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Verified Trader: I Took $2000 To $12.3M Trading ONE Main Setup! — Transcript

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0:00This trader went 158 days straight
0:02without taking a single loss turning a
0:04$2,000 check to over $9 million.
0:07>> There's super high win rate strategies
0:09that have pretty poor risk reward and
0:10I've always been on the opposite side of
0:13that where I would rather sacrifice win
0:14rate to have amazing risk reward. A lot
0:16of times that happens when I pyramid
0:18positions. I might have a position that
0:19I could close for a small profit, but
0:20I'll add to a winner. I make 10 times as
0:22much because I aggressively added to a
0:24winner.
0:24>> Introducing David Hannan, better known
0:26as Laptop Legend, a trader who lost
0:28nearly a million dollars in an hour and
0:30he didn't just survive. He rebuilt his
0:32entire strategy to become one of the
0:34most disciplined short sellers in the
0:36game. In this episode, David reveals how
0:38he turned $10,000 to a million dollars
0:40in a single trade as well as his exact
0:42three-step process to spot the top of
0:44the move with scary accuracy.
0:46>> Normally, I like breakouts, but they do
0:49inherently have a much lower win rate
0:51than a mean reversion type strategy if
0:54you know how to time it correctly.
0:55>> Explore that with me. I would just
0:56assume a breakout with the trend would
0:58be more favorable and a trying to pick
1:00the top seems more dangerous.
1:02>> When you get in a breakout, the idea is
1:04you want to have
1:06Pyramiding is basically the idea of when
1:08a trade is going your way, at a certain
1:10point it develops a structure where you
1:12can realistically change your risk and
1:14move it to a tighter position. You can
1:15then add to your position and get up to
1:17the same dollar risk level that you had
1:20originally. And so, if you have multiple
1:22opportunities where you can move your
1:24stop up and get a tighter stop and then
1:25increase your size, you can get to the
1:27point where you might have had a 10K
1:28initial risk on a trade, but you just
1:30get so big that 10K initial risk turns
1:32into a million dollars.
1:34>> If you break even a trade or if you move
1:35your stops to break even, you didn't
1:37trust your analysis. You haven't done
1:38the work correctly. Just overall
1:40managing a position is it should be a
1:41more set and forget thing of like if you
1:43made a decision to get in, you got to
1:44see it through. What do you say to that
1:45kind of belief?
1:46>> I can understand that argument because
1:51>> I want to take a technical deep dive
1:52today and really explore what it took to
1:54get here, the specifics. But I want to
1:56start off with when you see trading, do
1:59you explore it as an art or a science?
2:04>> I think it's a little bit of both.
2:05Um
2:07there's definitely scientific aspects to
2:09it where you have to
2:11be very analytical and go through the
2:14past and maybe um
2:16yeah, study what happened and come up
2:18with a thesis and go through all the
2:21charts and figure out exactly what it is
2:23to to prove your strategy. But, at the
2:25end of the day,
2:26um the way that I do it is is kind of an
2:29art because I'm not one of those
2:30extremely systematic people
2:32um who can say if a stock goes up
2:3610% for
2:38for 3 days straight and then does X and
2:40X, then I'll bet this much and cover it.
2:42Like, that's not what I do. So, what I
2:43do is I just I look at the past and I
2:46take that information and use it to
2:50um
2:50basically make a a thesis of what I
2:52expect to happen. And so, that's that's
2:54like intuition from the scientific side
2:56of of studying it. So,
2:58>> I I used to I had this conversation with
3:01many traders and it used to be more in
3:02the science category, is the conclusion
3:04I came to. You you make the scientific
3:05process to build your edge and then, you
3:08know, you follow the data. It's always
3:09about data. And then uh this trip on
3:11this US tour, I've spoken to quant
3:12traders who are completely systematic
3:15and use their algos and then, you know,
3:16a lot of professional traders. And I
3:17realized a lot of these guys are
3:19intuition and market experience and and
3:20decades under their belt uh and how they
3:22deploy to get super interesting. So, I I
3:24want to navigate this of like uh
3:27as you've had years under your belt, how
3:28that how that explores in terms of
3:31um how you deploy your edge. But, before
3:32we get there, can we set some
3:34foundations on what are your key
3:36performance indicators, KPIs, in terms
3:37of trade frequency, win rate you aim
3:39for, profit factor, risk reward, and
3:41average trade, average hold time, just
3:43so we can kind of get a framework for
3:44the conversation?
3:45>> Sure. Um I don't have
3:48all of those data things um
3:51specifically. I mean, I guess I could
3:53try to go look them up. Um, I know
3:56my win rate right now is about like 41%
4:00um, over the course of my career.
4:03Risk reward, it just depends per trade.
4:05Um, profit factor is something that, um,
4:09yeah, I don't have the current numbers
4:11overall between all my trades,
4:13unfortunately. But, I would say, um,
4:16there's there's different types of
4:17strategies, you know, there's super high
4:18win rate strategies that have pretty
4:20poor risk reward. Um, and I've always
4:22been on the opposite side of that where
4:25I would rather sacrifice win rate um,
4:27and have a sub 50% win rate to have
4:29amazing risk reward. And a lot of times
4:31that happens when I pyramid positions.
4:33Like, I might have a position that I
4:34could close for a small profit, but I'll
4:36add to a winner and then it ends up
4:38turning into a loser a lot of the time
4:40and that kills my win rate. You know, I
4:41could have a 60% win rate if I didn't do
4:43that. Um, but the ones where it does end
4:45up going on to work, I make 10 times as
4:47much because I aggressively added to a
4:49winner. So, that's kind of my
4:50philosophy.
4:51>> Explore with me, uh, this idea of
4:53pyramiding to be done effectively and if
4:55you have any recent trades to share with
4:57us around this idea.
4:59>> Yeah, so pyramiding is basically the
5:00idea of, um, you know, you put on an
5:03initial position in a trade and then the
5:06trade begins to go your way.
5:08Um, and when the trade is going your
5:09way, at a certain point it develops a
5:11structure where
5:13you can realistically change your risk
5:15from where it was originally and move it
5:17to a tighter position. And so, when that
5:20happens, you can then add to your
5:22position and get up to the same dollar
5:24risk level that you had originally, but
5:27now you have a larger position. And
5:29then, if the position continues going in
5:30your favor, you could theoretically do
5:32the same thing. And so, if you have kind
5:35of a big picture trade where there's
5:36multiple opportunities where you can
5:38move your stop up and get a tighter stop
5:40and then increase your size and then the
5:41same thing happens, you increase your
5:43size, move your stop up, you can get to
5:44the point where, you know, you might had
5:47a 10k initial risk on a trade, but you
5:50just get so big after adding and moving
5:52your stop up that that 10k initial risk
5:54turns into a million dollars.
5:56>> Mhm.
5:56>> And that actually happened to me
5:57recently on this Bitcoin breakout. Um
6:00that was like, I think in the middle of
6:01July, if I'm not mistaken. Um where I
6:03originally took a $10,000 risk on an
6:07options position,
6:08um and I was able to pyramid that into a
6:11million-dollar gain after like 4 days.
6:13>> Wow. Wow.
6:15The story is crazy. And and when someone
6:17hears those numbers, they're like, "Wow,
6:19I'm going to do that right away." If we
6:20can kind of draw a line, maybe it's a
6:22blurry line, but just kind of what is
6:24the separation between euphoria, greed,
6:27chasing a trade, and you know, getting
6:29overzealous on an idea and
6:30over-conviction versus the art of doing
6:33this correctly in terms of okay, this is
6:35scaling in, this is a de-risk the
6:37principal, and then laddering.
6:39How do you How do you deploy that
6:40differently?
6:41>> It's It's very difficult. Um you know,
6:44there's a lot that goes into it, and I
6:46think a huge part of it is having put
6:48the work in before to know how the stock
6:51that you're trading moves and like what
6:53what the tightest pivot points are that
6:55you can be adding on, um and not just
6:58adding randomly into strength because
7:00if you add too much too soon uh into
7:03strength and then it pulls back, like
7:04you're going to ruin your average and
7:05you're going to stop out for a loss.
7:07Um and so it Yeah, I think really you
7:09just you have to know exactly where
7:11those those pivot points are.
7:13Um and that's something that only comes
7:14through experience and just really
7:17knowing how these patterns play out and
7:19having a bunch of examples of them.
7:20>> Mhm.
7:21I I usually get to kind of entries and
7:23and uh break-even drills later on, but
7:24we we can explore it since we're here.
7:26Is the Is the philosophy here that the
7:28first trade you got in with the 10k risk
7:29in this example, it's an independent
7:31trade with this independent trade idea,
7:33entry criteria, and XYZ. And then once
7:35that starts to ride into profit, do you
7:37have a break-even protocol and then
7:39reuse that principal on the next
7:41position?
7:42>> Yeah. Okay, so it's it's uh
7:44it's not necessarily increasing risk.
7:46It's uh recycling the same risk is what
7:48we're doing here when we pyramid.
7:50>> There's different ways that you can do
7:51it, you know. Um
7:53as your conviction in a trade grows, you
7:55of course could choose to use more risk
7:57than you initially had even on the on
7:59the first position. Um
8:00but typically the best way to do it is
8:02is to not do that because obviously the
8:04farther the trade goes in your favor
8:05like
8:06theoretically maybe the worse the EV is
8:09getting um at that point because it's
8:10already so far above your initial uh
8:13entry. So, you know, I think it it
8:15doesn't always make sense to to risk a
8:17lot more on those later entries.
8:19>> How would you do it? Uh would it be like
8:21following it with an EMA or is it kind
8:23of market structure related?
8:25>> Um
8:26I think both. Yeah. I mean, for me
8:27personally, I prefer to use market
8:30structure um and just like, you know,
8:33for example, on the Bitcoin trade, um
8:36I had a trade back in November of last
8:38year where I made like I want to say
8:40like 300,000-ish on on the breakout. Um
8:43but I learned a lot because in that one
8:45I did a terrible job of pyramiding um
8:47overall and I just I kind of fumbled
8:51that aspect of the trade because every
8:52time um
8:54the that it was working and it would
8:56break to new highs, I would be like
8:57adding aggressively on those new highs
8:59with a really tight stop and then I
9:01would just sell those adds on the first
9:03pullback. Um and that actually ended up
9:05costing me like I think an extra 100,000
9:07dollars and I never got to have that
9:09extra size. Versus if I did it the way
9:11that I did on this most recent trade, I
9:13probably could have made a million on
9:14that trade, too. But I learned those
9:15lessons from that one where like the way
9:17that Bitcoin likes to go a lot of times
9:19is it will have like a support level and
9:21it'll wash out under that support level
9:23and then it will go once it flushes
9:24everybody out. And so that is
9:25specifically what I was looking for on
9:27this. Like the daily structure is still
9:29intact. It's it got really tight and
9:31then it broke out through I believe it
9:32was the 112 level, but don't quote me on
9:34that.
9:35Um and then once it did that, then it
9:38kind of confirmed my overall thesis on
9:39the daily. So, at that point I was
9:40looking for these washes and reclaims to
9:43be adding size and risk versus the low
9:45of that wash that was under the support
9:47level. Versus before, I would buy as
9:49it's going through resistance, and a lot
9:51of times it would just clear out over
9:52resistance and then come back down into
9:54mid-range, and I would just puke it at
9:55lows because I was, you know, oversized
9:57with a bad average.
9:59>> I trade a currency. So,
10:01a healthy currency market is generally
10:03even on a long time frame, but it's a
10:05consolidating market unless it's a very
10:07weak currency that we're trading. But,
10:08in the stock market indexes, crypto,
10:11generally speaking, they're an
10:12appreciating asset. So, there's a
10:14baked-in trend. When you are entering at
10:16all-time highs or you extremely high
10:18periods, you know, around 100k and
10:19beyond on Bitcoin, for example, um, and
10:22I remember off camera you were kind of
10:23saying some trades are intraday, some
10:25trades can even be swing.
10:27Is this idea of like, okay, if this
10:29intraday plays works out and I've got
10:31this appreciate I've got this tide on my
10:33side, I might as well ride it into a
10:35swing trade and beyond, or is there
10:37different models for different times of
10:38the year?
10:40>> I think when I'm Yeah, whenever I'm
10:41going into a swing trade, I always have
10:43the idea that it's going to be a swing
10:44trade
10:45um,
10:46just because the way I structure trades
10:48are are very different if not for that.
10:50Like, if I'm in a day trade and I buy
10:52something and, you know, it immediately,
10:54for example, in the options, I think I
10:55was up um, by the end of the day on the
10:58entry. I'm pretty sure I was up like
10:59100% on the options. You know, if that's
11:00a day trade, I would be taking that
11:02immediately. Um, but because I had the
11:04swing trade thesis, I ended up holding
11:06those and selling for like a 5 or 600%
11:08gain um, after three or four days. So,
11:11uh, it's just a a very different trade
11:12plan when I come in knowing that it's
11:14going to be a swing.
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12:01Is Is your main technical driver um cuz
12:04I'm familiar with this Bitcoin play
12:05recently.
12:06Is Is Are you Are you kind of waiting
12:08for a range of consolidation, maybe call
12:10it an accumulation, and then trying to
12:12anticipate the breakout and directional
12:14bias, or was this just one trade example
12:16kind of thing?
12:17>> Um I think that's just one of my
12:19favorite patterns in general. It's just
12:20a a big picture breakout where you get a
12:22really nice move and then the stock or
12:25asset, whatever it is, um forms a really
12:27tight range and then perks through that
12:29range. Um that's just one of my favorite
12:30patterns of all time because
12:33especially if you
12:35if you structure the trade the right way
12:36um before volatility expands, you can
12:38just get some incredible risk to reward
12:40on that. Um and if you pick the intraday
12:42spot because you know that the daily is
12:44super primed, like you can I literally
12:46risked like on um on one of the ETFs, I
12:48risked like 10 cents
12:51on BitX. I risked like 10 cents on my
12:53entry and ended up getting like $10 a
12:55share.
