The Stock Trading Reality Podcast

It's always enjoyable to bring back previous guests who we've had on the show, and that's exactly what we do in this "live coaching" discussion. I say "live coaching" because in the free-flowing format of these interviews, we stumbled down some fantastic rabbit holes that lead into assisting our guest with some annoyances and frustrations in his trading. Our guest, who goes by "Remy" in the chat room goes into open details about how his journey has been progressing and what hurdles he realizes still exist. If you take anything away from the interview, please see how being self aware and honest with yourself can lead to getting yourself onto a path with a clear cut goal that'll provide a solution to the problem. A lack of honest with yourself goes nowhere, but being honest, as you'll witness by being a fly on the wall can open up the doors of progress. Notes: Today we reinterview Remy who made his initial appearance in episode 39. His journey started by puppet trading a biotech trader but quickly realized that his beginner's luck ran out and he gave back all his profits and then some. Remy has had to trade from his phone for a long time but he explains the pitfalls of the Robinhood brokerage and why it doesn’t work with the names he trades. While he excels paper trading, when he gets behind the wheel of his live account he struggles to emulate that success. The big problem he struggles with is his emotions that are associated with a small account. Clay recommends that Remy save up for a larger account so his ‘account protectionism’ won’t lead him to making emotional decisions. Losing 20-50 dollars when trading a volatile stock like TSLA is completely normal but when you are operating with a 500 dollar account, you are much more emotional taking those losses. Quotes: I lost 200% of my winnings by puppet trading and I realized that was not a successful route for myself. In a split second, the thing dumps and I’m sitting there typing in my stop loss and hoping my wifi works. I have been trading with emotion. I’ve had poor risk management but I definitely see the light at the end of the tunnel. I started out with 5 contracts but needed to really scale it down. I had a poor entry and lost 50% of my account. I’ve been able to read the charts and recognize patterns. I’m ecstatic about that because it’s come a long way. Links: https://claytrader.com/podcast/episode039/

There is zero doubt in my mind that many people will be able to relate to this trader's journey. Thanks to the openness and honesty of chat room member "Luna" (same name in chat room), we were able to go step-by-step through a journey filled with many struggles; however, at the end resulted in a spot that many new traders fine themselves in. The this "spot" is a problem, the good news is the solution is very straight forward. Sure, hearing what Luna realized he needed to focus on is not the most attractive and sexy thing from a marketing perspective, but it's the truth and is something that EVERYONE and ANYONE can do. Notes: Luna has been a member for many years and got interested in trading in 2012. He got involved when a bank said that they would add a small amount of their own funds if he made a large enough deposit to start an account. He planned on being a buy and hold trader. He began to buy shares of companies he was familiar with/used often in everyday life. In the next few years, Luna got interested in penny stocks based on penny stock newsletters primarily. Unfortunately he usually ended up buying in the ‘dump phase’ of a pump and dump. Luna got hosed on one trade and blew up his account so this led him to the rebuilding phase. After learning about options he decided to focus specifically on them to trade larger names that moved less on emotion. To avoid the ticket charge at his brokerage, he ended up trading 5 contracts at a time which was much larger size than he should have used. He is currently paper trading to solidify his strategy while he saves up to build up an account. He has opened and gone through multiple 100 dollar accounts so he would like to build up a larger account so that he didn’t have to go all in on every trade with a small account. He is building his account with a good old fashioned JOB. Quotes: I was completely blind to the market. I thought you had to work for a company to even buy shares of that company. I blamed myself. I was completely uneducated, throwing darts and not knowing what I was doing. I did a whole week of paper trading and then I went live. I didn’t keep it realistic either. I was greedy. Trying to build the account a little higher. I’ve come to realize I need to start with more than 100 dollars. I am passionate and persistent to figure this thing out and not give up. I will learn how to do this. Links: https://claytrader.com/videos/trade-penny-stocks-steroids/ Books: Trade Mindfully, The Inner Voice of Trading, and Trading in the Zone

