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The Woman Who Beat 99.6% Of Hedge Funds: OrderFlow Is Noise! THIS Is 90% Of The Game! — Transcript

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0:00This trader has been day trading the S&P
0:02since the day it was born. Ran a $300
0:05million fund whose 5-year returns beat
0:0899.7% of hedge funds on the planet. And
0:11over a dozen legends on the show told me
0:13the same thing. Linda is one of the most
0:16iconic traders of this generation. The
0:18biggest players are very, very good at
0:20disguising their movement and they're
0:22not going in and out like an elephant.
0:24You're not going to be able to see what
0:25the hell they're doing. They might be
0:27going through multiple accounts,
0:28multiple firms. So, you're going to tell
0:30me that as a little pee on human, we're
0:33sitting here in our chair trying to make
0:34stuff out of order flow when you've got
0:37so much noise in the markets that is
0:40generated by little algorithms pinging
0:42left and right. It's a very misguided
0:44type of game to play. Introducing Linda
0:47Rashki, a market wizard, best-selling
0:49author, and former floor market maker.
0:52And she's the inventor of several
0:53technical setups like the total soup and
0:56holy grail strategies. And unlike the
0:58other 9 figureure traders I've sat down
1:00with who hold trades for months or
1:02years, Linda is in and out within hours
1:04or days just like you and me. Anytime
1:06you have a volume spike, okay, just an
1:10intraday volume spike. Go down on a one
1:13minute chart. See exactly where that
1:16volume came in. 80% of the time it's
1:19going to be on a previous intraday swing
1:21high or swing low. So what does that
1:24tell you? the algos are at work because
1:26there are a lot of algos out there that
1:28trigger off of a channel high or a
1:31channel low getting penetrated and then
1:33what they can do I know cuz I've done
1:35this all right I'll tell you all my
1:38secrets the algo can initiate
1:42if you are a discretionary trader and
1:45you are losing money you must cut
1:48[music] back your size because something
1:50is wrong either you're not getting
1:52enough sleep at night or there's has
1:54been a regime change and you haven't
1:56recognized that you're making too many
1:59unforced errors and getting sloppy.
2:01Something is wrong. So, you need to cut
2:04back your size until you can regroup and
2:06figure out why that draw down occurred.
2:09Everybody's going to have six losers in
2:11a row. That's a given. Even with a 90%
2:13win rate, you will have six losers in a
2:15row. So, you have to allow for that in
2:17your sizing just to begin with. Now,
2:19when you are trading a system, the last
2:22thing you want to do is cut back your
2:24size when you're going into a draw down
2:26because that's when it's ready to spring
2:29and have a big win again. So, they're
2:31two opposite schools of approach there.
2:34Both have very good groundings in their
2:36math. In this episode, Linda reveals the
2:38exact test you can run on your own chart
2:40today that shows you exactly where the
2:42algorithms are firing, why she thinks
2:44most traders are lied to about the
2:46realities of trading order flow, and why
2:48the most profitable traders in history
2:51hold their trades for less than a day.
2:53These algorithms are helping us in the
2:55sense of they provide liquidity. But
2:56unless I can understand them, their
2:58behaviors, their tendencies, the
2:59footprints they leave, does it leave any
3:01useful information for me? I'm trying to
3:02basically understand what is it in price
3:04action that I can latch on to say this
3:05is a signal. this is useful, this is
3:07predictive, these are the things I
3:08should be looking out for.
3:10>> So there's several ways that we can
3:12overcome this problem. Okay. The first
3:16way is
3:20I want to start off with some beliefs
3:21that you have that are I want to say
3:23contrarian. I'm aligned with you which I
3:25which which is why I'm really excited.
3:27But um first of all this idea that when
3:29I speak to these big money managers and
3:30these professionals and these veterans
3:33their approach seems to be very I want
3:35to say primitive technicals very as
3:37simple as just a breakout and the edge
3:39seems to be in trend following on
3:41longtime horizons and maybe by extension
3:43of sentiment positioning and macro
3:46whereas yourself you also were a money
3:48manager you're you're in the same crowd
3:49I want to say in fact better than most
3:52uh yet you are a proponent of shorter
3:54time horizons uh proverbly saying that
3:56the crystal ball gets foggy if if you
3:58try to look too far into the future. So
4:00then it sounds like the average retail
4:02trader we are on the lower time frames.
4:03We are intraday day trading and scalping
4:06and XY Z. First of all, bird's eye view,
4:09why does that disparity seem to exist in
4:10the industry where the average retail
4:12trader is on shorter time horizons yet
4:14the average pro seems to be on longer
4:16time horizons. And why have you decided
4:17to be on this side of the fence?
4:20>> Maybe it's the people you're
4:21interviewing. I don't know. Um but you
4:23know there are uh some of the biggest
4:26and best funds in the world with the
4:29best performance ever. Renaissance
4:31Medallion Fund they have a under 24hour
4:34holding time. You know I mean um Monroe
4:38Trout under 24-hour holding time. You
4:41know Toby CrarAel was very shortterm.
4:43All these players are very very short
4:44term. A lot of them keep a low profile
4:47and it doesn't necessarily behoove your
4:50audience to try to understand what they
4:53do because it's it's they're working
4:5520,000 different strategies across every
4:58market in the world on very short
5:00duration time frame. And so it's really
5:02a game of infrastructure buildout. Your
5:06data engineers you have it's just a
5:08whole different style. Um, a lot of the
5:12trend followers were trend followers in
5:14the late 70s, you know, and early 80s.
5:17That's when they really made their big
5:18money and when Richard Dennis came on
5:20board and stuff like that. Now, trend
5:23followers have had some very miserable
5:26years. I think they've been having
5:28excellent years the last couple years. I
5:31follow a couple of them. A couple of
5:32them are good friends. It's not
5:35necessarily a style that was going to
5:37work for an individual unless they have
5:40an obscene amount of capital because you
5:43need to be able to cover n number of
5:46markets at the same time allocating
5:49enough capital because if you're doing
5:5120 markets, three of them might make
5:54your year. You see, so it takes a lot of
5:56discipline, a strong belief.
5:59Almost every trend follower out there
6:02and the systems themselves have had 40%
6:05drawdowns at one period. And I don't
6:08think your average individual would want
6:11to sit through that. So
6:15getting into the I want today's
6:17conversation to uncover truths in the
6:18markets. Naturally, we can get into
6:20trade models and techniques, but also
6:22understanding the why of why do things
6:24work. I want to understand why does
6:27first of all, does past price help us
6:29predict future price? I think that's one
6:30truth I'd like to uncover.
6:33Well, it depends on how far out you want
6:35to predict. There is a positive
6:37expectation. If I am just predicting one
6:40or two bars, I can get a positive
6:43expectation. All right. So with that
6:45sense uh yes you know is it the first
6:49bar low to high after three bars high to
6:52low? I don't care if you're looking at
6:53five minute charts or daily charts there
6:55is a slight edge in looking for a bit of
6:58follow through. Okay but it you know
7:02predicting is an evil word.
7:05>> What is a better word? Um,
7:09predicting implies to me looking out for
7:13a either certain target, okay, or a
7:16certain duration. And the longer that
7:19you are in the market, there's more
7:21variables that can get introduced into
7:24this system. It's not a closed system.
7:27So you don't know if there's going to be
7:28a tsunami or a nuclear blast or you know
7:31a new invention or a new you know drug
7:34discovery or you know all these
7:36different things. It's a hard time
7:39horizon to uh have a good confidence
7:43factor in
7:45>> simply to say that the degree of
7:47certainty decays upon greater time
7:49horizons because
7:50>> so eloquent you say it so much better.
7:53>> Just to summarize it [laughter]
7:54I'm a proponent of this.
7:56>> Okay. Uh but I also want to understand
7:57why uh is it the way I've rationalized
8:00it and I may be wrong is when a large
8:03player gets in they create some sort of
8:05market impact which creates certain
8:07waves in the markets that I can
8:08temporarily ride. I saw if these waves
8:10that might last a day might last a
8:12couple of days and if I'm to then
8:14predict if that's going to create a
8:17whole trend for the next 6 months I
8:19don't know feels like a flip of a coin.
8:21Uh so therefore I feel like the
8:22advantage for a retail trader is on the
8:24shorter time horizons if I can correctly
8:26read where the greater players are uh
8:28placing orders in the markets. Would
8:29that be an appropriate way to view
8:31things?
8:32>> No, I don't want I think it's very
8:34difficult to know who is doing what and
8:37play this guessing game. You can't do
8:39that. Um Perry Kaufman's thesis is that
8:42there are so many different players in
8:45the markets now on different time
8:46horizons and sizes and billiondoll funds
8:50and you know the financial pools owned
8:53you know in private wealth funds and and
8:57you know and then the short-term
8:58algorithmic trading and the retail and
9:00the commercials. It's like I don't want
9:03to play a guessing game of who's doing
9:05what. And that's exactly what I'm doing
9:06because the guys that are the biggest
9:08players are very very good at dis
9:10disguising their um movement and they're
9:13not going in and out like an elephant.
9:16You know, they're always tweaking and
9:18adjusting and doing all these little
9:19things.
9:20>> What do you mean disguising their
9:21position?
9:22>> You're not going to be able to see what
9:24the hell they're doing. They might be
9:25going through multiple accounts,
9:26multiple firms, multiple uh, you know,
9:30all sorts of ways. If you think you can
9:33read that, you're crazy. You know,
9:35certainly we can read a volume spike and
9:38so forth, but um, let me just give you
9:40an example. If you have Fidelity an a
9:44mutual fund, right, and they have a very
9:47large position in a particular stock,
9:49and this is just a really boring mutual
9:51fund, okay? It can take them two weeks
9:55just to get that position reduced
9:58>> by 50%.
10:00They don't have the flexibility to go in
10:03and out like a retail trader might. You
10:08see? So yeah, they're dinosaurs and and
10:12with regards to that, you as an
10:13individual should perceive that as an
10:15edge to your favor in that you can take
10:18advantage of liquidity where they
10:20cannot.
10:22>> By liquidity, you mean the ability to be
10:24nimble and enter and exit very quickly.
