're
16:33looking at, right? Less everything else
16:34and and because you said actually
16:37candlesticks are a byproduct of the
16:38volume. I actually had a conversation
16:40with Steve Nison, the father of the
16:42candlesticks recently. Uh fascinating
16:44and incredibly thankful for his work
16:46too, but volume is what you're looking
16:48for.
16:49>> Absolutely. The the main drivers of the
16:51market, I don't care what level you're
16:53looking at, I don't care what indicator
16:55you have on a chart, it doesn't matter
16:56unless there's volume there confirming
16:59it or not confirming it. So the the the
17:01the two biggest things that drive
17:02markets are volume and volatility.
17:04That's where you need to identify that's
17:06what you need to identify to be an
17:08effective trader and look for your edge.
17:09So I I and it's not for me, I say it all
17:11the time, it's not for me to tell
17:12traders what areas they think are
17:14important or they think is their edge.
17:16That's fine. What I'm saying is confirm
17:18your areas with
17:20with volume and volatility, meaning you
17:22know, when you put on a trade. So you
17:24have so many traders that love this
17:25these static trades, right? Like well, I
17:27trade Nasdaq, I like to risk 20 points
17:29to make 60. Well, that's great when the
17:31ATR is 20, you know, 5-minute ATR is 20
17:34points, meaning it's rotating about 20
17:35points every 5 minutes. If you're if
17:37you're risking 20 points in a 90 ATR
17:40market, which we've had quite a few of
17:41them last year with all the news
17:43nonsense,
17:44uh you're almost 100% going to get
17:46stopped out just just from the random
17:48rotations because it's the so volatile.
17:50So you got to know the volatility you
17:53know, and your sizing correctly to that
17:55volatility.
17:56>> What would your trading look like if
17:57capital wasn't the constraint? That's
17:59the reality for most traders. It's not
18:01skill holding them back, it's size.
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18:35>> Um yeah, so like I was saying, you know,
18:36the the areas that traders is not for me
18:39to to tell you guys, to tell traders out
18:40there what areas they deem important.
18:42That's fine. What I'm saying is demand
18:44um you know, volume in that area and the
18:47way I judge the volume is with the stop
18:49iceberg information, the CME MBO data,
18:51the
18:51NAS data. And then you also need to know
18:53the volatility of the market because if
18:54you're just using these static stop
18:57if you're trading in a volatile market,
18:58you're going to get stopped out most of
18:59the time if if you don't understand
19:01that. So
19:02uh those are the two biggest drivers of
19:04the of the markets in my
19:06>> Yeah, there's a
19:07huge complaint out there because of the
19:09choppy markets at times and
19:12the traders really need to understand
19:13that ATR to avoid some of that chop.
19:17>> Yeah, ATR is one of them and they also
19:19need to recognize relative volume,
19:21right? So the relative volume and I use
19:23a Sierra Chart uh
19:25where they they show you the relative
19:27volume for the exact time period of the
19:28of the that day and I look back 30 days,
19:30right? So relative volume is under 100%,
19:33you're very very very likely going to
19:35get this choppy whipsaw trade and we
19:38actually have a trade for that in
19:39Bookmap and that's my main platform I
19:41use. They actually have all these these
19:43awesome algos. They're called Market
19:44Pulse. They have these different algos.
19:46One of them is called the Price Change
19:47Indicator and that is just golden when
19:50you know, nothing's going on and you
19:51will see it's like I have it set for 5
19:53minutes, just the default setting if you
19:54get it. Every time the market moves too
19:56far too fast uh in a base based on the
19:59last 5 minutes, these algos come in and
20:01snap it back the other way. So then when
20:02you start it, I posted something on my X
20:04feed if someone wants to go on there and
20:05look at it um from Nasdaq a couple weeks
20:08ago, but it's it is just you can you can
20:10scalp with that too if you know, if
20:12you're a scalper type trader, but you at
20:13least understand what I tell traders all
20:15the time too. Like even if you're
20:17getting frustrated and not trading it,
20:18at least you can see why the market is
20:19doing what it's doing, right? Most a A
20:21of traders getting in these position
20:22trades are looking for big moves and
20:23then the relative volume dies down and
20:25it starts to chop around and you then
20:27you can at least see the price change
20:28game like okay, I know why this is doing
20:30this now. So you can either, you know,
20:32just not be annoyed or you can actually
20:34join in with them and then you know,
20:35make I call it scalping around my
20:36position. So if I'm long and it starts
20:39to die down and it starts to do the
20:40price change game, I can get out of a
20:42portion, you know, get out when it moves
20:44up, get back [clears throat] in when it
20:44moves back down and then I can I can
20:46catch my R on those rotations versus
20:49trying to catch one big move which maybe
20:51not happen for hours if it happens, you
20:53know.
20:55>> Yeah, in that chop a lot of traders are
20:57getting like wicked out essentially.
20:59They're they're setting their stops,
21:01they're getting wicked out constantly.
21:03Are they being hunted? Talk to us about
21:05hunting uh stops and
21:08are you at the point where you do you
21:09place hard stops?
21:11>> Yeah, I do and I get ticked out
21:13constantly. So I'm using the zone
21:14drawing tool so um again the CME and BO
21:17data
21:18is is the enhanced data that I use that
21:21identifies not only the icebergs but
21:23stop runs with 100% certainty. So
21:25instead of I've seen some educators out
21:27there like when the market makes a high,
21:29oh those are stop runs. Well they don't
21:30know for sure. With this NBO data they
21:32100% you 100% know whether it's it's a
21:35stop run or an iceberg order, right? So
21:38um
21:38>> Is it because it it it it knows the
21:41historical information based on
21:43somebody's placing either just a stop or
21:45a limit or what that order is, it
21:47actually reads that exact order?
21:49>> Yeah, well it's it's an order it's a
21:51specific order that's put that's put in
21:52through the CME and then they they
21:54broadcast that information, right? So
21:55it's got an order attached to it. So
21:57book map
21:58you know, from nine years back they
22:00found a way it's actually longer than
22:01that. They found a way to disseminate
22:03that data which shows shows us on their
22:06platform where these stop runs and these
22:08these iceberg orders occur. So it's it's
22:10it's literally order ID numbers and they
22:12know based on the the order type what
22:14what it is.
22:17>> Well that sounds like a significant
22:18edge. I mean I
22:20>> Oh yeah.
22:20>> In in trading, you know, equities at
22:22just the basic level two data you can
22:25see volume increase, you know, but you
22:27don't necessarily know. I mean, it
22:29doesn't sound like it's as in depth as
22:31perhaps your level three data where you
22:33know what these orders are. You can see
22:35speed on the tape and you can say, hey,
22:37you you can basically guess is that you
22:39know, stops getting taken out, but you
22:41know for certainty with these icebergs
22:43and the stop runs, these are stops
22:46and these are big players that are, you
22:48know, holding this level.
22:51>> Right, exactly. That that's the whole
22:52key, right? So usually stop runs, I call
22:55it the dumb money and don't be offended
22:56if you're a retail trader. That's the
22:58retail trader. I'm a retail trader
22:59nowadays too. But usually stop runs are
23:02are just the the retail trader puking
23:04out. Well, what does that tell you?
23:05That's important most most of the time
23:07again, nothing is 100% trading. Most of
23:09the time it's just retail traders puking
23:11and you'll get a reversal, right?
23:12Because that's not initiative buying.
23:14It's not big money coming in buying.
23:16It's puking. So that is information in
23:19zone, right? If you're looking at it,
23:20you know, again, it could be you know,
23:22whatever you're looking at that you
23:23think is important,
23:24Bollinger Bollinger Band, Fibonacci
23:26level, whatever, and you're ready you
23:27want to go short and all of a sudden you
23:29see a buy stop run, you're like, okay,
23:31now I really want to go short if this
23:32validates either way and I have ways to
23:34validate the stuff. But now you know,
23:36hey, that was not initiative buying.
23:37That big big green candle was a was just
23:41a puke. Guys puking out. It's way more
23:44likely to reverse. Now this happened in
23:45my area that I wanted to short anyway.
23:47Now I have myself in a real edge, right?
23:49So that that's what I'm referring to.
23:51>> Yeah, and you've talked about different
23:53there's balancing and trending. So
23:55personally like I like to avoid I mean,
23:57you can certainly I know you have many
23:58edges, but I love the puking because
24:01that's part of how I trade too where I'm
24:02waiting for essentially
24:0590% to exit their position, right?