12:55>> I see. I see.
12:56>> So, when when all the time frames align,
12:58it just you can get some incredible risk
13:00to reward.
13:00>> I'm with you. I think a lot of people
13:02stay away from consolidation cuz they
13:04it's noise and and it's choppy and you
13:06know, there's not the move, and then
13:07they'll get into trends cuz the trend is
13:09your friend. Sure, but the asymmetrical
13:10gain here is really if you can get in
13:12before the you know, before the move,
13:14before the breakout. I want to if you
13:16can follow me uh mentally here.
13:18I want to describe an inflection point
13:19and and kind of hear your elaboration on
13:21it. So, when you have a range, uh let's
13:23just call it a box where you have equal
13:25highs and equal lows, and we've just got
13:26a very static range. And then you shoot
13:28higher, you're breaking out of the
13:29range. Now, you're obviously going to
13:31have the breakout traders that are going
13:32to be waiting for a pullback into the
13:34range, maybe a break test, maybe a
13:35Fibonacci, an EMA, and they're going to
13:37go look to go long. And then you have
13:38the other side of it, which is the same
13:40breakout, but then this is now intended
13:42to be a sweep of the highs, grabbing the
13:44liquidity and stops, whatever, and then
13:46it pushes to the same mid-range area,
13:48but then continues lower. So, you have a
13:50point in the market this this inside the
13:52range where the price action prior is
13:54exactly the same, and then it just ends
13:56up in completely different directions.
13:58How do you differentiate, uh,
14:01considering yourself being a kind of a
14:02breakout pattern trader here,
14:04um,
14:05to not be on the wrong side of the
14:06market?
14:07>> Um, I prefer when it gets very tight.
14:12Um, and I mean, I think probably, what
14:15is it, the, um,
14:16I think it's called the ascending
14:17triangle is is my favorite type of
14:19pattern where you have like a flat top
14:21and an increasing slope into there. So,
14:23it's like a very, very tight
14:25compression. Versus if you have, um, you
14:27know, a range like this, to me that's
14:29still fairly loose, um, and it's just
14:31harder to have a defined risk point
14:32because it could break out above and
14:35like come back into the range, but it
14:36still wouldn't have broken the support.
14:37And I just that's not really tight
14:38enough for me. So,
14:39>> was doing just that in this period. It
14:41was it was ascending
14:42>> getting very, very tight, yes, just like
14:44that.
14:44>> And, um, is there any telltale signs
14:46inside that compression that will kind
14:49of give you an an idea of like it's more
14:50likely to break out in that direction,
14:52not that direction?
14:54>> Um,
14:55I mean, I tend to think most of the time
14:57that when you get, um,
14:59ascending support and like a flat
15:00resistance line, I tend to think that's
15:02going to break up to the upside. Um, and
15:05when you have, uh, you know, a flat
15:06support and descending resistance, I
15:07tend to think that's going to break to
15:08the downside. And then you can get the
15:09symmetrical ones where to me it's a
15:11little bit more 50/50. Obviously, they
15:13can end up breaking in whatever
15:14direction, but, um, I love taking
15:16breakouts and I love taking breakdowns
15:18on the short side as well when you get
15:19the flat base and the the descending
15:21>> And and how do you how do you go from
15:24trade idea, for example, this technical
15:26pattern that we're describing to go from
15:28idea to execution? What is your What is
15:31your protocol to take this as a actually
15:32I'm going to enter now today with this
15:34entry, this stop loss?
15:36>> Um
15:39there's certain things you can look at.
15:41Um
15:41depending on what the time frame is,
15:43like maybe you need to wait for the EMAs
15:44to catch up or the the SMAs to catch up
15:46and everything to get coiled and very
15:48tight. Um and that's usually what I
15:50would look for on like a bigger picture
15:51trade, but yeah, I mean, I think
15:54once you've seen the structure of the
15:56market enough, like you kind of know
15:58when price is ready to go and when it's
16:01not.
16:01>> Mhm.
16:02>> And that might sound like hard to
16:04replicate, but there's just like once
16:06you've looked at price enough, like I've
16:08gotten to the point now where
16:10for example, Ethereum right now, like
16:11it's building a nice flag and I think at
16:13some point this could break out and go
16:15well over 5,000, but um
16:18it just the flag didn't look ready to me
16:20yet. And so, you know, there's a lot of
16:21people who maybe were positioning long
16:23thinking that it has to break out. Um
16:25but to me it just looked like the flag
16:26needs more time to develop. And so, when
16:29I see that, I'm just I'm trying to stay
16:31out of that because the worst type of
16:33market for me uh where I take the
16:35biggest losses is a choppy market
16:37because I love betting um just on like
16:40the continuation, whether that is um
16:42because you get a huge parabolic move
16:44and I'm betting on continuation to the
16:45downside or I'm expecting a breakout and
16:47I'm betting on continuation to the
16:49upside, but if I bet on something and
16:50then it pulls back and I cut and then I
16:52flip short and then it comes back up,
16:53like that's where I take the big losses.
16:55So, I really like to wait for just the
16:56price action to get very tight.
16:58>> Mhm.
16:59So, just comparing my currency trading
17:02mindset, uh
17:04I I tried to cuz I started investing a
17:05lot this year, so moving towards stocks
17:07and indexes, and I tried to take my
17:10price action beliefs there and kind of
17:11bring it into this domain and just to
17:13see if it will assist me.
17:14And generally speaking, it didn't, um
17:16which was interesting. And what what
17:18what I would refer to as more primitive
17:20or basic technicals, which are heavily
17:23manipulated I and I see them getting
17:25trapped all the time in in currency in
17:27the stock market tends to play out. It
17:29was very interesting for me to see that
17:30just a break test which fails all the
17:32time literally daily basis in forex. I'm
17:35like oh, Tesla just did that and and and
17:36Bitcoin in essence just did that. So
17:38it's interesting to see the differences
17:40here. I don't want to explore for
17:42example an EMA that you're you're
17:43referring to him.
17:44Is it an idea kind of a self-fulfilling
17:47prophecy that if all the big players use
17:49these technicals
17:50is not there's nothing inherently
17:51powerful about the EMA. It's it's it's
17:53just a line. It's not necessarily a
17:55rejection point or something that price
17:57should move. But if enough people use
17:58that EMA enough orders get into the
18:00market then price must respect it. Is
18:03this the case that we're basically
18:04seeing you think?
18:06>> I could see that it's you know there's
18:08there's some elements of that but I also
18:10think that
18:11it's just there's like a certain amount
18:13that price can realistically move
18:15without having some type of
18:17consolidation. And so
18:19I think EMAs just help us to identify
18:21like okay maybe it's it's done enough
18:24consolidation and caught up to the point
18:26where it's ready to make another move.
18:28And I don't know why the math works
18:29specifically the way that it does on
18:31that but
18:32I I feel like it's just as much of that
18:34as it is the the self-fulfilling
18:36prophecy fact.
18:37>> Mentioning here the the kind of how much
18:40it could move or what what is the
18:41ordinary movements. Do you use any
18:43deviations average daily range average
18:45session movements
18:47inside your strategy?
18:49>> Um this is not something that I've been
18:50huge on but it's something that I've
18:52added to my playbook recently. If you're
18:54going to be a swing trader you
18:55definitely need to focus on the stocks
18:57that have the highest average daily
18:59range
19:01because if you're focusing on stuff with
19:02a 2% average daily range it's just not
19:04going to meaningfully move your
19:05portfolio like something with a 7 8%
19:08average daily range would.
19:10And and something that you you really
19:11need to think about because obviously
19:13there's an opportunity cost of sticking
19:14your money in stuff that's that's not
19:15moving.
19:16>> So the the what you just mentioned here
19:18of 1 or 2% in a day in currency that's
19:20wonderful. And and the reason being is
19:23we we can really explore leverage. You
19:25can even get 1 to 500 accounts. Whereas
19:27in in the stocks world it's basically 1
19:29to 1, right?
19:30>> Um, most of the brokers that I use give
19:33you 1 to 4 um, up to 1 to 4 intraday and
19:35then usually 1 to 2 overnight. Um,
19:38>> Have you found that restricting in any
19:40way in your career new traders run
19:42towards leverage like that's the savior.
19:44You've built a career in a in a 1 to 4
19:46environment. Did you ever feel like it
19:47was holding you back or has it been
19:48sufficient?
19:49>> Definitely it hasn't held me back at
19:51all. Yeah, I mean I guess I've I've been
19:53blessed to have enough capital to where
19:55you know, I don't really need to use
19:56leverage for the most part. I think
19:58there's certain times where maybe I'm
19:59trading less volatile stocks but that
20:01that give a great setup and I'm swinging
20:03large multi-million dollar positions and
20:04I need to use leverage for that. Um, but
20:06for the most part I haven't really
20:07needed it just because the majority of
20:09my career has been in small caps and in
20:12small caps or OTCs you can just get some
20:14ridiculous moves. Like Octo ran like
20:165,500% intraday the other day. Um, you
20:19know, and so when you get moves like
20:21that like why do you need leverage of
20:22any kind? Like if anything I want like
20:25reverse leverage. I want like
20:26>> Tone it down here.
20:27>> a quarter of 1% of my account in a in a
20:29stock like that because that's just
20:30terrifying. You know, so if I'm putting
20:32400% of my account in a stock that's
20:34making a 5,000% move like
20:36just no. There's no way to manage risk
20:38on that, you know?
20:39>> When when you look at the entire gain
20:41you've had over your career, which
20:42domain
20:44for example large cap, small cap, which
20:45asset class was the one that contributed
20:48the most profit?
20:50>> I would say small caps overall.
20:51>> Interesting.
20:52>> Yeah. Um, but that's it's definitely
20:54making a shift in recent years just
20:55because
20:56I've been expanding my playbook um,
20:59and just learning how to profit from
21:01similar patterns but on larger cap
21:03stocks. So like
21:05um, one of my good friends Jack Kellogg
21:07he told me that like the best time to
21:10uh try to capitalize on these large
21:12caps, which for the most part can be
21:14fairly choppy, but like for a day trade
21:15is when they start behaving like small
21:17caps. And so one of the patterns that
21:19I'm super familiar with is uh like the
21:22first red day when you get an
21:22overextended chart, a parabolic
21:24extension, uh and then it has a
21:26pullback. And if you know how to
21:28capitalize on that pullback, you can
21:29short it and make some good money. Um,
21:32and in general, large caps don't really
21:34give that pattern very often. And so
21:37when you get when you get a large cap
21:39that gets really, really overextended
21:41and starts behaving like a small cap
21:42where you get three, four, five up days
21:45in a row with expanding range and volume
21:47and they're gapping up each of those
21:48days, uh that's when you can
21:51actually bet big on these things. And so
21:53me learning that is like, okay,
21:56this makes sense to me. Like I have this
21:57experience from the small cap land, and
21:58so I can transfer this over to large
22:00caps. When large caps start behaving
22:02like small caps, that's when I can bet
22:03big on it and uh you know, actually have
22:05decent edge there. And so just by
22:07utilizing that, you know, I've been able
22:09to have some pretty decent trades on
22:10these over the last like year-ish since
22:13I learned that. Um, really the first one
22:15that I ever tried was SMCI. A lot of
22:17people have talked about this, but that
22:18was an amazing first red day uh back in
22:21February of 2024. Uh and I didn't really
22:24do too well on that because it was the
22:25first time I'd ever taken this trade on
22:28a large cap. Uh and I think I made like
22:3040K that day or something. Um, and then
22:32the same trade showed up again on MSTR
22:35in November of 2024 um when that had its
22:37first red day from like 540 down to like
22:40370 in a day.
22:42Uh and that day, you know, I I scaled up
22:43a little more. I think I made like 250K
22:45that day. Um, and you know, when the
22:47next one comes around, I'll be even more
22:49prepared and hopefully do even better.
22:50So just being able to recognize those
22:53patterns for small caps and when they
22:54start playing out in large caps is it's
22:56just this cool thing. And I only noticed
22:58that because my friend mentioned it.
22:58>> For the last 2 years, a proud sponsor of
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23:38get back to the episode.
23:39>> It's It's very interesting to hear I
23:41mean, knowing your backstory and having
23:43the $2,000 as your first account size to
23:46then be throwing numbers around, not
23:48even going to talk about the millions in
23:49a trade or a million in a trade, but
23:50even just 40K, 200K. Th- These are huge
23:53numbers.
23:54H- How do you mentally prepare for that
23:57kind of size?
24:00>> I don't think there's any way that you
24:01can prepare, really. I think it's just
24:04it it turns into a a number. Um
24:08and you kind of detach. Yeah, you you
24:10kind of have to detach. Um just through
24:12the years of doing this day in and day
24:15out, you get a little bit desensitized,
24:17you know? It's
24:18This might be kind of grizzly, but I
24:20feel like it's the same reason that like
24:21maybe someone who works at like a
24:23uh a butcher shop. Like they might be
24:25desensitized to blood. If you're like an
24:26EMT, you know, you don't care about that
24:28stuff as much. It doesn't affect you
24:29because you see it every day in and out.
24:31And if you're a trader, uh
24:33these numbers, they just start to lose
24:34meaning because
24:36>> Interesting.
24:36>> it trading money, like, you know,
24:38I was talking about the SMCI trade, like
24:4040K or whatever. Like, in real world,
24:41that is a a lot of money. Like, I can
24:43buy a ton of groceries with $40,000. But
24:46in trading money, that to me, that's
24:47like
24:47>> Mhm.
24:48>> that's like nothing now. Like, if I have
24:49a 40K day, I'm not even excited about
24:50it. I'm just like, okay, whatever, you
24:52know?
24:52>> I I think when you're when you're
24:53placing the trade, you can detach, but
24:55when you lose uh an amount, so let's say
24:57you lose an amount that you know is you
24:59could be like that could be an annual
25:01salary for someone or something like
25:02that.