10:27>> Hey, if I want to bang out a 20 lot at
10:29the market, I'm not going to get
10:30slippage. [laughter]
10:32>> Certainly can't do that in some markets.
10:34If I wanted to bang out 10,000, it ain't
10:36going to happen these days.
10:38It makes sense. You're you're you're
10:41mentioning here that the institution
10:42will break up their order and try to
10:44disguise it. And I I've come to learn
10:45about dark pools where another guest
10:47said that whatever makes it to the order
10:48flow is exhaust fumes. Majority
10:50inequities off off the books. It seems
10:53like every year in the retail space, in
10:55the online retail space, everybody's
10:56hunting for the new holy grail. And
10:58therefore that creates fads and
11:01buzzwords and also scapegoats and say
11:03he's the villain and this is what works.
11:04And it seems to be this year it's all
11:06about order flow where uh all the old
11:08strategies they're obsolete and
11:09everybody should learn about orderflow
11:11because that's where the real edge is.
11:12And then I watched a video of yours
11:14where you got into this idea of you want
11:16to as a trader eliminate redundancies.
11:18And that was interesting for me because
11:20I think a lot of retail traders they
11:22feel like adding to the plate adds
11:24certainty add confidence because I'm not
11:26just trading EMA. It's EMA plus trend
11:28plus pattern plus Ichimoku plus D. So
11:31then you feel comfortable and reassured
11:33that you've got 10 modes, not just one.
11:35Why is your pursuit in eliminating
11:37things as opposed to adding?
11:40>> Well, there's several things. I'll tell
11:42you a funny little story. I used to be
11:43friends with Richard Arms. Uh he was the
11:46one that invented the tren. Okay, he's
11:48passed sadly. Uh Dick is what we called
11:50him. And Dick uh used to say, "If you
11:54have two watches, you'll never know what
11:56time it is. If you have one watch,
11:59you'll always know what time it is.
12:01because they're never going to agree.
12:03And so what happens is if you can reduce
12:05stuff down just to essential indicators
12:08that help provide you that pattern
12:10recognition support,
12:13uh, you know, you might be able to have
12:16a little bit of glimmer, you know,
12:18beyond looking at too many squiggly
12:20lines. And if you think about it, moving
12:24averages, oscillators, a lot of these
12:28quote technical indicators,
12:30they're based off the first and second
12:33derivative of price. Okay? Price is
12:35always going to be one step ahead. And
12:38no matter how you slice or dice it. So
12:41maybe an oscillator will smooth out some
12:44of the noise in a bar chart, it'll never
12:46test out in a system. You cannot create
12:49a system with a positive edge that's
12:52going to have a first or second
12:54derivative of price. So, you know, it's
12:57fun to play around with for sure, but if
13:01you're trying to come up with an a model
13:03that has a statistically significant
13:05edge, you'll do much better using ATR
13:09functions or, you know, uh percentage
13:12functions, things along those lines. For
13:14the last 2 years, a proud sponsor of the
13:16show is a topranked leading prop firm,
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13:51industry with a leading trusted prop
13:53firm. And with that being said, let's
13:54get back to the episode. I completely
13:56understand that these indicators, they
13:58are lagging. So how can they help you
13:59predict something because they're
14:00already behind price or a derivative of
14:02price? The the argument that I would
14:05imagine an orderflow trader would say is
14:07orderflow is not something that is um
14:10lagging in the same way. In fact, it
14:11could be leading or predictive because
14:13it's giving me context to price to say
14:15price has come into a demand area. It's
14:17coming to a discount into a low. We
14:18could expect buyers to come in. But how
14:20do we know if they're here? I can read
14:21it on the tape and see yes, there's a
14:23aggressive buyers stepping in. This
14:25should naturally be a sense of cause and
14:26effect. Aggressive buyers step in into a
14:28right area. Price should go up. Doesn't
14:30feel lagging or doesn't feel like a
14:32derivative. Am I mistaken?
14:33>> Wouldn't you just see the same thing on
14:35a bar chart? I mean, [laughter]
14:37seriously, if buyers are coming in, you
14:39should start to see the price lift,
14:40right?
14:42>> Sure. They're mirror.
14:43>> I'm simplifying it for you. I'm
14:45simplifying it for you because I don't
14:46really think that we're able to process
14:49this stuff on a cognitive level and then
14:52make a decision all the while, you know,
14:55with our other where are we going to
14:57risk to manage these trades and so
14:59forth. It's um I don't know. I just
15:02think that there's better ways that we
15:04could uh process information perhaps
15:07look at a higher time frame. You know,
15:10areas on the chart where uh would be
15:13logical swing highs and swing lows,
15:16things along those lines. And the other
15:17problem with order flow is it's so
15:19dependent on time of day functions. So,
15:21you're always going to have a surge in
15:23volume off the opening. You'll have a
15:26surge in volume off Asia opening, a
15:28surge in volume off Europe opening.
15:31You'll have a complete dry up in volume
15:33if they're waiting for an economic news
15:35report or a release. You are going to
15:38have a surge of volume going into the
15:40close. So, how are you going to
15:42normalize all these time of day
15:44functions for your order flow is
15:47basically a fancy way of looking at
15:49volume or splitting it up, right? And
15:52>> would you say that certain times of day
15:54or time functions as you're saying
15:55because it it's
15:57volatile throughout the day. Is there
16:00better skews of saying these times of
16:02day have better expectancy and these
16:04types where there's drying up liquidity
16:06is less worthwhile to be trading? Have
16:07you found any correlation between time
16:09of day of execution and outcome?
16:12>> Sure. Absolutely. If you're going to do
16:14any type of breakout pattern, you know,
16:16or the range expansion stuff, you want
16:18to be doing that off of a session
16:20opening. That's going to be your ideal.
16:22Now, it doesn't mean that you can't see
16:25things at other times of day. And
16:27there's little subtleties such as days
16:29of the week have their own little
16:31nuances. Oh, yeah.
16:33>> What have you noticed on a let's say a
16:35daily oh days of the week cycle in terms
16:37of liquidity?
16:37>> Oh, just for example, Monday tends to be
16:39much lighter volume than Tuesday and
16:41Wednesday, that type of stuff. You know,
16:44um there's seasonality to volume. uh
16:46certain months have much heavier volume.
16:49You know, around the uh beginning and
16:51end of a quarter, you'll get increases
16:53in volume for obvious reasons. So, and
16:56it all depends on the market, too. You
16:58know, if you're trading the grains, you
17:00know, you've got rollover, you've got
17:02crop reports, you have seasonality with
17:04a harvest. So, they all have their own
17:06little subtle nuances.
17:08>> I guess volume alone maybe isn't so
17:10useful because it could cancel out in
17:12the sense of I think of it like a
17:13tugof-war. You have two teams pulling on
17:15a rope. If there's five people on both
17:17sides or 20 people on both sides, yes,
17:18there was more volume, but they also do
17:20cancel each other out. I guess we are
17:22looking for lopsided where there's way
17:23more buyers than sellers. Is there
17:25anything in the days of the week or
17:27seasonality or even time of day that
17:29would help me perceive strength as
17:30opposed to just a rising tide of volume?
17:34>> Well, it would show up in the uh
17:37persistency of the trend in the bar
17:39chart. Even if it's a five-minute chart
17:42and you start seeing three consecutive
17:44bars to the upside. Well, hello. You
17:48don't need to tell me that there's an
17:49imbalance there. You know uh another
17:52thing that you might your your your
17:54listeners might find interesting
17:56experiment just to make a point on a
17:59different level is anytime you have a
18:03volume spike. Okay, just an intraday
18:06volume spike. Sometimes gold will do
18:08this or crude oil or even uh you know
18:12the bonds are a currency in particular
18:14the index futures and copper. Go down on
18:17a five minute chart and then go down on
18:20a one minute chart. See exactly where
18:23that volume came in. 80% of the time
18:27it's going to be on a previous little
18:29intraday swing high or swing low. Okay.
18:33So what does that tell you? That's tells
18:35you that the algos are at work because
18:38there are a lot of algos out there that
18:40trigger off of a channel high or a
18:43channel low getting penetrated. Okay? So
18:46you'll see these surges in this volume
18:50coming in just from an algorithm
18:52execution. Boom. Right at that, you
18:54know, swing high. It's so blatant and
18:56obvious. And then what they can do, I
18:59know because I've done this. All right?
19:01[laughter] I'll tell you all my secrets,
19:03you know, but I'm not a billionaire from
19:04this stuff. But the algo can initiate
19:09and the price can go tick tick tick tick
19:12tick tick, right? Like you do off
19:14reports. Very dangerous time to be
19:17getting reactive. But let's assume it's
19:20not that. It's just a structural point.
19:22And then if it starts going tick tick
19:25tick, if it's gone tick tick tick down
19:28by a certain function, boom, the al goes
19:30flat. Okay? Because it doesn't want to
19:33get caught in a noise spike.
19:36It can do this faster than you can blink
19:38an eye. So, you're going to tell me that
19:40as a little pee on human, we're sitting
19:42here in our trail, you know, chair
19:44trying to make stuff out of order flow
19:47when you've got so much noise in the
19:50markets that is generated by little
19:52algorithms pinging left and right for
19:55strategies that last anywhere from 5
19:58seconds to 5 hours. I think it's a very
20:00misguided type of game to play.
20:03>> I guess I should begin with, we spoke
20:05about it off camera, but we are up
20:07against the brightest minds that are
20:08better capitalized, that have better
20:10infrastructure and now it's nancond
20:12execution and you even mentioned to me
20:14how an alpha can decay in a day. So when
20:17you have this shape-shifting beast that
20:18is the market and your counterparts is
20:20people that are way better than you. I
20:22guess we should begin with saying can a
20:23retail trader even survive in this
20:25market because you also tell you also
20:26say that the market is not zero sum it's
20:28negative sum considering the costs so in
20:30such an environment should we even be
20:32considering to participate
20:35be grateful for these other algorithms
20:38out there because that provides
20:40liquidity okay if we didn't have all
20:43that going on and you don't even have
20:44the pits anymore now nowadays be
20:47grateful because it provides volume and
20:50this is what we need. Um, and it it does
20:54create another style of trading called
20:57opportunistic
20:59trading. Hear that? That's for a
21:01tornado. [laughter]
21:03>> Oh, wow. Okay.
