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James 0:15
what’s going on guys? Welcome to another episode of the After Hours Podcast. We have our usual gang with us today we have Joe, Alex and Harry. But we are actually joined by a very special guest, someone who I’ve been super interested to talk to over the past couple years. And I know everyone here is super excited to talk to him as well. We have Tim Grittani. So Tim, thank you for coming on. We really appreciate it, man.

Tim Grittani 0:39
Thank you guys for inviting me cool to be here.

Tim’s Background and How He Started Trading

Alex 0:41
Yeah, of course. Great. Yeah, I was gonna ask you to start off. I know you have kids and kids terrify me, dude, I’m 28 years old. My girl wants to get married sometime soon. And obviously, the next thing after marriage is to have kids. And I’m really terrified. So I want to kind of ask you what it’s like been trading as a father and trying to manage that.

Tim Grittani 1:03
Yeah, um, so I mean, truth be told I’m a lot closer to retire now than actively trading. It’s kind of evolved into that over the last few years, I have two kids four and two, when our first was born, you know, I started off just taking a few months totally off and adjusting. And then it kind of turned into slowly easing back into full time trading when he was getting old enough, he would like sit on my lap while I was trading during periods of time, and like one of my three monitors would be like, kids videos, to like, keep them entertained. And, you know, kind of kept up with doing it that way up until in July 2020, I think. And then around that time, we talked about having our second and kinda knew that that’d be a game changer, where you know, then we’d be dealing with two crazy little guys instead. So I plan to totally pretty much step away once I second came along. And I was working on some quant algo trading stuff with a coder friend of mine down in Puerto Rico, and I figured maybe I could try to let that take over completely. So since our second came along, it’s been a lot more like I’m just showing up for the very best for at least that’s my goal. And I’m trying to like kind of stay a little bit plugged in, like, you know, keep an eye on Twitter and see what people are talking about. But unless there’s like a huge sector really popping off, I’m trying to just more step away and enjoy time with my kids and not so much be as active on the trading side anymore, which has been at first an adjustment. You know, there’s there’s a lot of FOMO that kicks in, there’s a lot of, you know, feeling bad about missing opportunities, but then you kind of refocus and realize, like what’s really important

James 2:49
That is absolutely terrifying. I think it’s, we were holding your kid, and I’m thinking of some stock going like parabolic and you just like I’m gonna put you over here by just dropping them off. I mean, that’s like, how did you deal with like that kind of in the moment, like, kind of like, when you were trading? Was there ever a moment where you’re like, you almost misfire, you did something wrong, because you had to come and deal with your kid on your lap or like had to move them around.

Tim Grittani 3:14
um, I don’t remember anything specifically, that would have been like, Oh, that was my kids fault or anything like that. My wife, my wife was a rock star, she she did most of the work, you know, when I was actively trading with my oldest and he was kind of hanging out like she would swoop in and take him away if he was getting fussy or things were starting to get a little crazy. I mean, I one thing I will say is that like, you know, parent fatigue and like sleeping bad at night and all that is like a very real thing. And our first one especially had really rough nights. So there definitely were like some fatigue mistakes that were very avoidable. Like Kodak. I don’t know if you guys remember when that thing went crazy parabolic. And there was there was one day where I think it was just a fatigue mistake where I thought I was totally closed out of a short on that after day one and I had 5000 shares open that I didn’t know about or maybe it was 10,000. But I didn’t I didn’t figure it out until like mid morning parabolic the next day and we lost six figures on it was just a partial, but my God, like I had never done anything like that before in my career. And I guess the only other thing really would have ever come into play would have been like, just you know, when you’re tired, you make more emotional decisions. So you know, like getting frustrated not cutting a loser or taking an impulse trade because I’m like, Oh, I’m going to try to trade but really, I feel like I should be spending time with my kids. So you know, like, stuff like that kind of creeps in like just weird little mental things

How His Risk Tolerance Changed After Having a Kid

Alex 4:42
when you’re trading alone. At the end of the day, whether you make or lose money, it’s pretty much all on you. If you are a lone survivor trader. You feel like at least me sometimes I feel like I could just risk abnormally large because at the end of the day, I’m only going to hurt myself if If it doesn’t work out the right way, after you had a kid, did you feel like your risk tolerance changed after that?

Tim Grittani 5:10
Yeah, that’s a good question. Um, in some ways, yes. Like one one huge shift for me is like, you know, like, I’ve got the side algo quant stuff going on that’s still like, is trying to do short selling. But like, personally, I said, I show up for the best stuff now mostly, like, I am pretty much not short selling at all. Like, I think I’ve done one short, personally and like the last two years. And other than that, like, I’m just trying to long because it’s much less stressful for me, there’s a lot less chance of, you know, screwing up and winding up, you know, not fully covering something and having a go, you know, multiple hundreds of percent against you. So I’ve kind of chosen the path of least resistance in that sense, where it’s like, okay, let’s just play the long side, because I know I can do it. And I know that it will stress me out less. But you know, the flip side of that, too, is that, you know, as I did detach a bit, when I do have those days, where I choose to show up and try to trade something, I do find myself going larger, and attacking it with more size, because that like I kind of hit on earlier, there’s that bit of me that’s like, okay, if I’m gonna show up, I want to make it worth it.

Alex 6:14
Well, that’s, that’s awesome that because that’s something that I always think in the back of my head is, I consider myself someone that welcomes risk, I consider myself someone that enjoys it to an extent. And I guess my fear is that when I have more responsibility in my life, whether it be a wife or kids, more people that depend on me, I feel like maybe I will not be able to overcome the fear of that risk. So it’s interesting to say that you actually, you actually go even larger, bigger, because, you know, you say, if I’m here, I’m just gonna do it, I’m gonna do it the right way. And that’s a great way to think about it.

Tim Grittani 6:53
One that I mean, also, like, you know, there’s always that angle of it, where it’s like, you know, how much of your net worth is really in your trading account or at stake? And you know, that answer is different for everybody. But, you know, I definitely keep that in mind where it’s like, okay, if I’m watching something, and it goes to zero, like, you know, that’s my worst case scenario, and I still think about that first. You know, before I even enter a trade, like, How bad could this really get? And can I live with that?