25:04And then you start to say what could
25:05have done with that money. Those
25:07thoughts will naturally creep in.
25:09How do you, number one, make sure you're
25:11not getting too bogged down in a loss,
25:13but at the same time not getting too
25:15carried away and and you know laddering
25:17too aggressively and having too much
25:18euphoria cuz now a small lapse in
25:21judgment, which would have been maybe
25:22500 bucks or 1,000 back then, but now
25:24we're talking a serious lapse in
25:25judgment in terms of account size.
25:28How do you How do you maintain
25:30groundedness or following the plan when
25:32you extend it out to this large capital?
25:36>> I think you just it's it's about
25:38sticking to the process and no matter
25:40what kind of numbers you're seeing in
25:42front of you, you just keep doing the
25:43same thing. And that's for me is is
25:45trusting my trade plan, having a set
25:48risk that I'm allowed to lose before I
25:49enter the trade, having the max losses
25:51set at the broker level, and no matter
25:54what, you know, I know that I'm willing
25:56to lose this amount going into the
25:57trade. So like
25:59yeah, it might not feel great because I
26:00didn't really want to lose that much
26:02going in, but I was willing to do so. So
26:04even if it's a much larger number than
26:06it was when I started several years ago,
26:09I'm still okay with that and I know that
26:11it's part of the journey overall. Like I
26:13had my biggest red day
26:15in I think like since 2022
26:18this week. I had a 98k red day. I almost
26:21had my my first six-figure red day since
26:22my blow-up on
26:24on I like back in October of 2022. And
26:28you know, it didn't feel super great,
26:29but I was able to
26:31see the big picture, you know, all I
26:32have to do is I zoom out and I look at
26:34my overall equity curve and like it
26:35literally is the tiniest little blip
26:37there on that down tick.
26:38>> It's like price action. There's going to
26:40be down push.
26:41>> Exactly. And so that's I think that's
26:43the most important thing. Just like
26:44seeing the big picture and sticking to
26:45your process regardless of what the
26:47numbers are telling you. And something
26:48that I have actually been trying to be
26:50better about recently is
26:52systematizing a little bit more in terms
26:55of risk and it's something I still need
26:56to work on because
26:58to really excel as a trader
27:01you have to scale up risk accordingly to
27:03the size of your account and that is is
27:06very tough to do mentally. There's very
27:07few people who have been able to
27:09successfully do that at like the perfect
27:12level.
27:13Jeppez, I don't know if you've heard of
27:14him. He's
27:16I think he's from from Finland. He's
27:18he's a trader who started out with an
27:20algo and what he just made out he
27:22started out like systematically but he's
27:24a really good example of how you can
27:26compound your account like crazy.
27:28He started and I think a couple of years
27:30ago he was yeah at like 30k and now he's
27:33about to cross eight figures in profits
27:35and that's just because he's you know
27:37risking a set percentage of his account
27:39on all these trades and whether his
27:41account is
27:42100k or 5 million he's still risking the
27:45same percentage amount and so if you
27:46have the edge it can really scale it up.
27:48>> Yeah a lot of traders that I've seen
27:50scale up they start off in percentages
27:521% risk per trade and then they end up
27:54just doing fixed dollar amount
27:56per trade and somewhere along the way
27:58the percentage game kind of
28:00it just doesn't feel as comfortable
28:01anymore so I can see your point there.
28:04You know this idea of because what we're
28:06really discussing here is psychology
28:08the ability to adapt to the numbers and
28:09and whatever emotions that evokes in you
28:11but when I explore this idea of
28:13psychology especially because you
28:14mentioned someone systematic and coded
28:15into an algorithm this is a debate I've
28:18had and both ends of the spectrum are
28:20firm in their which is interesting to
28:22see but what I want to explore this with
28:24you this idea of like if you gave me
28:26your exact strategy and we spent two
28:28years figuring it out so you I could
28:30learn everything. In the end your my
28:32mine and your performance would be
28:33different and a lot of people do say
28:34well the reason the difference in
28:36performance happens despite maybe an
28:38objective strategy or equivalent
28:39information is just personality traits
28:41or psychology which is an interesting
28:43point.
28:44And in your sense it seems like you
28:46didn't necessarily address your
28:48psychology. It was just years under your
28:49belt and you like you said desensitize
28:52you you you acclimatize yourself to any
28:55emotion. The greed you maybe felt
28:57desensitize any big losses you took you
28:59start to get desensitized over time.
29:01Would you would you say psychology is
29:02something you have to take care of or
29:04it's something that takes care of itself
29:06as long as you're following the you know
29:08the right plan over time?
29:09>> It's not something that I actively go
29:11out of my way to take care of
29:13definitely. I think if you're
29:15doing the right things I would say the
29:17psychology just kind of takes care of
29:18itself. But I do know there's lots of
29:20successful traders like Lance he you
29:22know he specifically sees
29:24I believe like a trading psychologist /
29:26coach Jonathan Katz I believe is his
29:28name.
29:28>> Uh-huh.
29:28>> Um and he's done some videos with him
29:30and you know I think there's something
29:31to be said for that you know maybe to
29:32unlock the highest levels of your
29:34potential. But it's not something that
29:36I've personally looked into a ton at
29:37this point so maybe that's holding me
29:38back.
29:39>> Uh I don't think so to be honest in your
29:41stage I don't think so. But uh if we are
29:43to explore because this is kind of if if
29:45we can kind of divide a pie between you
29:48have your technical edge you can have
29:50risk management you can have
29:51fundamentals uh and then you have your
29:53psychology. If we are to distribute that
29:55through a pie chart which one would you
29:57give different weightings to?
30:00>> What are the pie elements?
30:01>> So let's start off with technicals and
30:03then fundamentals risk or
30:05account management and then psychology.
30:08Let's split it between these four. Uh
30:10how would you weight each one?
30:12>> Um
30:15I mean I probably the most important
30:17thing is to have some sort of edge
30:19because it doesn't matter
30:21to me any of the other things if you
30:22don't have edge so um
30:25I I would personally say for me edge
30:26comes from a combination of technicals
30:29and fundamentals on most plays. Um
30:33So to me I I don't know I would say
30:35maybe
30:35>> Where are you skewed? Are you more
30:36technicals driving or is it more
30:39fundamentals driving?
30:40>> I'm definitely more technicals driven
30:42because I just feel like there's there's
30:44too many times where technicals and
30:47fundamentals don't align and I think
30:50maybe in the end after
30:5310 years, whatever, fundamentals will
30:55play out. But there's just
30:57you know the saying markets can remain
30:59irrational longer than you can remain
31:00solvent. Um
31:02and we're seeing that play out right now
31:03with the quantum sector where you have
31:05stocks like RGTI, IONQ, QBTS, QUBT. All
31:10of these terrible stocks, I believe most
31:12of them have very little to no revenue.
31:15Um and you know they're multi-billion
31:16dollar market caps and in the last week
31:18they're up like 100% almost. Um after a
31:212000% run and then going sideways for 9
31:24months. And so this is just an example
31:26where you have short sellers betting
31:27against these things because
31:28fundamentally they're terrible
31:30companies, but technically it doesn't
31:32matter. You know, they made a a
31:33beautiful run, they got extremely tight
31:35and they broke out of a a perfect base.
31:37Um and so if you're too focused on
31:40fundamentals, you can just get
31:41absolutely destroyed.
31:43Just fighting this stuff because you
31:45know it doesn't make sense, but at the
31:46end of the day it doesn't matter. So
31:48that's why I prefer technicals because
31:49if if when I listen to those it stops me
31:51from being stubborn on the wrong side of
31:52a trade. And on the flip side like you
31:53can have great companies that are super
31:55undervalued for a long time just because
31:58um you know, the technicals just they
32:00don't they don't add up. Like UNH was
32:03was it got absolutely crushed. Obviously
32:05there were some fundamental aspects to
32:06that, but you know, it was very
32:07undervalued um for a while and if you
32:09were buying that aggressively on the
32:10front side all the way down like you
32:12could have gotten destroyed especially
32:13if you had leverage there.
32:14>> Would you would you look at certain
32:15things like the COT report or would you
32:18look at what the big players are trying
32:19to do and try and assess what is already
32:22priced in
32:23um or are you trying to read sentiment
32:26through price action?
32:27>> Yeah, I I wouldn't look at a report like
32:30that. Honestly, I've never even heard of
32:31that report.
32:33I mean for me it's just through price
32:34action. I mean you could also see what
32:36people are saying on social media. Um
32:38there's there's some aspect of that. Um
32:41but the biggest thing is just yeah,
32:42looking at price action, volume across
32:44sectors. Um
32:46if institutions are accumulating these
32:48stocks, like it's very obvious when you
32:50look at your scanners and you see all of
32:52these stocks in the same industry that
32:54are the charts look very similar.
32:55They're all doing a ton of volume uh
32:58regularly, consistently, day by day. So.
33:01>> An investor, they would obviously look
33:03at diversification if they're
33:05overexposed on one sector and so forth.
33:07Do you try and apply that when you are
33:10you know, day trading or trading
33:12uh the stock market in general?
33:14>> Um I prefer the saying like uh I forget
33:16who said I don't know if it was
33:18one of the great investors. He said I
33:20prefer to have all my eggs in one
33:21basket, but watch that basket very
33:23carefully.
33:24>> Okay.
33:24>> remember who that was. I don't know if
33:25it was
33:26>> saying.
33:26>> Yeah, I I don't know if it was Ackman or
33:28or someone along those lines, but um
33:30that's my personal philosophy. Like um
33:34I would rather have all of my bets in
33:37concentrated areas that I'm very
33:39convicted in and then just
33:41be watching it like a hawk and make sure
33:43that, you know, everything is going
33:44according to plan versus trying to
33:45diversify um and just putting risk on
33:48other setups that might not be as good
33:50as as the other you know, the setup that
33:52I prefer.
33:53>> I saw it just yesterday. I think it was
33:54maybe Ray Dalio's uh was quoted in
33:57saying that when you are worried, you
33:59don't need to worry and when you're not
34:00worried, you need to worry. And that
34:02kind of reminds me of if if you watch
34:03something enough and obsess over it and
34:05and see the the whole full picture and
34:07you're worried about it, you'll probably
34:09be okay. You don't need to worry about
34:10it. Um
34:11what space does crypto hold for you
34:13because it seems like it's not your main
34:14domain, but but it seems like you're
34:15still interacting with it.
34:17>> Um yeah, so crypto specifically, I don't
34:20trade like crypto itself. What I do is I
34:23trade uh the ETFs that are listed or the
34:26leveraged ETFs or the options for those
34:29ETFs
34:30um that are listed on the stock market.
34:31So I don't Yeah, I don't trade actual
34:33Bitcoin via, you know, perpetuity or
34:36anything. Yeah, I don't I don't trade
34:37it. So.
34:37>> Okay. Well, we mentioned earlier
34:40pyramiding and and this is kind of a
34:42risk or entry protocol. What are the
34:45styles of entries or sizing in would you
34:47would you or risk sizing uh would you
34:49do?
34:51>> Could you elaborate a little bit on
34:52that?
34:52>> For example, um if you have a very high
34:54conviction play, would you size up or is
34:56it always standardized risk? Maybe not
34:57percentages anymore, but fixed dollar
34:59amounts
35:00uh based on conviction or for example,
35:02if something is sizing up as a swing
35:03trade, uh maybe you size up because you
35:05know I can pull out an intraday amount
35:07and then and then let it run or go.
35:09Is there Is there any other creative
35:10things you may be doing? For example, in
35:12my case, I've been standardized my whole
35:14career of 1% risk. And
35:16I thought I was doing the right thing
35:17cuz I I was just taught that and it's
35:19the way I did it and it's all I know.
35:21And then through the show, I've spoken
35:22to so many traders that do creative
35:24things with risk. Uh and this year I
35:26started to change it through inspiration
35:28of my guests. And I started to realize
35:30maybe it was a form of holding myself
35:32back when I have an A+ setup that maybe
35:34it's not that frequent, but it's high
35:35conviction. The data's behind me. Why
35:37not do 2 or 3% risk? It's not the end of
35:38the world. And I tried it first time in
35:40June
35:41and it was to my favor. Uh so then that
35:44became something that was oh, this is
35:45something I can now continue to test and
35:46explore. Pyramiding I've never tried and
35:48and there's other things that I've seen
35:50people do. So, I just wanted to explore
35:51here cuz you've sized up from a from a
35:53small amount of money to a lot of
35:54amounts of money.
35:55Uh was what what was in there to to
35:57enable that kind of growth?
35:59>> Yeah, exponential bet sizing is
36:01something that has helped me a lot um in
36:04my later career to really go parabolic.
36:06>> Exponential bet sizing, what do you mean
36:07by that?
36:08>> So, this is also something that Lance
36:10Brightman talks about a lot. Um, so I
36:12definitely recommend watching his videos
36:13on that. Um, but basically, it comes
36:15down to not betting just 1% on every
36:18opportunity when you see it. Um, because
36:20not all opportunities are created equal.
36:23Um, there's
36:24>> Mhm.
36:25>> The I think the example that he likes to
36:26give is poker hands. Like there's plenty
36:28of poker hands that are positive
36:29expected value if you play them
36:32not all poker hands have the same
36:35expected value. So like if you get
36:37Jack Jack suited
36:39you probably would still want to play
36:41those in most circumstances, but you're
36:43not going to bet the same on that as you
36:45would on a pocket Aces because you know,
36:48just say Jack Jack suited so you can't
36:50be suited.
36:51But my point is like you know, you can't
36:53expect to bet the same on something that
36:55has a lower EV and get better results
36:59overall. So the the point is you want to
37:00bet exponentially more when you have
37:03these super rare setups that don't come
37:05along very often because you know that
37:07the vast vast majority of the time
37:09you're going to win on them and the vast
37:10majority of the time you're going to
37:12make a lot more than you would lose if
37:14you're wrong. And so when those come
37:15around you want to bet instead of like
37:17you know, one is your normal risk and
37:19betting two on this you might want to
37:21bet like eight on
37:23when you get just an absolutely
37:25incredible setup because it's just so
37:26likely to work. And when you do that it
37:28just juices your gains to a ridiculous
37:29amount.