21:03>> Yeah. Okay. All kinds of bells and
21:05whistles in this town. No, opportunistic
21:08trading is waiting until one side is
21:10pulled offside, if you will. Now you're
21:13sitting in capital cash and then that
21:15gives you the chance to go in and take
21:17advantage of it. So, it's just a
21:19different type of game. So it's and and
21:22it's not like you're trading against the
21:26brightest minds. The brightest minds
21:29have programmed their exocomputers and
21:32protocomputers and all the algorithms to
21:35run 20,000 strategies in the background
21:37and you do this all day long. You're
21:39going to have a positive expectation
21:40each day. So really the geniuses in my
21:45opinion aren't necessarily sitting
21:48behind the screens getting burned out
21:50day after day.
21:52>> I guess I guess a [clears throat]
21:53necessity would be these algorithms are
21:56helping us in the sense of they provide
21:57liquidity but unless I can understand
22:00them their behaviors their tendencies
22:01the footprints they leave uh does it
22:03leave any useful information for me? I'm
22:05trying to basically understand what is
22:06it in price action that I can latch on
22:08to say this is a signal, this is useful,
22:11this is predictive, these are the things
22:12I should be looking out for.
22:14>> 99% of the time, and this is just my
22:17opinion. If you guys can show me
22:19million-doll statements year after year
22:21after year, more power to you. I'm only
22:23speaking from my frame of of view. Okay?
22:27So, and there might be tools that I
22:29don't necessarily agree with that
22:30somebody's using. Wonderful. You know,
22:33that's fine. There's not the best thing
22:35about this business is there's not a
22:37right or a wrong way. There's not a
22:40correct way, okay? There's just whatever
22:44works for you that you've got a
22:45profitable bottom line at the end of the
22:47year. Okay? That's all it comes down to
22:50really. Risk management, if you think
22:52about it, if you eliminated your biggest
22:55loser year after year, I bet you'd be
22:58three times more profitable. You see, so
23:01we can get so caught up in the little
23:03minutia and it's very difficult these
23:08days to detect signal from noise. Okay,
23:11this is not a new theme. Um, so there's
23:15several ways that we can overcome this
23:18problem. Okay, the first way is
23:23if you are on too tight of a time frame,
23:26you're going to mostly be up in the
23:28noise.
23:29Okay. So, you know, look at a one minute
23:32stock chart. Tell me you can make sense
23:35of that. You know, uh, you know, well,
23:37of course, we can find two or three data
23:39points during the day where there's a
23:41little continuation pattern. No doubt
23:44about that, but you have to be careful
23:47about getting down into the weeds a
23:49little bit too much. And so for me, that
23:52feeling of trying to dissect the order
23:54flow and who's doing what and this and
23:57that.
23:59The idea of this game is get the main
24:02idea right. Get the main idea right. Is
24:06it a low to high day? Are we going
24:08higher or is it a high to low day? Once
24:11you can get that main idea right, that's
24:1390% of the game.
24:15>> Let me ask you a question. In all the
24:16years that prop firms have existed,
24:18well, how many times has a firm given
24:20traders the opportunity to trade without
24:22any rules? Well, let me present to you a
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24:39talking no consistency rules. I'm
24:41talking no daily loss rule, no risk
24:44limits per trade, and no restrictions on
24:46the type of strategy you are trading. No
24:47prop firm has ever done this. I've never
24:49personally seen a model anything close
24:51to this. And you pick how you get there.
24:53Two-step [music] fly, two evaluation
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25:34So, if that is interesting to you, click
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25:37toot to claim your account today. It
25:40seems to me you're inferring here that
25:42most traders are hyperfocused on entry
25:46types, how to get in, whereas you're
25:48more focusing on probability of
25:50direction for the day. That's where you
25:52would begin.
25:53>> I would I start there for sure, but you
25:55want to be mindful on your what they
25:58call initial trade location. you know,
26:01your initial trade location is then
26:03gonna adjust your risk. Um, and I'm like
26:07everybody else. I love to play with
26:09little, you know, tricks and can I put
26:11out a uh can I quantify something where
26:15I have an agent that can work a
26:16particular pattern for me? Why not? It's
26:19we can do that nowadays. We couldn't do
26:21that three years ago. Okay? And it's
26:23still in its rough stages and it might
26:25depend on the quality of your data, but
26:27it's just a game. So part of that game
26:30is of course your initial trade
26:32location. However, your game's going to
26:35be worthless if you don't have money
26:37management algorithms, you know, and
26:39that's really where,
26:42in my opinion, the real money is made.
26:45And the real money is made in
26:47understanding the outliers and
26:50understanding the aberrations. Okay?
26:53because this is the unique information
26:56instead of just our everyday job blow
26:58hourly charts and stuff like that. The
27:00aberrations could be huge gaps, huge
27:04huge in insane volume, huge bars, you
27:08know, uh a change in relationships
27:11beyond a historical norm. for example,
27:14when the bond yields, the 30-year yields
27:17dropped below 5% and they hadn't ever
27:20been there for like years or, you know,
27:23the changes in the yield curve there.
27:25These types of changes in historical
27:28relationships,
27:30you know, are aberrations. They're hard
27:32to model because the frequency of
27:35occurrence is so much lower. But that's
27:38where the gold is buried. And this is
27:40what every trader wants to wait for. And
27:44so in the meantime, we do these little
27:46scalping games or, you know, two to
27:48three day swing trades or whatever you
27:49want to do. Play the game. Don't lose
27:52money. And then when you get that
27:53opening, what's really important is that
27:56you manage it by trailing a stop,
28:00staying with the trade, even doing some
28:03campaign trading where you're adding to
28:05it or trading in the direction of that
28:08initial position. This takes a long time
28:12to understand, you see. And uh I had a
28:16friend who taught me a really good
28:19phrase. Fortunately, he unfortunately he
28:21passed uh many years ago. But the name
28:25of the game for him was about dollars
28:28per time unit. Okay? Meaning um and he
28:34traded a volatility breakout type of
28:36system.
28:38So we want to get into the market where
28:40we can make the most dollars in the
28:43least amount of time. You see, it's I'm
28:46not I'm not a genius. if I get in and
28:49I'm holding holding and then all of a
28:51sudden there's a big bull move and it
28:53carries me along with it you know but
28:55there are certain uh data points
28:58structural points and we can quantify
29:01them where we can get in and trail a
29:05stop. Now most trade management you
29:08really can trail a stop no more than 15%
29:12of the time on pure technical trading.
29:15In other words, let's say that you have
29:18three exit strategies that you can
29:20choose from. One, play for a small
29:23target. Small target might be half of an
29:26ATR. You know, average true range on the
29:29time frame that you're trading, even if
29:31it's a daily chart. Play for a large
29:34target, maybe three ATRs or even a
29:37certain standard deviation function. Uh,
29:40three trail a stop. Okay. And this is
29:44and and then we can do things like time
29:46stops as well. Hold for a duration of n
29:49number of bars or days. And now
29:52effectively what you're doing is you're
29:55building out an actuarial table. Do you
29:58understand that concept? An actuarial
30:00table is what insurance companies do to
30:03look at your life expectancy and it's
30:06all fuzzy variables and probabilities
30:08and and so forth. So you're you're
30:11essentially building out an actuarial
30:13table with this type of thinking. But
30:15what I wanted to say is maybe 15% of the
30:19time your optimal exit strategy will be
30:23a trailing stop.
30:26Interesting.
30:27If well you define ATR as this is normal
30:30behavior and the average trade is not
30:32going to be abnormal outcomes or we
30:34can't index or uh factor for abnormal
30:36outcomes. It seems to be waiting for the
30:39breakout and an abnormal trend in your
30:41direction and per you got the great
30:42entry and you don't know when it's going
30:43to run to. Uh therefore I'm going to
30:45trail the stop that's going to be on
30:46fewer occurrences. Would we not I was
30:48assuming you were going to tell me that
30:50uh majority of the time you want to take
30:51it at ATR or a standard deviation
30:53because that's more common.
30:55>> Okay. So average true range meaning if I
30:58have five minute bars and they're all
31:00like on average, you know, that would be
31:01one average true range. you know, if
31:03your daily S&P uh range is 50 handles,
31:07okay? And you can get an average of for
31:10the last 10 days, your average true
31:12range. And that's how we're going to
31:14measure our unit. Now, it doesn't have
31:16to be a breakout. Some of the most
31:18lucrative spots to trail a stop, which
31:21are fairly easy to quantify, could be
31:24springs and traps, right? You know, the
31:27false breakout to the downside. You've
31:30done the Vspike. we've flushed all the
31:34longs out and it creates a vacuum on the
31:37other side. Okay, that's a very common
31:40uh pattern by which we can trail a stop.
31:43So, it really depends on just the
31:46overall structural uh Yeah, when when
31:50you said trail, I assumed there was some
31:51sort of moving average and you're just
31:52creeping it up. But here, it sounds like
31:54it's steps. The next time you see a
31:56flush and a vacuum, you just jump into
31:58that level and then the next one. Is
32:00that how you're doing this?
32:01>> So, trailing stops, there's a zillion
32:04ways to trail a stop, and it's not like
32:06there's one optimal way. For example, a
32:09parabolic is a trailing stop. You could
32:12have a moving average that's the lowest
32:15low of the last 10 days. Make an a
32:17moving average of those lows and that
32:19could function as a trail stop. Um the
32:22lower end of a Kelner channel or a
32:24bowlinger band if you want. It could be
32:26a trail stop. Uh I think the one of the
32:29more popular and effective and
32:31consistent ones is the one that Wells
32:34Wilder put out uh in the public domain
32:3740 years ago with his book that's is
32:40volatility stop and reverse. So we can
32:43take two and a half average true ranges
32:46and add it to the lowest low or whatever
32:50metric you want to use. There's, you
32:52know, a zillion ways to skin a cat with
32:54this stuff. that would be a viable way
32:57to trail a stop. So, I mean, you know,
33:00we spent probably two years modeling
33:04every trail stop we could ever think of.
