Welcome to the After Hours Podcast Hosted by Harry Hoss and James Freedlender Presented by My Investing Club
Whats going on guys, back with another episode of the after hours podcast, today’s just gonna be here tonight, we’re just going to be kind of chatting about the current market cycle, and then answering some questions from a few of the members at NYC. So we can hop right into it and you know, kind of read before we started here, and I already kind of gotten into it. We were just catching up and talking and we figured we’d just start recording now. But, you know, we’re just talking about how the market right now is, is tough. It’s I know a lot of guys over the last couple years who made a lot I mean, millions of dollars. Yeah, who now during this market are struggling long and short. Because there’s just, it’s just a weird one. Right? And it’s like, the range isn’t great. The opportunities are like I would I wouldn’t say we got an eight plus setup on either side. And in almost like months. Yeah. months. And it’s and it’s tough. So you know, and and Harry for you, like kind of how are you adjusting as a long to this current markets? I know you’re still doing well, but it’s just slow, slower. It’s different.
Market Cycle and the Current Market Cycle
Yeah, I think for me, it’s really always been about market cycle, right? So it’s been a lot for me has been, like, if you look at something today on like, we’re recording on June 3 2022. If you want to go back and look, but like something today, like SOPA, right, they kind of push it free market, they kind of formed this range. And I feel like you know, like the kind of like popular thing on Twitter right now has always been this like, kind of what I’ve been seeing it’s been like this high, they clear out pattern right? Where the stock goes too high today, Long’s are chasing shorts are stopping out because that’s where you’re supposed to be stopping out and it just stops, right. And now we’re kind of in this weird, I guess, like situation where there’s like not as many shorts stuck at the lows, because they’re all waiting for this like magical holiday clear out. So like, I found that there hasn’t been that many shorts that are stuck at the lows. And, you know, it’s been really difficult to push back up to high today, like the past like kind of cycle that we’ve been in is that things haven’t really been moving too high a day, they’ve been moving just underneath high today, or they’ve been getting like this kind of secondary bounce. But things really haven’t been moving to high today. So I’ve kind of found it interesting for me, like I’ve had to readjust my targets this week to underneath high day to a little bit under right. And I think for me, it’s been all about adapting just to the current cycle, right? This is why you keep a journal just to kind of, you know, scribble down what the markets doing while you’re kind of in the moment, right? So like, for me, I always like keep up like a little journal, a little piece of paper for kind of a week by week type of basis where I write down okay, stocks are having a hard time getting to the highs right now. Or, you know, if I’m long at the lows, I’m going to be I guess I’m going to be kind of forming lower lower targets, instead of always looking or depending on that high day punch, right? You know, if you’re long at 240, a high is 263. You have to be, you know, selling underneath 263 For sure. Right now in these type of, you know, conditions, maybe next week, we’ll get a bunch of like high day rippers right, things can change, you know, on a dime. And but for right now, for me, it’s been like things can’t get to high today. So I’m selling below high today, I’m really kind of bearish on my targets. I’m not looking for homeruns I’m not looking for these stocks to rip over high day. You know, I’m just being very conservative with my targets. And I think that’s just kind of how I dressed.
How to Take Advantage of a Bearish Market?
Yeah, it’s weird. It’s like, it’s like right now, like we came from market in 2020 and 2021, and even part of 19 where I just I kind of like call it like the believers market. Like there were so many stocks that would just, they would take high of day and continue. And I feel like we’ve been in this kind of downtrend in the past like year of there’s no continuation. It’s very rare and generally the ones that do continue or like grinders to they’re not even like stocks and you want to be in like I I feel like recently it’s like I’m I’m someone like I in my opinion, I have a good like read on on stock at like price action. And you know, we both have seen it a long time and you can get a good feel. And lately I find myself like contradicting everything I’m saying like I’m like, Oh, wow, this stock feels like it’s gonna rip. But at the same time, I feel like you could just stop and be over and it’s like, how can you take advantage of that, like, am Alex today? I mean, it was like, there was a there was a moment in there. I’m like, yeah, if this was 2020 this would probably be at 20. This would have gripped over high of day and despite the seller 14 and We would have, we would have really seen tested highs and tried to test 1450 or whatever. And now it’s like how the hell do you even do that? You know, as a as a short right now, it’s tough because there’s no range on these plays. And people think like, the weaker stocks, it’s great to short. Yeah, it’s true. But if there’s no range for you to hit, like, I need a stock basically, like 30%. And above, it leaves just that’s the minimum. And that’s even like that. I feel like I’m scraping the bottom, because realistically, what are your targets? I mean, if if a $2 stock is up 30% Your targets probably like 30 or 40 cents away. But is that even really worth it? You know, it’s it’s tough. So, so right now, on the short side, it’s basically just like, taking the singles taking the scalps, and they come and, and, you know, it’s, it’s tough. So it’s, it’s definitely been an adjustment period for everybody. Yeah.
And I think also, for me, it’s always been on like a week to week basis, like how I kind of evaluate and something that Austin and I both do, is we have a list of like old runners and like the, this is easy to get, you can just ask and after hours, someone will have this, right. And I put it all in kind of a watch list. And when I wake up in the morning, I check it and I say okay, like how optimistic are we today? Right? What’s the overall market doing? What’s the overall sentiment, like you’d be so surprised? Like, if we are in a very, like bullish time period, like bitcoin is running crypto is running, everything’s going crazy, people are crazy optimistic. People don’t mind buying at the highest, right? People don’t mind buying those types of breakouts, because they’re less guarded, right? The overall market, like the economy, you know, everything kind of trickles down. And so when I wake up in the morning, and I see every single former runner, read or deep read, I’m like, okay, you know, today is like a less optimistic, you know, market environment, right. It’s like, some people have the, you know, the spy, and they rely on that for large caps. But for us, our spy is really that list of stocks and that old list of runners, you know, because like, if you have like three previous runners, like kind of like, you know, running that have ran like four or five days ago that are now trying to start to push up. That’s pretty bullish. But if you have everything that has ran in the past, like 10 days red or deep red that is not as bullish, right?