37:30>> Let me let me push back on this from
37:32what other guests have said to me.
37:34Number one would be
37:36if you have high conviction plays and
37:37opportunities and then you have a
37:39hierarchy of these are my A+ setups,
37:40these are my A, B+ and and lower
37:42conviction rates.
37:43I guess
37:45as a signal of win rates. These have a
37:46high expected value, high win rate,
37:48these have lower ones. But like
37:50why even take the ones that have a lower
37:51expected value? Why take the worst off
37:53setups if you have these high quality
37:54ones? Why not only take them?
37:56>> Well again, just because there's still
37:58positive expected value in taking those
38:00trades, you know, it's like if you see
38:02money lying on the ground, would you
38:04pick it up? I mean, the answer is I'm in
38:06trading still at this point to make as
38:08much money as I safely can.
38:10And so if I have setups that come
38:13throughout the year that are not as
38:14good, I still want to be putting risk on
38:16those setups because they can add to my
38:17bottom line and keep me in the flow of
38:19the market versus it's a lot more
38:21difficult to execute and in my opinion
38:23there's a lot more pressure on you
38:25psychologically if you know, okay,
38:27there's going to be two opportunities
38:28throughout the entire year that I'm
38:29going to put risk on and if I mess these
38:31up like
38:32I'm going to have a red year versus
38:34okay, there's going to be 200
38:35opportunities, two of them are going to
38:37be insane, but I'm going to still be
38:39green
38:40pretty good going into these
38:42opportunities and have a cushion and be
38:43in flow with the market. So, that's what
38:45I would argue.
38:46>> Would you say it's accurate cuz I've
38:47heard traders say this that majority of
38:49your profits come from the minority of
38:51your year as to the
38:52effect I've heard I've heard traders say
38:54that
38:55two months of the year make my whole
38:56year.
38:57>> Yeah, I I looked at the data for 2024. I
38:59forget the exact numbers off the top of
39:01my head, but I believe it was like
39:04I want to say like the top 14% of my
39:07days accounted for like 82% of my
39:09profits or something like that.
39:10>> Oh, wow.
39:11>> Uh
39:11>> Truly an 80/20 split.
39:13>> Yeah, the Pareto principle.
39:14>> and was that by virtue of sizing up on
39:16those 14 days or it was just um
39:20these were my high conviction plays that
39:22don't appear that often. Um but these
39:24are the ones that contribute the highest
39:26risk to reward.
39:27>> Yeah, I mean I think it was a
39:28combination of both of those. That's
39:30when the best
39:31>> reward and high risk.
39:32>> Yeah, high risk reward, high win rate,
39:34and that's when I chose to bet
39:35exponentially. And my year could look
39:37very different if I didn't trade like
39:39that, you know.
39:40>> So.
39:41>> Now, one of the biggest
39:43ironies or or conundrums of the market
39:45is
39:46this idea of being wrong and loss
39:48because in general in life if you if you
39:51fail at something, you go back to the
39:53drawing board. You try again. You fail
39:54an exam, let me go study more. And this
39:57is like a feedback loop. Whereas
39:59obviously in the market you have to
40:00realize that losses are baked in and and
40:02sometimes a loss means you change
40:04nothing. This was a a valid loss. This
40:06is part of the plan.
40:07And the irony here is that the
40:09distribution of events will not be nice.
40:11It won't be win loss win loss and you
40:13could be smashed with a losing period of
40:14seven in a row.
40:16And the the way the reason I'm bringing
40:18this up is because when you are dynamic
40:20sizing, you might get a
40:22uh,
40:23a funny moment where the market is
40:24laughing at you and basically saying,
40:25"That big play that you sized up on,
40:27yeah, we're going to lose those, too.
40:28And then the ones you win on, they're
40:30the ones you had low conviction on, you
40:31low risk." So, even though your win rate
40:33might look okay, your risk reward might
40:34look okay just by virtue of the sizing
40:37that you did, you might be in the hole
40:38and in extended period of drawdown. And
40:40if it was in another scenario equal
40:41risking just to play devil's advocate,
40:43you would have been okay. How do you
40:45navigate those because I I know if you
40:46just zoom out, it's going to be okay,
40:48but I mean navigating those days or
40:50weeks where this ironic, uh, behavior is
40:53happening.
40:56>> I think that the cool thing about the
40:59extra conviction setups, usually for me
41:02that comes on mean reversion setups when
41:05you get
41:05>> Oh, interesting.
41:06>> a hugely overextended chart either to
41:08the upside or to the downside.
41:10>> So, why why do you think that is? I I
41:11would have assumed this accumulation and
41:13and and a consolidation and then a
41:15breakout and you you're running with the
41:16trend, you're running with the big
41:18movements. A mean reversion or reversal,
41:20why is that the the more asymmetrical
41:22play?
41:23>> I think to me it's like a win rate
41:25thing. Um, so like normally normally I
41:28like breakouts, um,
41:30but they do inherently have a much lower
41:33win rate than a mean reversion type
41:35strategy if you know how to time it
41:37correctly.
41:37>> Explore that with me. I would just
41:39assume a a breakout so with the trend
41:41would be more favorable and a trying to
41:44if I'm to use the the phrase pick the
41:46top or trying to reverse, uh, you know,
41:49catch a falling knife kind of term, uh,
41:51mean reversion is is by nature reversal,
41:53uh, seems more dangerous.
41:56>> It might Yeah, I mean
41:57more dangerous, I could agree with
41:59potentially, but the win rate is just
42:02it's just better. Um, it's a fact if you
42:05if you go look at the data, um, just
42:06because of the nature of how these
42:08things play out. So, when when you get
42:10in a breakout, the idea is you want to
42:11have really good risk reward. Like you
42:13might buy through opening range highs
42:15versus low of day. Um and that's like a
42:18very tight risk. And if it runs, you
42:19might hold it for a month and get really
42:21good risk reward. But you're going to
42:22get stopped out when it breaks through
42:24low of day, whether that's that same day
42:26or 2 days from now when it fails and
42:28then reclaims later. Like there's just a
42:29lot of um messiness that can happen in
42:32breakouts. And that means that the win
42:33rate is just a lot lower. Versus when
42:35you get a hugely extended chart, like
42:38MSTR, when it went up to 530, 540,
42:42the odds that MSTR is still going to be
42:44trading there a day from now, 2 days
42:46from now, are just incredibly low at
42:48that point. And so it's almost like
42:50it doesn't really matter where you enter
42:52at that point. It's just the big picture
42:54chart is just so overextended, the
42:56rubber band is so far stretched that at
42:57some point it's going to snap and come
42:59back down. And so you you don't have to
43:01be precise with your entry and your win
43:02rate is just a lot higher. And so that's
43:05where like I just get really convicted
43:07on those um because I know this is
43:09unsustainable. Versus a breakout, like a
43:12stock doesn't have to go up. You know,
43:14it can get really tight and then just do
43:15absolutely nothing, you know? There's
43:17plenty of times where that happens. Yes,
43:18I'm going to bet on breakouts when they
43:20look great, but that doesn't mean that
43:21they have to go up. But any stock that
43:23goes straight up will have a pullback at
43:25some point. It's just a fact.
43:27So
43:29I got a lot of I got a lot to explore
43:30and add. I want to start off with if I
43:32was a new trader and hearing this, I
43:34would be like, "Cool. I'm going to try
43:36and pick the top every time because this
43:37gives me the best opportunity of
43:39volatile elastic band popping back up. I
43:41want to be involved in that." So first
43:43of all, let's let's try and clarify
43:45uh how to do this in a safe way. And I
43:47want to share share a story with you. So
43:48I had a uh guest who's a market wizard
43:51and
43:51you know, he's he's maybe he's in his
43:5360s, I'm not quite sure. And he was
43:55managing $200
43:57uh himself as a hedge fund owner and
43:58then in his career up to $700 million.
44:00So he's a very competent trader, 30-year
44:02track record kind of thing. And his
44:03whole career was based on reversal
44:05trading. And I was like
44:08this this goes against what we are
44:09taught as traders 101, follow the trend
44:12kind of thing. And when we explored it,
44:13he was like, "Okay, so what kind of when
44:15when you see a trend, what is going on?"
44:16He's like, "Oh, the buyers are getting
44:17in and the sellers are getting out. So,
44:19you have the the tide on your side."
44:21He's like, "Okay, and as you get higher
44:22and higher, what's going on?" He's like,
44:23"Oh, there's more adding. I guess that
44:26they're pushing and more people are
44:27catching this tide." He's like, "What
44:28happens when it keeps going all the way
44:29to the top?" And I was like, "Okay, now
44:31you reach a point where there's like max
44:33buyers." And then then how's it going to
44:35go higher? I was like, "That's true. You
44:37can't there's not an infinite amount of
44:39buyers that can go." He's like, "Yeah,
44:40exactly. So, you reach a point where
44:41it's like on an oscillator it's reaching
44:4395, it's reaching this extreme." He
44:44called it crowded. He's like, "At some
44:46point, you just need a shock event." And
44:48he's like, "Sometimes it'll even be on a
44:50positive news that is just like the
44:52buyers start to get out and it's a
44:53cascade." And it's just like it runs
44:55back to the mean reversion, as you're
44:56saying. So, initially my gut reaction
44:58would have been like, "This doesn't
44:59sound like it's a favorable play." But
45:01when he explained it like this, I was
45:02like, "Oh, this makes a lot of sense cuz
45:04it's just built up tension and at some
45:06point it is going to break. But how do
45:08we take this philosophy and and kind of
45:10this wisdom behind of what's going on,
45:12the mechanics behind, and layer it in
45:14into, "Okay, let's just not keep picking
45:15highs. How do we know how to sensibly do
45:17it?"
45:18>> That comes from studying the past again.
45:20I mean, it's I'm going to sound like a
45:21broken record here, but that's just the
45:23best way that I have found to
45:26accurately pick entries and know when to
45:28get in stocks. So, I mean,
45:30there's plenty of examples of stocks
45:32that go up and might look like they're
45:33decent short and then they just keep
45:34going up, but I think the more you study
45:37the past and know how the biggest
45:41runners in history topped, the better
45:43you can identify in real time what these
45:46factors look like that make a run
45:49unsustainable versus being sustainable.
45:52You know, when you have a stock that
45:53makes three massive green days and then
45:55has some tight inside days,
45:58you know, that's consolidation. That's
45:59price acceptance. And there's a decent
46:00chance that that might not be a great
46:02short because, you know,
46:04could it break down? Yes, but it could
46:05also continue higher. But when you get a
46:07stock that goes parabolic parabolic and
46:09it just keeps speeding up on more and
46:10more volume, at some point, like I have
46:13seen from the past that that will have a
46:15decent red day. The more overextended
46:17that it gets. And you can classify this
46:18based on how far it is out of the base
46:21that it just made, you know, how many
46:22days has it been running for? How far of
46:24an extension is it? How big is the
46:26market cap? What is the average daily
46:27volume like? How much has the volume
46:29increased? All of these factors. How far
46:31extended is it over its 50-day moving
46:32average or its 10-day moving average? Um
46:34and when you get all of these factors
46:36aligning, uh that's where the odds just
46:38become more in your favor. And you
46:40combine that with an intraday entry
46:42strategy, which is like, okay, I'm going
46:43to enter once this
46:45uh breaks low of day with a high of day
46:47stop or whatever. And at that point,
46:49like you have a very fixed risk to
46:50reward. Um and you know what that is.
46:52And so, if it
46:54reclaims and makes a new high of day,
46:55you stop out. Um and then it gives you
46:57an opportunity to get back in later if
46:59maybe it goes a lot higher and then it
47:00breaks down again, you can short the
47:02first 15-minute candle break or
47:0430-minute candle break after high of
47:06day. Uh there's plenty of ways that you
47:07can structure an entry, but I think it's
47:09just finding the way that you can get an
47:10intraday entry based on the conviction
47:13of the overall daily chart.
47:15>> So, I want to explore a couple of things
47:16here. Number one is conviction. Now,
47:18conviction is a
47:21could be a feeling. It's like, oh, I I
47:22just feel like it's going to reverse.
47:24I've seen this play out. My intuition is
47:25getting involved. Market experience. And
47:27And this is a gray area. So, I want to
47:29explore that. And then pairing it to
47:31basically my opening question, the
47:32reason I asked it is for situations like
47:34this. Is trading an art or a science?
47:36Because now when we're talking about you
47:38you can add all of these confluence or
47:39based on momentum and and and deviation
47:41and, you know, an an oscillator, how
47:43overextended it is. You can start to
47:44say, okay, at some point this has got to
47:45reverse. But to your quote earlier,
47:48it can also keep going. It depends how
47:50much liquidity you have, how big your
47:51account is. How do we safely do it in
47:54terms of not to overfit because then you
47:56can add a 20 list things of like, "Okay,
47:58these are the reasons that market should
47:59reverse." But then
48:01how often is all 20 going to be there?
48:03How do you do this in a way that can be
48:05as scientific as possible?
48:08>> I'm I'm not a huge data guy.
48:10So, that's it's a question that's
48:12difficult for me to answer in that
48:13regard, honestly. I know that there's
48:15people who have crunched the numbers and
48:17and they know the exact percentage,
48:18etc., that it needs to be overextended.
48:20>> The The reason I ask is because you you
48:22kind of said, "Okay, let's study what
48:23happened at previous highs and and how
48:25they kind of back." Was there anything
48:27you noted that that is worth mentioning?
48:29>> Yeah, I mean, the biggest thing is
48:32the blow-off volume and the increasing
48:35range and typically gaps.