33:06And I know what you're talking about,
33:07the chandelier stop where it ratches it
33:09up. And guess what? One quarter, this
33:12method would be optimal. Another
33:14quarter, this would be optimal. And I
33:16had a guy, he worked for me for 10
33:18years, and all he did was modeling and
33:20statistic, all of our our research and
33:22statistical stuff. And he turns to me
33:24one day and he goes, "You know, Linda,
33:27on the best trades, it doesn't matter
33:29what technique you're using. They're all
33:31going to keep you in." I'm like, "Okay,
33:33point made." Yes, point made.
33:36>> I have a lot of traders that tell me the
33:37opposite, which is no one went broke
33:39taking a profit. When it goes in your
33:41direction, uh, take a profit. Even here,
33:43you're saying dollars per time, which
33:45means the initial momentum, as I
33:46understood it. So, when it starts to
33:48slow down or flatten, yes, it could
33:49continue, but momentum is slow down.
33:51Therefore, your your dollars per time is
33:53slowing down. There's many reasons that
33:55people just trim it or partial along the
33:57way. Why have you found that trailing it
33:59and see what happens is a better
34:01approach top down than um trimming along
34:04the way or having hard outs?
34:06>> Now, now mind you, I said only 15% of
34:09the time is it optimal to trail.
34:11>> Oh, okay.
34:12>> Okay. Everybody would like to trail a
34:14stop and think they're going to capture
34:16stuff all the time. No, the majority of
34:18the time, especially with intraday or
34:21discretionary trading, the majority of
34:24the time, play for a small target or a
34:27big target if the move is just starting
34:30or perhaps scale out. Um, you know,
34:33Perry Kaufman put out a wonderful uh
34:37math behind the the way to scale, which
34:41is let's say I had five pieces. This is
34:44Perry's work. I I I cite him as my, you
34:47know, hero. Um, so when you're scaling
34:50and let's say I'm scaling out in five
34:52pieces, you would want to scale the
34:54first three pieces fairly close
34:56together. Boom, boom, boom. Because the
35:00odds of duration now drop off. You can
35:03here's the fourth piece and then boom,
35:05here's the fifth piece. What what a lot
35:06of people call runners, you know. So uh
35:10what I also think about and I don't know
35:11if this would be your line of thinking
35:13also is if somebody is on the intraday
35:15and they are looking at the 15minut time
35:17frame or 5 minute time frame naturally
35:19you will have a tighter stop and the
35:22idea of like oh just turn a intraday
35:24trade into a long-term hold and get a 1
35:25to 50 riskreward. I know that's
35:27unrealistic but I also do wonder the
35:29riskreward of holding a position because
35:32out of all the traders I've spoke to I
35:34think the minority would be in some sort
35:35of trailing fashion. majority would be
35:38put it at break even and then have your
35:39targets or even a lot of people don't
35:41use a stop or a break even which I find
35:43fascinating but what I think about is
35:45let's say it's going from 1 one to 1 to2
35:47to 1:3 if I allow a 1 to4 to go back to
35:50break even I'm giving up unrealized 4R
35:53to maybe gain another r which is
35:55negative riskreward so then I also start
35:57to think is there an inflection point of
35:59continuing to hold the trade becomes
36:00inefficient even though sometimes it
36:02does and therefore as a function of
36:04riskreward we should exit not targets or
36:06trail.
36:09>> Oh, I don't know. I'm blonde. That's too
36:11confusing for all me. Seriously, I can't
36:13do all that RR and all that kind of
36:15stuff. No, you know what? In general, I
36:17I I'll be flat out truthful.
36:20>> I'm usually all in, all out. Okay. It's
36:23really rare that I scale. Okay. Um I do
36:26put positions on. When I'm putting
36:29positions on, I'm just holding till I'm
36:32all out. Okay. Because
36:34>> in my mind, even though I'm not doing
36:37the pure math on this stuff,
36:39>> if there was a reason to take off part
36:41of it, then there would be a reason to
36:43take off the whole thing. In other
36:44words, the technicals have done so. Uh,
36:48and and what you'll see is people who
36:50scale out, they scale out on the
36:53winners, but when they're getting hit
36:55with a stop or a loss, you're getting
36:57clipped on the whole thing. That does
37:00not make sense to me, you know? So I'm
37:02usually all in, all out. That's my
37:04trade. It's like on to the next shuffle.
37:07>> So I understood from a lot of my
37:08research that you were an intraday
37:10technical trader. But the way you
37:11phrased it now was that's cute. That's
37:13fun. I do that here and there, but I'm
37:15waiting for these dislocations, these
37:17big opportunities, and that makes my P&L
37:19for the year, which then for me was
37:21like, okay, that's great. That that
37:22those are the big opportunities, but
37:23they're infrequent. So I guess you can't
37:25make a living out of expecting those
37:27things. um in an average year,
37:30especially on your fund because you had
37:31larger size, would your profit of the
37:33year be skewed heavily towards those
37:35outlier opportunities or was it kind of
37:37a 50/50 balance to to have a reason to
37:40preserve this one?
37:42>> It was really interesting because, you
37:44know, we had the the stats on each
37:47market, which was our best market for
37:49the year, and I kind of divvied things
37:51up into three profit centers. So, profit
37:54center one was my S&P day trading. I
37:56mean, that was my baby. I know I can
37:58always go in and make a living S&P day
38:00trading. I started trading the S&Ps the
38:02very first day they were listed.
38:05>> Wow.
38:06>> I called down to the floor and that was
38:08from the Pacific Coast Stock Exchange.
38:10Placed an order. I think uh what was the
38:13price? I don't know, maybe it was it
38:15like 285 or something like that. I don't
38:18even remember. And you know, they traded
38:20in uh a larger unit size then. I mean,
38:23even though it was the big S&P, but I
38:26think they were in in dimes
38:28or nickels. They were in nickels back
38:30then. And uh I think I took 80 cents
38:33which was a huge trade you know but
38:37it it was a very easy trade for me to
38:40make because I was so ingrained with the
38:44time of day from being a floor trader in
38:47the equity options which is an arbitrage
38:50business per se but you could see the
38:52crowd behavior the way that they would
38:54come in and pay up way too much off the
38:57opening. So you still see that today
38:59with stocks, that opening bulge where
39:02everybody wants to chase and all of a
39:04sudden the move's over after the first
39:0625 minutes, right? And then in the old
39:09days it would be um
39:13just before 12 noon, that's when the
39:16specialists, you know, would go to lunch
39:18or all the floor traders would go to
39:20lunch. You get your counter trend
39:22reaction because the specialists had to
39:23get their inventory back from selling in
39:25the morning. You see? So there were
39:27these tendencies that were based on
39:29behuman behavior which would continue to
39:31repeat themselves. And if it was a long
39:34day, well, all the boys up in Boston,
39:36the Fidelity crew who were out there
39:38eating clam chowder, they'd come back
39:40and it would be like 2:00 and okay,
39:42let's get the party going again. All
39:44right. So now we've got a few more
39:46different types of days. But was very
39:49ingrained into me these time of day
39:52functionalities. And we had um because
39:56the stocks were denominated in eighs,
40:01you could use the ticks because if half
40:04the stocks were on an uptick, you know,
40:07from perhaps a buy program and then just
40:12onethird of them dropped back down to a
40:15down tick. That would be good for about
40:17three points in the index, which was
40:19huge back then. Okay, there's this
40:21phenomena of being able to use the
40:23ticks, the eb and flow like a tide. Now,
40:26you can't do that anymore because
40:28everything's in fractions. Damn it. You
40:29know, you you you find the key and they
40:32change the lock, right? So, um but I'm
40:36digressing. Profit center one was the
40:39shortterm scalping. For me, that was one
40:42to three trades a day. Okay? So, it's
40:45not like you're going in and out and in
40:46and out and in and out. If you look at a
40:48chart of the S&Ps, there's probably on
40:51balance two to three swings that last 60
40:55to 90 minutes in duration. You just want
40:58to capture one or two of those. That's
41:00all that I was trying to do. That's
41:02scalping. To me, it's making a day
41:04trade. And then profit center 2 was the
41:06in one day, out the next. You know, the
41:09volatility breakout stuff or more
41:12importantly for my style of trading that
41:15tailor trading technique rhythm. If we
41:17just had two days high to low, okay, the
41:22sellers have exhausted themselves. It's
41:24time for a low to high day. So that
41:26concept of what is the trend for the
41:30day?
41:31That's why I said that should be your
41:33departure point. Is there a trend for
41:36the day? Are we trading outside of that
41:39first hour's range? Trend for the day.
41:42That's your friend. So that was our
41:45profit center number two. And you always
41:47hold profitable trades for another day
41:49or two. If uh if [laughter] they're not
41:51profitable, they become day trades,
41:52right? And then profit center number
41:55three was if we had one of those daily
41:58weekly setups where perhaps the weeklies
42:03are correcting back down and then the
42:06dailies show a buy divergence at the end
42:09of that technical swing.
42:12best riskreward in the book. You can do
42:14that on any time frame. Look for the
42:17correction back on the higher time
42:19frame. Look for the little complex loss
42:21of momentum on the lower time frame.
42:24It's not going to work 100% of the time,
42:26but it's going to give you excellent
42:28riskreward.
42:30And then profit center 4 was sort of the
42:32like, damn it, I just feel like buying
42:34oats at this time of year because they
42:36always go up at this time of year. Let's
42:38put on a position in oats. know those
42:40those stories in my trading sardines
42:42book. And um so what I found is that
42:46looking back over a couple years worth
42:47of data, if I divided it up into
42:50quarterly performance,
42:53one profit center might perform best one
42:56quarter, one quarter it might be my S&P
42:59scalping, the next quarter it might be
43:01the second profit center. So it just
43:03added a real, excuse me, a really nice
43:06diversification there. and I never knew
43:09what was going to unfold, you know.
43:12>> Very interesting. I can also from a top
43:14down I can imagine if the market is
43:15trending something will work better
43:16compared to consolidating. I guess
43:18scalping would be in a tighter range.
43:20Trending would be the in day positions.