Joe 7:16
So speak in a net worth? Just kidding. What ways outside of the market because you know, that’s what everybody knows you for is is is short selling well in the beginning, longing, OTCs, and stuff like that. I mean, new trading tickers was the first DVD I ever watched. And I was like, This groundbreaking for me, I was like, dude, hell yeah. But then you transitioned into the listed side of things, and was just almost exclusively short. And then you’ve pretty much been a stock guy for the entire time. What what do you what do you how do you try to diversify? Or do you outside of stocks outside of the market?

Tim Grittani 8:01
Um, I haven’t done a ton of diversification. I mean, we have we have a rental property. So I mean, we get a little bit of side income off of that recently, with, you know, the interest rates getting so crazy started doing like CDs, and things like that, just to get some kind of return on capital. But beyond that, I haven’t really branched out too much like, I never really got into like, the whole crypto craze or any of that stuff. You know, much to my regret now, but yeah, I mean, I remember watching that back when Bitcoin was like, 1000

Joe 8:36
it’s like when when it was MGTI. And John McAfee when he was alive was front running all that stuff.

Tim Grittani 8:43
Right. Yeah. I mean, but yeah, I just, I haven’t really, I guess my former diversification is, is the algo and automation stuff that I’m trying to accomplish, because that is kind of the like, like, let’s have a computer fully doing everything for me while I’m away. And I don’t even have to worry about it like that, that, to me feels like passive income, even though it’s still, you know, tied into the market.

Harry 9:06
So maybe we could kind of touch on that a little bit, because I find that stuff kind of fascinating. And also, similarly, I also kind of took that approach to I’ve been, like, the last like, two, three years, mainly have been going along as well, because I’ve just seen so much risk. Just going short, like in the past couple years. I found it like, it’s definitely gotten like super, super crowded. So I’ve been doing a lot of longing as well, but maybe we could talk about the, the AI and kind of or sorry, the algo process and kind of like how you’ve been like going about that type of stuff. Like what’s your kind of process of like, kind of attacking and like getting involved in in like creating those algorithms and what are kind of maybe you could briefly touch on like, somebody’s like your strategy and stuff like that.

How Did You Get Into Algorithmic Trading?

Tim Grittani 9:54
Sure. Yeah. I mean, it’s, um, I’ll be honest, I thought it was going to be much easier than it is. I thought it’d be as simple as like trying to plug in rough versions of a few of my strategies, and they do fine and like make a little bit on the side. And that was kind of the original goal, like let’s just, you know, make a little bit of extra money on the side with the algos. And it’s kind of slowly evolved into this evolved into this like crazy in depth thing where I’m like having to get way more granular with it than I ever imagined. Just because it is so difficult to you know, try to filter out the best plays and attack them in the best way. It started with Long’s you know, same thing like I didn’t really understand if automating short selling would even be possible with the whole locates process and all that. And I mentioned earlier, I have a coder friend down in Puerto Rico. And he, he had a background in the coding and automated strategies from crypto actually. And so he’s been just a huge asset, like, I could not have done any of this without him just because I don’t have any kind of real background in that stuff. So it turned into like his role would be put things into code and my role would be trying to provide like, what should the trading logic of each strategy be? And, I mean, we’ve had our ups and downs for sure. Like, we really got into the long side of things when the market was at its hottest when everyone was getting the stimulus checks, and made something like $900,000 in January and February of 2021. And then that was like around the time when we first launched it, like maybe a couple months after I was like, oh my god, like I’m a genius, I’ve got this. Like, but we had trained the whole thing on like, you know, data from when the market was at its best. And that was the problem, because then when things cooled down in March, and I was you know, super distracted, my second son had just been born. I was I was just kind of like, really hands off with it. And I was like, okay, like, sure, you know, the market can’t possibly keep going at this pace. And maybe it’ll go sideways for a while, maybe it’ll draw down a bit, but like things will stabilize, it’ll be okay. And I basically let it bleed off back down to 100k. And it only took like six months for that to happen. So, you know, when the market cooled, it really cooled. And it kind of taught me a lesson about like seasonality and like how much like, I hadn’t considered that in the markets, because it’s one of those things, I think we kind of recognize as traders, like in the moment, day to day, week to week, and I was trying to do like a one size fits all approach where it’s like, Okay, here’s a strategy that’s just going to cover every market, and hopefully it you know, it’s fairly consistent. So then after that, I was like, okay, maybe I should get into short selling. And we figured out that we could automate through DHS, and we could automate the Locate process, and we could basically get all that firing completely on its own. And that, you know, that was a little bit more consistent and a little bit better. The approach I tried to take with that wasn’t so much true to like the way I had traded personally, I was more trying to do, like, take a really wide stop approach and try to have a high win rate. And the problem with that was just that I think I was over optimizing where, you know, I’d be back testing these strategies, and maybe tweaking my criteria a little bit too much, and trying to make it a little bit too pretty. And so we’ve go on these, you know, I think it’s a problem a lot of traders face in their personal trading, where it’s like, okay, you’ve got a couple of weeks where things are pretty consistent, you got decent gains, and then a bad day wipes out that two weeks. And that I think we built back up to about positive 700 or 800k, once we incorporated the short selling, but we kept having those big, bloody red days, and I got super sick of having to sift through those because those were like, you know, it just it would put me in like a bad mood, like to see the algo have a negative six figure day and it’s like, Oh, my God is trading so stupid.

Joe 13:43
would you sit there and watch what it was doing.?

Tim Grittani 13:47
I’d be pretty like, you know, you can push notifications to my phone if a position was being taken and stuff like that. So I knew what was going on. And I could tell pretty quickly in the day if something was starting to spiral out of control and take loss after loss after loss. So I think it was December, I shut them down, I basically just shut them all off. And I was like I need to redesign all these because they’re just not good enough. And that’s what I’ve kind of been up to for the past four months and just starting to put together new ones and put live new ones actually in this last week, where it’s totally opposite approach where it’s like, Okay, now we’re really tight on the risk management win rate is way down from what it was before. But now risk reward is like way better. So we’re gonna see how it goes this time.

Liquidity Constraints With the Algorithm

Alex 14:30
Are there any liquidity constraints with the algo? Like, do you face yourself kind of being stuck in maybe an illiquid stock or oversized in certain stocks or anything like that? Yes.