24:07You're waiting for that versus taking
24:08the comfortable trade. That was kind of
24:10alluding to that in the introduction too
24:11how trading what is comfortable often
24:14time puts you apart of the 90%. Do you
24:16find that to be true if it's a
24:17comfortable trade? Perhaps maybe you're
24:20in the balancing there and I mean the
24:2290%. Yeah.
24:23>> Well, yeah, that that's what I say all
24:24the time. The
24:25the worst the trade feels to me most
24:27times, especially nowadays, like I used
24:28to be almost a solely a gut trader, like
24:31literally just watching. I didn't even
24:32have charts out. That's how simplistic
24:34my trading was. I was just trading
24:35straight off the order book, straight
24:36off the dome. And that's more gut
24:38feeling like watching the orders coming
24:39in and out. Nowadays I say my gut
24:41feeling is wrong is wrong 80% of the
24:43time, right? Because those they're
24:45they're designed to like do
24:47opposing of what how traders think. So
24:50so yeah, that it it's
24:52I'm very regimented now and and very
24:54rules-based with my trading versus
24:56trading by the
24:57>> Rules-based. Man, and in the book Dr.
25:00Brett Steenbarger wrote he said, I have
25:02here, your intuition was became
25:04automatic. So back then you were able to
25:07basically trade off of intuition, right?
25:09>> Oh yeah, that's that's how I made
25:10millions of dollars, right? And then and
25:12then again it then it just stopped
25:14working, right? So yeah, I did it for
25:15years and years and years and then
25:18you know, then it just stopped. So the
25:20moral of the story there is traders just
25:22always have to be
25:24ready to adapt. It doesn't mean throwing
25:26in a new indicator every three days that
25:28you think is going to work. It means,
25:30you know, watching stuff. So a great
25:31example of this, right? So the stock
25:33iceberg information's been the core of
25:34my trading for eight, nine years now.
25:37This options flow is
25:40it's now
25:41I want to say close second if not tied
25:44for the number one thing driving the
25:45markets. It is talk about manipulation.
25:47It's kind of like me getting a taste of
25:49my own medicine. Like I said, I used to
25:50be one of the biggest manipulators out
25:52there. Nowadays I mean this hero flow,
25:55so the flow is the options flow from the
25:57it's called it stands for hedging impact
25:59of real-time options. It's from spot
26:01gamma. They're like the gold standard in
26:02the in the option stuff, right? So
26:05this hero flow is the tail wagging the
26:08dog. So they what happens is these these
26:10entities come in and and again it's the
26:12newest manipulation especially at this
26:14time of day. This is when they
26:15really really dominate. They come in and
26:17they'll load up. So say they they start
26:19selling options they're either they're
26:21either buying puts or selling calls.
26:23Well the dealers are on the other side
26:24of that. So the dealers are long. Well
26:25the dealers are not directional traders
26:27so they have to come in the futures or
26:29an individual stock and they have to
26:30hedge themselves. So all they do is load
26:32up the dealer. The dealer has to hedge,
26:34and then they're they drive drive the
26:36futures trading. So it's not the other
26:37way around. It's not the futures driving
26:39the options. It's it's the options
26:40driving the futures. And you can watch
26:42this hero indicator from SpotGamma for 3
26:45minutes and be like, this is
26:46unbelievable. Like it it's whatever I
26:48mean every blip and and again it's easy
26:50for me to show you if you ever want to
26:51do another webinar where I'm showing
26:52stuff, but every blip in that thing it's
26:55what the market does most of the time,
26:57right? I'd say
26:58between the algos, like the price change
27:00algo that we talked about and these
27:01other algos in there and the options
27:03flow, it's 95% of the trade every day.
27:06There are you do get pockets like 5% of
27:08the time where you get the program
27:09buying or selling that's you know the
27:10big funds coming in and buying baskets
27:12of stocks and you know they got to get
27:14their business done and like I said
27:15earlier too, can you just identify that
27:17by the heavy relative volume? That means
27:19something bigger's going on. But most of
27:21the time and that's what trading is.
27:22You're just playing probabilities. The
27:24probability is most of the time it's
27:26this hero flow or the the these algos
27:30>> Is there a confluence there between the
27:32icebergs and the options?
27:34>> There is sometimes, but I I haven't seen
27:36that much of a correlation, meaning yeah
27:39I mean the other thing too is you need
27:40to know these gex levels, right? So
27:41these gamma levels. The gamma levels are
27:44where you know the dealers are going to
27:45be hedging, right? So the hero flow is
27:46as they're getting loaded up right now,
27:48these gamma levels they have them for
27:50the longer term
27:52options levels and then they have zero
27:53day to expiration. That's again that's
27:54the biggest game out there. But one you
27:56want to know where these gamma gamma
27:58levels are because they're like magnets
27:59like I was talking about the heavy
28:00resting liquidity before. The market
28:02will travel to them and then they're
28:03support and resistance because you know
28:05at least the dealer is going to be
28:06hedging there. They don't always just
28:07hold perfectly, but most of the time
28:11more often than they don't, aka trading
28:12edge, they hold because you know the
28:15dealers have to hedge there, right? So
28:16now you can imagine having that
28:18information at a gex level, then you
28:20have and I'd say you're watching it now
28:22a buy iceberg comes in at the same
28:24level. Now you got yourself I call that
28:26actually a sexy gexy. It's one of my
28:29it's one of my one of my strategies,
28:30right? So it's like the minute I see it,
28:32I just jump in the trade. So,
28:34these are just all things that traders
28:35need to know about or you're just flying
28:37blind.
28:38>> For the traders listening that maybe can
28:41picture what you're saying, what's your
28:43confirmational on entry though? So, you
28:46see these levels, do you place your
28:48orders with the resting liquidity or do
28:50you wait for some for it to confirm
28:53before you enter?
28:55>> Yeah, so I have I have two different
28:57types of trades. So, I have I have three
28:58trades where I call auto entry meaning
29:00I'll jump in right when I hear the event
29:02fire off, whether it's a stop event or
29:04iceberg event depending on my strategy,
29:05right? And
29:06so there there there's only three of
29:08those that I that I will take
29:10where I'll jump in right in the middle
29:11of the zone. Why is that? Because again,
29:13this is trial and error. I've traded
29:14hundreds of thousands of these, probably
29:15millions of these in the last nine
29:17years, right? So, I know the tendencies.
29:19So, when I first saw this stuff, the
29:20stop iceberg information um introduced
29:23to me by Bookmap, but Bruce from
29:24Bookmap, he kept telling me about it and
29:26then I finally got on with him. He was
29:27like, look at this how ridiculous this
29:28is. I'm like, this is crazy. This is the
29:30strongest as I've ever seen.
29:31But I've learned by trial and error the
29:33best way to enter these trades. I used
29:35to jump in every like if I see sell ice,
29:36I just jump in and sell, right? So,
29:37that's another thing that the listeners
29:39need to understand. Just cuz you see a
29:40sell iceberg, yeah, the big money's
29:42selling. The big money's not right all
29:44the time, every time they put a sell
29:46sell ice
29:47order in. They're right more often than
29:49they're not because they're the big
29:50money and if they keep putting sell ice
29:51in, sell ice, sell ice, the market will
29:53eventually
29:54relent, but
29:56it doesn't mean it works every single
29:57time, but it does behoove you to know
29:59where the big money's playing, right?
30:00So, I have I have three strategies where
30:03I'll get in right in the middle of the
30:04zone um and then the other ones again,
30:07this is from trial error where I I
30:08forced the market and this is going back
30:10to what we were talking about about the
30:12volatility buy where how I validate
30:14these areas is when I get the iceberg
30:16event, stop or iceberg event, I wait for
30:18it to push that five minute ATR that we
30:20were talking about. If it's able to
30:22push, fight the algos and push that far
30:24out of the out of the area, then it has
30:26way way higher of a tendency aka
30:29probability to continue in that
30:30direction. So, that's how I validate the
30:32area whether it can push the five minute
30:34ATR out of out of the
30:36>> You said something interesting about
30:38[clears throat] getting away from the
30:39algos fighting each other.
30:41Does most of that happen in that
30:43balancing and that's why you're waiting
30:45for
30:46the move outside of that the 5% ATR?