43:22I'm also curious do you have greater
43:25degree of certainty or conviction or
43:26size up on certain positions or certain
43:29styles of trading these profit centers
43:31or are they all equally allocated equal
43:33risk and you just see how which which
43:35one is it? Is it this quarter? Is it
43:37this stone or this turn stone? How how
43:38do you manage these types of systems?
43:41>> So, that's an excellent question because
43:43it is a problem when people start
43:45varying their bet size. I don't believe
43:48in that. I want an even bet size because
43:51I don't know where the winners are going
43:52to be. I don't know where the losers are
43:54going to be. And this the minute I start
43:55monkeying around with that, it's going
43:57to be Murphy's law. So I calculate out
44:00my unit size at the beginning of each
44:03quarter. I do it based on the average
44:06dollar range. Okay? So for example, I
44:09can take the average true range in corn,
44:12multiply it by the tick size and say,
44:15"Oh, corn has an average daily range of
44:19$500." All right. Now, maybe the S&Ps
44:22have an average daily range of $5,000.
44:27not necessarily these days, but you
44:29know, well, that tells me I can trade 10
44:32times as many corn contracts as one S&P.
44:36So, I try to make it all a very even bet
44:38size.
44:40So, I redo that at the end at the
44:42beginning of every quarter. And then,
44:45okay, I can do two units if I want. And
44:49each unit will be like one unit per
44:52$100,000. Okay. So, this is like when I
44:54was managing money. If we took in
44:56another couple million dollars, I can
44:58increase my unit size by another 30
45:00cars. You know, that type of uh thing.
45:03So, when I used to trade, I had somebody
45:06else doing all my execution for me. And
45:09sometimes when I used to call down to
45:10the floor, I'm the worst at executing.
45:12You do not want me pulling that trigger.
45:14I make so many mistakes. I don't know
45:16why. I buy when I should sell. I click
45:19I've bought the Swiss Frank when it was
45:21supposed to be the S&Ps, you know, it's
45:24just not me. So, um I always had an
45:27assistant who could execute for me and
45:31then I can just say buy one unit of
45:34silver, buy one unit of XYZ, sell, you
45:39know, that type of thing. And uh I'm
45:42never thinking about the numbers. I'm
45:44never thinking about the dollars. It's
45:47just like this is the spot on the game
45:49board. Put on a unit. This is the spot
45:52to take it off.
45:53>> I can see the reason why you put someone
45:55to execute in place for you just to
45:57avoid clumsiness or whatever the case
45:59may be. But I feel like you could also
46:01unpack a huge advantage which is a lot
46:03of traders feel the urge if it goes into
46:04draw down to start messing with it go
46:06chasing it or just messing around with
46:08it. But if you kind of delegated that it
46:11removes all I suppose psychological
46:13remnants of price moving in your favor
46:15against your favor. how quickly it's
46:17moving. Have you found it's also uh
46:19relieved you psychologically as well?
46:21>> Um, you know, when I first when when I
46:24first left the trading floor and now I'm
46:27upstairs, okay, upstairs as they say in
46:30the office of my FCM and then when I set
46:33up an office from my house, we didn't
46:36have electronic trading platforms.
46:38Everything was pick up the phone, make a
46:40call to the pit. I had direct lines to
46:42each of those brokers and give them the
46:44trade.
46:46So, I never started off with the little
46:49electronic things. Now, I don't even
46:52know how to type. Okay, I have to look
46:54at the keyboard to type. And thank God
46:56there's spell check. And this is ironic
46:59because I was a pianist for, you know,
47:01God knows my life. You'd think I'd be
47:02very good at this stuff. I just I don't
47:06I limit, you know, what I process. I
47:09know what I'm good at. I know my niche.
47:11I know I'm good at being in the flow and
47:14eating and breathing it. and I can just
47:15say, "Hey, let's get out." You know,
47:17that type of thing. Um,
47:19>> I I've had a lot of trader, so I'm I'm
47:21with you. I'm I've been standardized
47:22risk my whole career, which is just a
47:24decade now. And a lot of traders have
47:26questioned me said, "Hey, if you do, do
47:27you have high conviction setups? Do you
47:29have win setups that have a better win
47:31rate? Maybe they're less frequent, but
47:32you know, if you have a plus setup that
47:34has a 60 or 70% win rate, why trade that
47:36equally to another setup that maybe has
47:38a 30% win rate?" Uh, me saying high
47:40conviction plays, I should size up
47:42because I can yield more out of it. and
47:44they always question me and I'm not
47:45sure. I I just don't have the answer.
47:46>> When you say high conviction, that to me
47:49implies a bias, a cognitive bias. Is it
47:53a leaning rate model?
47:55>> I'm I'm leaning into the win rate as
47:57opposed to I know you mean that it can
47:58be a confirmation bias of sort. Uh but
48:00if I have a 30% win rate model and a 70%
48:02win rate model, why trade them both with
48:04the same position size? curious of of
48:06why you've considered standardized
48:08sizing versus dynamic or other people
48:10have told me, you know, lo in the losing
48:12period, you should size down because
48:14you're you're you're taking a toll
48:15mentally and I've always thought, well,
48:17it just means it's going to take me
48:18longer to get out the hole. So, I've
48:19always been standardized and it seems
48:20you have been also. But I'm sure along
48:22the way people have told you, hey, you
48:23should switch it up or try these things.
48:25But you've you've stayed for a minute.
48:27>> Well, first of all, nobody's ever told
48:28me anything. [laughter] I learned
48:31everything my uh self the hard way. But
48:34th this is this is the way that works.
48:36Okay. If you are a discretionary trader
48:40and you are in a draw down and you are
48:43losing money, you must cut back your
48:47size because something is wrong. Okay?
48:51Either you're not getting enough sleep
48:53at night or there's been a regime change
48:55and you haven't recognized that or
48:58you're you're making too many unforced
49:01errors in getting sloppy. something is
49:03wrong when you start to go into a
49:06prolonged draw down as a discretionary
49:08trader. Maybe you should stop trading
49:10that market. So, you need to cut back
49:13your size until you can regroup and
49:15figure out why that draw down occurred.
49:18I mean, everybody's going to have six
49:20losers in a row. That's a given. Okay?
49:22Even with a 90% win rate, you will have
49:24six losers in a row. So, you have to
49:26allow for that in your sizing just to
49:29begin with. That's with a systematic,
49:31too. Okay? Now, when you are trading a
49:34system, the last thing you want to do is
49:38cut back your size when you're going
49:40into a draw down because that's about
49:45ready when it's ready to spring and have
49:47a big win again. So, they're two
49:49opposite schools of approach there. And
49:54both have very good groundings in their
49:56in their math
49:57>> for for a discretionary trader. How can
49:59I correctly allocate? The mistake is I'm
50:02not adhering to the plan. I'm not
50:03sleeping enough. Maybe I'm having
50:04marriage issues and this is the reason
50:06for the the bad performance versus even
50:09in a winning period you have losing draw
50:10down periods and this is just factored
50:12in as part of the plan. I need to keep
50:13rolling the dice and it's going to be
50:15okay. How do I know when to allocate it
50:16towards performance and I need to size
50:18it down versus no this is the time it's
50:20about to become profitable. Stay with
50:21it.
50:22>> When it starts really bothering you like
50:24damn it, how did I lose so much money?
50:26Damn it. you know [laughter]
50:27>> how often in a in a year or whatever
50:30time frequency have you found yourself
50:31having to do this?
50:32>> Everybody's different and everybody has
50:34a different wealth profile. In other
50:37words, there's a lot of people that
50:39might keep $100,000 in their trading
50:42account, but they've got a net worth of
50:4420 million. Okay, it's not going to
50:46stress them to have a 20% draw down.
50:48Then you could have somebody that has,
50:51you know, $100,000 in their account and
50:54not a whole lot of money cash liquid,
50:56you know, and they owe mortgages and
50:58stuff like that. It's going to stress
50:59them out a lot. So,
51:02I do not like this. Oh, I made 20% on my
51:06account, these types of things because
51:08it's really not a realistic picture of,
51:11you know, and it's just really referring
51:14to the amount of leverage that a person
51:16is choosing. So, I would say my advice
51:20would be if it really starts bothering
51:22you, okay, it shouldn't. You don't want
51:26to be in a business that's so stressful.
51:29So, if it starts to be stressful,
51:32everybody feels if they take a day or
51:34two off that they're going to miss
51:37everything and lose their groove. But
51:39here's what's going to happen. When you
51:41are putting yourself under stress,
51:44you're gonna start doing the dumbest,
51:46stupidest things unconsciously
51:50because your your mind is trying to tell
51:53you, "Dude, chill out. What are you
51:56doing? You've destroyed your cortisol
51:58system. You've destroyed everything."
52:00You know, and you'll make such a dumb
52:02mistake that it you have to take some
52:04days off.
52:05>> I've always found that interesting. uh
52:07when I've spoken to certain
52:08psychologists on the show, they were
52:09like the old part of your brain which is
52:12responsible for for flight, fight and
52:13flight, it will override your logic
52:16center in in a certain period where you
52:18are driven towards risk and it and when
52:20you do calm down and rejogg your memory
52:22of what just happened, you will look and
52:24think that was stupid. But in the moment
52:25it makes so much sense because the old
52:27part of your brain just just hijacking
52:28you. Um, curious here the the mindset of
52:31a trader, the correct mindset because
52:33we've off camerara spoke about flow
52:35state, subconscious competence. There's
52:38also these people that have a lot of
52:39rituals behind their trading, a
52:40pre-market ritual and uh maybe
52:42meditation and journaling. And some
52:44people say that's that's fluff, that's a
52:46waste of time. Other people swear by it.
52:47And I've had traders that say they'll
52:48meditate an hour a day every single day.
52:50I'm like that's a lot of time. So I'm
52:52curious to know your mindset and
52:54routines around your trading plan.
52:57>> Yeah. You know, every individual is
52:59different, too. And so for your
53:01audience, there's no right or wrong.