Tim Grittani 14:42
So that is one of the criteria for the place selection that we put in, you know, even before I even really start trying to optimize and make them better. It’s like I just like right off the bat trying to cut out anything that’s illiquid. So we say like, okay, it’s gotta be trading a certain amount of dollar volume per minute or, you know, putting through a certain number of trades per minute. And that’s kind of its starting point. But even even with that, we still have issues with some liquidity stuff, like you mentioned, where there’s, you know, some slippage on the stops, or I think the bigger deal, honestly, is missing entries. You know, like, if you if you have one of those stocks that you know, spikes up, and you try to short it on the back side, when it’s just in its freefall collapse, and it never, you know, bounces back up to fill the rest of your position, you know, like missing those wins, especially in something that’s supposed to be low winrate, high risk reward, like missing those wins is really painful to the overall results

Joe 15:35
So how do you offset those situations, you know, when you do all your back testing, most of those times, you’re assuming, fills? World you’re assuming fills, but then when you go and deploy it, like you’re saying, you miss those liquidity situations where you’re trying to catch it, when it’s popping, and you’re adding liquidity versus taking liquidity. So did you ever do experimentation between that.

Tim Grittani 16:01
So with the, with the exit side, like stopping out in the slippage, what I did for this generation of play, is that I in the data we pulled, what was the highest price within five seconds of the stock stopping me out. And we’re using that as like, what would the exit be? So that’s kind of like the worst case scenario, because if we’re firing out a market order, like we’re gonna fill in five seconds. So we’re kind of building it off of a worst case scenario from the start, like, like, what’s the worst slippage we might take? And can we still build a possible strategy or build a loss by word, build a profitable strategy, you know, even with that worst case, slippage factored in. So now, I think I’m gonna do something similar on the entries, just because there probably does have to be a little bit of chasing involved with the entries. I don’t know if I want to be firing market orders at the entries, you know, chasing the stock going down. But yeah, you know, maybe, maybe use limit orders to chase a percent or something like that. And again, just, you know, when I, when I go into the back testing and looking at, you know, how would this have done on the past data? You know, just just factor that in as well, you know, okay, we we’ve had to chase 1% on the entry. Here’s what we would have been if we hadn’t filled on our stop for another five seconds after the stop triggered? And does it all still net out to be profitable? And just kind of hope that’s good enough from there?

James 17:25
Absolutely. Did it ever freak you out having risk on the table with you kind of not in control? Was it something like, because I know for me, I’m very much a control freak. So does it is it weird for you to like, watch this thing, trading your money, and like your capital and like almost like knowing, like, whatever happens, or it’d become easier, like overtime,

Tim Grittani 17:45
it’s pretty easy, because my coder tests things pretty well before we put anything live. So like, if we’re testing something like it might only be taking 50 Chair positions initially, just to make sure everything fires as expected, like my biggest fear would be something doesn’t stop out, the shutter stopped out. Like I mean, like something like, like, the weirdest one actually would have been top on Friday. We weren’t involved in that. But like that, that did not break high of day until after hours, I want to say, and ended volatility halted five minutes before close, which is normally about when we’re closing out a position that, you know, hasn’t gotten stopped out. So I messaged him on Friday because I was like, okay, like, we need to make sure we have something in place for this because like, if we wind up in a situation where you know, we volatility halt, don’t cover. And then there’s nothing in place to take it like to close the position after hours. Like we could end up in a situation like this is the algo work pre and post market like it can Yeah, it can it can route to like Arca or Ajax or wherever, you know, any any route you have on your desk terminal they can use. So you just have to make sure you’re routing to the right place. But But yeah, the biggest fear would just be not not getting out of a trade, which should get out of a trade. And, you know, we’ve been doing it long enough that I kind of trust that we’re not going to run into something like that. So so as far as having risk on the table just day to day that I’m not in control of you know, that just kind of comes down to position sizing just being comfortable with how much we’re risking. per trade. And yeah, I’m pretty detached about it. I’d say.

Stop-Losses and Volatility Halts

Joe 19:23
Speaking of those stop loss situations, back when RKDA ran and James and I are really attached to this stock in a very negative way. And then yeah, Harry on the opposite side. But RKDA was a situation where I learned the hard way that certain routes such as edge x and Arca have limit bands to what they will accept on a Stop Market order. So for example, if it limits up and then gap up past that limit ban, which I believe it’s, I had to talk to cobra. I talked to Chad and Cobra. And I was like what happened, dude? And because it just kept going, and I never stopped out and I had to physically like cancel orders and re enter. And they had to do a bunch of research. But it turns out that in that particular time, and I don’t know if it’s that’s really the case, but whatever it was, was that Arca and edge x where they were routing their stops through had limitations to how much slippage past your stop loss a market order would fill. And that creeped me the hell out man. And from there on out, I was tripping balls always to use a market stop in a in one of those cases where I felt like, well, what if this limits up on me or something like that from the short side, obviously. But yeah, that was I don’t know if that’s anything you’ve tested or anything you’ve seen ran through, but that was a weird situation, man.

Tim Grittani 21:01
Yeah, we had some kind of similar thing, like going into volatility halts, where certain routes, you know, if you’re trying to shoot the order through like, right, as it’s halting, or something that like, just rejects, and then the algo, like, our algo was being too dumb to like, realize that the order of reject and so we thought the order was placed. So we worked through that, and maybe a year ago or so, but yeah, we’ve gone through similar things.

Harry 21:27
Yeah, I just thought that maybe we could start on the some of the sector plays switch gears into that because we just had AI and obviously AI was a pretty big sector craze. So did you trade any kind of AI stocks?

Did You Trade Any AI Stocks?

