Clay Trader Podcast
STR 215: Irritable Bowel Syndrome? Nope! Just Text Alerts.
This one had me laughing. If you find yourself having to fake digestive problems in order to “make a trade”, I feel confident in saying you are NOT going about the markets in the wisest of ways – haha! Thanks to our guest, Chad, and his truthfulness we all get to see what certain “strategies” can lead to. As funny as his story is, I’m sure several of you can relate to it in one way or another. Bottom line, signing up for a service that promises to send you text and/or email alerts in order to make you money is not going to turn out well. I realize on the surface it sounds great (and the really great advertisers make it sound even greater), but in the real world and in a practical sense… it doesn’t work consistently. From both an entertainment perspective and a wisdom perspective, this discussion has lots of great stuff in it, so be sure to set some time aside to listen!
- Today we speak with community member Chad. His interest in the market grew after he talked to someone who retired early and was currently trading ETFs in his tax-free account to generate about $1,000 a week.
- After spending hundreds of hours going through free education and briefly paper trading (for a week), he pooled together about 7k and borrowed money to get his account to the 10k mark. His logic was that he could trade 1000 shares of stocks under 10 dollars with that size account.
- Chad started the first day positive and then promptly lost 800 dollars the next. This led him to realize he needed to find someone who could provide a more structured training. He joined a community that essentially played follow the leader. While he had some winners he had more losers which were also larger than his wins.
- He decided to take a break and focus on life instead of trading. Utilizing the gains from selling his house, Chad got his finances back in order and cleared his old debts that had accumulated. After getting back into trading he started to paper trade options, futures, and forex.
- Chad opened a futures account and began to rapidly trade intraday since his new job hours worked with market hours. He realized that he ultimately did not want to day trade. As much as he wanted it to work it just didn’t work with his personality. This led him to focus on advanced options.
- Now Chad is paper trading advanced options while he saves up to a certain amount for his trading account. While he has a rough idea when he will go live, he’s going to wait to see what his paper trading performance has looked like and will use that to determine when he is ready to put money on the line again.
- I thought you had to be on Wall Street or work in an office building to be a part of the market.
- I saw the tab at the top that said ‘Options.’ I thought that was settings for the platform.
- I was willing to listen to complete strangers to verify my thesis that this company would do well… even though they’ve never had a positive earnings report.
- I like to relate free education to a 1000 piece puzzle. You don’t have the picture on the box and you’re missing 100 pieces.
- I came to the conclusion was that I don’t like day trading. Despite wanting to do it so badly I didn’t like the rapid decisions you had to make.
Speaker 1: This is The Stock Trading Reality Podcast, episode 215.
Speaker 2: This is The Stock Trading Reality Podcast, where you get to see the realistic side of a trader’s journey. Get inspired and stay motivated by every day, normal people. Who were currently on their journey to trading success, and this is your host. Do you do cliff diving or ski jumping? If so, he wants to meet you, Clay Trader.
Clay: First off, I appreciate the invite. If you’re thinking of inviting me to come try it with you, or just flat out telling me I should give it a try, it’s not going to happen. I fully respect those people, I mean I think they’re nutcases, but I respect them. But cliff diving and ski jumping, now the ski jumping I’m talking about, have you ever seen the Olympics? Where they start off really high, and then they just go pretty much straight down. Then they just launch themselves, and there’s no poles or anything, and it was crazy.
Clay: But on … I don’t even know what channels, it’s … I’m not even going to try because it’ll probably end up being a lie. But some of the obscure cable channels, once in a while you’ll see cliff diving, or the ski jumping. It’s just pure craziness to think that … I think one of the first questions I’d ask either of those people would be, “How did you actually get into this?” I mean, how do you get into diving off cliffs, and just going straight down on skis and launching yourself huge distances.
Clay: I don’t know, but I would love to meet you if you fall into any of those categories. Because I think you’re, like I said, a total lunatic. But, I respect you for the skill that you have.
Clay: For today’s interview. We are talking with Chad, and I mentioned this to Chad, and I’m pretty blunt with him. But his journey, is a beautiful disaster, an absolute horrific train wreck. But, the honesty in which he tells it, and where he doesn’t hold anything back, I could totally relate. That’s why I call it I do, and I laugh. Because, I mean pretty much everything that you don’t want to do, Chad did.
Clay: We have all sorts of instances, where I get it. If you’ve never really been in the market, if you’ve never really tried to pursue this journey, some of it may sound crazy. Some of it may sound like, “That would never happen to me.” But you just, you never know. This is someone that’s also done quite a few stupid things, as you longer time listeners know.
Clay: However, Chad’s, this was a great discussion and a great journey. One where, I’m convinced there’s at least one or two things that you’ll be able to relate to. Who knows? Maybe you’re going through right now, maybe you just went through, and you’re still unsure, “How should I feel about that? Is that my gut instincts or am I just misunderstanding? Maybe I’m blowing things out of proportion.”
Clay: He covers all sorts of things where, there’s going to be stuff in there for everybody, really at any stage in your journey. Even if you’ve been around a long time, and you’re kind of a battle hardened veteran. If anything, you’ll get some probably comedic relief out of it, just because you’ll be able to relate. It’ll probably bring back some old memories, of when you were first getting started.
Clay: But like I said, Chad holds nothing back, and I really respect him for that. He’s completely candid, and he tells me how it was; lots and lots of stuff to learn from. It was a great journey, and one where, really, you can only laugh, and I don’t want to offer up any spoilers. With that being said, let’s just get to hearing from Chad and his story.
Clay: Chad, welcome to the show.
Chad: Thank you for having me.
Clay: First off, I appreciate your patience, for you listeners out there; had a few technical issues going on. But I think Chad currently right now, is doing a head stand with a pile of books, and his mouth is about two inches away from the mic. But, Chad is getting it done, and he’s being a trooper. But if you hear Chad wince in pain, or yell out, “My legs are burning.” He’s just probably in a very awkward position. But Chad, you’re in a good enough spot now? It sounds we found a winning position for you?
Chad: Yeah, I’m good right now. I really appreciate all the other podcast guests that have been on here, been a real inspiration. I’m sure I can just suffer through it for them.
Clay: I like that attitude. A little bit of crampage, or burning. Listen, you’re burning calories while you’re doing this podcast. It’s a good win, win deal. But yeah, a little bit of a later start than we wanted, but Chad is making do. I do appreciate that, because it’s not necessarily that … see, this is the type of community we have. We just have people that show up, and he’s got beads of sweat dripping down his face probably, right now. He’s probably being humble about it.
Clay: If he goes off topic, or just if we hear a thud to the ground, we’ll all know what happened. Chad will have one out like a … hae went out on The Stock Trading Reality Podcast. I’m not sure there’s any better way to go out. But, Chad, you mentioned you’ve listened to many of the past episodes. You know what’s coming here, but let’s just start at the … well, no. Let’s not start at the beginning.
Clay: Do you participate in the chat room, at all?
Chad: No, I’ve never been in there as of yet.
Clay: Okay. Okay. Have we ever talked before via email, besides, I mean, you obviously volunteered. Thank you very much, for that. But outside of that, have we talked in email before at all?
Chad: I did ask some questions a while back, when I was first going through the courses.
Clay: Okay. Okay. I can’t say that I necessarily remember that, but that’s okay. Point here, viewers is, I don’t know really anything about chat at all. I’m racking my brain out, trying to think back. But to be honest, I can’t recall back. Hopefully that doesn’t offend you Chad. [crosstalk]
Chad: Oh No, not at all.
Clay: [crosstalk] emails. All right, well good. I’m excited. It’s always fun to learn, to go on blind about somebody and just hear about their story. Or, I think it’s going to be your story. I don’t know. I guess that’s the whole point. We’ll see where the breeze takes us.
Clay: But where did all this actually start for you, Chad? As far as, where did you hear about the market? Then, what sorts of things you don’t happen that got you more interested in, or interested in the market, to the point where you want it to get a little bit more hands on with it?
Chad: Well, I’d say the first time that I ever was introduced to the market was, when I was in grade three and four. I had a teacher by the name of Mr. Edwards, and he was really big into mutual funds. He would fill up the chalkboard with graphs and charts, trying to show us kids about the power of mutual funds, and what they can do for you. If you’d invest this much money now, you’d have so much money when you get older.
Chad: Of course, we’re just kids, we were just happy to get out of our math test. We didn’t really care about what he was talking about. What I did take away from that was, the power of compounding interest. Which, for a child, isn’t really something that is on their mind on a regular basis. But, I did take that away from that.
Chad: But it wasn’t until, July of 2013, that I had a really renewed interest in it. I’s always thought the markets were for professionals, people that went to university; they went to eight years of business school. I thought you had to be on Wall Street, or work in an office building, wear a suit and tie, to be part of the market.
Chad: But, in 2013, I was visiting with a family friend. He had mentioned that he’d retired early, and we were asking them what he was doing now with his time. He said that he was trading shares of ETFs on the stock market, and he was making about $1,000 a week. It was all tax free, because he was using a TFSA account, tax free savings account here in Canada. That really sparked my interest.