53:04It's what works for you. I've never
53:06meditated a day in my life. Okay, I'll
53:09just tell you that flat out. Uh but um
53:13I'm a fairly mindful type of person and
53:18you know,
53:20breathe and stuff. Um, my main ritual is
53:24usually the night before when I do my
53:26homework and I just write out my game
53:28plan, which I can do in half an hour and
53:31do all that. Um, and I was so fortunate,
53:35you know, when I was um
53:39really building up my wealth and became
53:41a CTA and had a fund. I was really
53:44blessed because I had a business
53:46manager. All the phone calls went to
53:48her. All the bills went to her. she got
53:51the stuff to the the taxes to the, you
53:54know, accountant. I never even knew how
53:56much I was making or down on the year,
53:59anything like that. I went for like nine
54:01years not knowing my own net worth, you
54:03know, and that was just I just liked
54:04playing the game. That's it. I just
54:06liked playing the game. And um now not
54:10everybody is so fortunate that they have
54:12that situation. I certainly don't have
54:14that situation now. You know, it's me
54:16and I handle everything.
54:18But you have to learn to um
54:24eliminate all the distractions I think
54:26is very important. Keep your phone in
54:28the kitchen, you know, keep uh the dogs
54:31outside if they're going to bother you.
54:33A lot of people have young children at
54:36home, you know, set aside a special time
54:38to be with them. But then when your
54:40office when you're in the office, close
54:43the doors. So, I come in in the morning.
54:46I mean, I [clears throat] usually get
54:47up, walk the dogs, feed the dogs, you
54:50know, make my husband coffee, the that
54:52type of stuff, and then I'll sit down in
54:55my seat and I'll start, you know,
54:57looking at the overnight action, where
54:59are the gaps, making a few notes in my
55:01plan, and uh just let the day roll from
55:05there. I I try to walk in the morning
55:07just for like 10 minutes, and like I'm
55:10so grateful I live down here in Florida.
55:12I'm always like, "Thank you, God. Thank
55:14you, God." You know, just trying to say
55:16uh some prayers.
55:17>> These sound like general good practices.
55:19I'm also curious on uh everyone has
55:22their, as you're saying, their own
55:23temperament, their own personality just
55:24to share myself. I don't like being
55:26wrong on the day. So, I found myself
55:29taking one loser to 10 very quickly cuz
55:31I just fighting the day. So, then I've
55:33put rules in place like I two losses and
55:35then I'm out for the day. I've also
55:36found myself very irritable in a
55:38position. So, I don't like holding
55:40things for weeks cuz it's just one split
55:41second of a misjudgment and I I ruin it
55:44kind of thing. So, I've realized my
55:45temperament and I've tried to build
55:46systems around it as safeguards. But,
55:48I've always wondered would my
55:50temperament evolve? Could I even change
55:52it? Could I could I improve it as
55:53opposed to having to put guard rails? I
55:55could make myself better in that way.
55:57Have you found your temperaments when
55:59you started out your career to have been
56:01even present now and guardrails is the
56:03best approach or are these things I
56:04should work on?
56:06You know, that's an interesting question
56:09because as we mature, you know, and age,
56:12um, it I I used to be very short if I
56:15was interrupted. You know, if I'm
56:17sitting there and I'm concentrating and
56:19I'm just deep in my groove and somebody
56:21walked into the room and asked me a
56:23question, I'm like, you know, shut up.
56:25You know, that type of thing. But in
56:27general, I'm a very um downregulated
56:31person. I'm very chill. It's hard for me
56:35to be like too happy, too sad, too
56:37anxious. I don't get really angry or mad
56:40or else I've just internalized it. I uh
56:43I I'm a game player, you know. I'm like,
56:46you won't know what my cards are and I'm
56:49not about to show you. Never. Never. You
56:52know, and uh my mom used to say, she
56:55used to always accuse me of being aloof,
56:58you know. I'm aloof because I'm not
57:00really interacting.
57:02And uh
57:04>> yes, I've I've
57:07>> weird weird tangent, let's say, but
57:09>> people that go through a lot of trauma
57:11or people that go through a lot of
57:12hardship do also become uh apathetic, I
57:15think is the word. Kind of just neutral
57:16down the middle. And I guess in the
57:18markets, that's that's amazing. Like
57:20you're you're not too invested into a
57:22position. You're not too burdened by a
57:23loss. So I guess that's where you would
57:24want to be. But I guess in the outside
57:26life, that's that's a problem, I guess.
57:28Um, is have you found this to be some
57:30sort sort of advantage in the markets or
57:32is this something you've trained or is
57:34this just a personality style you've
57:35had?
57:36>> I I think it's just who I am. I think
57:38that uh, you know, I've always loved
57:41playing games and, you know, game theory
57:43and all that. My mind is like I do math
57:46and uh, notes better. I don't do good
57:49with words. I mean, which is kind of
57:51sad. My mom was an English teacher and I
57:54always flunked my vocabulary tests. you
57:56know, it's like words, you know, that
57:58gets me anxious, you know, but um and I
58:02I had a lot of knocks, you know, when I
58:05was younger. So, I think that life's
58:07experience builds you up a very thick
58:09skin. I just have a very thick skin.
58:12Now, that's something I have had to be
58:15aware of because
58:17um my husband's Greek [laughter] and as
58:20they say, Greeks wear their emotions on
58:22their sleeves, right? So, now we have
58:25Mr. emotional Greek stallion here and
58:29Miss Blonde Ice Queen. [laughter]
58:33>> Yes, I can imagine.
58:34>> And you know, it's like any
58:36relationship, you have to just be
58:38mindful and you know, as we age,
58:42recognize things and then make an
58:45improvement to reach out to other
58:47people. The exact reason I mentioned
58:49that was this has been my experience to
58:50in my marriage where I guess it's been
58:52helpful in in in the markets to be let's
58:54say stoic but in outside life it does
58:56become consideration let's say this is
58:59all building up to towards this word
59:01intuition you're talking about
59:02experience weathering storms and um yeah
59:05market IQ and all these things build
59:07some sort of subconscious wiring that
59:09maybe you can't put your finger on upon
59:11it and you could call that intuition and
59:13because you are a discretionary trader
59:14it means you will deploy your intuition
59:16whereas a quantity meditative person
59:18would say, "How do I differentiate
59:22greed, anger, fear, revenge as
59:24intuition?" And it's just a bad idea.
59:26I'm masking as my sixth sense. I'm
59:28curious to know how can you turn
59:31intuition into some sort of science?
59:32Should I trust it? When can I know to
59:34trust my intuition? Because I haven't in
59:36my whole career. I've tried not to at
59:37least. Um, and I might be missing
59:40something.
59:41>> I've never made a trade off of
59:43intuition. Okay? I don't I don't do
59:45that. um I will make a trade based off
59:50of a a signal which could be a pattern a
59:53a you know some condition like that.
59:55Okay.
59:56>> I also want to get into this idea of
59:58flow state. Now athletes get into flow
1:00:00state. You would even tell me even when
1:00:02you're reading a book you're so immersed
1:00:03you're in flow state. So immersion I
1:00:05think that's that's a good word. Uh
1:00:07intuition I'm undecided to be honest.
1:00:09Flow state I I find it a bit fickle. I I
1:00:12don't really understand what it is. Can
1:00:14you help me understand how a trader can
1:00:16enter this state of flow and how we
1:00:19could better them?
1:00:20>> I would be willing to bet that every
1:00:23single one of your viewers has
1:00:25experienced a flow state at one point at
1:00:28one area in their life. Perhaps it came
1:00:31through sports. Perhaps you're just
1:00:33jogging and it feels effortless and
1:00:36easy. Um, I was reading the book by
1:00:39Steven Cutotler, K O T L E R, and he
1:00:42said that every time he goes skiing, he
1:00:45enters into a flow state where it's just
1:00:48easy. Um, 5 hours could pass and it only
1:00:51feels like it's one hour. It's
1:00:54effortless.
1:00:55Um, another parallel term that you could
1:01:00use is single-mindedness.
1:01:03Okay. So, for example, when I used to
1:01:05practice the piano, I was very
1:01:09single-minded, just focusing on the
1:01:12piano, the notes, and you know, once it
1:01:15becomes easier and you've worked through
1:01:17the technicals,
1:01:19then it's like you could just close your
1:01:21eyes and play not quite like Stevie
1:01:23Wonder, you know, and that is for sure a
1:01:25wonderful flow state. So, tennis, golf,
1:01:30and trading when you're just absorbed
1:01:32into the screens and you feel like you
1:01:35can eat and breathe with the swings on.
1:01:39>> So, I guess there's two terms I'm
1:01:40mixing. Number one is like a tennis
1:01:42player. He's just really good at a
1:01:44backhand, but he doesn't exactly know
1:01:46why. It's not like he's studied it and
1:01:48the arm position and it's not a science.
1:01:50He's just done so many repetitions, it's
1:01:51become automatic, and then this feedback
1:01:53loop of I did this and it worked. I'm
1:01:54going to keep doing that. that I would
1:01:57maybe say is like a subconscious
1:01:59competence. Uh but I wonder if that
1:02:01applies this flow state or subconscious
1:02:03competence. I can do that when I'm
1:02:04driving. When I'm walking, I'm not
1:02:06thinking about my posture and the steps
1:02:08and the terrain in front of me. I just I
1:02:09just walk. But when it when it requires
1:02:11critical thinking when it's like
1:02:13decision- making of weighing up the pros
1:02:14and cons which the markets is can you
1:02:16enter subconscious competence flow
1:02:18states and this like um automatic way of
1:02:22being or will you always have to come
1:02:23into a state of thinking and
1:02:25consciousness and being totally aware of
1:02:27everything
1:02:28>> you know I mean when I do my best
1:02:30trading I am not thinking [laughter] I'm
1:02:33like okay it went up it just test
1:02:36rejected that price I can tell you the
1:02:38thought process I can tell you exactly
1:02:40what's happening. We just went up and
1:02:42tested that previous high and came down
1:02:44so quickly. That's a test reject. There
1:02:46was no volume up there. That was the top
1:02:49and you're going to start ratcheting
1:02:51down the other side. But I've seen this
1:02:54so many times. I'm not verbally
1:02:56processing it. Okay. I think a lot of
1:02:59traders can make the mistake of saying a
1:03:01gut feeling, a six sense, some magical
1:03:03power is my intuition. And and here it
1:03:06seems like you are quantifying it. It is
1:03:08pattern recognition. It's just something
1:03:10that you haven't put to paper.