Tim Grittani 21:42
I did. Yeah. Yeah, I was. I was around for those I totally missed that back round one in January or February or whatever it was. I somehow it just totally slipped past me at that time. But this time, I think it was the first thing that kind of I caught wind of was aI you know, the stock AI was breaking out. And that kind of intrigued me because it was like okay, maybe this is what will kind of reignite the sector for round two and this time I want to be there for it. So my process for that kind of was just immediately start researching, you know what, you know, AI stocks are out there. You know, I put the quotes because you know, a lot of low float stuff kind of takes advantage of sector crazes but yeah, I kind of started off going through Findus and finding the the lowest float ones that were in the same sector. And going over to dilution tracker, which is still a huge time saver forming because I don’t have to comb through filings then. And you know what, you know what could possibly drop it off around me what can’t and came up pretty early with the stuff like CXAI GFAI, BFRG? A couple others that never really ran too? Well. FRGT I think was one of them. aixi. I think that was a that that was close to me that like $1 breakout, but never really got there. But yes, I mean, I kind of like came up with a low float list. And then from there was just kind of looking for ones that weren’t too buried in previous resistance from January, February. Because, you know, there were there was stuff out there. Like I wouldn’t call it low float, but like so un or VBA AI, you know, like those things had run back then. But they had run with like, you know, 4050 100 million volume days, I think. And yeah, there’s 100 million there on so un so like, stuff like that. It was like okay, yeah, that might rebound a bit. But I don’t expect that to have some big crazy move. And like, I’m trying to be present for just the very best stuff. So I kind of like wrote those off. And I came back I came out for a GFCI like I had GFCI on that first day when it was at like $5 or maybe 550. And I had it through the next morning and sold it at like 11 or 12 into the morning spike, which was you know, in hindsight, not the best sell. And I don’t think I had a ton of size behind that one, like maybe four or 5000 shares, but still it was like a nice trade on that. And then I kind of was kicking myself a week or two later, when GAI when GFAI broke out. I did buy that breakout, I started scooping up a bunch of low float ones again, just kind of in anticipation because I’m figuring you know, all these chat rooms are going to start hitting low float stocks and CXAI. I had tried it back around the time GFAI had its first run and it never really got any volume never got anything going I think I think I was out of that for about breakeven. And then the morning that day it went to the what two to nine out looks like I bought that pre market because pre market had had more volume than I think it had had any other day. And you know I love the daily chart, the limited history the kind of lack of volume Mind and so I was buying dips pre market and you know texting one of my Trader friends as it’s having its morning spike being like I’m making the exact same mistake as Jeff out here but I’m selling it and I sold it like in the threes like it was I have more science behind that one at least but still like that was really frustrating for me that like I’m still not that great at holding on to these things because like you know that emotional side of trading still does kick in for me a bit where it’s like you know the thing is up from 150 to three and a couple of hours and I’m starting to think about like oh I’m going to be so pissed if this like reverses and I get back a bunch of my gains and like I never even really let it have any kind of like trend break or any kind of you know negative mood yeah like I was like It looks scary bullish chart you’ve ever seen like in terms of a wall like it never even really cracked below VWAP during regular market hours so yeah, like I got a ways to go on my holding these things. I also had iron px I think on this day going into the next one whatever day gapped up over $1 and I sold I sold that one too late. I yeah, IMPX I bought this one after the dip and the hold and took it all into this morning and got out I kind of had to chase the weakness down into the low ones unfortunately, it was really bad sales on that one. And it was like it was like this one actually had dilution he was it was it was sloppy like I mean I made out really well I’m I Long’s but at the same time, like it was really poor execution and a lot of room to improve. So it’s, it’s kind of like, you know, as a trader, there’s always mixed emotions, right? You know, like, there’s some things you can say, hey, I did that really well. And there’s always some things where it’s like, Hey, I could definitely improve at that.

Alex 26:55
Do you it’s funny, though. Sorry, James. Go for it.

James 26:59
Just because it’s funny hearing you like almost excited about the longs when I just know you is such like a short seller. And I think it’s like

Joe 27:06
he’s like a whole time. I’m just like I thought we read up on it. I’m like, what is happening right now?

James 27:15
Did you get involved in the short side at all? In any of the AI

Shorts vs. Longs

Tim Grittani 27:18
I’m I’m honestly like, I feel like I’m too out of practice at this point. Partially. Let me one thing for some context here. Part of what happened with the short selling is that when we went live with all these short selling algos through the DEA s terminals. It was it was a situation where it was like I can’t be logged in in both places. So if I tried to like log in and trade personally then it would kick my algos off or my algos would just like kick me off every, like 20 seconds when they make sure they’re connected or something like that. And then later I found out from the brokers, it’s like, no, we can just make you a second username. And like then both usernames can be connected to the same account. So like, this doesn’t even have to be an issue. But I don’t know, like, like I said, I just I was getting too stressed out by shorting and I wanted to be like stress free as much as possible. So I let myself get way out of practice with my shorts. And now it’s not a huge part of what I do when I do briefly show up to place trades. And I do miss it a bit because definitely there’s a lot of missed opportunity there on the short side.

Harry 28:22
Would you say that you’re mostly doing like breakouts a lot on long stuff like that?

Tim Grittani 28:28
Yeah, I’m definitely still looking a lot for like the big picture, multi day breakout type situation, you know, a intraday piece to it that I’ve kind of added for, like looking for ads is, it seems like there’s a ton of fake breakdowns. Like where it’s like there’s like a support crack like right around V whap, where it cracks under V whap. And then somehow, you know, you would expect to see a waterfall down and instead it holds itself just perked right back up. Like I love using situations like that to add to a position and then just using whatever that little crack low was as my new risk level. So I mainly am just looking for situations like that where the daily chart I think is like really primed to possibly go there’s not much of a flow to it. And the intraday is doing sneaky trapeze show.

Harry 29:17
Yeah, exactly. Yeah. No, that’s tough.

James 29:20
It’s funny. Do you think this strategy of like, because you again, I’ve known you in such a short biased guy, you know, is this strategy of you learning to do breakouts? Is this something that you think a lot of other traders can replicate? Or was it something that like really took you a long time to even kind of have the stomach to try it after going from shorting?

Do You Anticipate Sector Plays or Wait for Volume?