Chad: Here’s this regular guy, who was on his computer at home. Making money out of the markets, $1,000 a week? That’s what I’m making in a factory job, blood, sweat, and tears all the time. It really opened my eyes to that. I tried drawing as much information out of him as I could, and he was really reluctant. I understand now why he was reluctant, people don’t want to share too much. They don’t know what you’re going to think, or you know, along those lines.
Clay: What kind of information, were you trying to get out of him? Because, that’s-
Chad: Well, I wanted to know everything. I wanted to know, how much money he had. How much money he was using, per trade. What platform was he using? Was he doing it through his bank? What exactly was he trading? What exact ETFs? How many times a week? Every little detail, that I could get out of them. Trading’s really personal thing. Because I didn’t know what I was really asking about him, he was reluctant to give up some of the information.
Chad: But he gave me enough, that I was really interested when I got home. Because, I started fantasizing about, this could replace my current job. I don’t have to work the way I’m doing, the rest of my life. It really gave me a bright hope for the future, because really I felt like, “I’ve been already working 10 years in a factory. I’m going to have to do this for another 20, 30 years?” It was really disheartening and discouraging, to think about it that way. He just gave me a light at the end of the tunnel, to look forward to.
Clay: Here’s my question, because you are relatively new to the market and trading at that point. I’m guessing you were doing some research, alongside of this. Because, how did you know, to ask them what platform he was using? To ask him all the questions, that you were asking him? I mean, those are- [crosstalk]
Chad: I may not-
Clay: … definitely wise questions. But-
Chad: I may not have used exact-
Clay: … as somebody that’s new, how did you even know to ask those questions to begin with?
Chad: I may not have used the exact word, platform. But I want to know, how was he accessing the market? How was he buying these things? How was he making the transactions? Right? Now I know, that the correct term’s a platform. [crosstalk]
Clay: Okay. All right, I was going to say, wow, that’s actually pretty good. But that makes more sense, just how to access the market, and all that. Yeah, 1000 bucks a week, and tax free. I know we have several Canadian members, and those TFSA accounts, I hear that term quite often. I mean that’s definitely a good, powerful thing to use. I’m sorry you mentioned it, but we’re, where did you come across? He was a former teacher or something?
Chad: No, this was a family friend. It was a teacher, was back in grade school.
Clay: Okay, family friend. Okay. I guess, knowing what you know now, and then looking back, did he give you quite a bit of information? Or is it still pretty surface deep? Or I guess, taking the knowledge that you have now, and applying it to hindsight, I mean, do you think he, he was giving you a good amount of data? Or, was he leaving a lot of details out?
Chad: He was leaving a lot of details out, and it was very surface deep, like you said. He did show me where I could go, to maybe find something. There was a website that he was using, to find ETFs that were undervalued, stuff like that. I did go home and look up that website. But, after I got into the free education part of things, I never went back to that website again. I didn’t find it useful.
Clay: That’s funny. He sent you a site, to go find these things that were undervalued.
Chad: Yeah, and like I said, I was pulling this information out of him, he didn’t really want to tell me too much. I was really pushing him, so I don’t blame him for not showing me something, that really was generalized. It was very specific to what he was looking for, that’s why it didn’t really work for me.
Clay: It wasn’t a something like, okay, you go to this site. This site, I don’t know how the site actually operates, but it’s telling me that this thing is undervalued. Because it’s undervalued, that means it’s a good deal to buy. You should buy that, because this random site says is undervalued. It wasn’t anything that?
Chad: Yeah, and it was very confusing for me because I didn’t know anything. He’s trying to show me volume, and how many shares are out there on the market, the float, and all that stuff. It was just going way over my head. It wasn’t until I got home, and I was able to sort it out.
Clay: Okay. It’s not like he was leading you astray. I’m sure. Like you’ve already acknowledged it. When you’re talking to someone that’s brand new, new, and you’ve been doing something, you gotta be very careful how you approach it. Because, as you now know, there’s lots of little nooks and crannies that, they seem small, but they actually make a pretty big difference.
Clay: All right, well that’s what brought you back in, like you said. You started to talk to this guy, and he piqued your interest. Where did things go from there?
Chad: I spent the entire month of July in 2013, going through free education. I must have spent about 200 hours going through Google searches, and watching YouTube videos. Terminology I didn’t understand, I’d go on Investopedia and look up different terms. Then I just, I started paper trading. I opened up a RBC direct investing account. They give you $100,000 to paper trade with. I just started going to town on that.
Chad: I did about two or three trades within a week, and I thought, “All right, I’m good to go. I’ve done the paper trading, that’s all done, out of the way. Now I can get into opening up a live account.” But before I did, I realized that there’s 8,000 plus ticker symbols out there. I knew I needed something to help me narrow it down, as well as needing some sort of charting platform. Because as the band direct investing I was using, didn’t have very good charts at all at the time.
Chad: I started searching the web, and I found something called VectorVest. I don’t know if anyone’s ever heard of it.
Clay: Oh yeah, definitely heard of VectorVest.
Chad: Okay. They’re $60 a month, and you get the charting and all that. They have their own algorithm, to help you find undervalued stocks and things. I used them, then I would go on BNN, which is the Canadian version of CNBC, and business news, and they talk with hedge fund managers and that. I would verify what they were saying with … well, I was looking up on VectorVest, and then try to find trades that way.
Chad: I realized that, I wanted to buy 1,000 shares of something. I put all my money together, and that was a mixture of money that I had saved up from working a second job. I was doing some welding for somebody on the side, doing some spindles for iron railings. I had got about $5,000 from that. Then I put together some money that I got from work, some vacation pay and performance bonus. Then I didn’t quite have enough, I want a $10,000 because I wanted to buy 1,000 shares of anything under $10. I had to borrow several thousand dollars as well, which wasn’t a very smart decision in the long run.
Clay: Now I’ve got to ask, where did this thousand shares come from? Is this just an arbitrary number that you came up with?
Chad: It was a nice round number, and it worked out with the-
Clay: I like that.
Chad: … if you add 10 cents, if you made 10 cents, it was $100. If you made 20 cents was $200, so on, and so on. It just, my OCD, it worked out for me that way.
Clay: I was like, maybe it’s just a math thing because it makes the math a little bit easier. But, 1,000 shares, it’s just … but it’s amazing how a number … I mean, like you said, it makes sense why you did that for the math. But, how that one number drove everything. “All right, well I need now $10,000, because if I’m doing this price range.”
Clay: When in all actuality, yeah, I mean, there’s things as calculators, and there’s other ways to have made the math easier. But, I totally get it. But, it’s just funny how the human mind works, when it comes to, “Hey, 1000 shares,” and that started to drive everything else.
Clay: Now I don’t want you to creep ahead in the story or anything, but you mentioned you borrowed funds. Tell me more about that aspect. Because, like you hinted already, that wasn’t exactly wise. But, where do these borrow funds come from, and what are the details on that aspect?
Chad: I had an open credit line, that was a leftover from a vehicle purchase, and I still owed some money on that. But I thought, “Hey, I’m going to be making $1,000 a week trading, so it isn’t really going to matter. I’ll just borrow this money, and I’ll start raking in the dough.” I should mention too, that when I was looking at VectorVest, I came across my first options chain. I saw the tab at the top, it said options, and I thought that was settings for the platform.
Chad: I didn’t know anything, I didn’t know that in what options were, I didn’t know they existed. When I’d opened the page, it was every single strike price, every single number you can imagine, all the Greeks, open interest volume, everything. It was these little tiny numbers to fit everything on the page. That just frightened me to death.
Chad: I closed that page as quickly as I could, and I thought, “I’m never checking out options again. I don’t want nothing to do with them.” I should mention that.
Clay: No, that’s a great story, because I had the exact same thing. When you’re a brand new, or you don’t know what options are and you open up the options chain, it truly is. It’s like, what is all of this crap? It really does seem like … So, I just laugh. I think anybody out there that’s gone through probably is laughing with us. If you haven’t, you’re like, “Don’t be so dramatic.”
Clay: No, seriously, I’m not even to tell you as a new person to go open up an option chain, because I don’t want you to intimidate yourself and scare. Because it’s not nearly as bad as it looks. But it does look pretty overwhelming, and I know for sure. But that’s funny, because it’s so, so true. So true to the untrained eye, how vastly it’s … yeah, it’s crazy.
Clay: In your case, in order to fit every little thing on the screen, everything’s got to be even smaller. But I don’t blame you for closing that screen as fast as you could. But, all right, well you don’t think anything is a big deal, because, “Ah, that’s an open line of credit. I’m borrowing money, but I’m going to be making thousands. That’s not a big deal.” I’m curious to hear how this continued to play out.
Clay: I opened that live account with $10,000, and in August of 2013, right at the beginning of the month, I had a week off of work. The first day, on the Monday I had placed my first trade. I don’t remember what it was, it was a Canadian company. I think they were chiropractic supplies, or something. But they were trading at $8. I’m like, perfect. I can buy 1,000 shares at $8. The chart looked good, from what I knew of charting at the time.
Clay: Sure enough, within a half an hour it went up 20 cents. I sold it, got my $200. I just sat there on the couch the rest of the day, and I just had a permanent smile on my face. You couldn’t wipe that smile off my face if you tried. But then the next day came around. I didn’t trade anymore that day.