48:38And that's what I like to see. So, maybe
48:39that's not really a thing in like the
48:40Forex market, which I'm assuming is
48:4324/7. I don't know how that
48:45>> It It's 24/5.
48:46>> 24/5, okay. Yeah, I don't know if
48:48there's if there's gaps in the in the
48:49candles then. If they're
48:50>> Not not really. You have kind of an
48:52imbalance, but sometimes on a market
48:53open over the weekend, there might be
48:55>> Okay, yeah. Well, you know, for um
48:57for daily charts on stocks, which only
49:00show the intraday action on the daily
49:02chart between 9:30 a.m. Eastern time to
49:054:00 p.m., like all the action in after
49:07hours, etc., doesn't show up. And so,
49:09when you have a stock that is
49:10continually moving higher in after
49:12hours, like there's a huge gap on the
49:13daily chart. So, if something
49:15you know, for example, OKLO is one that
49:17I'm potentially watching
49:19for a parabolic short this week, because
49:21it's starting to really speed up on the
49:22daily.
49:23In my opinion, it would be a lot better
49:25of a setup if it went a day or two
49:27higher, but it's starting to get to that
49:29point where it's interesting me a little
49:30bit. Um And these are just some of the
49:32factors I look for. But like, if if it
49:34gaps up, the gap that I had yesterday,
49:37not yesterday, but the previous day, was
49:38like three or four dollars, I believe.
49:41And so, you know, if it starts having
49:42much larger gaps, like a $10 gap and
49:44then a push off of open, like to me that
49:46is that's like a sign of euphoria,
49:48especially on if you look at the
49:495-minute bar off of open or the
49:5115-minute bar, you just see like the
49:52volume versus the previous days. If that
49:54volume is just like enormous compared to
49:56the other days, that's another good sign
49:58of like this is blow-off euphoria.
49:59>> And I guess you got to pair it to
50:01sentiment and say, "Okay, there's no
50:02intrinsic value. This This is not a
50:04There's not something that has been
50:05revealed to the market like, oh, this is
50:07a bullish factor." It's like, "Okay,
50:08nothing has changed. It's just euphoria
50:10in price, not necessarily euphoria or
50:12intrinsic value."
50:13>> Yeah, I mean, they've gotten some
50:14contracts and stuff like that. But my
50:16understanding is they're still a
50:17pre-revenue company.
50:19Um
50:19>> Yes, yes, yes.
50:20>> But don't quote me on that. I just read
50:21that somewhere. But I mean, that's
50:22To me, the main thing that is important
50:24is just the extended chart. But, you
50:25know, all of those factors align. Um
50:28>> Back to this uh dynamic sizing because
50:30that's how we ended up in this topic. Um
50:32when you have pro-trend scenarios,
50:33breakout scenarios, counter-trend, and
50:35then you have the day trades and the
50:36swing trades, you know, you have a lot
50:38of variety. And I can see where it comes
50:39from because, as you said, like not
50:41every day is the same, and there's only
50:43pockets of opportunity across the year
50:44that are are really, you know, high
50:46conviction, which is why it makes sense
50:48to be dynamically sizing and and
50:50modifying things. With that being said,
50:51uh what is your philosophy in terms of
50:54conviction and low conviction and sizing
50:55high and sizing low? Is it just a factor
50:57of win rates here to to determine
51:00conviction, or is it overall assessment?
51:03>> Um
51:04>> Because it could be a lower win rates
51:05play, but you just see it as a 1:7 R.
51:08So, it's like, "Okay, this could be high
51:09conviction by virtue of risk to reward."
51:11So, what How are you defining what is
51:13high conviction and what's sizing up on?
51:16>> I'm not systematized about that either,
51:18to be honest. Uh I think it's just kind
51:19of a gut feeling.
51:21>> Interesting. Okay.
51:22>> Based on my experience in the markets,
51:23you know? Uh I don't think
51:26always I'm only betting larger on
51:30high-risk I mean, on on higher win rates
51:32setups because there's there's certainly
51:34breakout setups that I'll bet more on.
51:36But like, for example, the Bitcoin
51:37breakout, like the original original
51:39risk was 10K.
51:40>> Hm.
51:41>> Um which is extremely low for me because
51:43if I get an amazing first red day setup,
51:45I'll be willing to risk 100, 150, maybe
51:47even 200k on it.
51:48>> There's a huge deviation in risk. It's
51:50not like a 1% becomes 2%. It's It's It's
51:52a factor of 10.
51:53>> Yeah. And that's that's the whole
51:54exponential sizing thing.
51:56>> Okay. Uh super interesting. Okay.
51:59Uh go going into the actual entry,
52:01whether there's a high conviction or low
52:02conviction, maybe there is a difference
52:03here.
52:04I want to want to talk about trade
52:05management. Uh the reason I I ask is
52:08because my philosophy has been
52:11I'll get into a trade even if it's lower
52:12conviction, but I'll be very quick to
52:14break even that trade to to to de-risk.
52:17And if I get wicked out, so be it, but
52:18some the the way I'm trading is like I'm
52:20trying to capture when the momentum is
52:21getting in, so it should ideally be a
52:23tap and go. And if it's hanging around,
52:24it's it's not a good factor for me. So,
52:26I will be very aggressive to break even.
52:28What is your philosophy on trade
52:29management uh and specifically around
52:31break even?
52:32>> Yeah, I I do that a lot as well. Um
52:35there's certain people who I'm I'm
52:37probably
52:38fairly unique in terms of larger uh
52:41small cap traders in this. Most people
52:44that I've talked to, they have like a
52:45specific risk level um that they just
52:48they stick to kind of no matter what. Um
52:51whether that's, you know, if you're
52:51shorting, you short a lower high on a
52:54extended daily chart versus high of day,
52:56and no matter what happens, you're
52:57leaving your risk level at high of day.
52:59But for me, I'm I'm fairly dynamic with
53:01it in terms of what the price action
53:03looks like. And if it starts behaving in
53:05a way that I wouldn't expect in an ideal
53:07world, I'm very quick to de-risk that um
53:10and maybe, you know, get to the point
53:12where like, okay, if this is reclaiming
53:13my average, especially after a period of
53:15time, I'm just going to downsize a ton
53:16versus keeping all of that on versus
53:18high of day, like a lot of people would
53:20do. Um I'm under
53:22the opinion that or of the opinion that,
53:25you know, when you have these amazing
53:26setups, and you get in with big size,
53:28like they should really shouldn't be
53:29reversing and coming back to your
53:30average um if they're going to work most
53:32of the time. There are obviously
53:34exceptions to that and certain plays
53:35where it might be more choppy inherently
53:37by its nature. But I don't really want
53:40to be in with huge size
53:42at break even ever, you know, that's I'm
53:44I'm very uncomfortable in that position
53:45because that is where my largest losses
53:47in my career have come from. You know,
53:49the largest loss that I ever took in my
53:51career was where I went all in short on
53:53a pump and dump expecting it to go
53:54straight down and it did and then
53:56immediately reversed and I didn't take
53:57it off cuz I was thinking I was risking
53:59high a day and it blows through high a
54:00day and I'm just sitting there like a
54:02deer in the headlights already down
54:03multiple hundreds of thousands of
54:05dollars and it just keeps going and
54:06going and going and going. Like I don't
54:08like being in that position, you know, I
54:10I know what that felt like and so now
54:12yeah, I'm just if it's not working I'm
54:14in big size, I just get out immediately.
54:15That's how I manage trades.
54:17>> You know, when you have a factor of 10
54:18risk difference between your lower and
54:20higher entry types,
54:22when when you let's say you're doing an
54:24aggressive play or or more risk on the
54:26table
54:27and it's it's running in your favor. So
54:29everything is good and maybe you you
54:30break even the trade, so you know that
54:31you're not going to lose anything now.
54:33And then you have, you know, let's say
54:35you're one to two up and it's like,
54:36okay, we're going good in profit. Then
54:37you have a healthy 50% retracement and
54:40those swings whilst you are in the trade
54:42are larger. It's an interesting mental
54:44thought to say like if if I'm willing to
54:46risk a thousand dollars on a trade, then
54:48I know my worst case scenario is a
54:49thousand dollars. But if you allow 4,000
54:51up and it goes back down to 1,000,
54:53you've actually lost 3,000 in unrealized
54:55which is greater than your risk you're
54:57willing to lose, it's just unrealized.
54:59And and that could be a more burdensome
55:00feeling.
55:01Talk to me about that when you are now
55:03risking a lot larger and that swing is
55:04now 10x what you're used to in terms of
55:07numbers on the screen.
55:09The roller coaster of emotions in the
55:10trade even when you're risk free.
55:13>> So when you're in a trade, there's
55:15always dynamic expected value. If you're
55:17shorting an overextended stock
55:20and the stock is still green on the day
55:22because it's on its, you know, sixth
55:23green day in a row and it gapped up 20%
55:25that day,
55:26the odds are pretty good in your favor
55:28that the stock is going to come down.
55:29But if you enter there and now the stock
55:31goes down and it's straight down and
55:33it's down 20% on the day, whereas before
55:35it was up 20% on the day, the odds are
55:36no longer the same, you know? And so,
55:39depending on
55:41the overall time frame of your trade,
55:42you definitely need to be, in my
55:44opinion, actively managing um your
55:47overall risk exposure. Because if I'm in
55:50something that makes a straight move
55:51after my entry, and I'm in huge size,
55:53and then it starts reversing off of that
55:54straight move, most of the time I'll
55:56lock in a good amount of profits, unless
55:58I'm like specifically thinking this is
56:00going to be a huge big picture swing
56:02trade. Um because at that point I'm
56:04thinking, "Okay, whatever intraday move
56:06it makes today,
56:08I don't think this is going to be it by
56:09any means, and I think, you know,
56:11potentially it's only 5 or 10 or 20% of
56:14the overall move that it could make, and
56:15I don't want to risk losing my position
56:17by getting out and locking in profits
56:19here." But if if I'm in a day trade,
56:20man, and I'm in huge size, and it goes
56:22my way a lot, and it starts turning, I'm
56:24Yeah, I'm taking the vast majority, if
56:27not all of those profits, because
56:28usually it gives some kind of
56:29retracement, and then it'll like
56:30consolidate, and then make another leg.
56:32And so, usually it'll give another entry
56:33point.
56:34>> Yes.
56:35You know, I see a lot of TikTok traders
56:36and influencer kind of making reels at
56:39this idea of
56:41if you break even a trade, or if you
56:42move your stops to break even, uh you
56:44didn't trust your analysis. You you
56:46haven't done the You haven't done the
56:47work correctly. And uh just overall
56:49managing a position, it's it should be a
56:51more set and forget thing of like if you
56:52made a decision to get in, you got to
56:54see it through.
56:55Um
56:56I don't agree with it, and and I heavily
56:57manage positions. Seems like you're also
56:59in that camp. Um what would you say to
57:01that kind of belief uh of like once
57:03you're in, you got to let it see You got
57:05to see it through inside the stop or
57:06profit.
57:08>> I can understand that argument because
57:11most of the time your average price is a
57:15fairly irrelevant level on the chart
57:18overall versus like where you should be
57:20risking.
57:22What most people say is that you want to
57:24exit the trade when
57:26your thesis is invalidated.
57:29And for most people on the loss
57:31>> Yeah, correct.
57:32>> Okay.
57:32>> Correct. You know, you would you would
57:34want to stay in the trade and give it
57:35the chance to work out until your thesis
57:37is invalidated. And for most people,
57:38that's going to be when it breaks your
57:39risk level that you had set when you
57:41went into the trade.
57:43Um
57:43and I just think there's there's
57:44multiple ways of looking at that. For
57:46me, my thesis might be invalidated when
57:49the stock isn't doing exactly what I
57:51expected it to do, which is go straight
57:53down from my entry when I'm shorting, or
57:55go straight up when I'm buying a
57:56breakout, you know? And to me, just the
57:58fact that it's chopping around there is
58:00invalidating my thesis. So, there's
58:02definitely two ways to look at it, and
58:04um
58:06I don't know that there's a a great
58:07answer there. I mean
58:09>> No, I I I see I see it because um the
58:11information you had at the time of
58:13entry, the invalidation was here, high
58:15of previous day, let's say. And then, as
58:17you've got into the trade, you are
58:18monitoring Other people won't be
58:19monitoring, but you're monitoring
58:20momentum, reaction speed, do the
58:22participants get in in the direction I
58:23want them to get in? If they're chopping
58:25around, this is a bad sign, and maybe a
58:27signal or an invalidation. Therefore,
58:29you can now monitor or manage this
58:30position, whereas if it's tap and go,
58:32this is a good sign, don't need to
58:33manage it.
58:34Um and I guess others, let's say a swing
58:35trader, they wouldn't be adopting that
58:37kind of immediate cuz they're not trying
58:39to time the market the same way a
58:41scalper or intraday trader would be.
58:43Is a time of day of entry important for
58:45you?
58:47>> Yes. Yes, it is. Um I think you tend to
58:50get a lot cleaner moves around open. Um
58:52if you're trying to buy
58:55a breakout at like 1:00 p.m.
58:58I found it's just it tends to be lower
59:00volume and lower follow-through.
59:02Um and that's just something that
59:04you kind of have to keep in mind. Um
59:07>> It would be something that you consider,
59:08or it would be almost a full minute
59:09invalidation if it's in the tail end of
59:12the day.
59:12>> It really depends on just the overall
59:15daily setup and like, yeah, how
59:16convicted I am in this thesis in
59:18general, but um you know, if if the
59:21perfect daily chart is breaking out at
59:241:00 or 2:00 p.m., it's not going to
59:25stop me from buying.
59:27But mainly like maybe there's smaller
59:29intraday trades on like a a day one gap
59:31and runner
59:33that I would I would buy the morning
59:35breakout on if it's happening at 10:15
59:37a.m. But if it's happening at 2:00 p.m.
59:39I'm just like it's probably going to be
59:40a fake out, you know.
