The Stock Trading Reality Podcast

My world was unexpectedly turned upside down with this discussion. I’ll admit, at times my views can be quite rigid; however, hearing this person’s story has shown me I maybe need a different approach at times. With all that being said, the pathway and moral-of-the-story was once again the same (and yet another data point): no excuses! Our guest, Ethan (“qualia” in the chat room), had an upbringing that caused him first need to do some heavy lifting in order to change his mindset, but after doing so, he’s built himself a nice life and is now expanding into trading. The trading journey is still young, but given his mindset with his work ethic sprinkled in, there’s no doubt he’s going to be doing great things. I truly enjoyed this discussion and I know you will too. (in fact, I enjoyed it so much I also had a longer discussion with him on my The Money with Clay Podcast) Notes: Today we interview community member Ethan who goes by qualia in the chat rooms. While running his business in California, he met a broker who actually cared and tried to help his clients outperform the market. After looking at all the fees, Ethan wondered why he shouldn’t just buy stocks himself. Considering his upbringing, he realized that he had conflicting thoughts about money. This has led to swings in his income over time. He needed to change his thinking and this would ultimately be the turning point for him. After visiting some friends down south, Ethan realized that his money could go much further in the real estate market there over the California market. After getting established at their new home, Ethan decided on a date to which he was going to enroll in Claytrader University. Now that his finances were in order, he spoke with a broker friend of his and realized that he could learn how to do this himself. Regardless of his new plethora of knowledge, the next hurdle to overcome is the emotional side. He knows what he needs to do but it really counts when the rubber meets the road. Quotes: Somehow I got in contact with a broker and this guy was so caring. He always made sure he was helping his clients. Thinking differently was like an exercise and building on it one small step at a time. We had some friends that lived down south. I could start up my business again and I could buy real estate very cheap. People use brokers because they are afraid. They don’t want to do it. They want to put it in the hands of others. I actually have to sit down and make a plan and test that plan until I know it works. That’s the hardest part.

It’s different for everyone, but many times, the wake-up call in regards to, “Hey, slow down!” comes in the form of a nasty account fire. Thanks to some very honest candor on this episode’s guest, Josh, we all get to see (or reminded of) how dangerous the markets can be when approaching them without an actual plan. Sure, it never feels random at the time while everything is playing out, but just because things seem to be going okay does not mean you truly have a logical plan in place. From where Josh started to where he is now is night and day; however, he still has room to grow and plenty of things to work out, including trade management which we dig more into with some live coaching. Josh is a solid guy who offers up many things that others may not disclose, but in doing so, he helps bring a very realistic light to the pitfalls of trading. Notes: Today we talk with community member Josh. His introduction to the market was during his time in the military. At this point in his life he did not have any time to spend getting educated further on market principles. Josh’s friend was big into marijuana stocks. This was toward the tail end of the big pot stock run that happened 4+ years ago. Following his advice he took his account from 300 dollars down to 80. This is when he realized he wanted to learn from someone who knew what they were doing. After investing in his education he began to practice. He waited until he had over a 50% success rate before he decided to fund a live account. Since he has a full time job and doesn’t have time to focus on the charts all day, Josh decided to swing trade using the daily chart. Currently Josh is struggling with management of trades. While he has a great hit rate, if you trail your stop too tight you are hurting your overall profit by cutting good trade ideas short. After digging into his feelings toward money, Clay determines it might be best for Josh to reduce his position size. This should help him stomach losses easier and hold winners longer. Quotes: I tried to trade a couple. One worked. Another I had to hold for about a year and a half. Originally I tried using the 15 minute chart and riding it all day long but that didn’t work. Now I use the daily. I had more success with the breakouts instead of the pullbacks. I kept getting whipsawed out of the pullbacks. It makes sense but I have to get over this mental thing I have about it. Nobody likes to lose but I don’t go crazy if it goes against me. Discipline, consistency, and don’t cheat yourself.