1:03:12>> Whereas I'm also curious on
1:03:14>> there is certain thing as form. Like if
1:03:16I'm playing basketball and I've got five
1:03:18in a row, I might there's probably a
1:03:20better chance of me getting this into
1:03:21the sixth one because well I don't know
1:03:23it's just I'm on a roll. Let's say can
1:03:25that flow
1:03:27>> that would be flow.
1:03:28>> Sure. It feels easy. You know that b
1:03:31it's just free from outcome. There was a
1:03:33quote that Stephen Cutotler used and I
1:03:36think it was Michael Jordan and he said
1:03:38that when he's in that feeling of flow
1:03:39and he's going for his windmill dunk or
1:03:42whatever the hell he did, you know, he
1:03:44said that hoop is like the size of a
1:03:46hula hoop.
1:03:48>> That's what it felt like to him just
1:03:50open and waiting for him.
1:03:52>> It's very interesting.
1:03:53>> Yeah.
1:03:53>> Do you think that uh comes with time or
1:03:56or can even a newer trader harness this
1:03:58sense of flow?
1:04:00I think it just comes from your passion
1:04:02in doing this and being able to
1:04:04eliminate the other distractions that
1:04:07cause anxiety. You can't experience a
1:04:10flow state when you are also feeling
1:04:12anxious. It's going to make you tense.
1:04:16Um, so you have to be able to let go of
1:04:20the anxiety and feel relaxed. And I am
1:04:23not an expert in this area by any means,
1:04:25but there is so much information that
1:04:27people can Google on the internet. And I
1:04:30even believe that uh I think it was
1:04:33Steven Cutotler even gave some exercises
1:04:36that you could do if you wanted to try
1:04:38and get into the flow state. So um
1:04:41>> Oh, interesting.
1:04:42>> resource.
1:04:44>> I can imagine anybody can get into a
1:04:45flow state when they're on a roll. It's
1:04:47going easy. They're five winners deep.
1:04:49But can you access this mindset when
1:04:51you're losing, when you're in draw down,
1:04:53because I suppose that's when it's most
1:04:54useful.
1:04:56>> I think that if you're good at the flow,
1:04:59it's playing the game. And it doesn't
1:05:02matter if you just won or if you just
1:05:04lost. Okay? It's like when I'm playing
1:05:07cards, and I love playing cards, if it's
1:05:09Jin Rummy or Bridge or Backim, you know,
1:05:12any of those games, right?
1:05:14>> It's the process of playing. It's it's
1:05:18you know I'm not a chess player by any
1:05:20means but it's still being in the game
1:05:24and it doesn't matter if you just won or
1:05:26just lose. Now if you've let yourself
1:05:28get sloppy and out of control and that
1:05:31draw down starting to become bothersome
1:05:34you're not in a flow state there. But
1:05:36you know it's like counting cards and
1:05:39it's just like same thing when a a a
1:05:41great lesson for people to do. They
1:05:44don't have to trade this way, but they
1:05:47might want to do it on paper for a
1:05:49little bit. Come up with a volatility
1:05:51breakout system. There's a zillion
1:05:53versions out there. Do it on paper,
1:05:56okay? Because the nice thing about a
1:05:58volatility breakout system, and you're
1:06:01not going to get rich trading one, I
1:06:02promise that, is that the entry is well
1:06:05defined, the exit's well defined, the
1:06:08stop is well defined. You know, you
1:06:10could even enter and exit end of day.
1:06:12How simple is that? If your stop isn't
1:06:14hit, very simple. And now do that on
1:06:18paper with five different markets. Each
1:06:21market should give about two trades per
1:06:23week. And just write it down. Write it
1:06:26down. Write it down. And it's like
1:06:27flipping the cards over. Is it red?
1:06:29Flipping the cards over. Is it black?
1:06:31Here was a winner. Here was a loser.
1:06:33Here was a winner. Here was a loser. And
1:06:35you totally desensitize yourself to the
1:06:38wins and the losses. It's like, no,
1:06:40you're just playing the game and staying
1:06:43in the process.
1:06:44>> I I I watched a video on this exact
1:06:46topic and it was the aha moment for me
1:06:48was like, you know, when you play a
1:06:50song, are you just trying to get to the
1:06:51end of it or is it the enjoyment of
1:06:53listening to it? Well, marriage is the
1:06:55goal to just like get to the end of it
1:06:56or it's the process of it. Maybe at
1:06:58times it might feel out of the way, but
1:07:00the idea being that I guess when you're
1:07:02playing for the love of the game and
1:07:04trading I guess is a hard path and it's
1:07:06only in if you find a passion and an
1:07:08enjoyment and the stimulation of trying
1:07:10to solve it. If that's a calling for you
1:07:12is probably where you will naturally
1:07:14thrive because you're not trying to aim
1:07:15for the the goalpost for the end finish
1:07:17line. It's in the process. Very
1:07:19interesting. I want to explore now um
1:07:22this idea that I I wanted to get into
1:07:23sooner but I like this uh topic that we
1:07:26just covered the price action signature
1:07:28of price flushing levels uh goes and
1:07:31then creates a vacuum void and then
1:07:32you're trading in the opposite direction
1:07:35uh especially on a day trading or a
1:07:36scalping perspective. I I see this
1:07:38happen constantly. The the thing is
1:07:40there's a lot of pivot points or these
1:07:42inflection points where it could happen.
1:07:44But the hard part is to know what is a
1:07:45breakout and it's going to continue
1:07:47versus it's a flush and it's going to
1:07:49reverse because at that inflection point
1:07:51it it could go either way and I'm
1:07:53betting on one side. So then I've always
1:07:55explored okay is it what I'm taking on
1:07:57the left is it a high of previous day
1:07:58high of previous week is it a daily
1:08:00pivot and you can have a long list of
1:08:02things or is it in the reaction type
1:08:04that I should quantify and say this is
1:08:06giving me certainty when I'm in that
1:08:08moment of price has broken out and I'm
1:08:10looking to sell cuz I'm thinking it's a
1:08:11flush when another person is thinking
1:08:13it's a momentum it's a breakout how can
1:08:14I make sure I'm on the right side of the
1:08:16fence
1:08:17what if you can't what if there is no
1:08:20such thing as certainty
1:08:22>> or at least have the odds in my favor or
1:08:24manage it. Manage the loss or manage the
1:08:26outcomes.
1:08:27>> Well, you want to manage it. That's for
1:08:28sure. You should know when you enter,
1:08:30how much room are you going to give that
1:08:33and what is it going to look like where
1:08:34it starts to fail.
1:08:35>> I like how you always stop me when I
1:08:36speak in absolutes, which you mentioned.
1:08:38I Yes. I just want to get into
1:08:39frameworks around price is doing this.
1:08:42Uh these are the correct things I should
1:08:43be doing to not know, but at least have
1:08:45things in my favor to know I should be
1:08:47selling in this area and know it's not a
1:08:49bullish breakout.
1:08:51You know, it's um you can print off
1:08:54charts at the end of the day and circle
1:08:56where you're getting in and out. And
1:08:57then with the benefit of hindsight, you
1:09:00can look, was it in the middle of the
1:09:02day at lunchtime when nobody's around?
1:09:05Was there a news event? Was there a
1:09:07catalyst for it? Um you know, what do
1:09:11the good ones look like? If it is a good
1:09:14one, how much should it back up against
1:09:16me if my entry is correct? So you can
1:09:18start doing that type of modeling in
1:09:21terms of how much excursion it'll do on
1:09:24either side of your entry price and then
1:09:27you can come up with a statistical
1:09:29measurement of it should not go beyond
1:09:31this point if it's going to be a good
1:09:33trade.
1:09:34>> What did you mean by excursion? Is it
1:09:35like the amount of displacement?
1:09:37>> Yeah. How much is it going to go on
1:09:39either side of your entry price? You
1:09:41know.
1:09:42>> Okay.
1:09:42>> Yeah. So you're not you're not
1:09:44necessarily looking at technical things
1:09:46on the chart to place your entry and
1:09:48stop or profit targets. It's more these
1:09:50data sets around ATRs.
1:09:52>> No, not at all. If you're looking for
1:09:54breakouts, breakouts usually imply that
1:09:58you are pulling out of either a a
1:10:01previous trading range or consolidation
1:10:04or high volume node. if it's in the
1:10:07middle of the chart. You can have a
1:10:08breakout that's a channel breakout which
1:10:11is taking out the highest high of the
1:10:12last n number bars. But you can equally
1:10:15have a breakout if let's say you've done
1:10:18an ABC type of thing down and you have a
1:10:21little pattern at the bottom of that
1:10:23swing. You could have a break out to the
1:10:25upside where you're getting impulse up
1:10:27and that's still got a long ways to run.
1:10:30So break out per se doesn't necessarily
1:10:33mean going above the highest high or the
1:10:35lowest low. I mean one of the popular
1:10:39patterns is a breakout from a little
1:10:41three bar coil there just three daily
1:10:44bars which is powerful because you have
1:10:47a built up a little bit of an
1:10:49equilibrium point where everybody's in
1:10:52agreement. there's price bar overlap.
1:10:55And so once you start to pull out of one
1:10:58of those areas, one side is going to be
1:11:01on the wrong side or else you're going
1:11:03to want to pull new monies in. So it
1:11:07sort of depends on the configuration
1:11:09that you are breaking out from. I've
1:11:11spoken to a variety of guests on the
1:11:13show and a unanimous common denominator
1:11:15between all of them is the emphasis they
1:11:17put on data and actually knowing the
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1:11:58Tomorrow.
1:12:00I believe almost a decade ago you
1:12:02stopped the money management side and
1:12:04now you've been trading your own own
1:12:05capital since. I wonder what that
1:12:07transition's been like when managing
1:12:09large capital versus managing your own
1:12:11answerable to investors XY Z. I'm
1:12:13curious if your trading style has
1:12:14evolved or frameworks, mental
1:12:16frameworks. Has there been any uh change
1:12:18in that transition?
1:12:20>> It's called being retired. [laughter]
1:12:22>> Okay. Okay. So, why why have you
1:12:24continued to then trade in general?