I recently got an entire new trading computer that was a custom build. The person I used to build it is the "techie on staff" - itNate as we call him. He is essentially like Batman as he usually is operating in the shadows of the site doing all the behind-the-scenes stuff..... however, today he's stepping into the light to talk about computer stuff and why/what he chose for my new computer. Our esteemed cohost Chezz is also quite tech savvy, so him and itNate has plenty to talk about as I listed and asked newbie questions. If you are thinking about getting a new trading computer or perhaps doing a bit of upgrading, this discussion will please you I'm sure. Notes: Today we interview our IT guru, Nate. We discuss the logical order for building a Computer. Step 1: Pick your processor. Nate recommends a Core i7 7700K but remember, there is always updated processors every few months. The big emphasis would be to focus on an i7 over an i3 or i5. We are big advocates of Intel over AMD based on our personal use. Step 2: Pick your motherboard. Things to focus on include making sure your socket type is compatible with your processor (CPU). You’ll need to forecast how many video cards you may need and this will be based on how many monitors you plan on having. 2 video card slots is pretty standard and will cover almost everyone's needs. Nate purchased a MSI Arsenal Intel Z 270M board for Clay’s most recent build. Step 3: Monitors. We have a deep discussion on how many monitors you think you will need. We are firm believers that less is more. Clay and Chezz rarely use more than 2 monitors for trading. Monitors are also the easiest thing to upgrade and add in the future so if you’re budget is tight, start with 1 and expand later. Nate picked out Dell 4k 27” screens. Model # P2715Q Step 4: Video card. Nate picked a PNY Quadro K1200 which handles all of Clay’s 4k monitors. While you don’t need a gaming graphics card to handle trading, you just need to do some long term forecasting regarding what you will be using the computer for. Workstation video cards will be absolutely fine for trading. We also highly recommend Nvidia cards over AMD. Step 5: Memory. Your motherboard will determine what specific speeds you need for your RAM. We recommend never going below 8 gigs of RAM and 16+ will set you up for ‘future proofing’ the build. The new standard is DDR4 and it is also recommended if you ever upgrade in the future keep it the same brand, same model. You want complete compatibility when it comes to memory. Step 6: Storage. We recommend solid state drives (SSD) since they make programs and windows load many multiples faster. While traditional hard drives (HDD) are a good amount cheaper, they are more prone to crashes and as stated above, much slower in terms of loading programs. Step 7: Case. These typically don’t matter as long as you get the size that your motherboard requires. Nate used a micro ATX motherboard so he got Clay a micro ATX case. Step 8: Power supply. PCPartPicker can help you estimate what the power draw will be based on your components so as long as you get one that sufficiently meets the needs, you will be fine. Ex. Your components use 400w of power. Buying a 500W power supply would be more than enough. Step 9: Operating System. You will want to get a 64bit operating system as that is the new standard. We are content to recommend Windows 10 since it has been out for a while and has patched any major issues. Trading platforms are mainly focused on Windows over Apple since a majority of their user base uses Windows. Additional: Uninterruptible Power Supply. This is what we call an insurance policy. If the power goes while you are actively trading and your power goes out, you’re out of luck and better hope you can get on the phone to call a brokerage to close your trades. We prefer to have power supplied from this power supply (UPS) to give us 15 minutes of battery power to close our trades and not have to deal with the headache of literally being in the dark. Computer Parts: Processor: Intel Core i7 i7-7700K – http://amzn.to/2tsWuoB Motherboard: MSI Z270M MORTAR – http://amzn.to/2ttaTkT Memory: Ballistix Sport LT 16GB – http://amzn.to/2tti7Fq SSD: Samsung 960 PRO Series – http://amzn.to/2usGrUC Optical: ASUS DRW-24F1ST – http://amzn.to/2tyA7yF Video: NVIDIA Quadro K1200 – http://amzn.to/2sKzuCc Power: Corsair CX430 – http://amzn.to/2ttbovh Case: Antec VSK3000E – http://amzn.to/2tyjhzT OS: Windows 10 – http://amzn.to/2tsWKnz Links: Video: How To Build A Trade Computer https://www.cpubenchmark.net/ http://www.pcpartpicker.com/