Clay: I had learned through my education, however briefly, about overtrading. I kept that in mind. I didn’t want to take another trade, to have that feel good feeling again. I just, I shut everything down. I waited until the next day, and I use VectorVest again to find something else. I don’t remember the price that it was at. I think I had already gone over my under $10, way of thinking. I think this was around $24. I bought a hundred shares or something that.
Clay: Sure enough, I lost $800 that day, just on that one trade in the morning. $800 to me, that’s a lot of money. I have to work a whole week of overtime, to make that back. I just felt sick to my stomach. I felt throwing up. I was banging my head against the wall. I was like, “What were you thinking? What are you doing?” Because all those voices take over when you’re in the trade, as you mentioned on the podcast before.
Chad: You probably mean, literally banging your head against the wall?
Clay: Yep. Literally, I had concrete walls in the apartment, and literally banging my head against it. [crosstalk]
Chad: For listeners, I want to stand up and defend Chad. Chad is not a lunatic, just, you have to trust us. As he alluded to, we talk about the voices all the time. I promise you, you have voices in your head, listener. Whether or not you’ve met them is a whole another story. But if you would to meet them, then yeah, come join this world we call trading.
Chad: You will meet these voices, that will because you to do … I mean, we’ve had people now with weak knees, I mean, we’ve had people cry. I don’t know if we’ve had anybody ever throw up, but we’ve had a lot of things. Where, I mean it’s hard to describe, other than you just got to experience it for yourself. Heed our warning, we’re not being dramatic. Chat is not just simply a nutcase. No, these voices are very real.
Chad: I wanted to make sure, that he wasn’t just talking in metaphors, with him banging his head on the wall. But I’m not shocked at all, that he was banging his head on the walls. Because the voices are intense. Especially Chad, which is, I think that’s a great … not I think, I know that’s a great way that I’m glad you looked at it. Was, “Wow, that $800 I just lost was a week of work.”
Chad: I think a lot of times people lose that perspective where they’re just like, “Well, I watched some YouTube videos, I’m going to go out there and start trading. If I lose this amount,” but, this amount that you just are so conveniently going to potentially lose, as a listener, what is that amount? You equate that amount, how long would that amount take you to make.
Chad: Because, that’s what’s going to help you respect this business of trading a whole lot more. When you start to look at numbers in the sense of, “Wow, if I don’t try take this seriously, I could literally lose a week’s worth of my time, a week’s worth of my work in a single trade,” like you did. As far as that trade is concerned, was it a mirror image of the previous day where you made the $200? Or, was it something totally different and you just …
Chad: I mean I’m assuming you thought it was a good trade when you started. But, do you remember any more details of it? Or do you just remember that $800 number?
Clay: Well, I do remember it was a video game software company. I think it was, they were developer. They had just finished their earnings, and so it was the next day right after earnings. That’s probably why it was so volatile, moving around. Yeah.
Chad: Day number two of trading, and now you’re all of a sudden trading earnings right after a … so, it was volatile, then. It was crazy volatile, is what you’re telling me?
Clay: Yeah, it was going up there it was around $24, I think it ended the day at $32, so that should tell you how volatile it was, it was moving large percentages up and down. But I after it got the $800, that hit my breaking point and so I sold it; I didn’t wait. It didn’t go until the afternoon, up to the up to the $32.
Chad: I’m assuming your “breaking point” was not a some rule based stop-loss. Your breaking point was just from the psychological standpoint?
Clay: Yeah, it was the point where I was dry heaving. That’s when I decided to stop.
Chad: You’re using the dry heaves stop-loss, quite effective. You don’t want to use a throw up stop-loss, because then you lose money and you have a mess to clean up. I liked that Chad, at least you got out at the dry heaves stop-loss. That’s a much more efficient way to do it from a cleanup perspective. Okay, so you’re feeling sick, you were banging your head on the walls. Where did things go from that point?
Clay: Well, to add to that, I didn’t know what trading I was doing. Never mind, what kind of trader I wanted to be, I guess I was day trading at the time. But, because I worked during the day then, day trading doesn’t make any sense. I should have been trying to swing trade or something, but I didn’t stop. You’d think feeling sick that after losing money, would just make you want to shut it down and stop, and not lose any more money. But-
Chad: Well, you got to go back, right?
Clay: Oh of course.
Chad: There you go.
Clay: The potential there to still make $1,000 a week, that’s still my dream. Still fantasizing about that, that’s still up a possible reality in my mind. I continue, and it wasn’t until September 30th … the first couple of trades were in August. September 30th, I decided to try and do a buy and hold. I wanted to put my money into something. I didn’t want to sell it right away because of working during the day. I’m just going to buy something that looks really good, it can’t lose, and we’ll just go from there.
Clay: I found something called the UNXL was the ticker symbol, or Uni-Pixel Displays Incorporated. This turned out to be like, you mentioned you had a stainless steel muffler company that you put all your hopes and dreams in. This was kind of that, to me. I wasn’t willing to let it go, I put everything into this. They made a flexible printed electronics, and energy efficient films for touchscreens.
Clay: While I was holding it, it was doing nothing but losing me money. This is where I found StockTwits, and Seeking Alpha, and I first had my encounter with the confirmation bias. I was willing to listen to complete strangers, to verify my thesis on that, this company was going to do well. Even though they’re losing money, and even though they have only negative earnings, they’ve never had a positive earnings report.
Clay: None of that seemed to matter, because this complete stranger on the Internet told me everything’s going to be fine. Everything’s going to be okay, they’re going to do great. I had bought them at around $20, which turned out to be the last high that, that stock made. I never really looked fully at the chart. If you look at the chart now on it, go back about 10, 15 years, it went up to $40, and then it came back and then did a dip, it came back up a little bit higher back up to $20.
Clay: It just looks a penny stock, if you look at it. You wouldn’t know that it was up to $40, and down to $20, and in that range. You would just look at it, and be that’s a triple zero one, up to 50 cents, and then back down. I never really looked at the whole chart, never really saw the pump and dump thing that was going on there.
Clay: I just kept holding it right into a December, and it did nothing but just lose me money the whole way. I think I had a 200 shares, is what I had in that.
Chad: You held because- [crosstalk]
Clay: Well, because this complete stranger was telling me, everything’s fine, so I held onto it.
Chad: Right, exactly. Again, that’s a whole … you sound crazy to somebody that’s never experienced all this. To the listener that is thinking this guy’s an idiot. No, I assure you … and this is why, first off Chad, I respect you very much for sharing this sort of stuff. Because, this is what you set yourself up for when you go into the market, not quite sure what’s going on.
Chad: The human mind is a fascinating place, it’s a weird place. To be brutally honest, it’s a dumb place. I’m king dumb, my stainless steel muffler company, I thought it was going to make me rich. I thought my engineering degree was, “What a waste of time this turned out to be, because I’m going to be rich off this stainless steel company.” When I call somebody else’s thought processes dumb, that’s coming from somebody that is at the top of the mountain, as far as the dumb moron mountain is concerned.
Chad: That’s why, if you take anything away from this, don’t think that, “No, no. I would never allow myself to do something that.” Just be very, very careful. The voices, the human mind, it’s a tricky place. Especially, when money gets involved. Especially when, “Well that person apparently knows what they’re talking about.” You forget the fact that. “Well, they’re a complete stranger. I don’t know who that person is.”
Chad: That’s the whole idea behind this, is to remember you’ve heard, remember Chad, remembered me, stainless steel muffler company guy. Don’t let the voices overtake you, and lead you down the path of, where in hindsight, you look back and say, “Why? Why was that my thought process? That doesn’t make any sense.”
Chad: You held and held, and I guess, I’m assuming at one point you did sell. But, what actually led you to finally take the loss? Was it a combination of things? But, pick back up from there.
Clay: Okay. Well, I kept holding it into December and it continued to lose money. This is when I realized that, I need some more help. VectorVest on its own, is not working for me. Watching the talking heads on BNN, that’s not doing it for me either. They seem to contradict each other a lot, anyways. One thing they had mentioned on there, on the TV, I saw Air Canada, the airline, and it was coming out of bankruptcy.
Clay: It was that $2 the whole time it was in bankruptcy protection, and it came out of bankruptcy protection. It had its first good earnings in a long time, and they were ready to go. I thought it’d be a good investment. Well, BNN said, no, airlines are too volatile. You don’t want to touch airlines. You don’t want to get anywhere near them. I didn’t, and I watched Air Canada go in a few months, it went from $2 all the way up to $13.
Clay: I just, hand to the head what do you, what do you do? I don’t understand how this all functions? I realize I need some more help. I need somebody who is experienced, who has been doing this for many years. That took me to the internet again, and didn’t find you at this time, I wish I had.
Clay: But, I found people like [inaudible 00:30:29], and others that. I’d never invested my money in them, I was always very skeptical. But at the same time, I did learn a lot of new things from them, from their free videos and the information they had out there. Then I ended up finding somebody by the name of, [inaudible 00:30:52].com and what.
Clay: What made me go with him, was he seemed very genuine, and he had a video of him celebrating a good week of trading, and it was just him at McDonald’s eating a Big Mac. I’m like, this is my kind of guy. This is the kind of guy, that I want to put my money in and learn from. He was charging $1,000 a year. I had a performance bonus from work, and Christmas time. I took my $1,000 and they gave it to him.