30:49>> No, I mean the the volume events aren't
30:51aren't necessarily balancing. They you
30:52know that that doesn't have to be a
30:54balance area, but I you know I do pay
30:55attention to balance areas and so again
30:57that's important because balance areas
30:59are just traders placing bets, buys and
31:01sells, buys and sells. Not all balance
31:03areas are created equal though, right?
31:04When you look at a candlestick chart
31:05they all look the same, but you can have
31:07a balance area that there was low really
31:09low relative volume and it was just you
31:12know price changing back and forth back
31:13and forth with nothing going on versus a
31:15balance area that there's 6,000 buy ice
31:18in that area, right? Or in that balance
31:20area. So not all are are created
31:22equally. So you need to be able to
31:23discern the difference between the two
31:26uh when you're looking for bigger moves.
31:27But yeah I mean just cuz it's an event
31:29[clears throat] a stop ice doesn't mean
31:30it's necessarily balancing.
31:32>> Okay, I see. I see.
31:33>> question.
31:34>> Yeah, [sighs and gasps]
31:35and you know without the data you got
31:37the CME MBO data. Do you think there's
31:39[clears throat] any value I mean I know
31:41a lot of traders like to look at the
31:43book, but with so much spoofing going on
31:46there's still I I mean I know you're
31:49the intention, right? The intention to
31:50actually get the shares was is what
31:52traders need to do legally, but we still
31:54see that going on.
31:56Do you think there's value in reading
31:58the book outside of the CME MBO data?
32:01>> No, I get I get this all the time. This
32:03is what I tell traders.
32:04They I I can't tell you how many times a
32:07week I get contacted by traders asking
32:09me how do they trade the dome depth of
32:11market, right? The the order book. You
32:12don't, right? Again I used to be one of
32:15the the best in the world at it. There's
32:17a reason if I and made millions of
32:18dollars doing it. So if I'm not doing it
32:20it's probably telling you something,
32:21right? I'm not saying there's not some
32:22Simon out there that can watch this
32:24stuff, but again I was one of the
32:26fastest clickers in the world and I I
32:28couldn't compete with the algos cuz I'm
32:30not faster than a computer. If you think
32:32you're going to look at an order book
32:33especially you know like the like right
32:35now I'm looking at the Nasdaq. It's like
32:3612, 14, 15, 16 lots up. It's like and
32:39they're being put in pull, put in pull.
32:41It's like there is no benefit of
32:43watching. There's no edge anymore in
32:45that, a consistent edge. Yeah, you can
32:47get lucky for, you know, a week or maybe
32:49a month. I I don't even think you can do
32:50it that long, but I I don't look at that
32:53anymore because it's there's just not a
32:54discernible edge. That's why I look for
32:57this this
32:58data, and I do have ways to scalp it
33:00too, but not through the order book, not
33:02in my opinion anyway. And again, I just
33:04>> Okay.
33:04>> best at it.
33:05>> Yeah, I mean you're the best to get that
33:07advice from. So I want to learn about
33:09the how the Scott of today was made. You
33:13know, let's let's go back in history
33:15once again, and you know, you had those
33:17years where you were making a
33:19significant amount of money. You You
33:21tried to stick with that edge, and the
33:23market kind of changed.
33:26Looking back,
33:28for example, you took some You took a
33:30few months, right, where you had some
33:32significant losses. When you reflect on
33:34those months,
33:38what could you have I mean obviously
33:39it's easy in hindsight to say, but do
33:41you think Do you think that there's
33:44you should have Like did you have a max
33:46loss in place, for example? Do you have
33:47a max loss? Do you suggest this max loss
33:49on the day, max loss on the account?
33:51What are your thoughts on on just
33:53stopping on the day, stopping yourself
33:55from yourself?
33:56>> 100%
33:58It's the most If anyone takes anything
33:59out of this out of this podcast, it's
34:02number one, right? You have to have a
34:05stop limit in place, and the best way to
34:07do it is through your firm. Meaning you
34:10know in your mind what you can lose on a
34:12day that's not going to hurt you, you
34:13know, overall. And it should be no more
34:16than, you know, six five six percent of
34:18your account size in a day. So you
34:19should be putting on one and a half one
34:21one to two percent on a on an individual
34:23trade. And if you hit six percent, I
34:24know that's only three technically three
34:26losing trades, but you just got to stop
34:28yourself. And the way to do it is again,
34:30I love the quote from uh I always use
34:32the Mike Tyson quote, everybody has a
34:33plan until they get punched in the
34:34mouth, right? So it's like it's very
34:36easy to sit here and say when you're not
34:38being emotional, oh yeah, I I don't I
34:40don't need to put it in with my firm. I
34:42I I know if I lose if I lose a thousand
34:43bucks, I'll I'll just shut it down.
34:45Trust me, you're going to have a day,
34:46especially if you're a trader and you're
34:48competitive, most traders are
34:49competitive, where you're going to they
34:51call going on tilt, right? And you're
34:53going to have a day where you get so
34:55pissed off or you get screwed, you get
34:57headlined, right? So that's all that's
34:58been going on here and you're so mad and
35:00it's like you just turn into a different
35:02person. So now you're going to make me
35:03tell the story, the most painful story
35:04of my trading career
35:07of [clears throat] of not not
35:08um
35:10not respecting this rule, right? So I
35:13had
35:14so when I got to my height, this was
35:162004. So 2003 I had 10 made 10 million
35:19bucks. So now we're in 2004, right? So
35:22my daily loss limit was $100,000 with my
35:24trading firm.
35:25Um so not they were supposed to stop me,
35:28like I said, you know, I'm supposed to
35:29stop myself, but they're supposed to
35:31stop me, too. Right? So now I have two
35:33layers of protection so I don't have
35:34these type of days. This is a great
35:36example of negative reinforcement. So
35:38what had happened is
35:39uh it was like February of 2004. I had
35:43again the $100,000 loss limit and I blew
35:45through it. So, you know, before that,
35:47before I established myself, if they if
35:49you hit that limit, your firm my firm
35:51would just shut me off. They I couldn't
35:53even place I'd go to click an order and
35:54nothing would happen. And I'd get on the
35:55phone I'd be like, what's going on? We
35:57shut you down, you hit your limit. Fine.
35:58That's what they're supposed to do,
35:59right? Well, it got to the point aka
36:02negative reinforcement. Negative
36:03reinforcement's when you do something
36:05that's wrong in trading and get away
36:06with it. Well, of course you're going to
36:07do it again, right? Cuz you got away
36:09with it. So there were so many times
36:11where I would lose the $100,000 like
36:12before 10:00 and I'd be like
36:16I would just get up and leave, go take a
36:17break, you know, go back to my condo,
36:19take a nap or whatever I needed to do
36:21and I'd come back levelheaded in the
36:22afternoon and I'd say, hey, I call up
36:24the risk manager, hey, could you give me
36:25an extra 50 grand? You know, I'm I'm
36:27back in my own mind, like I'm not, you
36:29know, losing my mind. Could you give me
36:3050 grand? So many times I take that 50
36:33grand, I make back the 100 grand and
36:34then I'd like end up up 200 grand on
36:36there, whatever, right? So they got to
36:38the point where they would just trust my
36:41judgment and not shut me off. So that
36:43that first day in 2004, I hit the 100
36:45grand, they would call me, and I would
36:47just be like as soon as they shut me
36:48off, they call. I be, yeah, I got it.
36:50I'm fine. Hang up, right? Cuz I'm pissed
36:52off. That day I lost $800,000 in about 4
36:55minutes.
36:56So
36:58again, should have been shut off. I
36:59should have stopped myself. Impossible
37:01when you're on tilt.
37:03And then the thing is too, both of these
37:04times it was even more embarrassing and
37:06it happened a month later, the exact
37:08same thing happened to me a month later.
37:11Firm calls, yeah, I got it. Lose another
37:13$800,000, right?
37:15Point is both of those days I woke up
37:17the next morning and I I literally said,
37:20what what did I do? Like who was that
37:22person? Like you know I don't even
37:23remember like what like how could I have
37:25let this happen? So the moral of the
37:26story is it's going to happen,
37:28especially in this environment. You are
37:30going to have a blowout day. I don't
37:32care who you are, it's going to happen.
37:34Make sure you don't lose. Don't don't be
37:36me, right? If I just would have
37:38respected my loss limit, I would have an
37:40I would have an extra $1.4 million in my
37:42bank account, right? So
37:44the the whole the the moral is it's
37:46going to happen to you at some point.