59:41So that that's probably the the main
59:43time that I would care about that versus
59:45larger picture chart.
59:47>> Referencing back to what I just said of
59:48like your unrealized loss
59:50on a retracement can be greater in
59:53dollar amount to your initial risk. So
59:55with that philosophy
59:57do you have any as you start to run
59:59towards profit now any approaches to
1:00:02trail
1:00:03your stop not just break even but like
1:00:04okay protection mechanisms
1:00:06or is it just trying to find that first
1:00:08impulse and lock something in and and
1:00:10then leave the rest?
1:00:11>> Yeah, there's plenty of ways that you
1:00:12can trail. You can trail based off of
1:00:14prior bars and you can choose the time
1:00:16frame there. Like if it's a super super
1:00:17clean move exceptionally clean move you
1:00:19can trail two minute bars. You know, and
1:00:22just wait until
1:00:22>> lows in a in a buy.
1:00:23>> Yeah, exactly.
1:00:25Or if it's going down you just once it
1:00:26breaks and makes a higher high on the
1:00:28two minute bars you just you get out of
1:00:30the trade or exit a part a portion of
1:00:31the trade.
1:00:33And there's also EMAs that you can use
1:00:34like I've I've dabbled in that a little
1:00:36bit. I have some friends who swear by
1:00:37like the what is the five minute nine
1:00:39EMA for intraday trades and the first
1:00:42the first time it closes under that you
1:00:44know, you want to get out of momentum
1:00:46long stuff like that. So I've dabbled in
1:00:47that a little bit just to practice
1:00:48holding or
1:00:49>> Either way if it's a five EMA or a two
1:00:51minute candle whatever whatever we
1:00:52explore here it seems like the very
1:00:54tight. It's like okay the the first kind
1:00:57of retracement you're going to tap an
1:00:58invalidation of a EMA or a or a two
1:01:01minute candle.
1:01:02Is this the idea you want to be managing
1:01:04very
1:01:05like what's the word like inclined like
1:01:07you were at the super
1:01:09the super tight price action and the
1:01:10moment you get a bit of a break you want
1:01:12to take a partial. Is this the
1:01:14philosophy?
1:01:15>> For the most part on just on smaller day
1:01:18trades and and scalps and things like
1:01:19that.
1:01:20Again it just depends on conviction
1:01:22level and how much the overall daily
1:01:24chart is
1:01:26saying to me that there's going to be a
1:01:27huge continued move.
1:01:30But I take again, I take a lot of trades
1:01:31and the vast majority are not with
1:01:34perfect super extended daily charts
1:01:37where I have conviction in a huge move
1:01:39that might continue into the next day.
1:01:40You know, most of the time I'm trading a
1:01:42small cap that might be like, okay, I
1:01:44have a feeling that this
1:01:46this stock that is kind of scammy is,
1:01:47you know, could potentially push higher
1:01:49today. So I'm going to buy some on this
1:01:51breakout and sell into the push once it
1:01:53starts breaking down the trail. But
1:01:54>> What about the idea of the reversal mean
1:01:56reversion where you know where the mean
1:01:58is and and that could be several days
1:02:00away and if you're just to forecast how
1:02:02long it should take.
1:02:04How would you then project a trade
1:02:06management when you have a lot of
1:02:07potential in a trade?
1:02:09>> You can trail
1:02:11versus the daily bars on that as well.
1:02:14I know I think
1:02:16I believe on the um
1:02:18the August 5th panic with the Japan yen
1:02:21trade back in 2024. I think that worked
1:02:24pretty well.
1:02:25If you bought that and then trailed the
1:02:27the daily lows on some of these stocks,
1:02:29it just worked incredibly well. And that
1:02:30was like the reverse. So not a
1:02:32overextended to the upside like
1:02:33parabolic, but kind of parabolic to the
1:02:34downside where you get spy with a red
1:02:36day, a gap down, another red day,
1:02:39another gap down and then the reversal.
1:02:41And so that was yeah, kind of the
1:02:43reverse there, but
1:02:44>> What what is your philosophy to let's
1:02:46say in a buy scenario to protect
1:02:47yourself on the lows of current price
1:02:49action whether it's through an EMA or
1:02:50low of the two minute or the daily, but
1:02:53you're you're using current immediate
1:02:55price action to determine your behavior
1:02:57as opposed to you enter a buy and you
1:02:59could see there's a resistance level,
1:03:01there's a counter trend line. Like you
1:03:02could have all these
1:03:03resistance or reversal factors that you
1:03:06can foresee.
1:03:07Why use current price action to protect
1:03:09yourself to get out as opposed to past
1:03:11price action reversal points?
1:03:13>> I'm going to be honest, I've never found
1:03:16that to be super super helpful at least
1:03:18in terms of
1:03:20um
1:03:22exiting, I guess. I don't know. I mean,
1:03:23there's I know lots of people who used
1:03:25like the short into resistance strategy
1:03:28where you see a daily chart that's
1:03:29topped out a bunch of times at a level
1:03:30and it pops up into that level and you
1:03:32short at that level.
1:03:33Um but I just yeah, I don't know.
1:03:35>> What about the exits?
1:03:36>> Yeah, for me it's just not something
1:03:37that I've I've found super helpful
1:03:39because it's a little bit too
1:03:41too difficult to determine exactly like
1:03:44whether it's going to stop exactly at
1:03:46that level or it'd go through that level
1:03:47and then does it still count? To me,
1:03:48that's just not something that's that's
1:03:50been helpful. I always just kind of get
1:03:51chopped
1:03:52when that happens.
1:03:53>> interesting one because you could also
1:03:54say like, oh, the simple market
1:03:55structure. I buy and then when I form a
1:03:57higher high on 1-hour time frame, then I
1:03:59know, okay, at some point this will
1:04:01reverse. It's a good exit point. But
1:04:03then I see your point here of like,
1:04:04well, what if it keeps going? And then
1:04:05when you do project these potential
1:04:07reversal points, you could also have 10
1:04:08on a screen. Where is the resistance
1:04:10trend line, higher high, EMA and it's
1:04:12like, oh, which one do I pick? So then
1:04:13some people will manage a long or you're
1:04:15just managing from the beginning, which
1:04:16is an interesting interesting
1:04:18perspective. Uh do you believe in
1:04:21I want to use the word liquidity. I
1:04:22don't know if that translates well for
1:04:23you, but just ideas where
1:04:25common stops would be. A support level
1:04:27that's probably stops below a trend line
1:04:28that's probably stops right above it. A
1:04:30session highs or day high, uh week high,
1:04:32etc. Do you believe that
1:04:34uh reversals or reactions can happen
1:04:36around these key levels?
1:04:37>> 100%. Yeah, and it really depends on how
1:04:40rigged the asset or or stock is in
1:04:43general.
1:04:43>> Why do you use the word rigged?
1:04:45>> Because there's I guess there's like if
1:04:46you've ever watched a super, super
1:04:49liquid stock
1:04:51um
1:04:51trade, it trades differently than
1:04:55other assets that might have um
1:04:57like a very low float where it's easy
1:04:59for one entity to accumulate the whole
1:05:02float and then manipulate the price
1:05:03action to their benefit, whether that's
1:05:05to run that up so that they can later do
1:05:06an offering or something along those
1:05:08lines. Um versus if you have a stock
1:05:11that is like a a 500 million share float
1:05:13that's doing a ton of volume, they just
1:05:15trade they trade differently. They trade
1:05:17a lot cleaner. And so when you get the
1:05:18low floats that do it a lot of volume,
1:05:20um those tend to be more manipulated or
1:05:22rigged where you'll get these clear
1:05:24support levels that are painted and it's
1:05:26just like holding this level perfectly
1:05:27and then it'll swipe through this level
1:05:29and it's like, "Oh gosh, all the long
1:05:31stop out, all the shorts hammer." And
1:05:32then in one candle, you'll get like, you
1:05:35know, a 30% rip back up and it's just
1:05:37like, "That's not normal price action."
1:05:39You know, stocks don't move like that
1:05:40unless somebody is controlling the
1:05:42action behind the scenes because they
1:05:44have an agenda.
1:05:45>> I like the way you worded it. Was it the
1:05:47the longs get
1:05:48uh something and and the shorts get
1:05:50hammered? Swiped and hammered, I like
1:05:52this. I'm going to I'm going to use that
1:05:53phrase. But what you're describing here
1:05:54is a cornerstone of my strategy. I call
1:05:57it an inducement. When when you see
1:05:58price flush and you're inviting an
1:06:00activity and taking out other
1:06:01participants, it's like, "Who's doing
1:06:03that?" It's got to be someone that is
1:06:04relevant. And thereafter, if you get
1:06:06confirmations, that it should it should
1:06:07rip in the direction that uh right after
1:06:10stopping people from buying, it then
1:06:11ends up long. Um because then I usually
1:06:13know that's a protected low. And then if
1:06:14I have if I see the signatures, I know
1:06:16momentum is on my side and it's just a a
1:06:19really juicy setup for me.
1:06:20Do you use that signature to your
1:06:22advantage in any way?
1:06:23>> I do, yeah. Um those are typically like
1:06:26more lower conviction trades for me um
1:06:28just because
1:06:31the way I like to trade is with pretty
1:06:32tight risk. Uh again, you know, trying
1:06:35to get good risk reward and maybe
1:06:36sacrifice my win rate. And a lot of
1:06:38these can be very whicky.
1:06:40>> Would you not say that the asymmetrical,
1:06:42you know, that really great risk reward
1:06:43is in opportunities like this because
1:06:45you have a nice invalidation, which is
1:06:47just that flush price action, the low of
1:06:49that, which typically will be not a
1:06:51huge, you know, a huge size. And then,
1:06:53well, if you got the momentum after that
1:06:55manipulation, it should rip in your
1:06:57words. So would you not say that there
1:06:58is a good risk reward potential in these
1:07:00ideas?
1:07:01>> Um
1:07:02you can it just depends how how far they
1:07:05want to go, but it's it's hard to know
1:07:06that. And also, the liquidity is just
1:07:09very different in small caps versus the
1:07:11kind of stuff you're trading. Um because
1:07:13when they really want to flush these,
1:07:15like I could have 5 or 10% slippage uh
1:07:18on my stop when they just absolutely rug
1:07:20these things. And so, it's difficult to
1:07:23>> So, the risk is not because of the price
1:07:24action model is risk by virtue of you're
1:07:26trading a small cap.
1:07:27>> Exactly. Yeah, and when something has a
1:07:301 million share float and is doing 2
1:07:32million volume per 1-minute candle, it's
1:07:34like they can just make some ridiculous
1:07:36moves. So, yes, I can be pre-convicted
1:07:39that that's going to have a crazy uh
1:07:41type of manipulation move. Like uh AGMH
1:07:44was actually a pretty good example this
1:07:45past week. Um it had some some pretty
1:07:48trappy action that looked like that. Um
1:07:50and these candles, these dip and rip
1:07:52soap candles, um where it clears out
1:07:54under support and then it, you know, it
1:07:55washes everybody and then they run it
1:07:57after that. Um and I did buy that, but
1:07:59that's just one of those examples where
1:08:01I'm not putting
1:08:02exponential risk on something like that
1:08:04because I'm not super convicted because
1:08:07uh the risk reward is not super great,
1:08:09and I don't even know what the the win
1:08:11rate would be on that. It's just kind of
1:08:13more from feel trade um just watching
1:08:14the tape.
1:08:15>> I've spoken to a variety of guests on
1:08:17the show, and a unanimous common
1:08:18denominator between all of them is the
1:08:20emphasis they put on data and actually
1:08:22knowing the inner workings and the
1:08:23insights of your edge and your
1:08:25performance. That's why I'm proud to
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1:09:00link in the description or code TOT for
1:09:02Titans of Tomorrow.
1:09:03>> You know, it's interesting cuz from the
1:09:05Forex side that I'm in, these talks of
1:09:07like liquidity slippage and and like
1:09:09will I get fulfilled and all these
1:09:11things is never a consideration yeah at
1:09:13any retail level. But now hearing this
1:09:15from you and and I want to reference
1:09:16back to a conversation I had a couple of
1:09:17days ago with a quant trader and he's
1:09:19like
1:09:20he's a genius. He's not one of these
1:09:21phenom kind of he's an author and he's
1:09:23done a lot in his career and I was
1:09:24exploring this idea with him of
1:09:25you know, just this what we described
1:09:27this price action model of of a sweep of
1:09:29liquidity. I was like, you know, why
1:09:30don't institutions
1:09:32I first of all I asked him about he's
1:09:33like, yeah, I can totally see that. That
1:09:34makes so much sense. So I was like, so
1:09:35why can't that be coded in or why is
1:09:37that not what institutions are
1:09:39arbitraging or you know, this is a huge
1:09:40opportunity. He's like, what when you
1:09:42add enough size,
1:09:44uh you have an alpha decay. It's like by
1:09:46exploiting the market inefficiency, uh
1:09:49you close up the market inefficiency.
1:09:51And he said what the reason that these
1:09:52big institutions are not scalping or day
1:09:54trading in the same way that you and I
1:09:55may is because the fees and and the
1:09:58mechanics of taking those trades forces
1:10:00them to be a swing trader or long-term
1:10:02position trader. Hence, they have to be
1:10:03now fundamentally oriented and so forth.
1:10:06But he said in the ideal world, they'd
1:10:07actually love to be doing these kind of
1:10:08plays. It's just liquidity becomes an
1:10:10issue. I was like, oh, that's so
1:10:11interesting. But then now you're saying
1:10:12you're facing the same thing at at at a
1:10:15individual level. So this this is super
1:10:17interesting. Have you explored or
1:10:19considered other markets cuz right now
1:10:20in the US specifically there's been a
1:10:21rise of futures trading. I think that's
1:10:23by virtue of the Forex side and CFD kind
1:10:26of shut off because a lot of prop firms
1:10:28shut it off and then the rise of futures
1:10:30prop firms. So there's been a shift in
1:10:31the last few years
1:10:33from newcomers to go towards futures
1:10:35whereas it seems like you've been happy
1:10:36in your domain. Um what is what is your
1:10:38thoughts on this change that's
1:10:39happening?
