Clay Trader Podcast
STR 219: The Fundamental Voice is Wicked….
A huge part of trading is mental. It may sound dramatic, but if you want trading success, the mind must be mastered. Our guest today, Marc, takes us on a great journey of witnessing his Dad do well as an “old school trader” in the markets to now trading all on his own. Like all of us, he’s had struggles and the one is due to a mental issue I can relate too. Some people find it odd when I tell them, “I don’t know anything at all about this company, but I’m trading them” and Marc’s struggle illustrates exactly why I approach the market in this way. Bottom line, there are sneaky voices that we can be proactive against if we set certain rules for ourselves and that’s just one of the great nuggets of wisdom you will learn. Let’s get to it!
Clay: This is The Stock Trading Reality Podcast, episode 219.
Announcer: 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 everyday normal people who are currently on their journey to trading success. And this is your host, luck or skill, he wants and needs to know, Clay Trader.
Clay: I promise this was not planned this way. But there’s a big rabbit hole that the guest and I go down, which really just illustrates this whole idea of, are you sure that this is skill that is producing these gains? Or is it maybe a little luck? Is it maybe a little just happening to be at the right place at the right time? Maybe it is straight up skill. I’m not saying that if you are having success, then it is 100% for sure just random luck on your part. But what I am saying is that it’s worth considering. And if you need a little bit more context on this, like I said, a really great example of it occurred in our discussion today with the guest. And I wish I could say it was just clever to line things up like this. But it just happened to be really, really good timing. But just remember, whenever you’re out there, whenever you’re maybe seeing success. Especially if you’re newer, I get it. I sound stupid, and it’s a logical thought for you to have to sit there and be like, “Who are you to tell me anything? I have made X amount of money. And I’ve only been around for Y amount of time.”
Clay: Yeah. Why would you listen to me? I mean, you’re having success. Your account is growing. But that’s just the cruel, cruel irony of the market. So please, listen to this interview. And you’ll get to some points where we talk about that. And you’ll see kind of how this can all play out in a real life actual setting. And I really hope that you heed the warning that you’re going to hear. Today I am sitting down … Well, not sitting down. He might’ve been sitting down, I don’t know. I was standing the whole time, because I have my desk up right now with my standing desk. But those are just minor details. But we’re talking with Marc. And I joke around, I can’t pronounce his screen name in the chatroom, OGSELL. He’s a very active member, a very honest member. And I go a little bit into that at the very beginning of the interview. But we go down a ton of great rabbit holes. We talk a lot of trader psychology. And we really get kind of down in the nitty gritty. But the nitty gritty details of the things that really matter. The things that traders can struggle with.
Clay: The things that can deceive you, and then all of a sudden come back up to bite you. And there’s a lot of great stuff here. So I hope that you take it seriously. I hope that you listen and heed the warnings that Marc talks about. Because well again, I realize that it may sound goofy, because you’re having success. Just remember, Marc was also having success. Marc was up over $20 000. And then well, I don’t want to make any spoilers. So I’ll just say definitely set some time aside so you can listen to this whole discussion. So let’s get to it and hear from fellow member, Marc. Marc, welcome to the show.
Marc: Thanks for having me.
Clay: I’m not even going to try to pronounce your screen name when you were on the live webinar a few weeks ago. I’m sure … Well, maybe you don’t remember. Maybe it was so scarring that you’ve blocked it out. But it’s become very apparent and kind of a joke around the community that I can not pronounce your alias. So I’m just going to call you Marc. Are you good with that?
Marc: Yep. That’s good.
Clay: All right. Cool. Well first off, thank you for being here. And I suppose probably an introduction, which I haven’t recorded yet. I’ll mention that you’re one of these people that you’re not afraid to just keep it real. You’re not afraid to just, “Hey, I screwed up. Hey, I did this. Hey, I did that.” So it’s not like you’re somebody that it’s pretty common where people … And for a listen out there, maybe you’re in chat rooms or whatever. And you very well may have seen this before even on social media, where people are posting, “Wins, wins, wins, wins.” And then all of a sudden it’s silence. It’s like, “Huh, interesting. They were so willing to post wins and they were so vocal about it.” But I mean, I don’t know. They just went silent.
Clay: But Marc’s one of those guys where even if he does something where, “Whoops,” he’s more than willing to share it to the community. And I fact that included several weeks ago he came on to the live webinar, which is part of our service. And I interviewed him. The group interviewed him. And he was fully transparent with it. So I guess that’s my long way of saying to you listeners out there, I have a feeling we’re in for a good one. Because I know Marc is a guy that’s just going to just shoot straight. But where did all this actually start for you, Marc? I mean, where did you first hear about the markets? And what sorts of things played out that got you more interested to the point where you decided you wanted to get more hands-on with it?