In this episode we welcome back long time community member Dave (alias in chatroom, “SuperDave”). Like some trader’s goals, Dave wants to eventually quit his full time job so we can work from home and be his own boss as a full time trader. While Dave has not yet accomplished the goal, he is well on his way and has actually cleared a key hurdle – that being, going from “full time hours” at his job to now only “part time hours”. How did Dave know when to make this jump? How will he know when it’s wise to make the move to “full time”? We talk about this and much more. Whether you are looking to also quit your job to become a full time trader or just want to pick up some nuggets of wisdom, this conversation has something for everyone. Let’s get to it! Notes: Today we speak again with community member SuperDave. To recap, Dave joined the community first to test the waters. During his earlier times here, he recalls being called out for trading without a true proper education or background. This led him to step back and reevaluate what his overall goal in trading was. After opening and closing 3 different accounts, Dave decided to focus on only trading SPY because it is extremely liquid and presents trading opportunities almost every day. He would use his account value to determine the amount of contracts he needed to trade. Dave started slow and steady one contract at a time and now is able to trade quite a bit larger. Dave had an ideal time frame in which he wanted to transition away from his job, retire, and trade for income. He missed his first two targets due to personal and family events but has maintained his longer term plan regardless. He has a strict routine and criteria for trading which he utilizes daily. It is this amount of seriousness that has set Dave up for success and why he is getting very close to his longer term goals of full time trading. Quotes: I knew right away that I was being called out because I didn’t really know what I was doing. It’s all about controlling your emotions. You’ll figure out a trading style fairly quickly but then you have to discipline yourself to stay with it and trust it. I don’t take a lot of risk with my money. Now is not the time to take on risk… now is the time to take on growth. Over time, things change and you become more comfortable from looking at it over and over. It becomes much more predictable. I’ve had some pretty large losses that were hard to swallow. Wondering why I was still in there and letting it go further and further. Links: https://claytrader.com/podcast/episode055/

The sooner we teach/show/demonstrate to kids and teenagers the various aspects of money, the quicker we are setting them up for longer term success. We have an awesome example of that thanks to a Grandpa leading by example. Our guest, Kainoa (same alias in chat room), had great parenting which jumpstarted his financial journey and has lead him to focusing on goals that will benefit him greatly. This is a discussion for both young and older traders as there are multiple angles and viewpoints that I believe can offer helpful insights to all. Let’s get to it! Notes: Today we interview community member Kainoa who goes by the same alias in the community. He remembers when he was in college his grandfather took him with to his financial advisor and started to learn about compounding interest. Kainoa saw a friend of his posting on social media about trading in the stock market and inquired about what he was doing. This led him down the rabbit hole of Youtube and trading. He was smart enough to see some red flags for who was trying to sell people a lifestyle versus a systematic approach. After taking extremely detailed notes on the courses, Kainoa started trading live which entailed some success and some failure. Revenge trading was a stumbling point for him but it’s more important that he recognized it early. Kainoa is extremely intelligent but his ambition is also his worst enemy. After realizing that this will be a slow and steady process, he took a step back from the market and reassessed his goals. This led him to a longer term time frame look at charts and continuing to enjoy the fruits of his full time job. After talking with Clay, there are some options presented that may fulfill a few goals Kainoa has in regards to swing trading and day trading. They also have a good conversation about personal finance in terms of funding other accounts and heading toward future goals. Quotes: It was pretty cool seeing my grandfather go through his retirement portfolio. Before I got involved I knew I wanted to do it properly. I wasn’t willing to invest in these guru’s because they seemed a little shady to me. Those losses would lead to revenge trading where I would repeat the same thing… being to aggressive and being emotional. I would categorize my trading as sloppy. I’m so eager to trade I take a wide variety of setups.

There is no avoiding it. As annoying and frustrating as it is, being wrong and having losing ideas is all part of trading the markets. Fellow chat room member Murray (alias in the trading room, “murman”) tells us all about how he has learned to become comfortable with being wrong. We go down many other worthwhile rabbit holes too; however, in reflecting back on the discussion, the battle with losing is what stuck out to me. Probably because it is the one common ground we all have as traders. Oh, and I haven’t even mentioned how a 14 month jobless period factored into his overall journey. Needless to say, we had plenty to talk about! Let’s get to it! Notes: Today we interview community member Murray who goes by ‘murman’ in the community. He realized that when you have any amount of money, you should learn how to utilize it in the market. This guided him toward learning about technical analysis. Unfortunately, Murray was part of a down sizing round at his job and this led to his unemployment for 14 months. After he got another job and back on his feet, he started to look into more macro relationships and how it impacts the global economy. After going through the options course here at Claytrader.com , Murray decided to invest into University and has now gone through the courses. What he enjoys the most is that when he feels uneducated about a certain indicator or strategy he can go back through the material and incorporate it into his trading thesis. An important thing in trading is understanding your comfort level with regards to position sizing. After some tinkering, Murray has found the amount of money he is comfortable losing if his positions do not work. This took some trial and error. Quotes: Every time I tried to research the market I stumble upon information on fundamentals and I can hardly keep myself awake to absorb that stuff. There are phases you go through to learn to trade. The first phase is learning to read a chart. If you can hit 40% of your trades, you can make money in the market and that’s about average. Solidifying those things down into trading rules instead of generalizations is key. It is very very thorough. You don’t need to watch this ten times to realize a concept. It’s point A to point B to point C with nothing missing.