37:48Have your protections in place and have
37:50them in place before you're emotional
37:52because it's you're not going to be able
37:53to control it. There's going to be at
37:55least one time you're not going to
37:57control it and you're going to pay the
37:58price dearly.
38:00>> [sighs and gasps]
38:01>> Even 25 years later, does that still
38:03ring true? Do you still
38:05use protection even these days?
38:07>> Yeah, I mean
38:09I I can control myself nowadays a little
38:11bit better, right? But yeah, I still,
38:13you know, with the trading firm that I
38:15that I have that I have shut out shut
38:17off limits, right? So so if I hit 6% of
38:19my account size, they just shut it off.
38:21And there's no you there's no reasoning
38:23with them, right? It's like
38:24it doesn't reset until the, you know,
38:26Globex opens back up at 5:00. But yeah,
38:29and that's the way you have to have it.
38:31Just just know there's always another
38:33day. There's thousands and thousands of
38:35trades in your lifetime. There's going
38:36to be another day. Just you just say
38:39today's I don't know what this is. I
38:41don't know what's going on and you're
38:42going to have it. I have the best edge
38:43on the planet in my opinion and there's
38:45days that I just say I I don't know what
38:47this is. This makes no sense. You know,
38:49it's a headline, it's a you know, the
38:50options flow, whatever.
38:52Just say I'll see you tomorrow. It's
38:53just like an athletic event, right? When
38:55you go out and play an athletic event,
38:56you go play a golf game or a tennis
38:58match, you don't just sit there and keep
38:59getting your head kicked in.
39:01So you're betting money playing these
39:02sporting events. You don't just keep
39:03stay out there for 24 hours just getting
39:05crushed. You just be like, all right,
39:07you win. I'll see you tomorrow. We'll
39:08We'll meet up again tomorrow. That's how
39:10you have to trade treat trading. Like
39:11you got to treat it like an athletic
39:13event. Like you're not going to win
39:14every single day. Just say you got me
39:16today. I'll be back tomorrow. We'll
39:18We'll We'll We'll meet up again.
39:20>> Yeah, you got the you got the Callaway
39:22hat on. So I know that
39:24>> Yeah.
39:25>> Not a paid product placement.
39:27>> Yeah, exactly. I've been I have been
39:28paying a lot of people though on the
39:30golf course too getting upset.
39:32>> Yeah, I mean
39:34what tilts you these days? Do you I mean
39:3625 years later, do you still get tilted?
39:38Cuz some traders are under the belief
39:39like, you know, I
39:41one day I'm going to escape
39:43being tilted.
39:44>> yeah, I mean the things that tilt me now
39:47that that set me off, my triggers are
39:49the stop offs to the ticks. So with the
39:52stuff I'm using and this we have the
39:53zone drawing tool that draws the CME and
39:55B data the events right on the heat book
39:57map heat map. And these entry points and
39:59the stop points that I base off of this
40:01information are ridiculously accurate.
40:04Like it's it's maddening how accurate it
40:06is. So I cannot tell you I have a
40:07collage. So for the last year I have
40:10over 150
40:12stop to the exact tick and the market
40:15turns around and goes exactly where I
40:16thought it was going to go. And I'm not
40:18talking area, I'm talking exact price.
40:21That's my trigger and I try my best.
40:23It's embarrassing too because I have a
40:24trade room. I get I trade live every day
40:26twice a day, right? And I get on there
40:29and it's like the first one happens.
40:31Okay,
40:32second one, third one. By the fourth one
40:34I'm I'm losing my mind and then the
40:36thing is too with me this is another
40:38great
40:39thing that traders need to know, right?
40:41You do not pretend like you're not mad
40:45or emotional in trading, right? You
40:46don't You don't
40:48internalize or keep it inside. Get out.
40:50I don't know.
40:51My way is I just talk, talk, I call, I
40:53just
40:54>> Broken monitors?
40:55Few were broken up
40:56>> I did it before I was on my podcast.
40:57They're even better now with my
40:58webinars. It's even better now because
41:00I'm talking to myself anyway. At least
41:01I'm talking to somebody. But even back
41:03when I was at my trading firm, I had my
41:05own office and not many people did at
41:07the time because I kind of earned it,
41:08right? I was the number one trader
41:09there. But guys would walk past my
41:11office and they'd hear me just talking,
41:13talking, talking, talking, bitching,
41:14bitching. And they go into the owner's
41:16office and be like, who who is Paul
41:17Saini talking to in there? He's like,
41:18oh, this is an imaginary friend that he
41:20talks to. So that that was I've been
41:22doing it for 25 years. That's how I get
41:24it out, right? That's that's my puke if
41:27you will. Like that's how I get it out
41:28of my system.
41:30Some some traders have to get up and
41:31take a walk. Some traders have a squeeze
41:33toy, whatever. Whatever you need to do
41:35to get it out and not just act like it's
41:37not bothering you, you need to figure
41:39out that in in your trading life, like
41:41what you need to do. Again, go work out,
41:43whatever you need to do. Mine is just
41:45incessantly bitching, incessantly
41:46bitching. So again,
41:48>> What did that look like after the
41:50$800,000 losses? What what did that look
41:52like for Scott?
41:54>> Oh, [clears throat] well, that day I
41:55when I used to be a immature screen
41:57breaker too. So I literally shattered
41:59like four screens. Like the risk manager
42:02came into my office and I literally was
42:04like, look at this the candle was like
42:06this big and that what I lost in there
42:08and I like ripped off the threw the
42:10monitor against the wall. It was it was
42:12really bad, right? So
42:14and then there was another time too. So
42:15I was telling you about this guy I used
42:16to trade against the other local, right?
42:18990 you can look him up. You can find
42:20him in a second. He used to be the
42:21biggest market manipulator ever. And I
42:22mean illegal manipulation. We can get
42:24into that story too if you like. But
42:26anyway, there was one day that he had
42:28run into this remember I said it was a
42:29poker game, right? So
42:31he knew he knew he knew my my firm
42:33number, right? We were 023 that was King
42:36Street Trading and he knew actually it
42:37was the clearing firm where we traded
42:39ABN Amro was the trading firm. So
42:42anyway, he would know when he had me
42:44caught because you could see he saw I
42:46was loaded up with 3,000 then he would
42:47start to push it in my face, push it in
42:49my face because at that time and he
42:51always would do it right around 10:15
42:52and 12:30 Central. To this day, it's not
42:55that's where you I've thrown away
42:56millions of dollars. Do not trade at
42:58that time of day if you can avoid it,
42:59right?
43:00That that's my best advice for that,
43:02too. Anyway, it was one day where he had
43:04he'd done it again. I'd lost like 400
43:06grand and this is when Dr. Brett was
43:09there and he can he can validate the
43:10story. He was there. They had I was so
43:13pissed off. I was literally cuz they
43:16were in Chicago, too, this firm. I was
43:17leaving my firm to go live physically
43:21pummel this dude. That's how upset I
43:22was. I was going to go to the firm and
43:24this guy was going to get killed,
43:25basically. My my boss and Dr.
43:28Steenbarger had to physically accost me
43:30at the door so I wouldn't leave to go
43:32kill this dude. That's how I was talking
43:33about going on tilt. That's the
43:34ultimate, right? When you want to go
43:35kill someone,
43:37that's that's not that's not a good
43:38tilt. So,
43:40but that that's just one of the stories
43:42and how emotional, you know, my
43:44triggers, right? So I I don't get that
43:45bad nowadays. There are some days I get
43:47upset, but not not like that.
43:49>> [laughter]
43:50>> I feel like we need to put a hotline
43:51number at the bottom.
43:53>> Well, I mean, these are all very
43:54embarrassing stories, too, right? But
43:55it's just it's good for people to learn
43:57like it's it's very possible for this
43:59stuff to happen.
43:59>> I love the honesty. Yeah.
44:01>> And it's all relative, too. Yeah, that
44:02was hundreds of thousands of dollars,
44:04but you know, it could be $1,000 for
44:06somebody, right? If that if that's a lot
44:08of money to them, trust me, the triggers
44:09are the same. And it's the And that when
44:11that's the other thing, too, that's what
44:12allowed me to get to a big size in my
44:14trading is because for me, it's about
44:16being right or wrong. It's not about the
44:18amount of money I would lose,
44:19right? So and that's why a lot of
44:21traders can't can't size up because the
44:24minute they do, they they start to panic
44:27and they can't trade that big a size.