Clay: I was very surprised, that I went through all of his content in one short night, just a few hours. I’d watched everything, read everything, listened to everything, and I was like, “This is what my $1,000 bought me?” I was pretty upset over that.
Chad: You’re not exaggerating, are you?
Clay: I’m not exaggerating at all.
Chad: Okay, okay.
Clay: This is going back to 2013. If there’s somebody out there who’s, using him right now, he might be totally different. He might have way more content. But back then, that’s all that he had. But, I still felt I got my $1,000 worth. I still felt I got my money’s worth out of him, just because of the things I learned were completely new to me. But, one of the negative things, there’s actually two negative things I took away.
Clay: One was, his version of teaching you candlesticks and candlestick patterns, was to tell you to go by Steve Nison’s book. Now, Steve Nison is a great person to learn from. But the fact that he wasn’t teaching me himself, I didn’t like that. I gave him all this money, and then he’s just telling me to go buy somebody else’s information. I didn’t like that.
Clay: The other thing that I didn’t like about him, was that he had these a seven rules. One of the rules was, to not trade options. Don’t go anywhere near options. We don’t want nothing to do with them. They’re too complicated. We’re just going to stick with buying and selling shares. Then he would go, and do a video, and write a big blog post bragging about how he just made all this money trading options.
Clay: I was like, you’re not following your own rules that you set out for everybody. You expect us to follow one set of rules, and then you’re going to trade with another set of rules. I didn’t like that either. [crosstalk]
Chad: Just for disclosure sake, you’re not talking in metaphors. This is all literal, because this sounds very … I am also confused with you right now based off what you’re saying.
Clay: This is not exaggerations or metaphors, right?
Chad: No, not at all. No, not at all. [crosstalk]
Clay: I’m confused too, then. Keep on going, but for the record, this is all very confusing.
Chad: Yeah. He was all about the Russell 2000, so he would buy Put Options in Russell 2000, or Call Options or whatever was going on. As he was bragging, he made something like $8,000 in his Put Options. He would go and brag about that to his students, to let them know how good he is at his strategy. But we weren’t allowed to do that, because that’s too complicated. You have to be trading for years and years, before you can start getting in the options.
Chad: With him, he had the text alerts, he had email watchlists. That’s one good thing I learned, was how to properly manage a watchlist. He had a master watchlist of a 100 stocks, and they were all under $10. He only traded stocks under $10, which match my previous thesis on the market, so that worked out for me. It was more of that confirmation bias, happening again. With those text alerts, I was at work and this was in the spring/summer of 2014.
Chad: I had my phone in my pocket, which we were not allowed to have on the floor. You’re supposed to be working, you’re not supposed to be on your phone. I would feel the buzz in my pocket, and I would pull up my phone and see the text alert. I’d run to the bathroom, try to get an Internet connection over my phone. Then I’m trying to access my bank website, and mobile services weren’t that great back then. They were- [crosstalk]
Clay: Oh, this is so bad.
Chad: … 30 minute. Oh yeah.
Clay: This is so bad, Chad.
Chad: Yeah. But I thought, “This is how it’s done. This is how people who work during the day, this is how they use people like this to make their money.”
Clay: I’m assuming this person portrayed themselves in a way, that made you think, this is all normal. This is how it’s supposed to be. Is that fair? Is that how they portrayed the market to be?
Chad: Yes. Yes they did. Yeah, they portrayed it that, this is the way it works. These are all the other people that are doing it, and you can join them too. This is how much money they make, and you can be a part of that. I was really anxious and excited to do that. Here I am running back and forth through my job. People are asking me if I got IBS, or do I have a girlfriend? They see me on the phone all the time. They’re wondering what’s going on.
Chad: The problem with the text alerts, that maybe a lot of people don’t realize when they start doing it, is when they send the to you, they’ve already made their trade. When you go and make it, you’re way late to the party. Even if you can get it within a minute, you’re still late. This thing could’ve moved by now. That’s what happened to me a lot was, he would be profitable. I would buy it at a higher price, and sell it at a lower price all the time.
Chad: Because, I was always late. Right? Trying to run to the bathroom, and then get my connection, and try to place the trade. I ended up, I won some, but I also lost more. The losers were a lot bigger, than my winners were. Slowly started to drain down my trading account. I ended up finding my best winner I ever had from him, was one that I found on my own. Because, he had taught me enough by then, that I was able to go off on my own and search for things.
Chad: I ended up finding this one, one day. The ticker symbol was MY, they made or sold windmills, and they just got a large order from China. The thing was breaking out, I saw it on the chart and it was going into a dip. I was like, “Great, I’m going to buy the dip, I’m going to get this thing, and I did. I ended up selling it later in the day. I had made $700, it was my largest win I’d ever had at that point.
Chad: It wiped away a couple of losers, and I was on cloud nine. I thought, “All right, I’m going to do this thing, now. It’s going to work. This brings us into the summer of 2014. I finally sold UNXL, Uni-Pixel, and that was in June. It had just rebounded from $5 to $9. Remember I bought it at $20. When it made that jump from $5 to $9, I said, “You know what, that’s it. I’m going to get out now.” I did, I sold it.
Chad: That left me with the boats, $2,000 that I had left out of my 10,000. At this point, I don’t know, I was very discouraged that I only had $2,000 left. I’m like, “I’m going to find something again, just I did with Unipex.” I did it all over again. I’m going to find something that I’m going to put this $2,000 in that I have left, something that can’t lose, and I’ll just wait until it goes up to $3, and I’ll sell it. Then, maybe I’ll add funds to my account and get it back up.
Chad: I found something with VectorVest, and through a JBP, and that was END, was a ticker symbol. They were Endeavour Incorporated, I think they were in oil exploration, and I bought them for $2 even, 1,000 shares of course. I let it sit there, and my living situation was going to change. I decided that I’ll just let that sit in there ,and do whatever it’s going to do. If it loses, it loses. If it wins, it wins. I don’t really care at this point. I’m just going to go on with life.
Chad: I decided that I was going to buy a house, so I did that. I bought my house, and I just, I tried to throw trading out of my mind. I just tried to put it in the background. And that- [crosstalk] okay, go ahead.
Clay: I have a quick question for you. We’ll pick up at the, you decided to buy a house, and you put trading out of your mind. Some of that money was borrowed to get up to $10,000, you mentioned now it was at $2000. I mean, did you just have to work overtime at work. Run me through the numbers quickly, on how did you satisfy that amount of money that was borrowed, that apparently was gone?
Chad: When I bought my house, I just consolidated my debt, and I just included that in there. That’s just debt, that I’m going to have to pay off.
Clay: Okay. It was just, you literally added that to your situation by-
Chad: Yes. It’s not-
Clay: Okay. Gotcha. Gotcha.
Chad: Yeah, it’s not a good way to view money at all, I will say that. It wasn’t smart. But, that is what I did. I can’t deny that.
Clay: Well, I respect the candidness. All right, so you’re, “I’m getting a house, I’m putting trading out of my mind.” This is really good stuff, in a sick and twisted way. I’m enjoying myself right now, Chad. This journey has been a train wreck so far, and I say that with the utmost respect. Because-
Chad: Well good, I’m glad.
Clay: … because I can relate. Many people can maybe relate. Maybe right now people don’t realize, that what they’re doing is a total train wreck, but yes. Unfortunately, although people may portray the market is operating in a way of, “Hey, we’ll send you the text alerts, we’ll let what we’re looking at to buy.” But what Chad has described, there is zero doubt in my mind that he’s making any of this stuff.
Clay: Because he has described it, exactly like it actually plays out. Where the people are going to buy-in, and then send out the text alert. Then when it goes up, because everybody’s buying, they’re selling. Then, whether or not the people make money on it, yeah, maybe sometimes it’s going to be random. But the point is guess what just happened for them?
Clay: They got another winning trade. They can put that winning trade in their results, and say, “Hey, see. When you follow my pics, this is what happens.” But, they never put in the disclaimer, “Well, this is because we buy first, then we alert everybody. Then when everybody else is buying, forcing the price up, and then we sell. That’s what’s creating these winning trades and these great track records.” They don’t, they don’t exactly explain that part.
Clay: But again, thank you for sharing. Because yeah, the market, there’s a little bit more to it. Despite what these people portray about text alerts, and all that. But I think I came up with the title, when your coworkers are asking if you have IBS. I think that the title might just be, “IBS? No, just text alerts.” I think that might be the title of this podcast.
Clay: Because, that was hilarious how your workers think that you had IBS because you kept having to go to the bathroom. But yeah, like I said, in a sick and twisted way, I’m really enjoying myself. All right, so the markets out of your mind. Where did things go from that point.
Chad: Before we continue, I’d just like to say about the text alerts that he … trying to say this right. He was supposed to be a swing trader. That was how we portrayed things, the whole thing’s one to three days. What ended up happening was, he would buy one minute all the next. He was actually day trading, and it totally confused me. Because I’m expecting, run to the bathroom, make my trade, but that’ll be it for the day. But no, I was going back and forth several times in a day, trying to buy and sell so I would lose as little as possible. That just doesn’t work. That’s not how he had advertised himself.
Clay: That’s right. I think he’s remarketed now. By the way, feel free to say whatever you want, because we’re going to block out the name. Just because I don’t want any drama.
Chad: I’m sure. That’s the way he is.