No, it’s, it’s funny. Like, it’s funny, you mentioned this, because I in my life, like part of the reason I got into small caps initially, well, not one of the only reason but one of the reasons I liked it, because I didn’t really have to pay attention to the market, right? Like I didn’t have to, like, think about what SPY doing. If spy was up down, it really didn’t affect the the trash that we’re trading. And it’s I’m realizing that as time goes on, and I think a lot of people like even veterans are learning this for the first time that the overall world affects small caps. Because usually the people investing in trading small caps are like, I don’t want to say gamblers. But they’re the people that have the extra money to throw into the small caps. They’re like, they’re the guys that were, you know, were shorting into, or they’re creating the momentum, you know, and it’s like, I’m realizing that every little thing in the world going on right now, whether it be inflation, you know, cost of living, all of that it’s not allowing people like I like friends of mine to, like, throw money into the market, because they because they don’t have it, they just don’t have that extra capital and you see it on these charts. I mean, it’s, it’s like we’re just missing that piece of everything of like, the believers, we’re missing those guys that throw money into these stocks, and then have them run from six to 12. Yeah. And then and then on the other side, there’s just less participants so unit you’re shorting like, for me it’s like I rely on guys selling like I rely on long selling in there’s just less participants so now the range is so much tighter. So it’s it’s very tough right now.
Buying Power Abuse and Optimism
Yeah, no, I definitely agree with the with the buying power abuse because you know, if everyone’s optimistic everyone’s making money low cost of living you know, people are you know, taking out like crazy mortgages people are going to say and they’re spending left right and centre that does trickle down to small cats you know, yeah, yeah.
It’s I mean love them or hate them right? This is not a political like podcast at all but like Trump was good for the market for the fact that he just always talked about it going up he always just talking about it ripping on new highs the this and that gave people that kind of confidence that like even if they lost on one there was they were always right back like oh, I can make it on another and another and so that you know for him like that, that was good for us for the longest time and I think that was a huge No, everyone always thinks that the shutdown of COVID and all that I think that was a lot of it too though.
Ya know, because People were taking those stimulus checks that were going up, they were going great. And it trickles down again to when people have that kind of extra money. They go in, and they had those stimulus checks, they had whatever, even if it’s only $3,500, or $1,000, or $2,000, that person, you do see how much it affects our little ecosystem, right? Even if they’re not even putting it into small cap stocks, even if they’re putting it into, you know, growth names or whatever, it all trickles down, it’s still, you know, lights the market up, it still makes people optimistic. I find like a lot of people aren’t really that optimistic right now. Like, I mean, not on anything, like you go outside, and, you know, I’ll talk to my neighbors, who are like, generally a lot of elderly people that live in my building. There’s not many, like young couples at all. And so I kind of, you know, go downstairs, and we’re talking and they’re, they’re, they’re pretty bearish on everything, you know, like, like grandparents, like, I just, you know, how to visit with them a couple days ago, my grandparents are pretty bearish, right. My grandparents are in cash right now. They’ve been in cash for a little bit, and they’re like, you know, what, you know, I don’t even I don’t I don’t trust what’s going on right now. And it’s that lack of trust, like people I find right now, like, are trusting the government. They’re not trusting the news. They’re not trusting really anything. And they’re not optimistic. They’re not spending money, people are tied for cash. And it really does kind of trickle down into our market.
Yeah, and it’s just, it’s weird, because you’d never would have thought that because I guess, in our lifetime, I mean, I’m a little bit older than me. But in our lifetime, like, we really haven’t experienced this, we haven’t experienced the market. And again, a time where, you know, things just overall are negative. And it’s, it’s tough to see and, you know, I, I have like, in my head, I use the I call it like the Instagram indicator. And it’s like, usually when things are great. I have people messaging me all the time being like, hey, like, you know, I want to learn how to trade or what stocks are there and all that stuff, and you know, all that stuff. And, and lately, it’s like none of that. There’s nothing like I don’t get any of that anymore. No one’s like, hey, I want to learn to trade. I just feel I feel like there was almost like that, because of all the the stimulus and everyone that got involved. The second the music stopped and like things started kind of dying down.
How Can You Invest in Crypto Right Now?
It just it almost sucked everything out, like even crypto right now. Chris, how can you invest in crypto right now? It’s the least exciting thing in the world. Nothing’s exciting. So it’s, it’s tough. And I just think as traders right now, it’s like, we basically just have to tread water. Until, until things change. I mean, again, I know guys who made big, big money last year, and they’re like, they’re just breakeven right now. Or they’re just like, small green. Yeah, it’s like, it’s tough. It’s like there’s we can’t get momentum on either side of the trade.