An open and transparent book. That was certainly the overall theme of this Welcome Back interview. Our guest has not only been on the podcast before, but I've also hung out with him in person on two occasions so I wasn't shocked by his honesty... the guy is a quality individual without question. Stephen (chatroom alias, "PH") shares his continued quest to gain solid consistency in the market as he trades and goes through many situations most people can relate to. He still has things to work on, but he's overall in an uptrend and that is what matters. Higher highs and higher lows. He also revealed a new venture he is undertaking that is designed to help all new traders. Be sure to stay until the end as we talk more about it. Notes: Today we are speaking with Stephen a.k.a. PH. His original podcast is linked in the notes below. Stephen started off mainly investing in companies he was familiar with when he just started. While Stephen went through many different strategies starting out, he had to go through that to find what exactly he is comfortable with and excels at. Now he primarily focuses on trading gaps which has led him to a high win rate and much smaller losers than winners. Stephen has utilized the concept of R, which is initial risk. This ties directly into Risk vs Reward and the big emphasis Stephen makes is the fact that it is dynamic. While he accepts the risk on entry, if he sees a more logical location to move his stop loss and lose less, he always will! If a trade doesn’t meet his determined targets vs risk, he passes on the trade. He has rules that he sticks to every trade but there is a need to have some flexibility. Considering Stephen is an entrepreneur, he launched https://www.stocktradersjourney.com/ to document his journey through education and his trading. He offers reviews of various trading education, trading signals and anything else that pertains to trading the market. He is doing this without any affiliation compensation. We truly enjoy these follow up interviews to really show the progress our community members have made. Learning to trade and trade well is not an overnight process but with hard work and dedication, any one truly can learn how to do it. Quotes: It’s the evolution of the journey and trying to find the strategy that most fits our individual personalities. The R is your risk value. Every single trade I’m willing to risk 1R to make 2 or ideally 3R. I don’t just set it and leave it though. You want to have rules but need to remain flexible. The market isn’t a rigid thing. It’s a living, breathing thing you can’t control. The purpose of this website is to share with people the mistakes I’ve made so they can learn from them. Links: https://claytrader.com/podcast/episode015/ https://www.stocktradersjourney.com/

In the majority of situations, the biggest struggles as a trader comes from the person looking back at you in the mirror. Of course, many people will blame external forces no matter how crazy it may appear; however, for the traders who are self-aware and honest with themselves they understand trading is a battle against ones self. Our guest from the community Eric (chat room name "Gman") does an awesome job of sharing the battle he has faced with himself. As you will hear, a strategy of listening to others is not going to lead you to profitable places in the long run, but, this is the cruel joke of the markets. If you can't depend on others, you need to depend on yourself...YET, that is where the big battle awaits. This is why trading can be so frustrating and difficult. Eric takes us down some great rabbit holes of discussion, so let's go! Notes: Today we interview Eric also known as Gman. While he doesn’t hang out in the chat rooms too often, Eric really took advantage of the education offered. A friend of his tried to get him involved into the market 10 years ago but he wasn’t very capitalized so he gave it up for a few years before his interest was piqued again. He drank some koolaid on a 5G LTE technology company that was trading in the triple zero’s. Unfortunately he lost everything as the stock went to 0. Eric started to recognize that message boards became a place for people who made the same mistakes to comfort each other. This was what led him to realize that there is no external factors to blame for his failure or success. He realizes that he is more often than not trading against himself. It is his emotions and fear/greed that leads to losses generally. After 4 years of sticking with trades, he realizes this is a part of the journey that he had to go through. He emphasizes that he doesn’t want anyone to find overnight success. People who experience that generally give it all back and then some instead of learn valuable lessons. Eric has made huge strides going from relying on other people at the message boards to give input on where to enter, how long to hold and where to exit to now being the CEO of his trading business deciding all of the above based on his risk criteria. Quotes: I opened an eTrade account with 1000 dollars. I enjoyed the market but didn’t have the money or education to do it. Some guy would come on and say ‘look at this patent. In 180 days it will go through so we have to wait.’ That’s why people like message boards. You can find like minded people who are making the same mistakes you are. I feel great but I have so much further to go. It’s a never ending process of looking at yourself and improving. When I trade, I know my charts. I can pull those charts up and analyze it to comfortably plan a trade. Links: https://claytrader.com/videos/1-penny-stock-short-scam/