Tim Grittani 29:40
Right? Um, I mean, I was I was like, one of the first strategies I ever got good at was OTC breakouts on like the scammy OTC pumping dumps. So like multi day breakout like has always kind of been like a big piece of what I did. With listed stocks that mean of course it was tougher and a lot choppier. But I did build some comfort In that, like back when I was still doing a lot of active trading on my own. So it’s really not like that new of a thing to me. If there’s like, the newest part maybe is just like trying to like judge, like, where’s there a fake breakdown? And how do I like, you know, add into that and be like, yeah, like Jeff a great example right there. Yep, you’re pointing right at where that that looks like it could sucker in some shorts or Scout some Long’s or whatever. And then somehow it just catches and continues. But yeah, like, I, I don’t have much fear at all with Long’s like, it’s very easy and very comfortable for me, because I know my stops, and I know what I’m going to lose if that stock gets hit. And, you know, I factor some slippage, and of course, but I’m very rarely surprised, you know, by how much money I lose when a long trade goes wrong. So it’s, it’s very easy for me, and as far as whether other traders can do that, like, long or short, I think, I think the risk first mentality is just the way to go. And that can make trading much less emotionally draining, you know, if you if you kind of know your worst case scenario, as long as you actually stick to your stops and take the trade off.

Harry 31:07
I know, one question that like, definitely a lot of traders, when they’re watching, this will definitely comment or ask, and that’s going to be do you would you rather anticipate these sector plays? Or would you kind of wait for the volume to come in, like, so a lot of the time, like, the volume will kind of come in, we’ll get over that breakout level, and we’ll run intraday. But also, sometimes, you’ll wake up, and it’s already blasted and pre market and you’ve already kind of missed the entry, you know, and it’s already fading back down to that kind of level. So would you recommend people anticipate a little bit? Or would you recommend people just kind of be patient and wait for that kind of intraday setup to kind of come?

Tim Grittani 31:49
Yeah, that’s, that’s a good question. Um, I mean, it was it was a mix of both, for me this last time, where, you know, there were there were some anticipation plays that tried and, you know, that was maybe 5050, whether it worked or not. And then, and then yeah, there were the ones where it was more like it had blasted already, like CSI pre market that day, and I was having to buy a dip and kind of like, you know, anticipate that it wasn’t over yet. I think that, I gosh, I think it might just come down to personality type, like, which one is easier for you. I feel like I personally feel a little more fear than the ones that have already run a bit and are having a pullback, because at this point, like now, they’re already trading a lot of volume. And there already are people, you could say, oh, man, they’re bagged. And like, it might be hard for this thing to come back and break to new highs, the anticipation trades, the biggest hurdle is liquidity. Because like I don’t want I don’t want to anticipate on something that is trading a lot of volume already, I feel like I’m chasing like, you know, the idea is kind of like try to start accumulating something that’s pretty low float before it’s really started to show any activity. And what I like about those is that, you know, if there’s not been a lot of chasing already, if there’s not been a lot of volume already, well, if the sector comes and goes, and it never really takes off, for whatever reason, like there’s not a lot of people to panic out, like nothing’s really gonna, like tank that stock on you, as long as you’re okay with your selection, and you didn’t grab something super diluted or anything like that. So, so I did have a few like that, where it was like, Okay, I grabbed like, 50,000 shares of this illiquid stock, and then it’s not really working and how do I get out of this? And I found like, you know, breaking up my orders into like, little, you know, 502,000 Share pieces and just like taking off like, you know, 50 little trades like, you know, e trade doesn’t charge you per trade or anything like that. It’s free trades. So you’re not like eating commissions or anything like that. So I’m kind of like, you know, tiptoeing in with tiny little orders and tiptoeing out with tiny little orders and trying not to, like, get too noticed. Because like, if I if I put a 50,000 Share selling all at once, like, yeah, the markets gonna move, I’m not going to fill Jack, but, you know, you fire through little 1000 share market orders, like you felt like that.

Harry 34:03
Yeah, it’s that’s definitely one thing that I’ve been working on as far as my own trading, trying to find that balance between like, anticipating, and also, you know, you see that volume come in intraday, and you’re like, Okay, this is it. This is exactly the confirmation that I’m looking for. So yeah, that’s definitely something that I’ve definitely been working on. So even for me, that answers kind of some questions for me, as far as kind of like what you do too. So that’s kind of cool.

Joe 34:27
And then Harry buys it, and they dump it. It was great news, though. What is happening to GF?AI? What am I?

Tim Grittani 34:40
Yeah, I hadn’t looked at that in a few days. Wow. That’s

Joe 34:42
what Alex

Alex 34:44
offering today.

James 34:46
that’s all that’s one word.

Joe 34:51
I was just an eater and as Peter through these charts, and I was like, why is the bid so much look? Oh, no.

Alex 34:59
Yeah, Add to offering today proposed offering

Joe 35:05
Did you catch any of that sector bit?

Tim Grittani 35:08
Sorry, what was that

Joe 35:09
the Chinese stuff that’s happening?

Tim Grittani 35:11
yeah, I’ve been watching that a little bit like so when it comes to like the whole, like playing sectors thing for me. I like to more focus on the sectors like where there’s some kind of legitimate news behind them, you know, like aI you know, you got all the chat GPT stuff going on. Like the last sector I really participated hard in was the oil stocks back last March, when the Russia Ukraine war started. They, you know, I like there to be like a decent fundamental reason behind the sector as well. Like with the Chinese stuff, it’s just like, okay, these are all scammy companies, and everybody knows it. So let’s chase them. So it’s like, I don’t really get as involved in that. Like, I was definitely watching Top after hours, on Friday, or whatever day it was and pretty amazed at its action. And I did actually consider trading a few of them Monday morning, because we saw all these sympathy ones gapping up. And so like, I think the plan going into Monday for me, it was like, Okay, let’s look like I kind of assumed top was just going to fall apart Monday and actually did way more than I expected. But I was thinking like, Okay, if top is collapsing on Monday, let’s have a watch list of other known scammy Chinese tickers and see if there’s any that you know, gap up and are holding up decently mid day. And the only one I can remember that really did that and made a big move was hu Di. My algo was actually short that around 415 I think from its quick morning spike, and then it covered it right at the 450 break. So I was I was pretty pleased at that kind of like, Hey, why didn’t I like why did I stop watching this one, I buy this, but you know that? That’s okay, like the China stuff is a little scary for even me.

Do You Ever Miss the Collapse Day?