Yeah, it’s difficult for both sides, just due to the lack of range, right? I mean, yeah. Something goes up from $2 to 260. Right? How much range Do you Do you really have there? You know, not not really that much. And now, if people were short, they’re going to be like, oh, what we have 60 cents, this can fade back to zero, but nothing ever fade to the whole, or very rarely fail. Right? So you got to take like, 50 50% of that move, right? From 260 to 230. And then you’re kind of saying to yourself, Okay, just like you said earlier, is it worth it to trade this for for 30 cents, right? And I find the price action like has been very, very wiki, we we’ve had stocks that are doing 100 to 100 mil and we’re in a 30 cent controlled range. So I mean, to me, it’s just like, now is a time to really kind of study and who knows how long this is going to last right? You can also use kind of the profitable training indicator as well like who’s like up and coming like you hear about guys all the time that have been that have built accounts during COVID You hear about guys all the time that have built accounts during the regular market. Now I find like, you know, there hasn’t been any superstars lately. It’s just a lot of guys who are just treading water, right? I mean, Jack Kellogg, like one of my friends killed it in the OTC market. And a lot of those guys have been, you know, just breakeven or, or plus a little bit or minus a little bit or you know, anything, right. So it’s been kind of like a tough market. You know, I think to me, like when I talk to a lot of people, like for me, a lot of things have been pretty, pretty straightforward, I guess I could say like, you can generally rely on like, if you’re, if you’re, if you’re along, you know, getting up there around high of day, you know, you can generally rely on us, you know, creating a high going lower and then trying to kind of get into that iodate zone, you can generally rely on types of setups like that. But I mean, a lot of people were like, Oh, Harry, like you were kind of bearish on tn XP that ran. But I was just because the market sentiment isn’t good give me like five more tn XPS. And I’ll get a lot more bullish, right.
And that’s the thing we need a couple of them to, we can’t just like one stock going over Hi, day is nothing. And what was the last time we got a stock that gapped up or that ran, and then didn’t just like, get back the move the next day? Like, it’s been a long time, like, there’s a lot of things we have to see, for me to have any sort of like, no competence in shorting right now. Like we need, you know, it’s but again, like, like we said, on both sides, it’s just, it’s just not there. So, I think right now, it’s like, the best lesson that I’ve learned, you know, from from bow now, especially in stuff is, you just have to live a life where, financially you aren’t stressed, because that’s what I’m seeing is all these guys, I got a few friends that I have that I brought into trading and stuff like they’re looking for plays like so hard. And it’s like, dude, if I don’t strain today, I don’t trade today. Like, that’s basically it. And it’s like, I just feel like you need to build a life where financially you are comfortable enough that you don’t have to stress about making money Monday through Friday, if you don’t have to, obviously everyone wants to that it’s a hard thing to swallow. But the reality is, like, as long as you can pay your bills and like you know, stay alive and like the tougher times. That’s what matters. Because how am i I’m, I guarantee you, however long this lasts, this is like a stock market winter, you know, as crypto winter, this is like, this is like small cap winter, whoever can survive these times will probably be around forever, because they’ve seen now create the craziest pies with COVID market in the craziest of lows with whatever you want to call this. You know, it’s just that’s it, it’s it’s just staying alive. You know, so everyone who’s like stressing and like, people are beating themselves up every day, I get messages like, dude, I’m making money now what’s going on? Like, I need help with this? It’s like, well, no one really is there’s a lot of people that aren’t, you know, and it’s just tough. So, you know, I? Yeah, it’s hard.
I mean, I’ve been pretty green, like, each day, not like as long as I want to be, but like pretty green each day, like, but it’s just about adjusting to targets and, and really, really, really just, you know, not being greedy.
Don’t Chase the Death Candles
And if one does rip above high today, or if one does kind of death candle below high a day, you know, it’s important that you’re not chasing those moves, right? We saw a tonne of people who we, you know, we get this like burst of volume, we get this tonne of buying and we get over Hi day, you know, it’s important that you’re, you’re taking some time and, and, you know, waiting, like, I think it’s like chasing those types of candles in this market. Is that right? You know, you’re better off in this market to you know, let’s say we go over Hi day, you know, you’re better off not too long out there, you’re better off just to chill, right? And you’re better off, like if we if we get this massive slam candle, you know, underneath high day and everyone’s super bearish on it, you know, you’re honestly better off not to short that either. Right? Like, I mean, I mean, your risk reward is like pretty bad. And like in this market, like things are so range bound that like, just because of the conditions like that is not gonna work as well for you, right? And even if you are shorting that, like even if you’re shorting that type of candle, how much range are you really getting, like, you have to be like, are you holding this for like an all day Vader? Like, oh, like, are you shorting into support, you know, all those things that you have to kind of worry about?