Marc: Yeah. My dad has been trading since I was a little kid. So I grew up going to annual shareholders meetings for local companies that he was investing in, and trading. He would typically buy companies that he liked the fundamentals of, and he liked the future prospects of. But then trade them on the way up as they grew. And he’s done quite well with that over the last 30, 40 years. So I grew up like I say, going to these shareholders meetings, looking at financial statements, watching my dad get the paper every morning and record prices and see how the shares have done, and make his decisions. And he’d spend every weekend away at the library researching companies. And it’s very different than what it is now with the internet and online brokerages for sure. But it’s kind of always been there. And my dad still trades today. He’s almost 80 years old. And still does quite well.
Clay: That’s awesome. You mentioned he recorded prices. I have no idea what that means. I’m assuming he wrote them down. But in what manner was he writing them down if you … Because that was just an interesting statement for somebody like me that just takes stuff for granted that’s grown up in the technological age, where it’s just like, “Why would you record a price that’s all on the screen in front of me?” But what was he actually recording or how … Do you know what I mean?
Clay: Like recording prices, explain this please to us.
Marc: Imagine a world where the charts aren’t created for you, but you have to do everything from time and sales. So you’re writing down numbers as you see them, and then he’s creating his highs, his lows, his patterns from that on paper. And then he’s figuring out where he can buy and sell within that range. And he still does that today. He does most all of his trading from the tape even today. He’ll look at some line graphs. But everything he does is from the tape.
Clay: Now he was recording these prices, was this part of the library research? Or is this as the day literally unfolded where you’d have … Obviously this had to have been when it was when stocks moved in quarters, or eights, or whatever it used to be.
Clay: So this is what he did during the day? He would just wait for the ticker symbol to scroll on the screen or whatever, and-
Marc: No, there’s no screen.
Clay: … write down the price?
Marc: This is newspapers.
Clay: Okay. All right. So this is-
Clay: … where it closes every day?
Clay: And he takes that price.
Marc: Yeah. He’ll see the high and the low, and the close, and the volume for the day. And he’d start charting that each day. And then-
Marc: … improve his chart the next day, and the next day. And he’d continue [crosstalk 00:07:56]-
Clay: Gotcha. So by no means was this some sort of intraday-
Clay: … chart and [inaudible 00:08:02]. And excuse my ignorance. Very clearly I have no idea how it actually worked in the past. But that is extremely interesting. So those … Let’s see. You said he had the open, the high and the low. So I mean, you couldn’t even really do candle sticks then? I mean, if you only had those three bits of information.
Marc: Yeah. And that really … And I don’t think candle sticks were in widespread use probably back then. And when you wanted to make a … When he wanted to buy or sell, he’d have call his broker up on the phone. And I know at one point, there was a $300 minimum commission, and he also paid a per share charge. So it was very hard to make money. You had to really play the market right, because commissions were so steep.
Clay: Wow. $300 minimum. That’s pretty wild. Like you said, your dad still did well, and he did a good job with it. But as somebody that just loves charts, uses charts, has the internet, has screens. To think that you would literally have to sit there and wait every day for the newspaper to show up, “Okay. There we go. Let me draw on some points here. And now it’s just a matter of waiting until the next day shows up.” I mean, did your … I realize from a broad sense it was more of he got companies, and then on the way up as they expanded, he’d trade. But did he have some sort of, “Hey, I need to have … ” Let’s just say, “I need to have at least 20 newspapers show up. Because that way I’m going to have 20 data points for some sort of chart.” Or did you really never get down to the nitty gritty? I mean, did he need a minimum amount of data? Or was he willing to buy just after a couple of newspapers showed up?
Marc: Yeah. I guess I didn’t really know all of his decision making at the time. I was just kind of watching him. He’s always there at the kitchen table and going over the numbers, and creating his charts. I was young. I didn’t know. I wasn’t asking the right questions back then of how he was actually making buy and sell decisions. It was the reason that we ever, that we first got internet access, dial-up access when you had to pay by [crosstalk 00:10:05].
Clay: Okay. Yeah.
Marc: But it was just so he could check prices more readily than he could through the paper.
Clay: All right. I wasn’t sure if maybe you had at Thanksgiving dinner or something been like, “Hey dad, now that I’m a little older, what were these prices?” Actually Marc, can you just hop off the podcast. Let’s get your dad on here. He sounds like he’d be a lot more interesting than you would. But no. That is really, really interesting. And I’m trying to wrack my brain here. We’ve had people that have definitely been around before the internet and all that sort of stuff. But I think that this is the first situation where somebody was kind of from your viewpoint, where you were just watching. But he was … I mean, was he a full-time trader? Or did he have another job?
Marc: He had another job. And he would trade from work. He was an accountant.
Marc: He would trade from work. He’d call up his broker throughout the day and get prices, and those were other data points. But then he did eventually retire at 55 to trade full-time.
Clay: Awesome. Wow. And you said he’s 80 now.