44:28For me, I could trade in between if it
44:30was a one lot or a thousand lot, it felt
44:32the same to me. It's about being right
44:33or wrong.
44:35>> Huh.
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45:45Terms, fees, and eligibility
45:46requirements apply. Okay, yeah, how I
45:48mean what for the traders that are
45:50listening and they they do want to size
45:52up but maybe for them it's not right or
45:55wrong. I mean how can they get to that
45:57mindset, Scott, where they're
45:59thinking less about the money and more
46:01about the trade and the money ultimately
46:03being the byproduct of that trade?
46:05>> Well, you you you have to get to the
46:06traders have to get there or they're
46:07never going to be a good trader. When I
46:09and I joke cuz I I was a Star Wars nerd,
46:12right? When I finally took off as a
46:13trader is when I turned off the
46:15targeting computer. Remember when Luke
46:16Skywalker blew up the Death Star at the
46:18end when he turned it off? So that when
46:20I finally turned off my P&L and stopped
46:22staring at my every tick, every dollar
46:24tick,
46:25that's when I finally took off. I just
46:27trusted the process and there would be
46:28days Of course you're always going to
46:30know where you're at and that's why and
46:31if you're losing that's why you have
46:32stop limit cuz if you have stop limit
46:33then you're done. But I would turn it
46:34off and I would just trade, trade,
46:36trade, trade. And there's days that I
46:38thought I was up like, you know, 50 80
46:40grand and I look at my P&L was up like
46:42$240,000. Things like that it's like
46:44wow, I had no idea.
46:45>> Wow.
46:46>> That's when you if you can get to that
46:48point where you stop because because
46:49when you're staring at the money you
46:51start to think about your the money in
46:54real world terms. And Trading in the
46:56Zone talks about this too. You cannot
46:57think about by Bart Douglas, the the
47:00second best book you can that you can
47:01get that's an anti-trader performance.
47:03But
47:04um if you start thinking about your your
47:06trading in real life terms, that's when
47:08you're a panicky trader because you're
47:10looking at the P&L and you're like, oh
47:11my god, I'm up my car payment and my and
47:13my house payment for this month and oh
47:15my god, I just gave it back. I got to
47:16get up, right? You cannot you cannot
47:19make it in this business looking at your
47:20P&L like that. So the best advice I can
47:23give there, just turn it off, have your
47:25loss limit in so if you have a bad day,
47:27just shut off. You don't even need to
47:28see it. And you'll be shocked if you
47:30turn it off and you just trade. You just
47:31trade. You'll start to lose track of
47:32where you are as far as being up. You
47:35look at the end of the end of the day,
47:36you're like and you just followed all
47:38your rules and you and you put the
47:39trades on, you'll be shocked. Like
47:41you'll have days like you make five, 10
47:43times more than you thought you were up.
47:44>> walk us through that for one of your
47:45trades, Scott. So you see the iceberg
47:47comes in, you see the stops taken out.
47:49Do you start with small and build a
47:52position on it? Walk us through a trade.
47:54>> So a trade is, you know, for me, I have
47:57so for instance, I'm only risking um not
47:59only I'm I'm risking $500 per trade per
48:01per strategy. But I mean, there's times
48:03like today right now, I have three
48:04different crude short strategies on. So
48:06I'm I was basically risking 1,500 bucks
48:08on the trade. And remember,
48:09I I got knocked out of the business. And
48:11it's not like I was a million dollar
48:12trader where I got back in and and I was
48:14able to put, you know, huge money in an
48:15account. And when I got back in, I
48:16actually didn't even have enough money
48:18to put in an account because I got
48:19knocked out 2013.
48:21You know, fast forward six, seven years
48:23later, Dr. Brett contacted me about
48:25Bookmap and I got back in the game. I
48:27was trading Apex, you know, the trading
48:29funding company to try to get I didn't
48:31have any money to put in a trading
48:33account, not to trade seriously, right?
48:34Nowadays, I I did have a friend back me
48:36for a quarter million bucks and I I
48:38still trade the Apex and I copied to
48:39that. Um but the point is,
48:42you know, I I'm risking, for instance,
48:44500 bucks and I have built in the zone
48:47drawing tool. Again, this this is on
48:48Bookmap. You go to Bookmap marketplace,
48:49you can see it's called Scott Zones if
48:51you guys want to see that, but you need
48:52the NBO data and everything else. Just
48:53contact me if you want to learn how to
48:55get all this set up. But the point is
48:56with the zone drawing tool, this is so
48:58important. So zone drawing tool helps
49:01eliminate almost all the issues why
49:03traders don't make it or blow out,
49:05right? One, it shows you the area,
49:07right? The the important area to trade,
49:09the edge. It shows the volatility. So
49:11it's showing you where you get in in ATR
49:13or get out in ATR, and then it shows
49:15your position sizing. So I know
49:16automatically looking at the zone draw
49:18drawing tool again, it's hard to just
49:19talk about versus showing you, but it
49:21shows me if I want to risk 500 where I'm
49:24entering
49:25a trade and then stopping out and so
49:27based on the ATR stuff in the in the
49:29zone information,
49:31it tells me exactly how many I can put
49:32on and risk 500 bucks. So it's like it's
49:35very very rules-based, regimented. It's
49:37like I get in here, I get out here. I
49:40know I can put on this many this many
49:41contracts and then I just let the trade
49:43work. That's what I mean. You have to be
49:45like that. So that's what algos do,
49:47right? Algos don't trade emotionally.
49:49Algos know where they put it on, know
49:51where they get out, and that's that's
49:53what they do.
49:54And when I say they, obviously it's
49:56impersonal, but the point is that's why
49:58algos make money. So if you want to make
50:00money in the markets and beat the algos,
50:02you have to trade like an algo. That
50:04means you have your exact areas you get
50:06in, get out, and you know your sizing,
50:08and then you just put on the trade
50:09whether you feel like it's going to be a
50:11loser or not. That is the biggest
50:13mistake that traders make. They skip
50:15trades because they feel like something
50:17is going to happen. That is the again,
50:20what did I just say? 80% of my feeling
50:22and I used to be one of the best feelers
50:23of the market out there, it's wrong I'm
50:25wrong 80% of the time. So the way to
50:27combat that I tell my traders too. So I
50:30can't tell you how many times I'll be on
50:31a webinar and and someone will say,
50:33yeah, I saw because I'd be like, okay,
50:35I'm long because the guys are following
50:36my strategies. I'm like, everyone is
50:38long this strategy that's trading the
50:39strategy, correct? And then a guy will
50:41be like, no, I didn't take it. Like why
50:44did you take it?
50:45Cuz it was ripping up and I I just
50:47didn't feel like this one was going to
50:48work. I'm like, okay, well, first of
50:50all, that's not following the process,
50:52right? You're not trading like an algo
50:53too.
50:54This is the best way to think about it.
50:57If you're so sure you didn't get long
50:58there cuz you didn't feel like you
51:00didn't feel like it was continuing to go
51:01or whatever, then you should put your
51:03entire life life worth, net worth on the
51:06short, right? Because you know what's
51:07going to happen next, right? No, you
51:09don't. That's why you just put on the
51:10trade because you don't know what's
51:11going to happen next, right? So all this
51:12stuff is also laid out in in Trading in
51:15the Zone by Mark Douglas, right? Like
51:16>> Oh, yeah.
51:17>> You don't know what's going to happen
51:18next. You know, he used an analogy
51:20between a
51:21happy dog and a dog that bit bit a kid
51:23and how the once the kid got bit, he was
51:26afraid to start
51:28he didn't run up to dogs anymore. It's
51:29the same with trading, right? You have
51:30winner, winner, winner. Oh, this is
51:32great. Then you have loser, loser,
51:33loser. That's like getting bit by the
51:35dog. Now you're afraid to to put on the
51:36trade. So if you have so the biggest
51:39thing though I bypass and all this, you
51:41have to have an edge. You have to have a
51:42viable edge that you know that's that
51:43works. That's what I teach my traders.
51:45Like that's the thing like you come in
51:47my trade room,
51:48you don't have to you may have a lot of
51:49issue have a lot of issues in your
51:51trading. You have to worry about if
51:52there's an edge. This is an edge. It's a
51:53proven edge and it's nine years running
51:55and strong. So now you've already you've
51:57already knocked that domino down. You
51:58got that done. You have the edge. Now
52:00you just have to put the trade on.