Clay: Speak freely on this individual. But he totally did start it off, with a swing trading type twist, so that’s hilarious. But, here you are thinking you’re getting a swing trading service, and then multiple texts a day. Which is like, “I thought swing trading was one to three days,” like you said, “but this feels day trading.” But of course it’s day trading, when he seen all the surges.
Clay: I mean, you now know how the game is played, and what was going on in hindsight. Right? You understand all the- [crosstalk]
Chad: Oh, yeah.
Clay: Okay. But, that’s funny. A nice little detail there, that here you are signing up for the swing trading approach, which is totally, I know exactly who, this individual I can confirm. Yeah, that’s definitely how things were marketed and portrayed. Here you are, like you said, just flat out doing day trades. But yeah, keep on going.
Chad: Okay. After I bought my house, and threw trading out of my mind, that took this all the way through 2015. My house was 100 year old house, so it needed a little bit of work to make up my own, and just spruce it up a little bit. It wasn’t until early in 2016, that I got a letter in the mail and it was about that ticker symbol END. They had been delisted, I think they had even gone bankrupt.
Chad: It was a letter from the lawyers, wanting to know if I wanted to be part of their class action lawsuit against them, and all that. That had the opposite effect. You’d think getting a letter that, and losing that final $2,000 would be it. That’d be the line in the sand, the last straw. You’d want nothing to do with trading ever again, the rest of your life. But actually, it’s a renewed my interest. It got me started watching the markets again.
Chad: Every day I would come home from work, and I would turn on the computer. I would go to free stock charts.com, and I would just look and see what happened throughout the day. See what Amazon’s doing and Netflix. I would spend hours going over charts, and trying different indicators. I wasn’t doing any paper trading at all. I just have a passion for the markets then, and I just wanted to see what’s going on; I just wanted to watch.
Chad: Then I started doing my trade searches again on Google and YouTube. But I a little more specific this time, because I have the house, I don’t have a lot of money. I wanted to know how do I trade with a small account. Then, this is where I first saw you. I saw some guy in a t-shirt in front of a chalkboard, and I went, “Nah, I’ll just watch that later. I don’t want to see that guy.” [crosstalk]
Clay: Yeah. But, if I was eating a Big Mac or Whopper you would have probably watched, huh?
Chad: Probably, yeah.
Clay: Sorry, I got to poke fun a little bit here. I mean-
Chad: Well, of course.
Clay: All right, good.
Chad: I’ll tell you the reason why, I didn’t click on your video then to watch it was. I thought it was too short. It was maybe, between five and 15 minutes. I don’t remember exactly. The thought that entered my mind was, because it’s so short of a video, therefore it has no value. What am I going to learn from 15 minutes from this guy, that’s going to change my trading around? That’s why I didn’t watch it then.
Chad: I went on to watch other videos, and then, this is where I got into options. I started to learn about the Greeks, and everything that goes around with options trading. I reset my practice account with RBC back to the $100,000. I started swing trade buying monthly contracts, of the more popular symbols like Amazon, and Netflix and such.
Chad: My experience with that, was I did that for both several months. I found that I was break even to a small loss. I found there was a lot of losers, and then there’d be one big winner that would pop up, but it wouldn’t bring me over the top. It would just erase the losers. I didn’t having all those losers, all the time. It was really discouraging and disheartening, and it really took the wind out of your sails. It wasn’t as enjoyable. Because trading’s fun, and it stopped becoming fun doing that.
Chad: I went back to searching, how to trade with a small account, and I was doing a search while I was a doing the paper trading. This is what I found everything, from options, to penny stocks, to day trading, to buy my strategy. No, by this strategy. The MACD crossover’s the way to go. No, it’s the moving average crossover, that’s the only way that you’re going to make money in the markets.
Chad: Then, I saw you again. It’s this guy in a t-shirt in front of a chalkboard again. I remember I had marked it as a watch later. I went back to my watch later list on YouTube, and I watched the video. You were going to reveal this top secret ticker symbol, that’s going to change your small trading account. It’s going to turn it right around. You wrote the ticker symbol on the chalkboard, JOB. I laughed and laughed, I was crying laughing.
Chad: Because of all the other searches I had come across. No one had ever mentioned this at all that, just work harder and save your money. Have a good financial outlook on your own, personal finances, and that’s how you’re really going to grow your small trading account. This led me to your other videos, and to your podcasts. It was April 2016, that I listened to your first podcast. It was episode 57 with Shawn, and I really enjoyed that. It was amazing.
Chad: Because I was paper trading options at the time, it really touched a nerve with me. While I was waiting for episode 58 to come out the following week, I went back to the number one podcast, and I started listening from there on. I listened to all the way up to about episode 75, I realized I had no money to buy your courses. By then, I was convinced that I wanted to buy a structured education, and I want it to go with what you offered, but I had no money to do it with.
Chad: On episode 75, you talked about, if you wanted to take trading seriously, you need to have your personal finances in order first. You talked a lot about that, and everything that you said in there made a lot of sense to me. I took all that to heart.
Clay: Out of curiosity, was that an episode totally devoted to personal finance? Because, I remember Chezz and I did one of those, at one point.
Chad: I believe that’s the one, yes.
Clay: Was that it? Okay. Okay.
Chad: Yeah. I listened to that a few times. I must have listened to it about three times. I listened to a lot of the podcasts, several times. Except the ones with Nate Wilson. I just skip over those ones. But- [crosstalk]
Clay: Hear that Wilson? Good. He deserves that.
Chad: No, I enjoyed his as well.
Clay: Yeah, he deserves it. No, don’t say that. Just stick with the fact that you skip over, anything that’s got Wilson in the name of it. Well done, sir. Chad, I you even more now. Always poking fun at the Wilson, as well, is a good investment of time.
Chad: Good. I’m glad you enjoyed that. I realized that my personal finances, they’re not in order. They’re not even close. I’m up to my eyeballs in debt. You know what? I don’t have a chance of trading again, the way things are. The housing market was good here in Southern Ontario, here in Canada. I live in Niagara Falls by the way. I decided to sell my house. I’d only been in it for two years, at that point.
Chad: But like I said, I wanted to take trading seriously. My personal finances were way out of whack, and the market was good. Now was the time to set things straight, get a fresh slate. I sold my house in December of 2016, and ended up making about 50% profit on that. That was a good trade, in the end. I used that money to pay off my debts, and I was actually very surprised by how much I had to pay. I had to pay $50,000. That’s how much my debts had added up to at that point.
Chad: That included $17,000 on my car, that leaves wet 33,000 left over, that is a just random other things that I had just accumulate debt with. It- [crosstalk]
Clay: It was amazing how it adds up, isn’t it?
Chad: It is very amazing. Yep. I used some more of that money to buy the CTU, in December 23rd of 2016. I went back to apartment living then, and I started a watching the videos while I was on my Christmas break, and I was enjoying them a lot. I was taking my time going through them. There was a lot of information to take in, and a lot of it I had learned already through the reeducation. But to have it in a structured ordered way, and to know I wasn’t missing any pieces.
Chad: I like to relate free education to 1,000 piece puzzle. You don’t have the picture on the box, and you’re missing a hundred pieces. Even if you do manage to put the puzzle together, you’re still missing out. There’s still something missing there. It’ll take you a lot longer to put everything together, if you can even manage to do that.
Clay: That’s a great analogy. That’s a very good analogy. But there’s also a dynamic of, I don’t know, some hourglass. Where an hourglass represents your money, because you only have a limited amount of money. It’s not you can take forever to put this puzzle together. I mean, because even if you have all pieces, I love the not having the picture on the box. You don’t even know what you’re supposed to be putting together.
Clay: But there’s also this time element where, well, you need to get it done in a certain amount of time. Except time is not time, it’s money. Because, so are you going to have enough money available to you to figure it out, before you burn it all? I mean, that’s a very good analogy there. Because, that’s exactly what the free route is.
Clay: But odds are, there’s going to be missing pieces anyways. Because when you don’t know what you don’t know, I mean yeah, that, that’s probably going to happen. Yeah, as an analogy man myself, I’m on board. That’s a great way to put it.
Chad: Yeah, you’re definitely right about the time aspect of it. Because, you could put all the free education together, but if that takes you 20 years, then what benefit is that? You’ve missed out on 15 years or more of consistent profits trading, if you would’ve had a structured education to learn from.
Chad: This brings us into January of 2017, and I slipped on some ice at work in the parking lot and I sprained my ankle really bad. I had to take three weeks off work. I used this opportunity to go through the courses even more. I decided I was just going to treat every day, like I was going to work. I would get up, go hobble my way over to the couch, grab an ice pack. I would sit there for eight hours, and just go through all the content, all the major courses I could get done in that three weeks.
Chad: I also did a lot of the webinars then, too. What I found was, that I was enjoying it so much, that I didn’t even end up spending eight hours, it’d be more 10 to 12. Then I was also, spending time on the weekends. I just couldn’t get enough of what I was learning. And-
Clay: So, you were not able to get through everything one night, right?
Chad: Oh, no, Not- [crosstalk]
Clay: Like the other individual. All right, good. Okay, good.