James 37:01
For sure. It’s funny, it’s for you now like everyone knows when you’re shorting like, the sector plays like a lot of times, like people are taking losses on the way up. It’s just a very difficult thing to time the top. And I know in the past, that’s something you used to do. Do you prefer this kind of method? Now? I know you’re you’re long now. But is this something like do you ever miss kind of that collapse day? Unlike taking advantage of that side? Or is that something that you’ve just completely pushed out of your system now?

Tim Grittani 37:30
Um, no, I wouldn’t say it’s completely pushed out of my system. I mean, that that kind of is like, like, you know, I said, I totally redesigned the short algo and that’s what their ultimate purpose is going to be is being there for collapse day. And that’s going to be their style to is they’re going to take their paper cuts on the way up, you know, losing our here and our there but you know, hopefully when it nails it, it’s you know, plus five or plus 10 or something like that. So, so yeah, I’m just trying to automate that because especially knowing that like it will stop itself out and no matter what, like it’s going to hit like the offer of high Databricks like, I think that I like knowing that I can’t personally get stubborn it’s out of my hands. So I think I’ll get my fix that way. But yeah, it can be it can be a little hard to see some of these things tank just be like I used to be involved in that like I used to be used to be adding on that pop and covering this washout.

Harry 38:26
On a lot of these on a lot of these breakout plays. How big is filings? Like how big does that come into play? Like if you see a breakout or like three bucks and they have warrants like let’s say four bucks would use would you like automatically think like, okay, they might try and break it out over this level get to these warrants or like maybe they have like baby shelf rule and they like want to run it to this price in order to get over that. How much does like your tinfoil hat? Come on when you’re when you’re longing?

Tim Grittani 38:55
Oh, yeah, the tinfoil hats always on? I’m I will play those differently. I will be more conservative for sure. I’m very I’m very paranoid. I have been caught in more than enough offerings. Like I just don’t want to put myself in that position as much as I can. So yeah, like I will, I will not take serious sighs on something where it’s like, Oh, they’ve got an s3, they could go effective any minute or something like that. Or, you know, if there are levels with warrants, I’ll probably be a seller into one of those levels. And a lot of cases, I just avoid those though. Like, I’m just looking for the cleanest ones where there’s like very little going on the one the ones that maybe catch my attention. Where I might make exceptions is like I’m trying to think of a good example, like maybe back last March.

Tim Grittani 39:47
Cei, like everyone knows how horrifyingly diluted CEI is. And that thing was putting in like day after day after day of like 4050 60 million shares of volume and kinda like slowly building this multi day chart. And it eventually did have some kind of breakout and big move. And I think I participated into that one. See what, uh, yeah, I think I’ve been like February and March 2022. But But yeah, like things like that, where it’s like, there’s just sustained really high volume, and the stock is not falling apart, despite the dilution that everyone knows is there. Then my tinfoil hat, you know, comes on even a little bit more, and it’s like, oh, they’re trapping shorts. And then I’ll probably let myself get involved. And I like to get involved with ones like that anyway, because the liquidity is there. Like it’s really not that hard to take sighs when the liquidity is there.

Harry 40:44
Yeah, BBA or sorry, bed bath. And beyond is another one, that that had that type of chart where like, we just kept getting that volume day after day after de. And that one, just, you know, before they went bankrupt before they did that whole offering and stuff like that. That one was also one similar, definitely to CEI,

Tim Grittani 41:04
where you were asking about, if there’s any like times I like Miss shorting, like, this is the one like I, I very upset with myself for not making an exception and shorting this after they put out that filing, but that awful dilution a few months ago, like I don’t know what I was thinking, but like that was as much of a layup as you get. So I think I’m gonna have to adjust a little bit to maybe keep half an eye out for another one like this. I’m back to the dark side where I was, I was getting really excited when they were ramping it up towards like, 50 cents. The other day, I was I had a dream. And I was like, I was also watching that. Yeah, I was I was getting ready. And they had a meeting coming up in a couple of weeks were like discussing a reverse split and everything. And I was I was like gearing up. I was getting ready to put in a huge short on that. And then they ruined it with all the bankruptcy news. Oh, yeah.

James 42:03
It’s gotta be hard bouncing back and forth, especially you know, if like, you’re waiting, like you say, you really want to only come up with the best setups. And it’s like, I feel like you could easily get suckered back into almost trading daily. If you’re like, Oh, well, I got to make an exception for this one now. And then I can make an exception for that one.

Tim Grittani 42:18
I did that I did that more. A couple of years ago, I’d say. And it was actually after the, after the oil sector, I kind of got myself a little bit addicted back into it again, where it was like, okay, that oil sector went really well, let’s, let’s keep this going. And then I traded really sloppy for a few weeks and was like, Okay, that’s enough of that, where it just was too much back and forth. And I was not making effective decisions. So that kind of, you know, it’s kind of when those things like you get burned, and then you learn your lesson. It really

Alex 42:56
How do you do you mentioned how shorting becomes stressful from time to time long can be stressful, too, if you get called an offering. But my question is, how do you deal with stress? How do you release stress? And do you have any advice for people that may be stressed in their trading, what they can do to kind of release some of that tension?

Tim Grittani 43:15
Yeah, I mean, the big one for me back in the day especially was just like, finding time to go to the gym and workout like, or like beach was like a big one for me after my son was born, and I was in Puerto Rico was, you know, it’d be like end of a trading day, I’d be like, totally fried and stressed out. And then I’d like pop them in this baby carrier, and just like walk the beach with him for like, 30 to 45 minutes. Like that was awesome, like just getting out and moving around. I think that there’s also a discipline component to that too, like, you know, a lot of us don’t really want to work out. And so when you’re overcoming that and forcing yourself to go and do it, that can kind of translate into trading a little bit, almost where it’s like, okay, you’re, you’re exercising discipline in another area of your life. So now it makes it a little easier to exercise discipline in front of the trading screen. So yeah, just getting getting active, I think was like one of the most effective things I ever had for stress management. Makes sense?

James 44:13
Like the do I mean, I think that it’s pretty obvious now that the market has completely changed. You know, since you’ve started you know, since trading, we’re talking small caps and everything is completely evolved. Do you think that one now it’s hard, it’s more difficult now more than ever to get into trading? And if so, do you have any sort of advice that you would give to someone interested in pursuing trading kind of in the current market?