52:02Doesn't matter though. I can show two
52:03traders, three traders the exact same
52:05which I do every day. Show them the
52:06exact trade where I'm getting in, where
52:08I'm getting out.
52:10Out of the three, they all have
52:11different results. One guy doesn't put
52:12it on, another guy puts it on, panics
52:13out. The other guy for a huge profit,
52:16right? So again, it's it's all
52:17dependent. You got to get to that point
52:19where you're a regimented and you trade
52:21like trade like a algo.
52:23>> Yeah, I love that. Mark Douglas, I'm
52:25huge huge fan. Love his books.
52:28And you you mentioned there. This is
52:30something I want to dive into a little
52:31bit too because it sounds like you main
52:33maintain a consistent sizing.
52:35I just
52:36I've spoken to a lot of different
52:38traders more recently, Jeff Holden where
52:40he says you got to swing on the A plus
52:42setup. But I know Mark Douglas discusses
52:45working probabilities, not having
52:47expectations as those are a visual
52:48representation of what you think is
52:50going to happen.
52:51So are is are there ever any times where
52:53you do lean into a position, maybe an
52:56iceberg's building or you size up or do
52:58you keep across all your strategies? Do
53:00you keep that
53:02consistent risk across all of them?
53:04>> No, you
53:05>> have to you have to definitely go for
53:07it. The A plus I have a A plus trade
53:10which I
53:11so when I got back in the business,
53:12remember I said I got knocked out when I
53:13got back in Dr. Brett was with SMB
53:15Capital. They trade stocks. So I
53:17actually trained with them for close to
53:20I don't know it's like six eight months
53:21that I was going to trade stocks and
53:23that's where I learned about the A plus
53:24setups. So they actually ground their
53:26traders. So they they want their traders
53:29to to to lay out and I'm sure he talked
53:31about this lay out their A plus setups.
53:33If they don't trade bigger when they get
53:34their A plus setups, then they literally
53:36get grounded the next day they have to
53:37they get put on the simulator the next
53:38day or the next week or whatever it is,
53:40right? So yes, you have you want to be
53:42consistent with your sizing, but when
53:44everything is is in line, you know,
53:47confluent per se. So for instance, I do
53:49every every morning I look at structure.
53:51So I look we talked about balance areas
53:53earlier, right? That's the biggest thing
53:54you can look at.
53:56Markets are either trending or they're
53:57balancing. Trending or they're
53:59balancing. Well, they're trending when
54:01they break out of balance because
54:02whoever was wrong in that area needs to
54:04get the hell out, right? So I'll use
54:06balance areas and what how the markets
54:08responding to those areas to give me a
54:10thesis. So my thesis is just it's just a
54:13guess based on what I think should
54:14happen based on these balance areas and
54:16my experience. So now I have my thesis.
54:19When the volume event matches the real
54:21time volume event, which is the most
54:23important something's happening right
54:24now and that matches my thesis, that's
54:26when I go for it. That's when I trade
54:27two three four times bigger normal size
54:30because you've got to go for the throat
54:32and they all talk about it. SMB talks
54:34about Dr. Brett talks about it.
54:38Um you got to you got to go for it. So
54:41yeah, you want to be consistent when
54:43they're just normal trades, but when you
54:44when it's all online, yeah, you again
54:46you got to take your shot.
54:49>> [laughter]
54:49>> But but have the conviction. So there's
54:51a couple things here, Scott, I want to
54:53look at. You you it sounds like you have
54:55to have the conviction to put on the
54:56trade. A lot of traders they may have
55:00conviction, but they don't execute on
55:02it.
55:03But then also like Peter Brandt told me
55:05recently, of course he's known for in
55:08the Unknown Market Wizards the strong
55:10opinion but weakly held.
55:15You know, there are so many out there
55:17that are brilliant. There could be
55:18brilliant people, Scott, but
55:20they can't execute or they need always a
55:23reason to hold on to a trade or a reason
55:25why a trade didn't work work in their
55:28favor in their in their favor. So how
55:30important is it do you have to have a
55:32strong opinion, have the conviction to
55:34execute on it, but just know to get out
55:37and move on? You don't need a reason for
55:40this trade not to have worked out.
55:41>> Right. Well, that's what I say, too. So
55:43the the the traders or the people that
55:45tend to struggle in this business are
55:47the smartest ones, right? Which is kind
55:49of an anomaly, right? So it's like
55:51um
55:53the smarter you are, the smarter a
55:55trader is, this is just from my
55:56experience, right? So
55:58the smarter a trader is, so we're
55:59talking like physicists, doctors, and
56:01like even lawyers, like
56:03they want a reason for every single
56:05thing that happens in the market, and
56:07you're never going to have a reason for
56:08every movement in the market and they
56:11you know, they and they I I can't tell
56:12you how many of these traders I have in
56:14my room. I have one in there now. He's
56:15been a year in there a year and a half
56:17and he's he's better, but he's still
56:19he's still pretty bad, right? Where he's
56:21just has to have a reason for everything
56:23that happens. Had just continues to
56:25bring new things in to try to and this
56:27isn't trading in the zone, too, right?
56:28Traders feel like the more they pile on
56:31their trading as far as indicators, the
56:33better they're going to trade. It's the
56:34exact opposite, right? So the traders
56:37that do the best are, you know, I'm not
56:39going to say dumb, right? I mean, I'm
56:41not the smartest student in the world.
56:42Not like I used the analogy earlier, I'm
56:44not the brightest bulb in the box, but
56:46you know, I'm smart enough and I can
56:47recognize patterns, right? So if you are
56:50a brainiac, you just got to you got to
56:52turn it off, man. Stop trying to add in
56:5585 things to validate a trade. Try stop
56:58trying to make any a reason for I can't
57:00tell you like even I'm on the Bookmap
57:01button where I do a a live trading
57:03webinar every free one for Bookmap every
57:05Thursday. Guys are like, what do you
57:07think this is here? Do you think the the
57:08the the shorts are are stopping out and
57:11then the big money is putting on to like
57:13I don't know. You're never going to know
57:14unless you're sitting next to the
57:15person. Even with the iceberg orders,
57:17they're like, well, what are they doing
57:18here? Are they getting out of the
57:19position? Are they in I I I don't know.
57:21You're never going to know. I know the
57:23area is important because it's an area
57:24of concentrated trade traders that are
57:26loaded up. When it moves out of there, I
57:28know it's going to be a very likely a
57:30bigger move out of there and we have a
57:32version trades that come back to the
57:33zone. The the point is you you're not
57:36going to know why guys are doing them
57:38unless you're sitting next to them or
57:39you're God almighty and I I doubt you're
57:41either. So just trust the process, dumb
57:44it down.
57:45Again, I my stuff like when you watch me
57:48trade, it looks like I got a bunch of
57:49indicators. I don't. It's just the zone
57:50drawing tool, my reversion lines and the
57:52guts levels on my chart and the heat
57:54map, right? I make my trading as simple
57:56as possible and that is how you're going
57:58to make it in this business. Do not
57:59confuse yourself.
58:01>> Yeah, a lot of traders they start their
58:02journey, Scott, and you know, I was one
58:05of them too, where you think the more
58:07indicators you have that like you said,
58:10it's going to equate to better
58:12results.
58:14>> Right.
58:14>> And it's just a fallacy. It's just a
58:15fallacy. So
58:16>> It's the opposite. It's the opposite.
58:18That's what it is.
58:19>> So you mentioned earlier
58:22legal manipulation. Do you want to
58:24expound on that story?
58:28You don't have to.
58:28>> Not not legal. It was illegal back then.
58:31So that same trader I was talking about,
58:32I don't like to name names, but
58:34>> Okay.
58:34>> you can easily find out he actually got
58:36banned from trading or from future
58:38trading like 2016 for a year or two and
58:40fined big deal like me. His fine was a
58:42paltry. It's just like these like
58:43biotech firms, right? Like they know
58:45they're going to get fined, you know, 10
58:48million bucks, but they made a billion.
58:49So who gives a crap, right? So this guy
58:50was the same way. Anyway,
58:52>> Okay.