Yeah, no, it’s all the faders right now is like it’s so funny everyone like they think it’s like great and stuff, but the reality is, oh, they fucking suck right now. I mean, they that what happens is the stocks run up, you get a nice entry and then you’re holding it and then it just goes into this like, range bound grind like it looks good, it looks good. And then all of a sudden you’re like wait a second, why is this grinding back up towards the highs but it won’t stop yo but it won’t it won’t go anywhere you know in something that I’ve done recently like I posted my my equity curve and after hours a little while ago and for May and the only thing that I think is keeping me going because like right now I’m just very steady I’m very steady up and I have a couple of those like big days that that bring up parabolic move kind of look in the chart but right now it’s just do my losses are small, like it’s very controlled losses and it’s just I’m keeping them the same I’m not like I don’t have like one loss that’s 1000 and then another loss that’s like 3000 like all my losses are small controlled, and my wins right now. They’re like small controlled and then you have that one occasional bigger day but that’s all it is just staying alive keep keep it the account kind of grow. wouldn’t like just like a paycheck like, like, I almost feel like I’m coming to trade just to get like my average salary, and like my average pay, and then that’s it, because there’s no opportunity to work harder and make more money yet. But again, it’s like you’re gonna grind yourself down so hard and then by the time the market changes your account, she’s gone. Or you’re just mentally fried. Because if you’re trying to long everything in this market, you’re probably it’s probably fucking brutal for you. And and then same thing if you’re trying to short everything. Pain and so it’s just, you know, it’s nothing gives me more comp comfort to like, you know, obviously, it’s not great for him. But like I when I see Alex even, like have days where it’s not easy. It’s not easy. He like has a good winning, losing day. It’s like that just should show like dude, even pros, veterans like guys who are at the top of this. I mean, that’s it’s not easy. So, but soon enough, we’ll get something that’ll catch everyone off guard. And I think we’ll, we’ll spark things up. But like we said, how long have we been saying that? You know, Jesus did I was really just saying I’m, I think in my head, like, I feel like we had a podcast. I’m not even kidding, I want to say close to a year ago, where it’s just, it’s just like, we don’t have it. You know, it’s wild. You know, I guess the only comfort, the comfort thing, though, is that you can still make money in any market, there is still opportunity. It’s just not, it’s not shining grandeur, and maybe we just all got a little blinded by COVID. Maybe we got blinded by the opportunity because it was so much so every day, that we just think that that’s that’s what it has to go back to. And the reality is like, I don’t think it ever goes back to that. I mean, that was that was special, you know?
How to Take Advantage of a Bearish Market
Yeah, well, I find we get periods of bullish action. Like, for instance, the oil sector, oil was running brought a lot of sympathy leaves, INDO, you know, all those types of stocks. And everyone was super pumped. You know, everyone was like, all markets back markets back oil started to go lower, everything got a little bit quiet. And people were like, people were like, wow, it’s that slow? You know, I really think for me, like, like, my only edge right now is just relying like on like, liquidity at the lows liquidity at the high. And I mean, that’s really it, right? I mean, if I didn’t like have that kind of edge in knowledge, I don’t know where I would where I would be, you know, because first bounce, for instance, right? How many stocks do we see spike up and then fade all the way back down again? Yeah. Right. That’s the type of market conditions that we’re in. For someone like you though, like, like, because like, obviously, for me, I don’t want to see a weak market. Like I don’t want to see would you rather like a super super bullish market? Or like, what would you what would be like at the top of your wish list right now? For like, like, your, your fader guy, you’re relying on those kind of all day, fader week, you know, pop up fade for the rest of the day? What would be like, at the top of your wish list? Would it be super strong market or medium or super, super weak market? As long as you can get fills?
Yeah. So for me, I want that super strong market. Because, you know, like, for for like, what for like what we do, it’s, you know, I’m fine with taking cuts, because that means, you know, your stocks giving you more range. Like nowadays, it’s like there’s we’re not taking many cuts, like, but there’s just no again, there’s no range. It’s like, I’m just I’m at this point where it’s like, I have trouble wrapping my head around treating anything when there is not a great risk reward. Like at least like, right, like three to one is like the concept and the idea you want. But it’s hard to get that sometimes. And it’s when the market is strong, and like really aggressive. Yeah, it’s, it’s tough in the short term, because like you’re getting cuts on the way up. But obviously, what do we know about small caps once once the air comes out of the balloon, it’ll come down. So it’s really just like we need I need those guys. I need those believers. And those people that just want to run the stock from three to six, you know, because right now, it’s because if you get a stock that runs from three to six, and you have a chance that it’ll probably fade back maybe towards 4.50, maybe for like maybe maybe gives back most of the mood. Right now, if a stock runs from three to three sixty. What’s the best case scenario three, that’s it’s probably not going to happen. It’s not going to go fucking red on the day, it’s probably gonna fade back to 3.25. And it’s like, okay, now how tight of an entry and how close you have to be to actually make it worth it. So, yeah, you know, we all want the same thing. That’s what’s fun. It’s just, it’s just getting it there. You know? And when stocks are this week, you can’t even force entry. It’s like, you know, today I was looking at like, SOPA or whatever. And it’s like, we’re like seven cents from the highs and I’m like, there’s just no real entry for me. I feel like the best case scenario I make 35 cents. And I’m risking. Yeah, like the math is there. I’m risking, like less than 10 cents, but it’s just it’s not good. It’s not what I want.
Where Do You Want to Get Long?
So I’d rather see that thing. That’s why I kept saying in chat, I want it over. Hi, I wanted to rip over high a day, give us a reason for it to come down rather than just stay in this range of valid shit. So we’ve been stuck in.