This is Part 2. Be sure to listen to episode 181 in order to hear Mike’s entire journey. Mike (chat room alias, “afroge”) and I pick back up our discussion with a deeper look into his actual trading strategy. Although I am not someone who uses a whole lot of fundamental analysis myself, it was still an enjoyable conversation hearing about how he mixes fundamentals and technical together. For you longer time listeners, you’ve heard it said time and time again, but there is no Holy Grail in trading. It’s all about finding what works for you and going with it – we get to see a detailed example of exactly this thanks to Mike’s willingness to share. Notes: Mike talks about how earnings are essentially a forecast for the future. It’s intended to show the value a stock has at a later date based on what they’re trying to do. If stocks were only priced on current value it would only utilize assets and liabilities in a simple math formula but that’s not how the market works. Clay and Mike talk about HMNY and the various red flags that presented itself. There is lots of information in the fundamentals that should have prepared investors to realize there was a concentration in that business. He talks about his easiest trade that involves momentum and reversion to the mean. Utilizing fundamentals and technical analysis is crucial for Mike to catch the meat of the move, whether that is to the upside or downside. Mike utilizes advanced option spread to facilitate his trades. He can construct these strategies so that he can only lose money on one side of the trade with a cushion even on his downside. Since his strategies involve multiple legs, he’s taking advantage of people who don’t understand the math behind his trade thesis. Quotes: Stocks are valued based on the future. If it was valued on today’s amount we would take total assets versus total liabilities. Just be aware of your surroundings and that instantly makes you better than the average trader. For me personally, the first thing I look for is swing activity in value investing. That’s the easiest trade you can ever make. If you’re good at math, good at setting up investment thesis and an option play that make no sense to the buyer, as long as they don’t understand the math you make money over the long haul. If you’re not willing to learn you will get punished.

The sheer bluntness displayed in this interview I found completely refreshing and… well… honest. There is no need to sugarcoat or beat around the bush when it comes to how the market actually works. Bottom line, if you show up to trade and are underprepared, there are people out there who will take advantage of that fact and punish you. Our guest, Mike (chat room alias, ‘afronge’), is one of those “punishers”. He has a great story and many insights on the market (hence the two part episode), but the one that stood out to me the most was how ignorance is costly. The market is a living breathing creature that sets up knowledgeable traders (such as Mike) to benefit against the ignorant/cocky traders. The cool part is, the market is also fair. You have a choice on which “kind” of trader you want to be. I’m confident Mike can motivate you to take the slower and more effort required route of becoming knowledgeable and then a PUNISHER! Notes: Today we talk with community member Mike who goes by ‘afroge’ in the community. He was introduced to the market at the young age of 6. While he was stuck in the hospital after a surgery he discovered what is now CNBC. Years later he discovered a publication called Value Line. This was very eye opening to Mike since he was able to see how these companies would grow over time. In his teenage years after working odd jobs, he decided to put just over $1,000 into the market. As he progressed through college, after changing his major and getting a masters degree in accounting, he was able to find a few jobs in the financial industry before ultimately becoming a consultant. Throughout this journey, Mike continued to expand his education to be more than just an accountant. As he progressed in his career he was forced to navigate lots of red tape that is involved in the world of finance, which led to him only being able to swing trade a limited number of names. He eventually realized this was not what he desired to do. Quotes: If you can watch TV and make money, keep in mind I’m in 3rd grade still, that sounds like a lot of fun. That was a big wake up call realizing that I’m never going to be a music major. I needed to find something to make money and something I’m good at. I learned investor relations, strategy, financial planning and analysis. This was good because it wasn’t traditional accounting. I know what I’m good at and what I need to learn. I’m not going to throw a large sum at a 5 minute candlestick chart when there are things I’m missing.

It all started with betting on sports. From that point forward, the pieces fell into place that allowed for a transition into the stock market and trading. Our guest, Burak (same name in the chat room) walks us through his journey of transitioning from sports to trading. The one benefit Burak had in his favor was he never treated sport’s betting as a random gamble. He approached it in a very methodical way which he wisely then carried over to his trading ambitions. Even if you don’t have any experience in betting on sports, there is still many nuggets of knowledge to collect from his experience. As someone who has never bet on sports, I really appreciated the business aspect of how he treated both like a business and not a gambling addiction (which unfortunately, many people do). There’s lots to see and learn from Burak, so let’s get to it! Notes: Today we speak with Burak who goes by the same alias in the community. He spent some time in college sports betting which taught him the importance of risk versus reward and managing your bankroll. After dabbling in the market with smaller amounts of money in more risky names, Burak started to invest in his education on top of all the information he acquired from YouTube and Google. Being someone who loves statistics, he originally leaned toward the algorithmic or automated trading. Ultimately he wanted to improve his day trading and had enjoyed trading the forex market. In the beginning of 2018, Burak joined Claytrader University because he honestly felt like it was a value buy with the amount of content you get versus the cost. Since his job is so demanding, Burak is focused strictly on swing trading. While he hasn’t investigated advanced options yet, Clay and Chezz ultimately suggest he takes a look because we consider it to be ‘swing trading with an edge.’ There are quite a few things that distinguish successful traders from those who fail. Burak treats this as a business and has an entire business plan outlined in terms of what he looks for regarding entries, exits, and in progress management. It’s consistent effort like this that distinguishes who succeeds and who does not. Quotes: It wasn’t until college where I was gambling a lot on sports betting. It has some relations to the stock market in terms of knowing your risk and knowing your reward. The first part was understanding technical analysis. The second part was the psychology part of it which I didn’t know about. In the back of my mind I always wanted to get back into day trading. I like forex. It’s 24 hours. I use full leverage but I have my stop losses set at a certain percentage so no matter what I don’t lose my whole account in one trade.