Advice for New Traders

Tim Grittani 44:38
Yeah, um, I mean, is it more difficult to get into it? In some ways? Yeah. Like I feel like some of the patterns are a lot less clean than they used to be. I mean, I know one of my favorites used to be like overextended gap down and now it seems like that setup is just like dead. Like you know, now that today’s version of overextended gap down is like the stock closes it It’s highs and gaps down 30%. And it’s like, how do I play this? So, I mean, stuff like that going away definitely makes things a little more challenging. But at the same time, I feel like there’s more volatility than ever. And volatility is really where the real opportunity comes from. And then it’s just figuring out ways to take advantage of it. So I mean, the advice for anybody starting out, I mean, I think it’s a lot of a lot of similar stuff to like, you know, when any of us would have started out where it’s like, you know, you’ve really got to take your time, keep your size under control, know, you’re gonna make mistakes, you’re probably going to have a blow up or two, and just not letting that take you out of the game and be like, irreparable damage, because those are some of the best lessons, and meticulous meticulous tracking, like, I’ve always been all about that. And I always will be all about that. Like, it doesn’t matter, you know, what variation of the setup is showing itself from year to year, like, you know, try to try to stay on top of it with data and figure out like, you know, just whatever you can to try to figure out how to take advantage of certain moves, you know, figure out what areas interest you fit your personality, and then just get to work. Do you love?

Harry 46:09
Oh, do you think that with like the rise of chat GBT with like the rise of AI? Obviously, it’s way quicker to study and to learn, like, compared to like, a couple years ago, the learning curve has been accelerated like crazy, you know, I can go in to chat GPT and ask it all type of questions about the filings, I can go in and ask questions about a lot of trading things, and it will spit me out the answers right away. So do you think with the more information that’s coming into play, that things could potentially change? And like patterns could solve working? Or do you think with like, like, do you think like, there’s going to be less opportunity because of the Accessing like to information? Or do you think it’s just going to stay the same and like nothing really to worry about?

Tim Grittani 46:57
I think it goes along with like patterns evolving, I think that things will probably get a little more difficult in that sense. Just that like we’ll have to kind of adjust our expectations. Like, you know, we already talked about overextended breakdowns, but like multi day breakouts, like, aside from when there’s like a big sector running, it seems like a whole lot of those stuff. Now, compared to like, it used to be much higher success rate. So something like that as well. Like, I think it’ll just come down to selectivity. Like I think a lot of the extreme scenarios that we all profit off of, are never really going to go away, you know, like, you get a bunch of shorts trapped in a play, like, that’s going to have some kind of blow off finish, and there’s going to be, you know, maybe an opportunity to get long that if you can recognize it, or an opportunity to get short that once it’s on the backside. So it’s um, you know, it probably comes more down to selectivity than anything, and like, just conditioning yourself to be a little more patient for the most extreme and potentially profitable situations. But it will be interesting to see how things change with, you know, the increase in automation and AI and all that, like, it’s, it’s gonna, it’s going to be in a journey.

The Million-Dollar Question

Joe 48:05
So a lot of stock traders, you know, novice people, newbies that are coming into the market, you know, they, they’ve got varying goals, backgrounds, anything like that, some may have large amounts of savings, some may have small amounts of savings, and they, they, a lot of people that come into this, they look to day trading as like a solution to their financial challenges. So, for those folks, what do you think that? What measures could new traders, regardless of whatever their motivations are, what what do you think they could implement to protect themselves? In the unpredictable world of trading? Man? The million dollar question.

Tim Grittani 48:53
Yeah, that’s hard, just because, I mean, I know that when I started, I probably didn’t have my head in the right place. And it was like, let’s get rich quick. And let’s do like, Let’s rush this process. And, like, I was trying to, like follow trading alerts, you know, like, I was doing everything wrong from the start, because like, that’s just what I want to trading to be like a way to quickly boost my bank account. And I mean, we all we can really do, I feel like it’s just like, keep repeating the same warnings over and over. Like, you’ve got to trade small, you’ve gotta like expect things to be much harder than you think they’re going to be. Other than other than just saying that and hoping people listen, I don’t know what you can do because like, I for years, I’ve said that same message over and over and I’ll still get messages where it’s like, Hey, do you think I should do credit card debt to fund my trading account? Like people are gonna do what they’re going to do but man, I hope they listen because it just also makes trading so much easier if you’re not doing it from position of like, I have to make money today. Yeah, like if you can actually come to the market and just say I’m gonna see what presents itself in, I’m gonna try to treat it as best I can, like, you’re gonna be such, you’re gonna be so much more effective as a trader than if you’re pushing and trying to make things happen. And it doesn’t matter why you’re pushing, like, I’ll, I’ll show up on a day where I say, hey, I want to trade and they’ll try to push and make things happen, because I want to feel like it was worth it to, like step away and be in front of the screen. And I’ll have a crappy day, like even now, like, you know, you’ve got to put yourself in front of the market with the right mindset.

Joe 50:26
Yeah. Well, everyone knows you, as you know, the, the icon of short selling that came out of that age, but a lot of people don’t know that, you know, just a regular guy. That’s just really damn good at trading stocks. And so, what I’d like to do is I’d like to finish up with just a lightning round of questions here for you just regular guy questions, right? Completely unrelated to trading. So just be ready. Here you go. Okay. All right. So what was your first job?

Tim Grittani 51:01
What was my first job? Yeah. My first job was I was at a Barnes and Noble and I basically worked the Starbucks counter in the Barnes and Noble for maybe 75% of my time there.

Joe 51:12
So the secret to being a successful trader is at least what’s up. Alex, that’s crazy.

James 51:23
All right. What’s your favorite go to meal? You get one your last day on earth? You get one meal to finish off? What is it gonna be?

Tim Grittani 51:32
I’m on a ramen kick right now. So it’s been I haven’t ramen like three or four times a week. So it’s probably a big wall ramen.

Joe 51:38
What’s your good good ramen? Not Not, not instant. Ramen. I was like, damn, the AI. AI algo was tough. What’s your favorite hobby outside of trading?