The brutal honesty our guest in this interview afforded us all to hear a very cautionary tale about the very real risks that exist in the world of trading. While these risks can be controlled and navigated, when a lack of understanding enters into the "new trader equation", the numbers can turn nasty in a hurry! Mark (chatroom alias "hyprsnpr") takes us through the various loops his journey has contained, including those dirty loops that many people are afraid to talk about. Because of Mark's courage and bluntness, we all as listeners (both new and old traders) are given the opportunity to learn and have reminders shoved in our face. I don't like beating around the bush, I'd much rather have it hit me between the eyes and that's exactly what you get in Mark's journey. Notes: Today we interview community member Hyprsnpr also known as Mark. He had a roommate whose Dad was successful in trading the market. They focused only on covered calls. Another pitfall was Mark was going all in on every trade he made and when bad news came out in that stock, his account essentially went to zero. After taking a 6-7 year hiatus, Mark saved up and once again set a portion of his funds aside for trading. This led him to start getting interested in investing but after a few years of going nowhere, he eventually found Clay’s youtube videos and joined the community. He flew through the courses after joining the University program and started trading before actually finishing all the courses. He found immediate success, which is a double edged sword, but eventually his over confidence led to trading a size much too large which led to a large drawdown. He decided to go back to paper trading and get back on course. Mark kept his size very realistic for practice. He knows what his comfort level is regarding trade size and wanted the transition from paper trading back to live trading to be 1:1. This is a great way to practice because your gains and losses will be the same size and your comfort should grow as you prove to yourself that you know what you are doing. What is very impressive is that Mark knows what his strengths are regarding trading. He knows his setups, he knows his time frame, and he knows his risk. This solid plan forms a foundation to keep him accountable and ensure that he only takes good entries and avoids forcing trades when there is no setup presented. Quotes: I thought there was no way out of the options unless it got exercised or expired worthless. That’s how little I knew. I thought it was going to go to the moon. I watched it fall to 5c but luckily it ended up turning around. I was revenge trading. I would say, ‘I lost 1000 dollars yesterday. I’m going to make that back today plus 1000 more.’ The reason I like options so much is the RvR standpoint. I can buy the equivalent of 100 shares for pennies on the dollar. I still struggle with the voices every trade regarding greed and fear but I’ve been much more disciplined. Paper trade however long you think you need to and then multiply that by three.

By far one of the hardest things to do as a trader or investor is to follow the rules. Assuming you've traded before, I'm sure you can relate to just how hard it can be when real money is on the line. Our guest, Ben, has a great story he shares with us which finds a centralized theme in following the rules vs. not following them. Ben's journey took him to the edge of almost wanting to give up on trading, but he then discovered another area of the market that re-energized his passion and drive to succeed. After adding in more tools to his toolblet, adhering to the rules and risk management systems became easier and easier. There is no question in my mind that there is at least a few things that we can all relate to in Ben's story. Notes: Ben’s dad was always interested in economics and the importance of savings. This was something that was taught to Ben at a very young age. While he was deployed overseas, since the market opened up in the afternoon and some other members of his company were trading, Ben started to get involved in long term investments in names he knew. This was unfortunately timed during the market collapse of 2008. Lots of gains can be made in the sub-penny market, however, after he looked into some of the companies, Ben recognized that most of the names moved based on hype versus actual performance or products. While Ben had transitioned back to civilian life, he did start trading after taking Robotic Trading but it became quite clear to him that he didn’t have a clear view of the whole trading process yet. This led him to Claytrader University to learn how to apply all the pieces of puzzle. Ben thought about giving up on trading. He was slightly jaded at these low price low volume stocks but after learning about options, this opened up his opportunities to trade larger and more stable names. A big turning point for him was waiting for a chart pattern to really leap out at him versus just making a pattern out of nothing. Adhering to his risk management principles, this gives him further hope of becoming a full time trader in the future. Right now, trading is supplemental income for him and his family. Good habits can scale which is what he is focusing on. Quotes: One of the guys was big into penny stocks. I was trying to stick with names that I knew. All well known companies. In hindsight, what are you thinking? This isn’t just a bad choice… it’s a very bad choice. (regarding sub-penny stocks) I was up about 20k on a 4-5 thousand dollar investment. Long story short, I broke even. I was putting a lot of pressure on myself to try to be successful without having the capital or understanding clearly what to do. I was kind of ready to give up the whole trading idea. Options can be very profitable if you are disciplined. The chart showed itself and I followed the principles which led to a very successful trade.

First a warning. This the second part of a two part interview, so before listening to this one, be sure to listen to episode 120. In Part 1 our guest, Janice Shell, sat us down for a story about one of the biggest penny stock scams in the past couple decades. It was truly a fascinating story that would make a great Hollywood movie; however, in this episode we move into more practical areas of the penny stock market. Janice and I talk about penny stock shorting, dumb excuses, and some tips that any newer trader who wants to get involved in penny stocks should understand and implement. If you are interested in trading penny stocks, then I'm not exaggerating when I say this is an interview you NEED to listen to. Buckle up for some very practical advice! Listen to Part 1 of this podcast: https://claytrader.com/podcast/episode120/ Notes: Janice discusses the unfortunate myth in the penny stock world that the market makers are the evil people who short and kill penny stocks when in reality, a market maker is generally a computer that makes money on the spread of the trades. Quotes: Market makers make money on the spread. On penny stocks, the spread is huge. People are conditioned to believe MM’s are evil. Investing is not a team sport. Do not get involved with teams. Penny stocks are not investment quality.