I think. Also, like, I have to say to myself my targets, right, because I’m usually in like at the low, like, Yeah, I’m like, for instance, like today I’m like MLS like I’m in, like, around 13 bucks, like I’m in at below, like, I mean, knock on wood, obviously, like, ya know, I tried to like brag or anything, but like, I’m usually in like, at the low, like, if you if you like, kind of when I go back and like back test myself, because I’ll always do it, you know, month to month or week to week type of basis, like how good are my entries? And what can I get better on? Yep, but nine times out of 10. Like, I’m never chasing the high. So like, I’m going to be in near the low if I have not stopped out. And so, you know, I’m saying to my, for me, it’s not a matter of where do I want to get long for me? It’s a matter of where do I want to sell? Right? Yeah. And it’s like, Okay, we have two lines, we have the top line and we have like the second coffee that secondary high, right? Yeah, how often and again, there it’s been very, very popular. The strategy of hide a clear out, right? How many times have I heard that pattern on calls, talking to people, right? Everyone is after that quote, high they clear up because your top tech you feel like a hero you feel amazing, right? It’s, it’s an adrenaline rush. It makes you feel like you you kind of like, I guess like for a lot of damage or people like it makes you feel like you know, you have some type of edge. And it makes you feel like, you know, you’ve you know, quote unquote, made it right, just by shorting IFA, it makes you feel like, you know, you’re like, I’m gonna just wait for this every time then. But I think the problem is, is that now we don’t have enough people who are short at the lows, right? Everyone’s running the hive. So when you have everyone trying to short the hive, it’s never going to get to your entry right? So I have to go back and say what is the current market like for sales right now right now it’s not high a day right? And that is where keeping a journal can literally help you so so much like saying to yourself okay, like today on sofa did we break the high today once we open no we know we did. Today on AMLX did we break the high of day? No, we could only get the 14 14 five. How come? We’re not breaking that? Because everyone’s short. 14.20 Everyone short two 70 Right. That was what worked for a long while. Right?
I feel like to right now. Like just while you’re talking about that like that. Like, I feel like dude, I feel like algorithms right now. I’m not a I’m not a tinfoil hat kind of guy. Never bitched about algos and all that shit. I couldn’t they know, I feel like well, they it’s obviously a real thing. But I, I never like to blame it on anything. But algorithms right now are probably having a field day because they know they can just dump liquidity into this and then bring it down and then grind it back up and continuously do it all it’s like a churning system all fucking day. You see it, you see it on the tape. It’s just like, it’s continuous.
Easier, like em, like they, you know, the game is really not rigged in your favour at all. Now they know where everyone’s long they know where everyone shore, they can see where your orders are, if there’s a bunch of orders up to 65 to 70 to 80. They’re not going to bring it to that, you know, yeah, of course. And so imagine, imagine you’re on sofa. And you’re your only strategy is like, Okay, I’ve got a short Hi day, you know, and it doesn’t bring you to that, and then you have to watch that entire fade, eventually, you’re gonna start going back to that secondary line, right, because you’re like, Oh, this is what’s going on this market. And then we start ripping back to highs again, then you start getting stopped out, and you’re getting very, very frustrated, where you can just pay attention to the market cycle. And, you know, journal everything down and, and, you know, just be very, very detailed in your trading and what’s working and what’s not. You know, for me, it’s going to be what type of lines are working, right? If I go back and watch my old tape recordings, which nobody of mine used to record every day for me, basically put it on a hard drive and gave it to me. And so I go back and watch that just for fun or just whatever, you know, I mean, you’re still obviously like grinding and working daily. And if I go back and watch that it’s funny because I’m like, wow, that used to work back then. But that does not work now and it’s just the market is constantly changing, you have to adapt. And for me, I’m never looking for that, that comfort. You know, I don’t really want to be always living in that comfort of oh, I’ve made it. Oh, I’ve done this. Oh, yeah. You know, I don’t want to be comfortable. I’d rather always be, you know, taking my little book out and saying to myself and jotting down, you know, what, what’s going on right now? What what’s working right now? What’s kind of happening right now? Are stocks breaking the highs? are stocks unable to break the highs? You know, what type of market pattern are we in? You know, we’ve been in a market sentiment where the highs have not really been able to break, right.
Tips on Keeping Stress From Affecting the Mental Side
Yeah. As a trader, as a trader now, like I, this is, this is like, the mindset I’ve always kind of tried to have, and I keep it this way is that I’m confident my execution, I’m confident in knowing what I know about the market. But I’m always kind of like, humbled to the idea that anything can happen. I mean, we could, how many times do we know now that flushed 2020 2021, and probably gave it all back? Or like at least a substantial point, right? It’s like, anything can happen. So it’s just, you know, finding ways finding systems that allow you to, to grow and keep risk and check through market cycles is really important, which is why bow realistically does well, and has done well for almost 20 or over 20 years, because his style of trading that he found, pretty much works and it works in Prop markets, slow markets, good markets, you know, everything. Yeah, you know, and that’s it? Well, you know, that’s the key is finding what works for you. And in the con constantly growing, like, we were just talking a month ago about how we’re, we’re expanding our playbooks. And you know, you were doing more like multi day stuff. And I was trying to get into more swings in like, of course, I get into swing trading at the top of the market, but, you know, it’s, you know, that’s it. It’s just constantly growing, constantly adjusting, and, and you’ll make it long term. It’s the guys that just think like, oh, this setup will work every time. Like, you know, it’s like, I love the deafblind setup, right? It’s a great setup when it works. But the reality is, we haven’t seen it a long time. So all these guys that are just like a one trick pony. I mean, they’re gone. They don’t exist anymore. You know. So we also we’ve been rambling for any realise we just kind of got into it, but you want to attack some of these questions before we wrap it up?
Yeah, sure. I mean, we can talk about this stuff all day. And I know, I know, people are listening. Any tips on keeping stress and personal life from affecting the mental side of trading would be greatly appreciated?
To hit a first level?