Tim Grittani 51:54
Probably right now. Bowling. I did. My first league and like four years. Yeah, man. And now I’m really getting into it again. And I’m like, Man, I want to beat my brother because he’s a year younger than me. And he’s always been a better bowler. I can’t handle that.

Joe 52:13
What book are you currently reading?

Tim Grittani 52:14
I’m not currently reading any books.

Joe 52:16
All right, favorite non financial podcast or TV show? What do you listen to or watch the most?

Tim Grittani 52:23
Um, I really enjoyed severance. I was I was big on Season One of severance.

Joe 52:29
Dude that shows wild! Yeah. Do I I still can’t figure out what’s happening.

Tim Grittani 52:36
I’m loving succession right now. I don’t know that councils nonfinancial, but

Joe 52:42
I think it is. Yeah.

Tim Grittani 52:45
I’m sad that time like, but yeah, billions I’ve been Yeah, that’s last season. And that’s coming out later this year.

James 52:54
Yep. Paul, Damian Lewis back to is Bobby. Good news. Nice. Fun. I’m excited about

Joe 53:00
what is your most memorable trading mistake? And what did you learn from it?

What Did You Learn From Your First Big Loss?

Tim Grittani 53:07
Oh, man, it might have been that Kodak thinking I was totally covered and I wasn’t. If it’s if it’s not that then it’s the $290,000 late loss where it was just you know, short failed to stop out add add add, add add and then just like blow out cover because I was too scared. And the lesson the lesson there. It took it took a few more losses like that to learn the lesson. But the lesson was if the stock is beyond my stop loss point, and I’m still in it, for some reason never ever had under any circumstance,

Joe 53:39
most memorable vacation you’ve ever taken. Oh,

Tim Grittani 53:46
I think going to Florida for the first Falcon Heavy launch. That was that was really cool. I enjoyed that a lot.

Joe 53:57
If you weren’t a trader, what would you have done?

Tim Grittani 54:01
I don’t know. I think about that a lot. I so after Barnes and Noble I was at State Farm for a while I like worked summers full time in State Farm. And I didn’t I was not a great college student. Like I didn’t really have any internships or anything lined up. I was a finance major. I had no idea what I was going to do with it. So I think I probably would have slipped back into that State Farm role and just kind of gotten trapped as a farm.

Alex 54:27
I have one last question. Do you think you’ll be trading stocks for the rest of your life?

Tim Grittani 54:33
In some capacity? Yeah, I think I’ll always show up for the big stuff at least like I I don’t know if I would have thought I would have like retired to this extent already. Just because like I mean, the kids had been in daycare for like a year now. Like I do have mornings free again. I just didn’t like not really using like I’m kind of enjoying the detachment and not having to show up every day to trade so I’m sure I’ll always be somewhat involved in the markets but I don’t know if I’ll ever be back to like totally Full Time.

Joe 55:01
And if you could have dinner last question if you could have dinner with any historical figure, who would it be? And why?

Tim Grittani 55:09
Oh my gosh, you’re gonna stump me with that one. I have no idea. I’m not a big history guy. I don’t think much about the past so I don’t

Joe 55:19
anyone you look up to anyone

James 55:23
you look up to that’s a tough one to

Tim Grittani 55:25
look up to. Yeah, that’s a great question. I don’t know.

James 55:29
That’s a stumper.

Tim Grittani 55:36
We got to work. That’s one to think about.

James 55:38
That’s good. Maybe

Tim Grittani 55:39
I’ll tweet an answer on that one. I need to think about that a little bit. I feel like I’m unreasonably stumped for that question. But like

James 55:45
you should have something but like it’s just not should have something

Tim Grittani 55:49
but I don’t

Alex 55:50
and I don’t I’m used to everybody up and coming talent on like social media, Twitter, whatever, like up and coming traders that you’ve been kind of monitoring or looking at or you think have like potential.

Tim Grittani 56:02
Um, there’s there’s a couple quant guys that like I kind of follow where they like, I know they’re doing the whole algo thing also, and lots of really heavy back testing. Trying to think of their Twitter handles now. One is, I think, like, I think he’s a teenager still, maybe, or something like that. And he looked like he was on some really good results for a while. And then day trading Zoo. I think that’s another one. Yeah. And it seems like he’s, uh, you know, he’s he’s very intelligent on the quant side of things. And he’s got his account at all time highs? I think so. You know, guys like that. I’m interested to see how they do because I think their data guys would like a lot better of a data background than me. So it’s always exciting to kind of see what’s possible for people like that, because I know that can take it so much further than I can.

Joe 56:55
What’s one thing on your bucket list that you haven’t accomplished yet that you want to?

Tim Grittani 57:01
I want to do one of those like SpaceX or Blue Origin, like civilian flights, like down the road, whenever whenever those are a little more available.

Joe 57:11
Talking right up Alex’s alley, right? Yeah. All right.

Alex 57:15
I got 500,000 separate bank account waiting for the waiting for it. Yeah, I

Tim Grittani 57:20
don’t want to do the trip all the way to Mars, like I think six months on a rocket, like freak me out. Yeah, like one of the one of the little civilian flights. We’ll start there and see how it goes.

Joe 57:30
Awesome, man. Well, thanks so much for being here, dude. It’s been yeah, thanks again, guys. It was awesome. Thanks, man.


About the Author
119 posts
James F.

James Freedlender is a driven day trader and entrepreneur hailing from Boston. Since embarking on his trading journey in 2018, James has honed his skills and specialized in trading penny stocks, with a focus on longer time frame moves. His dedication and sharp instincts have contributed to his success in the competitive financial world. In addition to his day trading accomplishments, James is a thriving business owner, running a popular barbershop and collaborating with his family in the design and renovation of homes and businesses. His entrepreneurial spirit and keen eye for detail have paved the way for continued success in his various ventures. Outside of his professional pursuits, James is an avid golfer and hiking enthusiast, always eager to explore new trails and perfect his swing. His love for travel has taken him to many corners of the world, enriching his life experiences and providing inspiration for his work. A firm believer in giving back, James is passionate about helping others achieve their financial goals and guiding them on the path to success. His wealth of knowledge, combined with his dedication to uplifting others, makes James Freedlender a respected and admired figure in both his professional and personal life.