1:10:41>> I think I'm pretty happy where I am
1:10:43overall.
1:10:45Um
1:10:46I would like to expand my playbook and
1:10:47and get into futures at some point, but
1:10:49it's not something that I would be
1:10:50actively trading on a day-to-day basis I
1:10:53don't think because I feel like
1:10:54the markets that I stick to is where
1:10:58>> is where your edge is.
1:10:59>> It's where my edge is, but also it's to
1:11:01me it just feels like there's there's
1:11:02more edge in general. I feel like
1:11:05I feel like a lot of futures markets are
1:11:07just more efficient than small caps in
1:11:09general.
1:11:11Especially forex markets, I think those
1:11:12are even more efficient.
1:11:14>> How are you using the word efficient?
1:11:15What do you mean by that?
1:11:16>> Efficient like there's less exploitable
1:11:19opportunities.
1:11:20Less clear points where a skilled trader
1:11:24could just absolutely crush it in my
1:11:26opinion. Like
1:11:28I'm going to keep quoting Lance, but he
1:11:29he has this term called the broken slot
1:11:31machine, which is basically like you you
1:11:32want to go and find just
1:11:34the opportunity where you can close your
1:11:36eyes and just go like this and it's it's
1:11:37going to be printing money. And you want
1:11:39to be there versus at all the other slot
1:11:41machines where they're just going to
1:11:42take your money. And to me there's like
1:11:44a lot of noise in the markets and
1:11:46there's not really that much opportunity
1:11:48overall. And you have to be very
1:11:51explicit about where your edge actually
1:11:52is and define that and stick to those
1:11:54areas. And for me there's just a lot
1:11:56more of that in small caps and in, you
1:11:58know, occasionally options and large
1:12:00caps. But
1:12:00>> Would you say there's a correlation
1:12:02between
1:12:03more liquid an asset is the less
1:12:05exploitable opportunities there could
1:12:06be?
1:12:07The broken slot machine is more likely
1:12:09to be in small
1:12:09>> I would agree with that. Yeah, because I
1:12:11mean I think more bigger players are
1:12:13involved in the most liquid assets and
1:12:15because of that they have
1:12:17obviously the most resources available
1:12:19at their disposal and they're able to
1:12:21Yeah.
1:12:21>> advantage. Yes, I hear it.
1:12:22>> They're able to arbitrage all of those
1:12:24inefficiencies away.
1:12:25>> So, if I'm to extrapolate this thinking
1:12:27out it's very easy to end up in well,
1:12:29we'll less trade meme coins then. And
1:12:31you can end up in that world where it's
1:12:33very illiquid and and it's very
1:12:34community orientated and very manipu-
1:12:36you know, there's a lot of opportunity
1:12:37there also.
1:12:39What what's your thoughts to that side
1:12:41of it?
1:12:42>> I'm just not super familiar with
1:12:45the mechanics of meme coins. I've tried
1:12:47to get into them a few times, but
1:12:50to me I just can't trade them in the
1:12:51same way because
1:12:53um
1:12:54like the slippage um just to buy and
1:12:57sell, there's like, you know, what there
1:12:59was like a 7 8% fee when I tried to do
1:13:01the transfer through PooCoin and all
1:13:03that stuff. So, uh to me like if I want
1:13:06to have tight risk reward and by the
1:13:08time I'm buying and selling, I'm already
1:13:10losing like close to 20% in slippage,
1:13:12like I can't trade like that.
1:13:14>> At what account size, if you don't mind
1:13:16me asking, did you start to run into
1:13:17issues of okay, now I've got to think
1:13:19about my positions maybe not fulfilled
1:13:22in the way that I want them to be or the
1:13:24markets that I trade now have to have
1:13:25considerations. When did that start to
1:13:27happen to you?
1:13:29>> Um
1:13:32it really just depends on the
1:13:33opportunity because
1:13:35I'll trade stocks that have anywhere
1:13:37from, you know, a few hundred thousand
1:13:39dollar volume per day with small size
1:13:41just because I can't stay away um
1:13:43to stocks that are trading multi-billion
1:13:46dollars in dollar volume per day. And
1:13:48obviously on those multi-billion, like
1:13:50I'm not moving the stock at all uh in
1:13:52any meaningful way even if I'm taking
1:13:54multi-million dollar positions. Um but
1:13:56you know, I've definitely hit liquidity
1:13:57issues in some of the lower ones with
1:13:59maybe a few million dollar volume on the
1:14:01day
1:14:02uh with just a, you know, maybe a
1:14:03sub-million dollar account uh a year or
1:14:05two ago. So, you definitely run into
1:14:07those issues if you're trading small
1:14:08caps.
1:14:09>> I want to say at the age of 28 that you
1:14:11are, you've achieved what most people
1:14:13dream of and
1:14:15I guess um you made an amount of money
1:14:17that your day-to-day life will not
1:14:18change even if you double the amount. Uh
1:14:20what keeps you going or what is your
1:14:22goals with your trading cuz you're so
1:14:24young, you got a whole career ahead of
1:14:25you if you want.
1:14:27>> Um
1:14:28yeah, I mean it's
1:14:30I would say I'm kind of split between
1:14:32like pursuit of of perfection of my
1:14:35craft and uh also just what I can
1:14:38accomplish with the money. So, like I'm
1:14:41I'm definitely a perfectionist and I
1:14:42love pushing myself to be the best that
1:14:44I can in every facet of my life. Um and
1:14:49so that is one thing that motivates me
1:14:50for sure, but you know, I think my life
1:14:52would change if I could significantly
1:14:54increase the amount of money that I'm
1:14:56able to pull in from trading just in
1:14:57terms of the good that I'm able to do in
1:14:59the world with my family. And you know,
1:15:03we've been working on charity projects.
1:15:05We're building schools in Columbia with
1:15:07with Tim Sykes that are opening in like
1:15:08a month. So you know, I'm just really
1:15:10excited to be able to do more projects
1:15:11like that and just to know how much
1:15:14impact
1:15:15$50,000 can have to someone in in
1:15:18underprivileged countries is is crazy.
1:15:20And so when you get to the point where
1:15:22you're at these uber high levels and you
1:15:23can pull in
1:15:25multi eight figures in a year like
1:15:27the amount of good you can do with that
1:15:28is just crazy. So I'm I'm really looking
1:15:31forward to hopefully being able to do a
1:15:32whole lot more of that at some point in
1:15:33my career.
1:15:34>> It's It's interesting to observe if
1:15:36someone's north star has shifted from
1:15:38what a young traders would be is like
1:15:39materialism and
1:15:41just want to get rich and ideally quick
1:15:43to now being like okay,
1:15:45philanthropy and and and and a greater
1:15:47cause and and looking more towards
1:15:48fulfillment. To someone that is younger
1:15:50and she's chasing the the finance side
1:15:52and the materialism side and I've been
1:15:54there and I'm sure you've been there in
1:15:55your early days.
1:15:57What kind of advice would you give to
1:15:58them in terms of especially in the city
1:16:00Miami where that's all around and that
1:16:02that can be a very strong pulling force
1:16:04or a magnet. What kind of advice would
1:16:05you give to that young 21 year old
1:16:07trader?
1:16:09>> It's just very empty I would say. It's
1:16:11not fulfilling. I definitely had a
1:16:14little bit of that stage because I
1:16:15didn't grow up with a ton of money and
1:16:17so when I first started to you know,
1:16:20feel like I was making my own money like
1:16:21I felt like I almost had to project that
1:16:23and like prove to everybody that I'm I'm
1:16:25now worthy. But once you get past that
1:16:28point and and start getting to higher
1:16:29levels, it just becomes less of a
1:16:31concern in my opinion and it just kind
1:16:34of takes the backseat and all that stuff
1:16:36to me it gets kind of old.
1:16:38Um
1:16:39like when I was when I first moved out
1:16:40of my parents house, I moved into this
1:16:42high-rise apartment and the first time I
1:16:44saw the view, I was just like in love
1:16:46with it and I was like, "Oh my gosh,
1:16:47this is the best thing ever." But like,
1:16:49you just kind of get used to
1:16:50materialistic stuff after a while, you
1:16:51know? Uh after like a month or two of
1:16:53living there, I was like, "Okay, yeah, I
1:16:55mean it's a cool view, but like
1:16:56it's just normal." And the same thing
1:16:58happens with everything. It's like the
1:16:59hedonic treadmill, you know? If you get
1:17:01a a new car that's like you're super
1:17:02excited about on the first day, after a
1:17:04while it's just like, "Okay, yeah, this
1:17:06is my car." You know? So,
1:17:08that type of thing is just not
1:17:09fulfilling versus when you can see the
1:17:11impact that you're having on people's
1:17:12lives, whether that's your family
1:17:14members who you're able to help out or
1:17:16you know, these kids that you go and you
1:17:17see they literally have nothing and
1:17:18they're they're super excited because
1:17:20they're going to have a place to study.
1:17:21Like it's just beautiful. To me, the
1:17:22comparison is you can't even
1:17:25Yeah, I can't even put it in words.
1:17:26>> Slight tangent from me, um I watched the
1:17:28Dan Bilzerian podcast and can't believe
1:17:29I'm even saying that, but uh he was
1:17:31talking about exactly what you said, the
1:17:32this hedonic treadmill. And he was like,
1:17:34"Man, when you're living in the best
1:17:35villas and you only go to five-star
1:17:36hotels and you got the most beautiful
1:17:38women and you have the the best of the
1:17:39best of every area of your life and
1:17:41you've been doing that for 5 years."
1:17:43He's like,
1:17:44"Then that your dopamine
1:17:46sets the bar there." He's like, "Nothing
1:17:48then makes you happy at that point. No
1:17:50experience gives you any assignment. A
1:17:52new car does nothing for you." And
1:17:53obviously that's an extreme example, but
1:17:55it's basically what you're inferring to
1:17:56here is is that um you acclimatize to
1:17:59the new standard that you have. But the
1:18:01funny thing is I watched people say this
1:18:04all through my youth and podcast people
1:18:05saying this like, "Oh, but you you know,
1:18:07it's
1:18:08money isn't happiness." For example,
1:18:10it's like I feel like everyone's got to
1:18:11touch the fire to feel it's hot.
1:18:13>> You got to experience it for yourself,
1:18:14you know? It's
1:18:15it's hard to take someone's word for it
1:18:17when you see all these flashy things and
1:18:19you're like, "I think that would make me
1:18:20happy." But once you actually get it and
1:18:22realize
1:18:23you're still the same person and it it
1:18:25doesn't fill the voids that you had
1:18:26inside you. It's like, "Okay."
1:18:28>> I'm curious on this thing that you said
1:18:29of like projecting because I did that
1:18:31for sure and I think everybody will. I I
1:18:35every young trader will and I when I
1:18:36wonder why, I think it's because when we
1:18:39are young, we are all put up with the
1:18:40all have a path put in front of us. So,
1:18:42I go to school, go to university, get a
1:18:44good job, and and this is what your life
1:18:45should look like. And naturally, as a
1:18:47trader, you probably are a bit of a
1:18:48nonconformist, and and you kind of veer
1:18:50off into this lane. A a lane where there
1:18:52is no path in front of you. You've got
1:18:53to pave your own. There's huge
1:18:55uncertainty, and there's big losses that
1:18:57can happen. In your case, large losses
1:18:58that can happen uh along the way. So,
1:19:00then you kind of grow a chip on your
1:19:01shoulder. And when you are working hard,
1:19:04sacrificing
1:19:06uh you know, not going out with your
1:19:07friends as much as you used to, and
1:19:08you're losing money, that's a weird
1:19:11position to be in. And there, when you
1:19:12go through that valley, the the what you
1:19:15want to do is you'll be like, "Mom, Dad,
1:19:16or friends, look." Like,
1:19:18see. Uh and I think it's an interesting
1:19:21experience. Did you have that similar
1:19:22identity going through? Uh like, wanting
1:19:25to prove it to the people around you
1:19:26because of what you had to go through?
1:19:28>> I think so, a little bit, yeah. Um I
1:19:29mean, I would say it honestly probably
1:19:31goes even back like more to my
1:19:32childhood. Um
1:19:34just like not feeling like I had enough,
1:19:36and like once I finally felt like I had
1:19:38enough, like I had to prove it to myself
1:19:40and maybe all the people who I felt
1:19:42doubted me.
1:19:43Um
1:19:44But yeah, it's it's just such an
1:19:45interesting
1:19:46thing to look back on.
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1:20:33>> What would you say the position of
1:20:35relationship to yourself is when it
1:20:38comes to trading because I want to start
1:20:39off with let's say ego,
1:20:41which is what we're talking about here,
1:20:42projection and and external validation.
1:20:44But then also the market can humiliate
1:20:47you or humble you. And then when we
1:20:49explore
1:20:50uh identity of a trader and what that's
1:20:52supposed to embody, do we now live a
1:20:54life through what others would say a
1:20:55trader should look like? For example, a
1:20:57trader should have a nice car, so I'm
1:20:58going to go buy a nice car, mimic that
1:20:59desire.
1:21:01How how is identity shifted for you
1:21:04uh around these topics as you've evolved
1:21:06as a trader?
1:21:07>> Identity is so tough for me as a trader
1:21:09because
1:21:11being a trader, it's really hard not to
1:21:14like I I can't think of the word, like
1:21:16stick my identity to my P&L performance.
1:21:19And that's something that I've struggled
1:21:20with.
1:21:21>> I see your point though.