Chad: Oh no, I was very happy with my purchase as far as that went. Because, yeah. That was a bad experience last time. I didn’t get anything for my money really. Yeah, this time I got more than what I could handle. This led me to starting things over, and starting fresh now. That leaves you with a question, what kind of trader do I want to be? I decided that I wanted to day trade, in the same capacity that had started in the beginning. I will say this about wanting to trade a certain way. If you want to trade a certain way, it’s not necessarily the way that you need to trade, in order to be consistently profitable.
Chad: But I wanted this so badly, to day trade. Since I was working during the day, I want it to figure out a way that I could day trade maybe in the evenings, when I get home from work. This led me to take your Forex course. I liked the Forex course a lot, but when I came time to paper trade Forex, I didn’t like it. I think it had to do with the lower volume at nighttime. The spreads really open up, and I don’t know, it just don’t really have the same movement in that, that I was looking for.
Chad: After paper trading that for a little while, I decided that Forex wasn’t the way to go. One of the only things left to do, was futures.
Clay: I got to comment on that real quick check, Chad. Because, we’re not here to bash a Forex, because some people love Forex. In fact, we’ve talked with people that do tread Forex. But what is true power, and why knowledge is power, is at least Chad a baseline of how to define for him, for him, bad. When you show up, and you don’t know what you don’t know, then how do you know even how to define what is bad? Or what doesn’t work, or what doesn’t fit what you’re looking to do? But he listed out some very valid reasons, based off of the time, and then based off the pairings that were open at that time. That it just didn’t quite fit, what he wanted.
Clay: Now, it’s not bad as a universal bad. Because maybe for somebody else, if they’re looking to do something a little bit different, then maybe what is bad for Chad would actually be good for that person. I realize this all kinds of sounds confusing, but that’s why you got to figure out what tools exist, how the market works. And going with a plan, going with the proper understanding and tools, so that you actually know how to define all of that.
Clay: Because, I will say that again, what was “bad” for Chad within the Forex market, might actually be “good” for somebody else. Now, there are of course universal bads. But within what the context Chad is talking about, because he did invest his time and his money into learning. Now he was able to identify these little areas, and decide that, “I just need to move on from it.” Where some people, when they’re just down the rabbit hole, when they’re trying to put together that big old puzzle, “Why think I have all the pieces here? I think that’s what it’s supposed to be,” but it just doesn’t quite work out that well.
Clay: I mean, great little … Chad has some notes, I know. But it’s probably a little thing, that you had written down. But that was actually quite impactful, because that’s the epitome of what knowledge will get you. Is you can actually start to define bad and good, for the context of your strategy.
Clay: But all right, now you’re moving on into futures. Sorry to cut you off there, but that was a great little nugget of experience there.
Chad: No, that was good, because that’s exactly right. Go right back to the beginning of my journey, and I didn’t know what trader I want it to be. I didn’t know how to separate the different kinds of trading. Now I’m getting that grasp of that, how to separate them into their different divisions. How to divide things up.
Chad: From this point I went to futures, so I looked up what information you had. You had a nice article on futures trading. That took me from there into paper trading. I did about two weeks of the paper, just to see if I liked it. It wasn’t to practice to go live, or anything. I did like it and I was trading in the evenings then. I was just on the ES, S&P minis. Then I opened an account, but it wasn’t to trade live, it was just to get the live data. I opened that with $5,000, and I used AMP Futures, and I used a TradingView as my platform. Then I just continued paper trading then, for a few months.
Chad: I admit, I could’ve done a better job paper trading. Because, the paper trading started out as coming home in the evenings and placing a few trades here and there, maybe one or two. Just trying to make maybe a point or something, $50 out of the market. And then, keeping my risk managed. But then, slowly I want to day trade during the day. But because I’m working during the day, I would come home from work, look at the five minute timeframe starting at when the market opened at 9:30, and would just not really hindsight trading, but I knew what the market already did.
Chad: I would scroll through the day, five minute by five minute, bar/candle. I would place my paper trades accordingly. Of course, where everything goes nicely because you’re not going to take the trades that you know don’t work out. Then this brought me into May of 2017, and my work slowed down a bit, and we did something called work share. That’s when you work a few days a week, and then the government pays you on unemployment for the rest of your time, up to your 40 hours. I ended up having Thursdays and Fridays off.
Chad: Now I’m excited to trade live, right when the market opens at 9:30. Even though the futures market is open 24 hours, that’s when all the activity happens is from the 9:30 till the 4:00 close eastern time. I went on the first Thursday, and I placed my first live trade. It broke out to the upside, so I jumped in, and I followed it up with a trailing stop, and I ended up making a $300 on one contract. I felt great, kind of like at that at the beginning. Where, if this is the way things are going to go, I think I can handle this.
Chad: The next day I did have a loser, but I managed good. I only lost $50. It was the only one point. I thought, “Okay, this is good. I’m keeping my losers in check, now.” This is the only one week, and I’m already thinking that this is a large enough sample size to judge things on. Then the next Thursday comes along, and I’m looking at the five minute chart in the morning, and I’m just not seeing anything interesting going on. Nothing’s really moving too much.
Chad: So, I switched to the one minute chart. And, wow, there’s lots going on here. I’m going to start trading on the one minute, even though I have no experience trading it, no paper trading on it at all. I had planned on making about three trades a day, but by the end of that day I’d made 18.
Chad: Yeah, my account balance had fallen to $4,200. Yeah. This led me to just stop trading, I just stopped. The same feelings as before, you felt sick to my stomach. It was a little bit more this time, because this time I had the nice structured education. I had paper traded for a lot longer. It felt I understood things better. On the days following, my emotions were just running wild. I was confused. I was angry that I was confused. I was angry that I wasn’t being disciplined.
Chad: Like I said, I’d finally had the structured education and I’d failed to implement what I learned and I just. I just felt a failure, and I just became depressed. It took me a long time to overcome that, took me about a month to get over those feelings. Realized that, I know I have a passion for trading it for the markets. Trading’s not going anywhere in my life, win, lose or draw. I’m going to continue at this, I’m going to keep trying.
Chad: I took some time, just to analyze where I went wrong then. I would come home every, day and I would look at that specific trading day. It had all the markings of where you took your trades, and I would look and see, what was I thinking, what was going through my mind, what was I feeling then? What actually did I do wrong, on a technical standpoint, to lose on those trades. Really, it took me a long time. It took me the rest of the summer to really just questioning myself, and ask myself those things about where I went wrong.
Chad: What I came to the conclusion was, was the biggest takeaway for me. It was, I don’t like day trading. Despite my wanting to do it, I wanted to do it so badly, but I didn’t like it. I didn’t like the sudden and the rapid decisions you have to make. I found I like to sit back, and take more time to think things through. I like the larger time frames. Even though I don’t want to trade that way, that’s the way that I like. It’s really strange for someone to say that. Who would do something, that they don’t like doing, just because they want to do it. It sounds strange, but that’s the way that it worked out.
Clay: That’s the way it should work out. That’s such a beautiful point. I’m stealing your quote from earlier, you shouldn’t be trading the way you want to trade. You should be trading the way you need to trade. That doesn’t mean that the way you need to trade, is actually how you want to trade. It sounds confusing, but welcome to the weird monster that we call the financial markets. Because, your voices, your inner desires, your emotions, your passions … you can have a passion for the market. I mean, and that’s definitely a requirement, we talk about it all the time.
Clay: But within the market, just because you have a passion for a certain way of trading, to Chad’s point, that doesn’t mean that’s how you should be trading. You may need to trade some someplace else, but it doesn’t mean that necessarily is where you would have ever thought. I mean, you absolutely nailed it. That’s a fantastic way of looking at it, is just because you want to try it a certain way, doesn’t necessarily mean that’s the way you should be going about it.
Chad: Yeah, I would totally agree with that. All of this left me with a question that I had to ask myself, how am I going to trade now? How am I going to continue on forward? I didn’t like buying options. I don’t day trading. I don’t think I want to do swing trading again. I really just had to think about this, about how I’m going to trade going forward. I just continued to think on that for the next year. I really, I just took a year off. Just to think about things, and let things consolidate in my mind.
Chad: I would still occasionally trade on my days off, or when my shift allowed. I was on an afternoon shift or something. I’d take a trade here or there. But I pretty much, I didn’t trade on a regular consistent basis. I realized the only CTU course I had not taken, was the advanced options. I took that in September of 2018. After going through that course, and I quickly decided that, this is how I want to trade going forward. This is how I want to approach the markets.
Chad: I closed my account with AMP Futures, I had $3,700 leftover. I just began paper trading with Thinkorswim. I didn’t know Thinkorswim was available here in Canada. I thought it was only for in America, in the states. It’s actually been available here since 2013, which I didn’t know either. That would’ve been really helpful back then, if I would’ve known that. I was using them, and I began paper trading advanced options with Thinkorswim in November of 2018.
Chad: After a couple months, I found I was up $800, on using $5,000, and I was very satisfied with that. But what I didn’t realize then too, was that volatility was up then, in November and December; the overall market was going down. I’ve found it now, I don’t have any trades on right now. Because I’m finding it tricky, with volatility now being on the low side. Other than the odd earnings here and there, I’m finding it a little bit difficult.