Oh, yeah, I think for me, like, I’ve done a pretty good job separating things because like, it’s very, very easy to it’s, I mean, just for me, like, it’s easy to take a loss and blame it on something, right. So for me, my approach has been like, obviously, if I’m really, really heated, I’m not going to trade that day, right? If I’m mad, I’m not going to trade that day. But like, again, how, like, for me, it’s really like my edge now is like, very good, where like, I’m not really even going into the market, it’s like thinking about the personal side of trading or whatever, right. And, you know, you can also use that kind of three strike rule, right? Or then that’s why keeping a max loss is very important. But for me like that, I don’t really let that affect me, just obviously, if you’ve gotten a very heated fight that morning, or obviously you’ve gotten a very, you know, you know, an argument or a situation that is that it’s like going to, like negatively affect your overall mindset and negatively going to affect your overall day, obviously, that’s bad. But there are always going to be day to day stresses, right? And it’s not necessarily going to come from you, right, someone could hate your car, right? You could be walking down the road and someone tries to rob you, you could be there’s all these outside factors that kind of venture in and how I kind of deal with that is just you have to kind of develop a trading rules and a trading system around that. So you can’t let anything you know, affects you and that’s why the let’s say you’re a big revenge trader. And on days you get in a fight, you’re always religion, well, you got to have a three strike rule. And if you can’t follow that, then you’re gonna you’re gonna get into some trouble, right? Yep. Or you got to be stopping out. It’s really everything comes down to risk management and knowing your edge, right? If your edge is, you know, this is just an easy one to pick out. But if your edge is high, they clear out and you are shorting inner lines, like you’re already not following your edge, right, you’re already you’re already setting yourself up for failure. And it’s easy to be like to blame it on things right. It’s easy to blame it on algos, China, a fight that happened two weeks ago. It’s easy to blame things but you need to take your own accountability in your own trading and say okay, I’m not Following my edge, and I’m not following my system, regardless of what is happening in your personal life, you need to follow your plan your edge and your system.
The Importance of Having a System in Place for Trading
And if you can’t do that you’re gonna lose on the best of days as well. Yeah, that’s for sure. Yeah. James. Yeah.
Yeah, I mean, like, for me, like, I know, I’m actually like, it took me a long time to realise this, but I am emotional. As a trader, I don’t, I don’t jump into shit. Like I don’t like, you know, freak out if I’m down or like, you know, I’m not like an overtrained or any of that, but I do. Like, if I have a bad morning, it is something that has affected me in the past, because I just, I come to the market, I might be a little bit more aggressive, even if it’s like 5% more aggressive. I’ve done things like that. So basically, like, what, why I changed to like a different style of trading for myself, was because I wanted a system in place that like my entry, my exit, all of it, my criteria is pretty much done out for me, like I you know, at this point, I know, I know where I’m going to enter, where I’m going to add and all that stuff. So it kind of takes out that like, my brain doesn’t feel clogged anymore. There’s no There’s no conflicting like, oh, you know, my fucking you know, my girlfriend was bitching at me this morning. I’m pissed. And now I’m gonna double downsides here, make all this money and fuck you. That’s just those the thoughts that not that I had them. But like, there’s multiple things in my head at the same time. So it’s like now it’s like, there’s nothing to it. And it’s just a loss of the loss. I know where I’m going to stop out, I know where I’m going to do everything. And it just it for me. That’s how I handle it. Because the reality is distress everyday. We live in a high, like functioning like crazy environment in the world. And it’s just every day, you’re gonna you’re gonna see the news, you’re gonna see there’s a war going on, you’re gonna see COVID This forbids that. You’re gonna be stressed every fucking day. And you’re, you’re you might not even know it. So it’s just, it’s best to have, like you said, a system in place for the rules. And if you can’t follow those rules, and you’re not going to be trading a long time anyway. So yeah, that’s it, you know?
Yeah. I mean, also, like, if you are, let’s say you run a business and you sell canoes at a lake, right? Regardless of whether you get in a fight with your girlfriend or not, you’re still gonna have customers coming in? Yep. Right? You’re still gonna have people who want to go kayaking, or canoeing on a sunny day, right? And you can’t if it rains, you can’t be like, Oh, just because I got in a fight with my girlfriend means people aren’t coming into my business anymore. It’s like, No, bro, it’s raining. Right? It’s like, you know, everyone’s very, very good at finding excuses. Can I understand? Like, you got in a heated fight? You know, your girlfriend, maybe maybe you don’t want to sell canoes today, right? Maybe you want to do something else? That’s fine. Right? You own your own business are independent, that’s fine. But you know, you really, really, really, and I know trading is different. And I know it’s an emotional game. But just for that example, like, you really, really, it’s just like James says, like James has his entry, his exit everything written down. So it’s robotic. It’s really how concrete your plan is, you know, the less concrete your plan, the more you’re going to get taken advantage of in the market. Right? The market is an emotional game, it’s going to prey on your emotions, the stocks prey on emotional traders, right? So if you don’t have a concrete plan, plus you’re all screwed up, like emotionally you are in for a recipe for disaster. Right? Yeah, you know, your your canoe shop is going to burn down.
You’re gonna get metal unemployment, you know?
Yeah, I tell my guys this because like, obviously, same thing, right? It’s very different, but we’re barbers. And it’s like, dude, trust me, sometimes the last thing I want to do is look and talk to a client. So sometimes I have a bad day. The other day, yesterday, I got called State Board was there doing an inspection? Usually, that means big fines are coming or some bullshit, you know, that we’re going to deal with, luckily, knock on wood, nothing happened. But like I walked in already in a bad mood. But you know what, like, I’ve told my guys, we have a system in place, like we have basically sounds stupid. But I have a basic list of questions that like if I’m not in the mood to talk, I’ll ask my client questions. And that will allow them to kind of do fill the dead air and I don’t really focus on it. And because guess what if I went in there, and the first guy was like, Hey, how’s your day? I’m like, shut the fuck up. What’s gonna happen to my tip? I’m gonna I’m not gonna get into it, but he’s probably never coming back. So it’s the same thing in trading systems in place. Have have it all written down. And you can kind of overcome that. I think.