1:21:22>> So much because
1:21:23if I'm at all-time highs, like it's
1:21:25really easy to feel great as a person,
1:21:27like I am a trader, I'm at all-time
1:21:29highs, I'm so amazing, whatever. And
1:21:31then when you have the slightest
1:21:32drawdown, you're like, if your whole
1:21:34identity is based off of you being a
1:21:35trader who's crushing it at all-time
1:21:37highs and and you're in a drawdown,
1:21:38suddenly like,
1:21:40am I still myself? Like, am I still
1:21:42good? Am I still worthy or
1:21:45all of these questions. It's It's hard
1:21:48to separate those two things and that's
1:21:49something that I'm still working on.
1:21:51>> How many years have you been trading? I
1:21:52guess
1:21:53>> Full-time since
1:21:55uh like maybe 4 and 1/2 years at this
1:21:57point.
1:21:58>> Many years in, do you ever get a sense
1:22:00of impostor syndrome
1:22:01where it's like, okay, you might have
1:22:02made millions in your career and and and
1:22:04when you're at all-time highs, you feel
1:22:06the I'm the man and then you go through
1:22:07a brutal period and you're like,
1:22:09was it all luck? Or was it, you know,
1:22:11like maybe it's over now, this is where
1:22:12the the run ends. Do you ever get that
1:22:14kind of sense?
1:22:15>> I
1:22:16get that a ridiculous amount, yeah, an
1:22:18unhealthy amount. So,
1:22:21something I'm trying to work on is being
1:22:23okay with bigger drawdowns um because I
1:22:26went through kind of three stages in my
1:22:28trading career. In the very beginning, I
1:22:29had no draw downs at all. I had like the
1:22:32158 green day streak where I was a hyper
1:22:35scalper and I literally just green day,
1:22:36green day, green day, green day and it
1:22:37was very easy because I was always at
1:22:38all time highs. But I would see my
1:22:40friends who would crush it on these
1:22:42bigger days where these A+ opportunities
1:22:44came in, they bet more, they were
1:22:46willing to hold for a bigger win and I
1:22:48never did that. Um, and so I learned
1:22:50from that and that's when I started to
1:22:51have bigger wins. Um, and I got really
1:22:53aggressive to the point where I finally
1:22:55had some big losses and that's where I
1:22:57had like my first big draw down which
1:22:58was, I believe, like 28% draw down off
1:23:01of all time highs. Um, which for me was
1:23:04enormous. Uh, and I didn't like how that
1:23:06felt and so I dug out of that draw down
1:23:07which took me over a year and now I'm
1:23:09back in the stage where like I've kept
1:23:11all of my draw downs sub, I think like 1
1:23:13and 1/2, definitely sub 2% for the last
1:23:15several years from all time highs peak.
1:23:17Um, but I think that's that's kind of
1:23:19holding me back a little bit. Um, and so
1:23:22I want to be better about being able to
1:23:25put more risk on. Um, and and not feel
1:23:28like I have to always be at the exact
1:23:31all time highs peak because if I'm not
1:23:33like
1:23:35it's it's mentally taxing on me. Um,
1:23:37because literally I'll have two red days
1:23:40uh, or three red days in a row where you
1:23:42know, I have a bad win rate. Um, I might
1:23:44have seven out of eight trades losing on
1:23:47a couple days in a row and I'm
1:23:49questioning everything. Um, and
1:23:50logically I know that that doesn't make
1:23:52any sense because I have the track
1:23:54record to support this and I've gone
1:23:55through this same thing and I talked to
1:23:57my wife about this. I've gone through
1:23:58the same thing so many times where I'll
1:24:00have red days, I question everything.
1:24:02I'm like, is this time different? And
1:24:03then a week in the future I'm up at all
1:24:06time highs again and I'm like, why are
1:24:07you questioning yourself? Two days
1:24:09later, two more red days, I'm like, am I
1:24:10ever going to make it again? So,
1:24:12>> It's interesting because logic, we could
1:24:14talk about the logic of that and and we
1:24:15could both say, oh, but logically it
1:24:17doesn't make sense, but
1:24:18the emotional side, at the time it makes
1:24:20sense, which is interesting, but I think
1:24:22I can link this to the hedonic treadmill
1:24:24kind of dopamine sets where you know,
1:24:26when you when you get to the world's
1:24:27this all-time highs, instead of
1:24:28realizing this is a beautiful
1:24:30experience, this is really great, this
1:24:31is the dopamine I should feel when I go
1:24:33through an experience, it just becomes
1:24:34your new set new uh baseline. So, when
1:24:37your all-time highs is your new
1:24:38baseline, a healthy mean reversion, even
1:24:41on an upwards trajectory, that mean
1:24:43reversion will feel like a down period,
1:24:45which which is crazy when you really
1:24:47think about it. Um so, in pursuit of
1:24:49improving that, any uh thoughts? Or is
1:24:52this cuz I've asked this question to a
1:24:54bunch people, and even a guy that has a
1:24:5630-year track record says same thing
1:24:57says the same thing. So, I'm like, oh,
1:24:58maybe it's it's a human instinct. I
1:25:00don't think it ever goes away. I don't I
1:25:01don't know.
1:25:02>> I don't know. I mean, some of my friends
1:25:03who are successful traders,
1:25:05I've talked to them and they say they
1:25:07just they just don't question
1:25:08themselves. They just know that their
1:25:10edge is good and that they're going to
1:25:11go through these periods, and it is what
1:25:13it is, but um yeah, I don't know if
1:25:16they're just built different and I'm I'm
1:25:17not cut from the same cloth, but
1:25:18>> maybe it's a proponent of risk. Would
1:25:21you say you're a
1:25:22a risk-averse or risk a risk-taker?
1:25:25>> I'm very risk-averse, yeah.
1:25:26>> I think I think it's pertinent to that.
1:25:28Uh I think the guys that are you know,
1:25:30even when I look around at some of the
1:25:31entrepreneurs that I know in Dubai that
1:25:32are really successful, when I was a kid,
1:25:35I would have thought the guys that are
1:25:36making these millions, they would be
1:25:37super smart, super you know,
1:25:39disciplined, super everything. And you
1:25:40you meet them and like
1:25:42they're just average, and and sometimes
1:25:44slightly below average in terms of
1:25:46intelligence, but that gives them that
1:25:49delusional optimism or that forever
1:25:51like, let's just take action. I'm not
1:25:52going to overthink it cuz it will work
1:25:53out. And it works in their favor in the
1:25:55end. And maybe the action-taker or the
1:25:56risk-taker is the one that uh
1:25:58not only gets the reward, but feels
1:26:00better about themselves in the process.
1:26:01Whereas, someone like myself who's also
1:26:03risk-averse,
1:26:04uh I question each moment. And even the
1:26:05highs, I'm like, yeah, but is this is
1:26:07this going to last and so forth? What
1:26:09about um
1:26:10you know that famous saying of like
1:26:11every millionaire has seven streams of
1:26:13income?
1:26:14And and as I've evolved in my my own
1:26:16journey, I've tried to adopt that. And
1:26:18and when I have adopted that, I've
1:26:21noted its benefits in my performance in
1:26:23the markets because I have
1:26:25not even talking about like I have to
1:26:27worry about rent. It's also like the
1:26:29chase in the market or the the hunger
1:26:31for money gets satiated a little bit
1:26:32from these other things and therefore
1:26:34helps me be a little bit more neutral in
1:26:36the market.
1:26:37Do you Do you have other sources of
1:26:39income and does that support you in in
1:26:41the markets in any way?
1:26:43>> Um so I actually
1:26:46Yeah, I'm I'm have a slightly different
1:26:47viewpoint on this actually. Um
1:26:50I
1:26:51took kind of the opposite route where
1:26:52like when I started off, um I had other
1:26:55income. I had YouTube income. Um I
1:26:57started like a a Discord channel and I
1:26:59had a Patreon and that income definitely
1:27:01helped me uh be less stressed out about
1:27:04trading.
1:27:04>> your econ eco-e-commerce days?
1:27:06>> Um no, so this was like right after I
1:27:08transitioned from e-commerce into
1:27:09trading. So I had the YouTube channel
1:27:11originally for e-commerce and then in
1:27:13the end of 2020, I started trading
1:27:15stocks and I was was so excited about it
1:27:17because you know, I made $2,000 in 15
1:27:19minutes and I was I had to share with
1:27:20people. Um and so I started making
1:27:23videos and people were like you have to
1:27:24open uh you know, a Discord. And so I
1:27:26was like, "Okay." And so I did that. Um
1:27:28and that got up to I think the peak was
1:27:29like maybe $20,000 a month in um the
1:27:32peak of uh
1:27:33February 2021. Um and it just went
1:27:36downhill from there in terms of uh
1:27:38revenue. But that definitely was like a
1:27:39huge help for me in the beginning of my
1:27:42career because I was trading my Roth IRA
1:27:44at that point and I didn't have to take
1:27:45any money out um not that I really would
1:27:47be able to except for contributions
1:27:48because it's a retirement account, but I
1:27:50was able to live off of those expenses
1:27:52um
1:27:53off of that income stream and grow my
1:27:55account while I was in the smaller
1:27:57stages. But now that I'm later in my
1:27:59career, I actually I'm kind of taking
1:28:01the reverse stance of that because I
1:28:04feel like the bigger you get as a trader
1:28:06and the more advanced you become, the
1:28:08more things that you have distracting
1:28:10you, it's actually holding you back.
1:28:13Um
1:28:13and so I actually made the decision to
1:28:15close down permanently my my Discord
1:28:17community and shut down my Patreon at
1:28:18the end of June.
1:28:20Um and you know, I've I've been having
1:28:22basically the best performance of my
1:28:24career since that. Obviously, it's been
1:28:25a hot market and it's so it's it's not
1:28:27it's somewhat of a coincidence that it
1:28:29overlapped, but I think just if you
1:28:30focus on too many things and spread your
1:28:33attention apart versus just like going
1:28:35all in on trading, it might actually
1:28:38hold you back. Um and this is something
1:28:39that Alex Hormozi talks about a lot.
1:28:41Like there's
1:28:41>> The girl in the red dress.
1:28:43>> Yeah, yeah, exactly. You know, you like
1:28:45you get it distracted by shiny object
1:28:47syndrome like I want to do this I want
1:28:49to do this and do this versus if you
1:28:51just stuck to doing one thing and doing
1:28:53it really well and for me that's trading
1:28:55for a decade plus. Like by the end of
1:28:57that point, you can scale that one thing
1:28:59to such a high level that you make
1:29:02exponentially more than you would make
1:29:03from all those other income streams
1:29:05combined. Um so that's the the way that
1:29:07I personally look at it, but I do think
1:29:08it's important to have some money
1:29:10outside of the markets just for peace of
1:29:12mind. Um so I do have that. I have a few
1:29:14other like outside investments.
1:29:16>> back to Hormozi, I think his quote was
1:29:17the difference between millionaires and
1:29:19billionaires is the billionaire is
1:29:20better at saying no cuz they'll all have
1:29:22good opportunity deal flow, whatever,
1:29:23but it's is this ability to say no is is
1:29:25is an interesting perspective.
1:29:27Uh I I want to wrap up the episode with
1:29:29an open mic towards the audience where
1:29:33they're a new trader and they're in this
1:29:34valley that I was speaking about, the
1:29:35valley of despair, where maybe they're
1:29:36isolating themselves, their parents
1:29:38don't understand what they're doing,
1:29:39their friends are saying come back and
1:29:40hang out and and they're not seeing the
1:29:42results yet. Uh so it's like high
1:29:44sacrifice and no reward, should I
1:29:45continue? What words of advice would you
1:29:47give to them?
1:29:50>> This is actually going to be a funny
1:29:51answer. I actually think trading is not
1:29:53the right answer for most people. Um I
1:29:56think it takes a special type of person
1:29:58to be able to make it as a trader.
1:30:00Um you have to be able to
1:30:02in my opinion be very disciplined and
1:30:03put up with a large amount of failure
1:30:06um for a long period of time and most
1:30:07people
1:30:09realistically don't have what it takes.
1:30:11So, I think the best advice for the
1:30:12average Joe is, you know, really
1:30:14question if it's what you want to do and
1:30:16like if you're willing to
1:30:18lose money for years before you see
1:30:21something that works for you because all
1:30:23of the people who I know who made it big
1:30:26in trading, like almost all of them lost
1:30:28for several years before they started
1:30:30making money, myself included and most
1:30:32of my best friends. So,
1:30:33>> Yeah, your biggest loss being?
1:30:35>> My biggest loss?
1:30:35>> Yeah.
1:30:36>> Um, well, my biggest loss wasn't at the
1:30:37beginning of my career. It happened
1:30:38after I found success. But, the biggest
1:30:39loss was like a 850k drawdown in an
1:30:41hour. So,
1:30:42>> Gosh. No.
1:30:43>> Uh, but obviously beginners not going to
1:30:44experience that. But, you know, I for
1:30:46several years from 2016 to 2018, I
1:30:48couldn't make money. I lost money, you
1:30:50know, for years.
1:30:51>> And the difference was what? You had
1:30:52money to lose when you lost 850 whereas
1:30:54even a $3,000 loss at the beginning is
1:30:56more painful.
1:30:57>> Exactly. Yeah, when I started with a 2k
1:30:58account, I, you know, a $30 loss hurt.
1:31:00>> Mhm.
1:31:01>> Cuz that was what? That was like
1:31:03I can't do the math. Like 4 hours? 5
1:31:05hours of lifeguarding for me? So,
1:31:06>> Uh, yeah, if you're if you're in the
1:31:07time for money realm, then even a $5
1:31:09loss is like, oh, that's x amount of my
1:31:11time.
1:31:11>> Exactly.
1:31:12>> Beautiful.
1:31:13Um, yeah, wonderful episode, David. This
1:31:14was a a lot of fun and I think we
1:31:16explored a lot of cool topics. So, thank
1:31:17you for driving down and being here for
1:31:19us today.
1:31:19>> Of course, bro. Thanks for having me on.
1:31:20>> There we go. Good stuff, man. There we
1:31:22go.

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