I was a bit nervous heading into this interview as I've known of and respected this person for as long as I can remember. If you're not aware, my first introduction to the stock market was via the penny stock market over 10 years ago, and I remember this person from way back then. The name Janice Shell is synonymous with penny stocks assuming you have been around them for awhile. If you are involved in penny stocks but have not heard the name, it's only a matter of time before you see someone blame her for something or use her name as a warning. She has been involved in the penny stock market for over 20 years and has seen it all. This has given her the unique advantage of being able to tell awesome stories and offer up great insights into some of the common "beliefs" that are floated around penny stocks. Even if you don't trade penny stocks, you'll get a great entertainment out of Part 1 as she tells a story about a penny stock company that is hard to believe... but it's true. Notes: Janice has been interested in the market since she was a child. Typical to many others, in her high school economics course, the class picked a stock and evaluated it over a 3 month period. In 1996, Janice started to investigate stocks she was interested in. She ran into a message board and while she intended not to post, she only made it 24 hours before posting her first response. She befriended some people on this message board and they started looking into various names and what they really do. Janice has many horror stories of pump and dumps and the resulting actions of not only the stocks but the legal ramifications that would follow. Many of these tales involve getting investor interest before diluting the stock to unbelievable levels. She has watched many of these shady companies CEO’s and other high ranking officers end up in jail, some of which are still in jail to this day. The amazing thing is that even after clear evidence of a scam, there are still some people who fully believe that this ‘penny stock gamble’ that they originally bought into will come to fruition. Quotes: I chose the most inexpensive listed stocks. I would buy and sell support and resistance. I realized in real life this wouldn’t work. The SEC finally revoked their registration years later. It took them that long. That was a penny stock with a product. He decided to sponsor a NASCAR event and encouraged people to buy stock in his company. The product was the funny car. There were still loyal stockholders. The SEC showed logs that had appalled even the most loyal of holders. It’s one thing to believe a scam will come true. It’s another thing to have your penny stock gamble to lead to hallucinations.

One of the most common tactics the emotion of greed uses in the world of trading/investing is seduction. The greed voices begin whispering into your ear and causing you to fantasize about all sorts of big/quick money dreams... and then you're sitting in a spot regretting your actions. Our guest from the chat room community DJ shares his experience with this. As you will hear, he had a very logical longer term strategy that was working and his account was growing, but then the biotech stock voices appeared. This lead to some lessons to be learned for DJ; however, you as a listener can learn from them without having to go through them! Notes: DJ got interested in the market a few years ago while he was in school. He would see Mad Money on the television and started to track gainers and losers. DJ was wise enough to avoid forums and message boards to find his trades. Even though he had a small account, DJ focused on pharma stocks which are extremely volatile and this was reflected in his profit and loss with big swings up and down. DJ started to contribute to his trading account over a year and a half and now had over $25,000 dollars to trade with. Most of this money was going into ‘safer’ long term investments but he strayed from the path and put a portion into the pharma stocks which led to a huge unrealized loser which he luckily recovered from. After joining the community, DJ joined CTU and decided to focus on options. He wanted to utilize his knowledge of charts and risk with the leverage associated for options. He liked that he could use a small amount of capital to trade larger names. Since DJ works full time, he finds it is easier to swing trade but he does have aspirations to eventually day trade in the future. He likes to try to learn the personalities of stocks for maybe a month generally before he puts on any trades. He now also believes in the powers of numbers. DJ understands that is a numbers game and that he will not make money on every trade he puts on. Now he simply takes his losers and looks for the next opportunity. Quotes: “I would just jump on one of those gainers or losers if I thought it would bounce but I was totally guessing.” “A lot was going into AAPL and GOOGL but I went totally crazy and put lots into CARA. That was my wake up call.” “Being able to put in 500 dollars and make a few hundred percent profit was very appealing. It is good leverage.” “If you look at the same ticker it tends to do the same thing over and over.” “Keep those losses smaller, doesn’t hurt as much and know that you went in with a good play.” “Go learn something. Find some method and learn it and use it. Don’t just throw your money in and wait for good news.”