1:12:26>> Because it's like the best game in the
1:12:28whole world. Come on. I mean, it's like
1:12:30I'll never stop trading. It's just like
1:12:32it's fun. But, uh I you know, I tried to
1:12:36pull myself away from it and that's when
1:12:38I wrote that book, the Trading Sardines
1:12:40book, which took me like three years to
1:12:42write. Believe it or not, I'm a horrible
1:12:43writer. Every word was painfully eaked
1:12:46out. But um you know, and what had
1:12:49happened was with the fund, it started
1:12:52to feel like more like running a
1:12:55business as opposed to just the pure joy
1:12:58of trading. So now all of a sudden, I'm
1:13:01I've got the auditors, I've got the
1:13:03accountants, I've got the attorneys
1:13:05writing blue sky laws, I've got like,
1:13:07you know, so many different moving
1:13:09parts. you know, my IT guy, the on and
1:13:13on and and then my data fees, the stupid
1:13:16exchanges because I had multiple feeds
1:13:18for multiple entities under me. All of a
1:13:21sudden, my data feeds were like $7,000 a
1:13:24month. And I'm like, this is not fun
1:13:26anymore. You know, I'm not doing what I
1:13:29enjoy doing. So, I that's when I sort of
1:13:31packed it in. And um and yeah, I don't
1:13:35have to trade another day in my life.
1:13:37But you know what? here. I got, you're
1:13:40looking at me, I got broken ribs, torn
1:13:43rotator cuff, up leg from getting
1:13:45bucked off a horse, right? And so for
1:13:47the last couple weeks, I'm like, aha,
1:13:49I've got so many more tools available
1:13:51now, you know, with uh the AI, the uh,
1:13:55you know, regenerative learning and the
1:13:57deep neural net, and I can I can use
1:13:59this database and I can write to the
1:14:01rhythmic API and da da da da da, and I'm
1:14:04going to have some fun with this, right?
1:14:06So, it's like a new game and I'm going
1:14:09down rabbit holes. I'm doing this like
1:14:1020 hours a day and I just love it, you
1:14:12know, because it's a challenge.
1:14:15>> Do you feel individuals leveraging AI
1:14:17and what it can do for us now is a bit
1:14:20of a time void and and maybe not
1:14:21focusing on the right thing or is it
1:14:23something actually very useful that we
1:14:24can use to better ourselves in the
1:14:25markets?
1:14:26>> AI can be used in two distinct purposes
1:14:29for the markets. The first is it's
1:14:31wonderful. I don't really use it in this
1:14:33capacity, but it's wonderful for
1:14:35streamlining your process. I mean, a lot
1:14:38of trading operations involve grunt
1:14:40work, okay? And the AI can do a lot of
1:14:43that grunt work for them. Um, and in
1:14:46terms of the processes, the research,
1:14:48the modeling, the statistics, all that
1:14:50sort of stuff. Um, huge savings in time,
1:14:55especially for coding purposes like you
1:14:57know, Claude and uh, you know, Fable 5.1
1:15:00and Opus. there's like it's amazing what
1:15:03they can do now even coding Python and
1:15:05stuff which is sort of a necessary uh
1:15:08integration to writing to the APIs. So
1:15:12um that's one way that you can harness
1:15:15AI where it's supporting you in doing
1:15:18your things. Then there's the other way
1:15:21in using AI. It's not going to work with
1:15:24the LLMs, you know, those large language
1:15:26models. So throw chatttp and claude and
1:15:29all these other ones out the window. You
1:15:30can use parts of them for a component,
1:15:33but now you're stringing several
1:15:35different pieces together. And let's say
1:15:38perhaps I want to train something on a
1:15:40pattern, which is a different approach.
1:15:43You know, I mean, there's two sides to
1:15:45the coin. You've got your neural nets,
1:15:48your deep neural nets, okay, where you
1:15:50just feed them a ton of data, a ton of
1:15:52data, and they're going to learn things
1:15:54on their own and stuff. And then you've
1:15:55got the regenerative learning where
1:15:58through the repetition it's going to
1:16:00correct and teach itself.
1:16:02And there is a way to use them together,
1:16:05right? Are we having fun yet, boys and
1:16:07girls? Huh? There's a way to use them
1:16:10together. You have the nice clean
1:16:12database and you know some little
1:16:14things.
1:16:15>> I want to um wrap up with advices.
1:16:19number one that is you were in the S&P
1:16:21since the beginning and then you went
1:16:23through the the the phone way call your
1:16:25broker and you don't know when you
1:16:26executed until he confirmed it and then
1:16:28through digitalization and then the
1:16:30internet and XY Z and now we're at a
1:16:32time where Jane Street and nano
1:16:33executions and quantum supercomputers XY
1:16:35Z and it can feel like this time is
1:16:37different and now the markets might
1:16:39change and we're entering a time of
1:16:40uncertainty and should I even be worried
1:16:43about this or is this just
1:16:44fear-mongering? I'm I'm yeah interested
1:16:47in your approach or forecasting of
1:16:49what's likely around the corner in the
1:16:50near future with the rise of recent
1:16:52technologies.
1:16:54>> You know um it's not like we're here
1:16:57today and two weeks ago we were here.
1:17:00Change is such a gradual insidious
1:17:04morphing.
1:17:06So we've been changing every single year
1:17:09for the last 40 years. you know, the
1:17:12servers, the connectivity,
1:17:15all this stuff. I mean, if anything, I
1:17:17was reading this fabulous article um uh
1:17:21written by this guy on the internet
1:17:23explaining how we have the tools that we
1:17:27can do exactly what Renaissance
1:17:30Medallion Fund does in terms of uh
1:17:34constantly coming up with new
1:17:36strategies, which is what you have to do
1:17:37if you're in that field. Okay.
1:17:40um they spend like $50 million, you
1:17:44know, a month. The the data, the data
1:17:46engineers, it's just like so crazy. You
1:17:49can do it for $500 a month. We have
1:17:51those tools available to us. You have
1:17:54access to those types of pools of data,
1:17:57you know, and API. Rhythmic's a great
1:17:59API, you know, so there's or if you get
1:18:02that good, you can write your own
1:18:03gateways for Lollicare. I love that
1:18:05because that's actually a very
1:18:07empowering response where people can
1:18:08feel like pessimistic that AI is going
1:18:10to make a harder and worse whatever but
1:18:12in fact is democratized democraing the
1:18:15playing field
1:18:16>> to what was once a hidden advantage for
1:18:17them because of their capital and access
1:18:19to talent is now I can do it with a
1:18:21couple hundred dollars of subscriptions
1:18:23uh which is actually yeah you're right
1:18:24it's very powerful last thing I want to
1:18:26ask is around longevity in the markets
1:18:30and a lot of traders have had a good
1:18:31year maybe a good couple of years but
1:18:34longevity in the markets I'm sure is
1:18:35another battle or mountain to climb in
1:18:37itself. Any thoughts or recommendations
1:18:39on that front?
1:18:41Stay healthy. [laughter]
1:18:43You know, it's not just a healthy body
1:18:45because that's what gives us energy,
1:18:48you know. Okay, you don't have to be
1:18:50perfectly in your clean eating. Trust
1:18:52me, I I put on a few pounds the last
1:18:54couple months, but um you know, it's
1:18:57important to exercise. that gets oxygen
1:18:59to the brain and you have to have a
1:19:02healthy body to have a healthy mind. And
1:19:05so in terms of longevity
1:19:08and I think even more important is your
1:19:11energy level. Energy is like a the most
1:19:16precious resource there is our energy
1:19:20level. And if you've noticed, people
1:19:22will tend to be attracted to other
1:19:25people that have high pure energy
1:19:27levels. You know, nobody wants to be
1:19:30around a pill that's just sitting there,
1:19:32you know, with negative energy. So, go
1:19:36back and take a holistic reproach. You
1:19:38know, even though we've been talking
1:19:39about a very dry topic, markets and so
1:19:42forth, and go back and you want to be in
1:19:45this business, fun.
1:19:48Fun is very important. you know, because
1:19:51it releases all the tension and stress,
1:19:55humor, of course, your energy level,
1:19:58which is dependent on exercise and sleep
1:20:01and all those kinds of things that they
1:20:03preach to you. And uh then you've got
1:20:06all the ingredients to be in the best
1:20:09game for your life for the next 50 years
1:20:11if you want, you know, and you so many
1:20:14good examples around us. I mean, Warren
1:20:18Buffett, come on. The dude's making
1:20:20trades in his bathtub 10 years ago,
1:20:23right? You know, at the crash, he's
1:20:24like, "Oh, I think I'll do some Bank of
1:20:26America, you know, in his bathtub
1:20:28there." It's like, and he's in his, I
1:20:30don't know, late 80s at that time.
1:20:31>> I think there's a there's a message in
1:20:33there that a lot of traders come to the
1:20:35markets because they want to better
1:20:36their financial situation. And it
1:20:38becomes a very short-sighted objective.
1:20:40But then when I look around at the
1:20:41people I've spoken on the show, uh, they
1:20:43retire but never stop. Even Larry
1:20:45Williams, I asked him, "Hey man, you're
1:20:46in your 80s. uh any plans of like
1:20:49slowing down? He's like, "Yeah, I've
1:20:50been thinking about that every year for
1:20:52the last 10 years and I haven't." Even
1:20:53Perry like bless him. I think he must be
1:20:56mid 80s at this point.
1:20:57>> And yeah, just as active as ever. And I
1:21:00asked him, you know, why? And he said,
1:21:01"Look, it keeps my mind active and
1:21:03sharp." And I know the moment I give up
1:21:05the markets, I deteriorate mentally. So,
1:21:06I was like, everybody that's falls in
1:21:08love with the game or gets into the game
1:21:10for the right reasons stays for forever
1:21:12because they find the beauty and fun and
1:21:13the the stimulation within it, which I
1:21:15think is a a wonderful message to end up
1:21:17on. Linda, I want to thank you very much
1:21:18for your time and giving us the
1:21:19opportunity to host you.
1:21:21>> Thank you for having me. It's uh it was
1:21:23fun. You're a good interview. I'm glad
1:21:25to hear. That was a lot of fun. Thank
1:21:26you.

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