I still can’t quite put my finger on it, but the way self-awareness as a person and trader was presented and explained truly intrigued me. Our guest, Wojtek (chatroom alias ‘Surlymac’), started out with dollar signs in his eyes and wanting the good life. As he will explain, in very self-aware fashion, this lead him to become blinded to logic and reasoning. When logic and reason go out the window because of greed, this opens up the emotional box of demons… the big one for Wojtek being stress. In fact, as I write this and think about it, the way he described his situation is that of absolute misery… ugh! If you take nothing else away from the interview, please take away the power of being honest with yourself when reflecting. It becomes much easier to fix things when you acknowledge them. I know you’ll enjoy this discussion, so let’s get to it! Notes: Today we interview community member Wojtek who goes by Surlymac in the community. After looking for some more ways to earn money, Surly ended up finding ‘gurus’ who pitched their wonderful lives as a result of trading penny stocks. After falling prey to the Stocktwits group think trap, he was broken both mentally and financially after a string of losers. He had heard of Clay and his nonexistent ‘shorting army’ shortly after this and he figured that if he couldn’t beat them, join them. After talking with Chezz and finding out that shorting army did not exist, he still decided to join the community. After a few days as a member, he enrolled in the University program. While he was learning a lot, this actually made him more dangerous in terms of trading. He knew enough to think he had solid plans but still wasn’t able to see the larger picture of what trading really entails. Surly eventually realized that trading advanced options fit the best with his personality because he could define his risk from onset of a trade. This allows him to sleep easy at night knowing that even if the market completely collapses over night, his max loss is capped at a level he is comfortable with. Along with finding strategies that work best for him and his personality, Surly now focuses on a smaller basket of stocks to focus on and this leads to a higher success rate for his trading. Realizing that success does not come overnight, he understands that consistency is what ultimately wins the game. Quotes: I was sitting on Google looking for easy ways to make money. Lots of videos with Lamborghini’s promising millions. You presented information in a very dry way. This piqued my interest. Also, everyone hated you. I realized how much I didn’t know and how dangerous I was. Robotic Trading showed me that there is so much beyond just one course. One of the big things I took away from last year was that I have time. I don’t like to see red. If it’s within the trade plan, don’t react. When I first started I was anxious, excited, fearful, joyful, the full gambit. Today, trading is incredibly boring.

It’s always great to have younger people on the show as it demonstrates how the markets are for all ages, no matter your experience level in this thing we call life. Our guest, Matt (his chat room alias, “dewolf”), walks us through his journey thus far into the markets. Matt’s journey is one I feel many will be able to relate to, but with that, also be able to take away from bits of information that can be used to avoid potential pitfalls. Although he is younger in years, those years he has lived and experienced the market have already begun to shape and mold him into someone that is giving himself a real possibility of long term success in the stock market. No matter your age, what Matt has gone through can and will assist in streamlining your personal journey, so please don’t’ dismiss him because of his age. Let’s get to it! Notes: Today we talk with Matt who goes by ‘dewolf’ in our community. He was gifted a book while still in highschool called “The Teenage Investor” but completely forgot about it until he got to college. After actually reading the book and reading that it explicitly said ‘do not day trade,’ this led Matt go look further into that topic. A quick google search had revealed tons of articles for him to dive into. Matt and his friend joined an investment club in college and purchased the Options Trading Simplified course for the club. Most club members didn’t truly appreciate using a cash account to avoid the pattern day trader rule. He paper traded for a bit and then funded an account to take live. While he currently utilizes options, he has the ultimate goal of trading stock outright. While he is confident in a few specific setups, Matt would like to broaden his horizons in terms of setups and also work on the mental game that trading requires. Quotes: I kick myself everyday not picking that book up and taking it seriously sooner. It went up a couple of cents and then it completely dumped. Nothing crazy or huge but that was my first trade in the stock market. All these people were economics majors, not traders. They were all very interesting and it opened up the other side of trading. Eventually I’d like to join University and learn about advanced options. I want to learn how to leverage using options over time.