Chad: I’m just taking my time. I’m building back the money for my trading, in my live trading account. I’m just working overtime at work whenever I can, whenever it’s available. I just went in on Saturday, this is Monday. I just went in on Saturday, and I did something. I don’t even work in that department, on the paint line. We were cleaning the paint booths and stuff. I’m just picking up overtime wherever I can get it, to try to build up my account. That takes us to my current standing.
Clay: Well I there was a comment over social media on the weekend, about pretty much just enforcing what Chad is doing. I posted a picture on Saturday morning, like 6:00, because I was up really early. But the point when, hey, you want to get ahead? Just go out there, and do stuff that a lot of people aren’t willing or wanting to do. That’s what Chad did on Saturday. Went in there, and just figuring out a way to make some money. Instead of, “I’m not quite trading, but I’m at my job.” and I thought, “You know what? Actually you are trading, you’re trading your time for a guaranteed paycheck.” Which goes way back to that video that Chad referred to, the best ticker symbol to trade if you want to grow your account is JOB.
Clay: Because, assuming you’re not doing an illegal profession, like a drug dealer, then your risk is very, very minimal, that if you’re willing to trade your time, you’re going to get a return on that time as in that paycheck. That’s really what, I think I want to really try to enforce that going forward is, you are trading. If you are at your job, you are trading. You are trading your time for a guaranteed paycheck. Get out there and trade. Yeah, maybe it’s not the markets, but yeah, I mean …
Clay: So, in other words, Chad, that was a great Saturday trade you made. Traded your time for a guaranteed paycheck. You’re not a drug dealer, right, Chad?
Clay: Okay. You traded time for a guaranteed paycheck, and you’re growing your account from a more of an indirect type of way. But, for listeners out there, remember that? Sure, it may not feel you’re trading in a stock market sense, or any sort of market sense. But you actually are trading, you’re just trading your time for a very, very … it’s a great risk [inaudible] reward. The risk is very, very minimal that you’re not going to get paid. But hey, I’ll take that risk. I mean, why wouldn’t you? Now, if you have something important, I’m not saying that you just go to work every day of your life. But you get the point, there’s a fine line in there.
Clay: Right now you’re doing advanced options trading, like you said, the current low volatility is making things a little bit trickier. But, is this with real money? Or, are you paper trading right now still?
Chad: No, I’m only paper trading. I’m trying to get my account up to $5,000 US. I’m close, but I’m not quite there yet. I’m thinking I might go live again in the summer, and I’ll just keep paper trading until then. That gives me six to eight months, that I can really get used to it. I’m still figuring things out. I’m still took taking a look at weekly options recently, and just seeing what they’re all about. You know, that kind of thing. There’s, there’s so much options, advanced options is a whole another world, and there’s lots to explore. That’s what I’m doing, just trying things out, seeing how things work. How different spreads, and different amounts of risk and things like that.
Clay: Now, you going live, is that dependent on some sort of paper trading results you see back? Or is that strictly dependent on, it’s just a matter of time for you to be able to save up on that amount of money?
Chad: It’s more or less just a matter of time. If I’m not happy with my paper trading results, I may hold back a little bit longer. But, when I have the money, we’ll see where I’m at with the paper trading. But the paper trading could hold me back from going live. It could, it’s a possibility.
Clay: Okay, good. That was going to be my one little, depending on your reply is, well, I’d make sure that you’re paper trading is a main driver there. Because, I’d hate to see it get to that $5,000 and, “Okay, I’m at $5,000, time to go.” But I’m glad that, that’s not the sole driver of what’s going to get you back involved. Is you’re moreso going to, kind of a combo effort, if you will.
Clay: My only question you would be hearing there, you’re paper trading, how you’ve done in the past, are you confident that you’re doing it … there’s no hindsight in this paper trading, right? You’re keeping things as realistic as possible?
Chad: Yes. Yes, very. Because of the advanced options, you pretty much have to wait a month to see how things work out. If you’re selling a monthly contract, or a monthly spread. That’s kind of what I’m doing. It’s really hard to do the hindsight trading here. But, as far as the paper trading goes, compared to what I’ve done in the past. I would say that, I feel very confident that this is the best form of paper trading that I’ve done to date.
Clay: I would back that up based off the fact of … let me put it this way. If you had said, “Yeah, I’m paper trading right now. I’m factoring volatility, and I have 15 positions on right now.” I would have to sit there and be like, “Wait a second. I don’t think you’re paper trading is your … something’s wrong in your paper trading if right now,” and again, for listeners sake. Right now as of the recording of this video, which is about mid-February, yeah, the markets right now are not … The way options work is, you really shouldn’t have anywhere close to 15 positions, or that many on, given the current context of things.
Clay: Now when this goes public, maybe the ball game’s a little bit different, but as of right now … So to hear that, things are a little tricky right now. No, you’re absolutely right. That tells me you’re being very realistic, and practical in your paper trading. Because, I’m not going to say you shouldn’t have to have maybe a couple on. I mean, there’d be nothing unrealistic about that.
Clay: But if you’re sitting here saying some crazy number, I’d probably have to as politely, as I could, maybe direct your attention back to, “I don’t know, are you sure you’re not going on about the paper trading, the way you have in the past.” But to your point, that is the nice little convenience about the advanced options. Because it is actually, truly a swing trading strategy. Things do take a while to play out. The hindsight aspect would work a little bit different.
Clay: I guess your goal is to, obviously swing trade. But, I’m assuming you want to get it down to the point where, you’re just having a check in at lunch for example? Or I mean, how active do you actually want to be, within the swing trading in itself?
Chad: I’m hoping to be, as little active as possible. I do have, Thinkorswim has a great mobile APP, so I do have that, that I can get out of a trade if I need to. But I don’t plan on entering any trades on my phone, not as of yet. I may in the future, I don’t know. But the thing with advanced options is, it doesn’t have to be that quick decision. You can take your time. I can go home at night, and plan things out. Then say, “Okay, tomorrow at lunch I’m going to enter this trade.” Then I can do that, and I can be very calm about it and relaxed. I know that I’ve thought things out ahead of time, and that’s the way I want to trade, I think going forward.
Clay: I mean, honestly, that’s the way you want a trade. But to compound, I think that’s the way you need to trade too. Based off how you’ve talked, based off your track record. Yeah. There’s nothing wrong with saying, “I don’t like, or maybe I’m just not very good at having to make split second decisions, or decisions in very short amount of time.” That’s okay. That doesn’t mean, that you can’t participate in the market. That doesn’t mean, you’re stupid. That doesn’t mean, that you’re not a good trader. That just means that’s how your brain is wired, and everybody’s brain is wired differently.
Clay: You as a viewer, or as a listener, you very well may not be good at … because if your brain is not wired in the way that Chad’s and some people’s are. Then the lesson you would just take away from this, is, “I got to accept the fact that, just because I want to trade a certain way, maybe that’s not how I should really be approaching the market.”
Clay: My apologies if you said this, but I know you’re beast mode in it right now, to build up those accounts. Do you have any idea, the projection, did you say June was when you thought you might have to $5,000? Or am I confusing that with something else?
Chad: Yeah, I do get a vacation pay in the summertime. Whatever little amount that leftover, I can take from that. It’s not a problem.
Clay: Okay, nice. You got a little while. Again, listeners context, we’re recording this mid-February. Yeah, there’s definitely no rush here, from the paper trading perspective. You know where you want to head. You’ve done a great job sharing things from a weakness perspective, I mean you’ve learned a lot, hence the journeys. Thank you again for sharing all that. But I mean, what are some things that you feel pretty confident in? I mean, some things where I said, Chad, what are, what is this some strength or strengths? What would you what do you feeling confident about?
Chad: I feel pretty confident in my chart vision, and how I’m able to see how things are progressing. I’m not really too sure, about what other strengths I may have. I never really give it much thought. I guess, realizing when you need to step back, could be a strength, too. Like, when I was earlier on. I knew that I was just losing money, but I didn’t stop. I couldn’t stop myself. Now, I can see when things are going wrong, and I can hold myself back. I can take a step back from the situation. I think that’s a good strength to have.
Clay: No, that’s good stuff. I mean, that’s really how it should be. Sometimes it just takes someone to get to that, but those are definitely strengths, for sure.
Clay: Well, looking at the time, we’re well over an hour. I’m definitely glad … how are you doing by now? You haven’t passed out? Are you sweating at all, your legs burning, or how you feeling?
Chad: Oh No, I’m good. I’ve actually gotten quite comfortable, now.
Clay: Well, that’s because you’re numb. You probably just can’t feel anything, from her neck down right now. So that was-
Chad: True enough.
Clay: Yeah, that was my theory. Is, well, if Chad can push to the point of being numb, then we should be good to go. But, would you be willing to come back at some point, to keep us all informed on how things continue to play out?
Chad: Well, sure. Of course, yes.
Clay: Good. Like I said, in a sick and twisted type of way, this has been a good conversation, with all sorts of nuggets to learn. If only it was easy as getting text alerts, that it promised to be swing trade alerts, but that actually turned out to be day trade alerts, that …. ah. What a mess that was. But you’ve learned from it.
Chad: If only.
Clay: Thank you again for sharing, because hopefully … not hopefully. I know at least one person out there that listens will, maybe they’re experiencing the same thing. Like, “Okay, good. My Gut instincts were right.” because sometimes a lot of people … that’s what we’ve learned from feedback is, people’s stories help confirm somebody who’s got instincts, but they’re not quite sure, “Is that really an instinct, or is that just some insecurity that’s not actually not real?”