Other guys said like, how do you narrow down plays? I often get distracted watching too many. Yeah, James, if you want to hit that one first.
how to not get to how to not get distracted.
How to narrow down plays not get distracted. He finds himself watching too many plays, trades long and short, but he misses his entries because he’s distracted.
Yeah, so. So for me like, I think 99% of the time when you’re like a small cap trader, you’re looking at stocks that are moving, yes. But if you really pull it back and Austin says it’s all the time actually He’s like, if it was a different scenario, would you really be trading this stock? Like this? This is why you can’t just be I can’t You can’t call yourself I feel like a momentum based like scalper or something because you could do that on every stock but you need a setup like if you don’t have a setup like for me that’s why it same thing why change to something that I know I there’s certain criteria that has to get met if the criteria gets met, I’m allowed to trade if not, fuck it. I turned I take it off. I don’t even touch it. I don’t think about it. And it’s like, how setups in place like, that’d be like hairier. How many stocks pop up on the scanner right this morning. I think like I got like 10 things that stocks popped up. And that’d be like Harry longing every single fucking one of them doesn’t make sense, even though Yeah, that’s that’s what he does he long stocks that are that are going up popping and making a setup. But here is a setup, that’s going to be wait for you. Let’s get to his entry. And that’s it. I mean, if you if you can’t identify like, I like to pretend that I’m interviewing at a hedge fund, and the hedge fund manager is going to ask me Hey, what are your setups? What do you trade? If I just say I short small caps? He’s gonna slap me in the face. Yeah. What’s he talking about? Dude, they know you need to identify your setup, to be able to articulate it to someone, and then I think you’re allowed to trade it.
Yeah, I agree. And I think for me, it’s like, Okay, we have 10 stocks pop up in the morning, which 1am I going to trade? Well, for the first, like, 1520 minutes, I’m not going to trade any of them. Right? I’m going to wait, and I’m going to look at the price action, and I’m gonna see what I want. Right? Then it comes down to a little checklist in your head, right? What’s the float? Right? What is the what’s the institutional ownership? I don’t really check dilution anymore, just because I go in with the mentality that every stock has an ATM, and I go in, you know, fat ATM, they can dilute it’s an all day fader 100%. And that keeps me from logging random bullshit, you know, but also it’s like, okay, what is the daily chart? Like, right? If we have a stock that has been active for, let’s say, between $1 and $2? It’s really active, everyone’s talking about it. And then we get up to three the next day. Right? Yep. You know, again, what are our shorts going to be trapped, are Long’s going to be trapped? Who’s back holding? You have to differentiate that and you have to really paint the picture, right?
How to Take Emotions Out of Your Trading?
You know, is this stock on? SSR? Is this stock doing this? Is this stock doing that, right, this whole kind of like checklist that goes in your head? You know, is this stock broken? Like is the high $3? And we’re opening up into Where’s V whap? On this ticker? Right? You know, and also a big thing for shorts is not shorting the lows and not shorting it to support you know, there’s a tonne of guys who see a red candle and they’re like, this is it, this is done this is it again, that is the market taking advantage of you, you need to have a concrete plan, the concrete entry, a concrete exit a concrete stop. And, and that’s it, right? If you, you know, can’t even follow those basic rules of trading, then you’re going to get in trouble. It’s the old saying, you know, we have a stock at two and we’re waiting for 250. And then you see 220 kind of stalled a little bit and you’re like, oh, I can take 220 And you see 230 And you’re like, oh, man I’m adding, then you see 240 And you’re like, oh, man, this is it like this? Is it 240 There’s a line here, we get to 250. And you’re like shit, bro, I gotta stop out. I’m in too big too early, you stop out and then it goes lower. And you’re like, Oh, well, what did I do wrong? You know, but you’re not following your original plan. And that’s the problem. Like, I get so many people who are Long’s stock spikes at the open, they just jump in. They don’t even know why they’re in. They just jumped right in. And I’m like, bro, like, are you even following any type of process or any type of plan? They’re like, well, they ended up following my original plan. I’m like, Well, yeah, no shit. Like, I feel like everyone has the same types of plans, generally. Right? Everyone has the same types of plans. The problem is, is just like, if you can’t follow it, and you get into quick or you’re not waiting for your lines, and you’re not waiting for your plan. You’re just gonna get taken advantage of and that’s it, you’re just going to get another one is I know, even the most seasoned traders struggle with emotions. Can you share any tech techniques you’ve learned to take emotions out of your trading? For me? It’s following a plan, right? Planning following a plan. If you don’t have a plan, you are going to be emotional, you’re gonna get taken advantage of that’s it. Can you guys talk more about readjusting plans? Um, I mean, yes, you can readjust. But I think if you’re newer, that’s a bad habit. You know, to be honest, like for someone who’s like a pro like Alex, Alex is like, Okay, I’m waiting for outer lines. And then he sees like, maybe like a massive stuff or attack in the US. And then he readjust like, for someone like Alex that’s like experience based right. And if Alex right that he’s readjusting Let’s plan on the chat. And maybe you can take a look at readjusting our steel. But for a long, like, could you imagine readjusting your plan after every 10 cents? Like you’re like, Oh man, like, I’m gonna, I’m gonna buy a 2.50. And then 2.55 3.00 You’re chasing? And I’m gonna, I’m readjusting. And readjusting. You know, thatdoesn’t really work, right? So to me, it’s like, if your life is the only way you can readjust the plan, in my opinion, is if you’re not in stock.But like you see a signal to top up like, if you’re alive, let’s say is, let’s say today on so right high as 2.63. Let’s say we get to 2.60. And we stuff, then you can say, Okay, I’m going to short the pot, right? But that’s like one of the only little ways because if you have said, Oh, I’m going to short into I’m going to short a View app when it gets there. Right before we even got, well, we did get to 2.60. But like, before we even kind of had that stuff move or had that topping action, you would have been stopped out again. Right? So as long as you’re not chasing and like your plan is like, Okay, I’m gonna wait for resistance. I’m gonna wait for a pop like, that’s okay. But again, that’s risky business, readjusting our plan after the open, right?