58:52>> so he was spoofing too. Spoof I was
58:54spoofing. It was legal back then up
58:55until 2007. What he was doing was
58:57crossing his own orders. Now that is
58:59taboo. It's always been taboo. Why would
59:01he do that? So he would wait, you know,
59:03again, like I said, it was around 10:15,
59:0510:30 Central every day. Then he the
59:07reason in the way you reason he would
59:09wait for that is because he knew the big
59:10money was now not in there as as as
59:13often, right? So like that's when New
59:14York goes to lunch, then Chicago goes to
59:16lunch, all the big traders, right? From
59:18the firms, then he would start playing
59:19his game. But what he would do is say he
59:21wanted to get long, he would start
59:23buying, start buying, right? And I would
59:25see it I would ping every order that
59:26came That's how active I was. Every
59:27order that I saw coming in the order
59:29book, I would just ping it with one lots
59:30just to see who it was cuz you could see
59:32counterparty, right? I'd see him buy,
59:33I'd see him put like a 500 lot in and
59:35I'd ping it, it's him. I'd have some
59:37orders resting. He was sweeping my
59:39orders. I would see it's him. I'm like,
59:40okay. Then what he would do, he would
59:42drop it. All of a sudden you'd see in
59:43the order book thousand, thousand,
59:44thousand, thousand out of nowhere. And
59:46then someone buys a thousand, someone
59:48buys a thousand. I'm like, what the hell
59:50is this? I had to I mean I knew what it
59:51was after a while. The guy was buying
59:53his own orders for himself, making it
59:55look like some somebody was buying a lot
59:57of orders and then all these traders
59:59would jump on, say, oh, look at all this
1:00:01big money they're buying. And then it
1:00:03would run into his orders, kind of like
1:00:04the algo games now that they play, and
1:00:06then he'd have all his offers above.
1:00:07It'd run into them, he would beef up the
1:00:09bid, which was fine. That was the
1:00:10spoofing part. So he would cross his own
1:00:12orders, beef up the bid, force traders
1:00:14to chase it up, then he get filled and
1:00:16he just yanked everything in the market.
1:00:17It was like a a big vacuum, right? So
1:00:20the the point is he was crossing his own
1:00:22orders, which is the most illegal thing
1:00:24you can do in the markets. It's called
1:00:26washing your own trades or cross
1:00:27trading.
1:00:27>> Ever watch a stock rip and think, I
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1:01:29>> So what I called the CME and many times
1:01:33I remember about the video recorder. I
1:01:34was videotaping it. I was I was
1:01:36literally narrating it as it happened.
1:01:39>> You're [laughter] narrating.
1:01:40>> Nothing ever was like I would literally
1:01:41say, okay, here he is. Watch what he
1:01:42does here. And it was he I would ping it
1:01:44ping it ping it. And you could see you
1:01:46could see the house. You could see he
1:01:47was doing it. We called him in two or
1:01:48three times.
1:01:50Nothing was ever done as far as I
1:01:51understood, but you know, it is what it
1:01:53is. But the point is
1:01:56it [clears throat] it was brutal. And
1:01:57that was one of the reason that was one
1:01:58of the reasons I got knocked out of the
1:01:59game, too. You know, it was high
1:02:00volatility. I mean, the low it was a
1:02:02couple with low volatility and the algo
1:02:04was starting to take over. And then this
1:02:05guy didn't help things at all. Like he's
1:02:07the guy. You can even see in my journal.
1:02:09Actually, I just did a a podcast for
1:02:10Titans of tomorrow. I brought my my P&L
1:02:14books from back then. I'd have a
1:02:15calendar book that I would write now.
1:02:17And you should see how many days that I
1:02:18was just bitching about this guy. Like
1:02:20manipulator got me again, cheater got me
1:02:22again, cross orders, blah blah blah. So
1:02:25it's it's funny. It's not funny because
1:02:27it cost me millions of dollars, but it's
1:02:29it's it's it's comical to look back and
1:02:31look at some of the stuff I was saying
1:02:32back then about it.
1:02:33>> Do you still have the video recordings
1:02:35of that?
1:02:36>> Oh, yeah. Yeah, I got I I have the video
1:02:38recordings. I actually put them on
1:02:40I did one of those things where you
1:02:41transfer it. So I have some of those.
1:02:43And I have screenshots, too. So if we
1:02:44can we ever get back another webinar, I
1:02:46can show
1:02:46>> Oh, okay.
1:02:47>> I can show actually you can see my
1:02:48orders in there and the order book I
1:02:51used to use trading technologies back
1:02:52then. So you can see all the orders and
1:02:54it was
1:02:55>> That'd be fascinating. Traders, if
1:02:57you're interested in that, yeah.
1:02:59>> That's the biggest thing for for traders
1:03:00to see how much was actually in the
1:03:01order book back then. Like the thousand
1:03:03lots, thousand thousand thousand
1:03:04thousand versus 10 10 10 10 nowadays,
1:03:07right?
1:03:09>> [clears throat]
1:03:09>> Yeah, traders, if you're interested in
1:03:10that, let us know in the comments and
1:03:12we'll certainly be having a
1:03:15second episode coming up, Scott. So you
1:03:17know,
1:03:18the last words over to you. I mean, what
1:03:19what would you like to instill in the
1:03:21traders that
1:03:22maybe are just now starting their
1:03:24journey? You've been doing this for a
1:03:25long time. You know, what what's the
1:03:27best piece of advice do you have for
1:03:29them?
1:03:30>> Um, well, number one, you need an edge,
1:03:32right? You You have to have a
1:03:34discernible edge, and you have to have
1:03:36the rules around your edge, and you need
1:03:37to trade the edge every time you see it.
1:03:39Number one. Two, you got to protect your
1:03:41protect your money, right? We've talked
1:03:43all about all this stuff already, right?
1:03:45Protect your capital. Some days are not
1:03:47going to make sense. This is been the
1:03:48most trying period of my 25 years, the
1:03:50last year and a half, between the tariff
1:03:52headlines and then the like we call it
1:03:54Iran ping pong, where every every 5
1:03:56minutes Trump says something, the market
1:03:58rips off the page, Iran says that's not
1:04:00true, the market goes back down. It's
1:04:02It's been brutal, right? So, I tell
1:04:03traders if you're just even breaking
1:04:05even the last year and a half trading
1:04:07futures,
1:04:08you're you're doing pretty well.
1:04:09>> What are you doing to manage risk in
1:04:11this headline ping pong?
1:04:13>> Uh, that would be just getting stopped
1:04:14out and usually to the tick, too, like I
1:04:16said. But yeah, there's nothing you can
1:04:17do. Again, you can have the best trade
1:04:19on in the world, the best looking trade,
1:04:21and it's moving in your favor. I mean,
1:04:22this happens to me three times a day.
1:04:24It's moving in my favor, Trump says
1:04:26something, the thing rips off the page,
1:04:28right? He's now I joke, too. It's not
1:04:30It's not even a joke. It's not even
1:04:31funny, but they're selling the pay 100
1:04:33grand
1:04:34a month to get the feed the his true
1:04:37social feed like, you know, 10 seconds
1:04:39before before it comes out to the
1:04:40public. Like it's it's insanity, right?
1:04:42But someone always knows. That's another
1:04:43thing, too. When you get the stop
1:04:45iceberg information, you you literally
1:04:46will laugh out loud, l o l. Like here
1:04:50comes the number
1:04:51at 9:00, right? All of a sudden, 4,000
1:04:54bias comes in the E-mini S&P 30 seconds
1:04:56before the number. I wonder if that
1:04:57person knows that number, right? So,
1:04:58it's just like the thing is it's
1:05:00frustrating, but at least you can see
1:05:02what they're doing, right? With the
1:05:03iceberg stuff.
1:05:05The flip side with the headlines,
1:05:06there's nothing you can do. You put
1:05:07That's where you got to get your stops
1:05:08in, too. You put your stop in and like I
1:05:10I say every day to my traders, I said
1:05:12when you know, here's my order, I'm in,
1:05:14I'm in this trade now. I just got to
1:05:15hope I don't get headlined or heroed.
1:05:17Heroed's when you get the options game.
1:05:19That's the newest manipulation that we
1:05:20talked about. I'll show you guys that
1:05:21too if I get back on, but
1:05:23you got you just that's why you you
1:05:25don't know what's going to happen next.