Clay: “Oh, no. A lot of other people are experiencing that. That’s definitely a gut instinct, that I should probably listen to.” Listeners, if you’re going to experience anything that Chad is saying, don’t worry, it’s not your imagination. Your gut instincts are trying to tell you something. Because, here’s another person that’s been through something similar. But, Chad, Chezz, as a listener of the podcast. I know that Chezz is part of this podcast. But, Chezz also has a time machine. If … not if. Chez will lend you the time machine.
Clay: But if you could go back into time and give yourself one bit of advice, what would that bit of advice be?
Chad: I think it would be to just, trust your own instincts. I think even early on, I had developed an instinct as to where I wanted to trade. Take for example that, Air Canada. Where I saw how things were, but I let the people on TV tell me otherwise. I think whether it’s going to be for the better or for the worse, I think you just need to let your instincts guide you. Then you can learn from that, whether it’s a success or a failure. I think I’d to go back and tell myself that, and just trust your instincts going forward.
Clay: Awesome. That was a good … I promise listeners, that was not scripted. That was just a good little segue into, you got to learn at some points to trust your instincts. If anything that Chad has talked about can help you confirm your instincts, then good. This was definitely a successful discussion here.
Clay: But now we need to move into the nitty gritty details of life. Chad, what is your favorite movie?
Chad: I thought about this a lot, because I’ve listened to all the other answers on the podcast. I can’t say I have a favorite movie. But what I do have, is a favorite genre, and I would say that that’s science fiction. Just about any science fiction movie, I’m down for that.
Clay: Now, is science fiction the same as fantasy? Or are those two separate categories in your mind?
Chad: I could watch some of the fantasy, like Lord of the Rings was okay, and stuff like that.
Clay: Okay? Come on.
Chad: I’m more into the science fiction side of things.
Clay: Like Star Wars.
Chad: Yeah. But even Star Wars, I’m not a huge fan of. [crosstalk]
Clay: How’s that not SciFi? That’s like a SciFi … well, all right. Tell me a movie within the SciFi. I need more context here then. Let’s break down the- [crosstalk]
Chad: Okay, maybe more of a SciFi mixed with a more of a current reality. Maybe something Independence Day, for example.
Clay: Okay. All right. That makes sense. You need a little-
Chad: The other one I really enjoyed was District 9. I’m really upset they didn’t, never made a sequel for that one, but.
Clay: I have heard of that one, but I’ve never seen it. Okay, that makes sense. SciFi, but it’s gotta be a little bit more grounded in reality than what Star Wars would be.
Chad: Sure. Don’t get me wrong. I like Star Wars. I watch all the movies, but I don’t own them. I’m not like a fanboy- [crosstalk]
Clay: You’re not dressed up as Darth Vader right now?
Chad: No, not at all.
Clay: Okay. All right. You never know. I mean, I’ve learned you just never know. Maybe I’m talking to a storm trooper, for all I know. But, just figured I’d throw it out there. What about food-wise? What do you like to eat up there, in the great country of Canada?
Chad: I’d have to say that my favorite meal is homemade Irish beef stew. I really liked that. I’ve had it homemade by my mother, and also in restaurants and I’ve enjoyed it both. I’d have to say that’s it.
Clay: What about dessert?
Chad: Pretty much ice cream, I’d say.
Clay: With maple syrup on it?
Chad: Oh, hell no. No, thank you. I gotta be careful with that. I’m diabetic, so I gotta watch all that maple syrup stuff.
Clay: Yeah, man. Hell, yeah. Okay. Yeah. Stay away from the sugars then. Stay away from the sugars.
Chad: I’d say favorite ice cream’s probably Tiger Tail.
Clay: Well, now what does Tiger Tail?
Chad: It’s a black licorice mixed with the orange.
Clay: Can I speak frank and honestly with you?
Clay: That sounds terrible. Black licorice? You like black licorice?
Chad: Well, when it’s mixed with that, when it’s in the Tiger Tail ice cream, yes.
Clay: Oh man, I was going to say that sounded … but that does not sound very good. If I just can …
Chad: If you ever see it, you try it. It’s not like chunks of black licorice. It’s a liquid black licorice.
Clay: I don’t know, just … well thank you. Yeah. I don’t know. I’ll eat some beef stew with you, but when it comes to desserts, I don’t know. I’ll just, I’ll have a donut or something. You can have your Tiger Tail ice cream. But, what about hobbies? What do you to do for fun, outside of a beast moding it at work, and then this market stuff?
Chad: Well, I spend, hours going over charts in that. But in the summertime, I really enjoy golfing. That’s pretty much, the one big hobby that I have, and when the weather’s nice. But when in the wintertime like this, and during my downtime, watching movies and TV shows, and playing the live video game here and there.
Clay: Nice. Please forgive me, my geography is … I mean I guess I teach geography to us Americans. But Ontario is relatively close to the bridge into Michigan, isn’t it?
Chad: Yes, it is. Yes.
Clay: How far are you from the bridge into Michigan?
Chad: Well, I’m at Niagara Falls. [crosstalk]
Clay: Oh yeah, you said that.
Chad: So, if you know where Niagara Falls is- [crosstalk]
Clay: That’s actually quite a bit of a drive, isn’t it?
Chad: Yeah, I think, to your side of the border there, it’s about three hours, I think.
Clay: My roundabout way is asking, because this summer we’re doing a meet up here in West Michigan. Is there any chance, that you’d be able to make it to the west side of the state of Michigan.
Chad: There is a strong possibility of that.
Chad: I just had my passport done, so I’m good for 10 years.
Clay: There you go. Oh, you just got your passport done, you said?
Chad: Yeah, just about a month or two ago, I got it redone. [crosstalk] I let it expire.
Clay: I thought you said, you had to get it done. Well, perfect.
Chad: No, no, it’s done. I have it.
Clay: Well, there you go. I’ve been talking with a lot of people lately, that are within striking distance of potentially being able to make it. But yeah, that’d be great if you could, you can start planning for it now. I don’t know, sometime this summer, but yeah. Would be fun to hang out, and trying to get some more Canadians-
Clay: … to come down from the Ontario area. How far are you from Toronto?
Chad: Depends on traffic, but when traffic’s good, you’re about an hour, hour and a half away of a drive.
Clay: Oh, okay. All right. Toronto’s close to the bridge, right? Over to Detroit?
Chad: No, I don’t believe so.
Clay: Oh, okay. No. It’s already evident, that I don’t know my Canadian geography at all. But, that’s-
Chad: That’s okay.
Clay: Yeah. Sorry, sorry. See, I can’t-
Chad: Toronto’s actually the other way, a little bit.
Clay: Is it? Okay. All right.
Chad: Yeah, it’s north and to the East a little bit.
Clay: All right. The lesson here is, brush up on my Canadian geography. But Chad, final question here. Three words, and these three words need to be what you would describe her associate with what you believe successful trading takes. What would those three words be?
Chad: I would say they are education, practice, and execution. I don’t think execution’s that ever been mentioned on here before, but it’s so crucial. If you’d take into, for example, when I was using those text alerts, I was not executing my trades properly. Doing that on my phone, and all that. Execution is pretty critical. Knowing when to execute it, and also when to hold back. Maybe the chart looks good, and then all of a sudden you get a drastic candle, and you need to hold back, execution’s key.
Clay: That’s a great word, for sure. I mean, if you don’t know how to execute something then, I won’t say you will never have any success in it. But, there’s no way you’re going to ever have consistent success in it. Which is important around these parts, we call the markets. But yeah, those are, those are good words for sure.
Clay: Well Chad, like I said, we’re well over an hour now. Great discussion, in a sick and twisted way. Thank you for being so honest about things, and not holding back. There’s no doubt in my mind, it’s going to help at least one person. At least one person will benefit from, either relating. Or, maybe they’re going through something that you mentioned, right now. If we can confirm some gut instincts, that’s going to be a win for everybody.
Clay: Chad, you already said you would come back, which is good. But yeah, thank you again for not only volunteering to be on the show, but also contorting yourself into a position to make all this occur. Yeah, thank you very much.
Chad: You’re very welcome. My pleasure.
Clay: For you listeners, before you all go, final few things. If you’re listening on YouTube, be sure to check out to the rest of the channel. There are other videos, there’s live trades, there’s a vlog, there’s several videos. Check out the channel as a whole, hopefully you’ll decide to subscribe.
Clay: If you’re listening to this on iTunes or any of the other podcast players, then subscribe, and especially on iTtunes, if you could leave us a positive rating or comment, that really helps us out and it goes a long way. I appreciate and thank you for it.
Clay: Finally, if you’re listening on ClayTrader.com, the show notes page, first off, you’ll see a thumbnail image there. Click the share button, and then down below there’s an area for comments. If you want to leave comments, questions, suggestions, go ahead. We will be interactive with you, and get back with any sort of comment that you do leave.
Clay: But regardless, thank you, Chad. Thank you, viewers. We’ll see you back next week.
Speaker 2: This has been The Stock Trading Reality Podcast. Thanks for taking the time to hang out. To learn more about Clay and the Clay Trader Community, including the trading team, premium training, and more visit ClayTrader.com.