How to Adjust Your Trading Plan on the Fly
Yeah, dude, I think in my opinion, and this is gonna sound super harsh, but I think 99% of people are not including myself, are not talented enough in trading to adjust plans on the fly. And I mean, then there’s multiple reasons because one, price action is tricky. Like, you can get fate. I mean, everything we say, is kind of just, you know, it’s an educated guess from like, I feel like the stocks, like the Harry system, I feel like the stock is gonna rip. It’s an educated guess, because we’ve seen it before. But you know, for a fact that’s going to happen next. So if you’re just in the moment, you know, like, oh, quick stuff, like sometimes your brain tricks you. I mean, I happens to me all the time, a stock stops, and I’m like, oh, it’s dead. And then next thing, you know, we’re back up to where we were, I mean, same on am TX, whatever. That’s what it did. It’s like $1, and then bounced back up to the highs and lows. And it’s like, you can’t adjust. Like, if you’re truly a profitable trader, I think, you know, that, like adjusting plans mid trade, like doesn’t really work, you get emotional, you know, it’s like, that’s why you have a plan. That’d be like me writing down my plan, my entry exit, add all that, and then saying, fuck this, this stock had a seller here, I’m getting in now. Yeah, that just took I’m not good enough for that. So I think you know, you know, just as newer traders, if it doesn’t work to your original plan, then fuck it, do it. People need to be okay with losing or missing. It’s okay. Yeah.
How did you transition from scaling to one bullet slash line? That’s more for James, I think.
I just sucked at scaling, I realised that my losses were too big. And I just wasn’t good at it. I found that out get emotional, because again, it’s like you’re scaling. And I found it hard to make a plan to scale. Because if I had a plan to scale that 500 shares, four bullets, you know, and I only hit two of them, I wouldn’t know how then adjust my plan day. Alright, how am I gonna get the restaurant? Or what am I going to do? So I just had to I looked at charts for a long time and figured out, you know, hey, I need to have more of a system based where it’s one entry with a set risk and, and go from there. And then I’ve made videos on it to kind of moving my wrist down as I trade, you know, I don’t just keep my risk the same always. And I add and think, a little bit bigger. So yeah, that’s about it.
When When do you cut versus attack iron, like this is all related to scaling. When to attack viruses scaling? I think, like when you’re scaling, like, you have to have a plan, you have to know what your averages, right? It’s one thing to say I’m gonna take 100 shares at each line, but you need to know that your average is going to be somewhere in the middle. Right. And that’s the problem for a lot of people is that they don’t understand where their average is at before it’s too late. They look at their p&l, and they’re like, wow, like, in order to scale you have to be taking, you have to be willing to size up more on each line, right? So because that’s what it’s going to bring your average higher, so you have to really go from, you know, if you’re using Max 100 chairs, you have to go from 25 to 50 to like, you know, 100 Kinda, yeah, you have to bring that average up as you go. That’s to scaling. And if, if you’re just trying to say, Oh, well, I’m only going to use 100 shares, you better believe that, you know, 80 or 50, or, you know, more than half or near your best line, right? Yeah. And that’s why it does take a lot of size to scale. And you need to understand the mathematics of this right? Where’s your average going to be in your plan, right? I think a lot of people it’s easy to just say, Oh, I’m gonna scale hundreds You’re out here. I don’t care. How did you ever damage shop? Right? Yeah, you know, right. But it’s like, instead of that you should be saying I’m going to use like, less than I’m gonna use like 30% here, I’m going to use like another like, you know a little bit more here. And I’m going to be thinking about the mathematics and I’m going to be really, you know, I’m going to be, you know, straightforward and like, because like, you need to know where your average is at. And that’s the problem is like, if you’re not doing that extra step and knowing where your average is that like, you’re going to get in trouble.
Yeah, also do people need to realise like, and this is an easy way to say is you’re either bow or you’re out, Alex scales 30% and keeps his stuff to where he knows he’s wrong, and he stays small and then when it confirms to him, he adds right, whereas bow bow will keep a lot of his bullets like either the same size or like a little bit bigger as it gets higher, but he’s a robot in the fact that he’ll cover out so if he protects his average or if he has a bad average, he covers out on dips, because he knows he’s gonna bring his average up higher and make back even that tiny loss or even so I’ve seen him skill 500 shares like a bunch and then he’ll just cover out like 1000 shares on a small dip so you can ease up like 100 bucks but then he does it over and over and over so it’s like he can’t scale like bow but then want to add like Alex my opinion, it’s you got to pick one or the other because it gets too hard. Pick one and they both work equally as well. There’s you can’t can’t overdo it.
It’s 100%. We can talk like literally forever. This podcast.
I know we should we should cut this up.
But yeah, thanks everyone for for watching. We’ll be back. And yeah, we’ll be back with another one shortly.