1:05:26You just put the trade on and hope that
1:05:27you don't get headlined heroed and just,
1:05:30you know, hope the trade works. Some
1:05:31some trades just don't work, but that
1:05:33again, the best way to think about it
1:05:36[laughter] the the the best analogy that
1:05:38I know of is liking it to a casino,
1:05:41right? A casino is consistent. They
1:05:43don't sit there just because one guy
1:05:45comes in and waxes them for you know, a
1:05:47big whale comes in beats them one day,
1:05:49they don't just shut down the game and
1:05:50never deal blackjack again. They know
1:05:53that if they just keep dealing the
1:05:54cards, aka taking the trade over the
1:05:57long run, if they have an edge, which
1:05:58they do mathematically, the way the the
1:06:00game is set up, they will make money,
1:06:03right? So they don't panic over a losing
1:06:05hand, a losing day. They keep putting
1:06:08the trade on, dealing the dealing the
1:06:09cards. And they have the rules and
1:06:11things like that. So that's exactly if
1:06:13you think about it like a casino again,
1:06:14straight out of Mark Douglas Trading in
1:06:16the Zone,
1:06:17um that's how you can internalize it and
1:06:20and and just be like, okay, I know over
1:06:22100 trades, 80 of these or 70 of these
1:06:25or 60 of these, whatever
1:06:27are going to be profitable. I know I'll
1:06:28be profitable. I might have a string of
1:06:30five, 10 in a row that lose. What if I
1:06:32That's my point. If you know you have an
1:06:34edge, you just keep putting them on. I
1:06:35know this is the best edge I've ever
1:06:36seen in my life, so I don't panic. It
1:06:38doesn't mean I I don't get pissed off
1:06:39losses. I I I It's even more cuz the
1:06:41expectations make it more painful
1:06:43because I think every trade should win
1:06:44cuz I saw see how powerful this stuff
1:06:46is. It's still not easy, but I still I
1:06:48don't skip the national trade though is
1:06:49what I'm saying. I still put on the
1:06:51trade. And if it's just a day like we
1:06:52talked about this entire webinar, if
1:06:54it's a day that things aren't working,
1:06:55all right, I've lost, you know, four
1:06:57four in a row, five in a row, I'm done.
1:06:58I'm out.
1:06:59>> And does it apply to every market? Are
1:07:01you trading basically every market?
1:07:03>> Yeah. I mean, I I have a large So that's
1:07:05how I that's how I utilize my bandwidth
1:07:07nowadays. So I used to be able to, you
1:07:08know, watch these orders come in. I used
1:07:09to process things very quickly. Well,
1:07:10now I don't trade off that nonsense
1:07:12anymore. I can watch For instance, I'm
1:07:14watching crude, gold, Russell, Dow,
1:07:17E-mini S&P, uh Nasdaq, soybeans, wheat.
1:07:21So I I
1:07:22cuz I want to take When I hear these
1:07:23events fire off, I want to take it. I
1:07:25don't care what market it is. It doesn't
1:07:26matter what market it's you need to know
1:07:27the threshold, meaning what is a what's
1:07:29a sizable amount, a tradable amount for
1:07:31that market, right? So for instance, I
1:07:33will not trade an iceberg order unless
1:07:35it's is at least if it's not at least
1:07:37700 in the E-mini S&P. Nasdaq it's 150,
1:07:40right? So you need to know your
1:07:41thresholds and that's all built into the
1:07:42zone drawing tool I've been telling you
1:07:43guys about. Um you need to know your
1:07:45thresholds for the market a tradable
1:07:47event and then you know again your risk
1:07:49and everything else. But yeah, that's
1:07:50the I I want to take advantage of cross
1:07:52markets. I I especially on a day like
1:07:54today when nothing's going on, I hear
1:07:55soybeans I'm like, okay, I'll I'll go
1:07:57trade soybeans today, right? I don't
1:07:59trade it every day sometimes, but you
1:08:01know you just you I want to take
1:08:02advantage of these events cuz it's much
1:08:04better
1:08:04>> Yeah.
1:08:05And lastly Scott, I mean your resilience
1:08:08is very admirable. Uh you've seen the
1:08:11highs, you've seen the lows. A lot of
1:08:13traders they fall by the wayside once
1:08:16they hit the lows. I'm sure you have
1:08:18many stories there as well from some of
1:08:19your friends that maybe got out of the
1:08:21market and never came back. So what what
1:08:24do you think differentiated you from
1:08:25them?
1:08:27>> Um just perseverance, you know knowing
1:08:29that you know again I haven't I I've
1:08:31been through the ringer man. I've been
1:08:32through the ringer and you know and and
1:08:34somehow my my my wife's been with me
1:08:36this whole time. It used to be a joke
1:08:38like when I first started not being able
1:08:39to make money anymore, I used to say, oh
1:08:41yeah, you married you thought you
1:08:42married Superman and you got Clark Kent,
1:08:44right? It was funny at first then it
1:08:46wasn't funny like six, seven, eight
1:08:47years down the line. You know again I
1:08:49had to leave the business and go to
1:08:50medical sales and go kiss doctors' asses
1:08:52in their office every day. Talk about
1:08:53eating humble pie, right? Like
1:08:56these guys treat a lot of these doctors
1:08:57treat their sales reps like terribly and
1:09:01I so many times I want to say, do you
1:09:02know how many more money in three years
1:09:03than you're going to make in your
1:09:04lifetime and you're treating you're
1:09:05talking to me the way you're talking to
1:09:06me. It was very I had to swallow big uh
1:09:10dose of humble pie, but [snorts] uh
1:09:13the point is I just you know I was out
1:09:15of the business until I saw Bookmap and
1:09:17I saw a different way when Dr. Brett
1:09:19contacted me he said, this reminds me of
1:09:21how I used to view the market looking at
1:09:23these looking at the heat map and
1:09:24everything else. So once I saw it, I'm
1:09:26like, okay, I'm back.
1:09:27But I wasn' always like, oh yeah, I'll
1:09:29figure it out. I had to get out of the
1:09:30business for seven years, right? So
1:09:33the thing is for your traders, yeah, you
1:09:35just got to, you know,
1:09:36you got to the biggest thing is
1:09:39you want to be able to have some source
1:09:41of income where you're not just relying
1:09:43on because if you're relying on trading
1:09:45to support your family and you have no
1:09:48other outs, like it's either you make
1:09:49money or you're done and your family's,
1:09:52you know, going under and it's not going
1:09:54to never going to ever ever happen,
1:09:55ever. Like maybe one out of a thousand,
1:09:57I would guess. Same with gambling,
1:09:59right? If you anybody who gambles knows
1:10:01if you have to win, you're not going to
1:10:02win. It's just it does not happen.
1:10:05Anybody who has ever gambled on anything
1:10:06or traded, when you're not worried about
1:10:08the money, that's when things just just
1:10:10flow. It's like, oh, look at that. Hey,
1:10:11I just won another thousand bucks. Oh, I
1:10:12just had another $5,000 winning trade.
1:10:14When you have to make money, it's just I
1:10:16don't know what it is. It's something
1:10:17with the universe. It just doesn't
1:10:18happen for most people.
1:10:20>> Mm.
1:10:21Incredible story of resilience, traders.
1:10:23Let us know your thoughts. And Scott,
1:10:25thank you so much for coming on Chat
1:10:27with Traders. I'm sure we'll see you
1:10:28back here soon.
1:10:30I'm excited to share this story with the
1:10:32traders. It's going to resonate resonate
1:10:34with me. It's going to resonate with a
1:10:35lot of traders out there. But last word
1:10:37over to you.
1:10:39>> Yeah. I do this, you know, every day for
1:10:41my trading, my trade live and
1:10:44you know, just teach my edge and you
1:10:46know, come on by. I do the Bookmap
1:10:47webinar. That's a free one on Thursdays,
1:10:499:00 a.m. Central if you want to kind of
1:10:50see what I'm doing.
1:10:52But yeah, come on by and learn the best
1:10:54edge in futures trading in my opinion.
1:10:56>> Yep. We'll throw your socials down below
1:10:58if you traders you want to follow
1:10:59Scott's journey. But traders, thank you
1:11:01for listening to excellent episode here.
1:11:04Chat with Traders. We'll see you guys
1:11:05next time.
1:11:06>> Thanks for having me, Curtis.
1:11:07>> You've reached the end of this episode
1:11:09of Chat with Traders. But rest assured,
1:11:11there are more episodes loaded with
1:11:13[music] real market insight and zero
1:11:16hype on the way soon. So to stay updated
1:11:19[music and singing] with each great new
1:11:20release, subscribe to the podcast and
1:11:22we'd love it if you leave a rating and
1:11:24review. We'll catch you next [music]
1:11:25time on Chat with Traders.

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