Clay: So what is that? Another 25 years he’s been doing it. That’s really neat. So I mean, is this … Obviously that’s where you heard about the market, like you said. But what actually happened that made you finally want to get a little bit more active? Or if you’ve always kind of been active. So I guess, we’ll pick back up with your journey here. But that was definitely a rabbit hole I wanted to go down a little bit. Because that is some really interesting stuff. And for those of you out there like myself, I’m going to look at my screen a little bit different the rest of the day to realize that, wow. It used to not be this way. But back to you, Marc. So you watched your dad do this kind of just part of life growing up. So I’ll let you pick it back up from wherever you think it makes the most sense.
Marc: Yeah. So always being exposed to the markets. I always knew that one day I would trade. It was just a matter of finding the time, and being able to put in the effort to it. Kind of flip that switch and decide when I was going to do it. And I had opened a couple of brokerage accounts over the years, but never really funded them. And I never really did anything with them. I’ve ran a business for 21 years. So that’s taken a lot of my time. And finally this last year in October, I decided to put some money into an E-Trade account. And I was going to trade the way my dad did, find some good companies. But them when they’re beat up, and sell them when they’ve made a run and see what I could do with it.
Marc: And it didn’t take long before I got bored of that. And I thought I want to do more on a daily basis. There’s so many movements in a chart throughout the day where there’s a lot more potential, if you can watch it and make more transactions throughout the day. So signed up for a CTU right before Thanksgiving the last year to hopefully learn more about how to trade intraday.
Clay: Okay. Now I want to rewind just a tad. Stocks that got beat up. So what was your definition of a stock that had gotten beat up? I mean, was it simply just looking at the price in the chart and saying, “Wow, that price is much lower than what it was.” Or were you doing some sort of fundamental analysis that says, “Well, according to this and that, based on the P ratio right now, that tells us that this thing is actually quite a bit beat up relative to the industry standards.” But I guess the question is, how are you defining stocks that were beat up?
Marc: Yeah. I would do a Finviz scan, look for stocks that … I can’t remember the exact filters I had in there. But maybe they were down 20% in the last three months. I would look for stocks that had minimal debt, their sales had been growing, their earnings had been growing. They didn’t have any funny balance sheet items, and any goodwill that they were probably going to be writing off in the future. Just look like a decent company. But I also knew from my dad’s … From the years of my dad, any company, you can only trust the financials so much. Because it’s really up to the integrity of the C-suite and what they’re reporting. And as we know with Enron and others, there can always be scams going on.
Marc: So I didn’t get too deep into it, because I kind of see it as diminishing returns. I just wanted to see they had growth for the last five years, and they’re profitable, didn’t carry a lot of debt. And for whatever reason they were just beat up at the time. And actually it’s funny, because some of my first orders I put in, I found some of those companies. And I would just put a buy-in at what I thought looked like a low point. And I’d enter a corresponding sell order for 1% gain, and walk away. And my orders would fill, and I’d have a 1% return. And it was very easy.
Clay: So I hear the words, “Very easy.”
Clay: So my question becomes … Well, let me take a step back. How long did it take for this 1% to play out?
Marc: Sometimes within minutes. Sometimes very fast. I’d actually catch the bounce. And them sometimes it might take a day. And I’ve watched the chart throughout the day sometime. But then I had one of them that it never filled the sell, and it just kept going down, and it kept going down.
Clay: Okay. Yeah. Okay. All right. So you meant very easy in the sense of, it was a very simplistic strategy.
Clay: You buy, and then at 1% … Because I was going to come at you with, “Well, if it’s so easy, Marc, then why the heck did you ever change?” But now I realize how you’re defining, “Very easy,” is … So part of the strategy was, there was no stop-loss and there was no risk management. You were just getting in, and then you figured, “Hey, it’ll go up at least 1%.” Was that the essence of your thought process?
Marc: That was the essence of it. And that’s very … My dad’s never used a stop-loss, so I’ve always had that in the back of my mind. And that if you buy good companies, the prices comes back up. It comes back around. That was part of the strategy. And I think the one that didn’t come back up, I think I ended up taking a $5500 loss on it. And that was the time when I signed up for CTU. And I thought, “Okay. Well, I don’t want to do that. I like the gains, but I don’t want to take big losses. So I’m going to see what I’m missing.”
Clay: Okay. Now did that $5500 loss, I’m assuming that wiped out a whole bunch of those 1% wins?
Marc: Oh, yeah. It probably wiped out all of them.
Clay: Okay. So I mean, you were … Actually before I forget. Did you run any of this by your dad? Did you talk the markets with your dad? I mean, have you been like, “Hey, dad. This is what I’m thinking of doing,” and he got your input. Or have you kind of just been flying solo away from … Because to me, from an outsider looking in, I’m like, “Wow, you have a super good resource that you could reach out to and knock some ideas off of.” So do you guys talk the market? Or is that just [crosstalk 00:17:02]-
Marc: We do.
Clay: … that’s just not how-
Marc: We talk about companies. We talk the market. But we have very different trading styles. I’m trying to … My dad will very much trade the same way that I was. He’ll put the orders in, and he’ll go outside and do something in the yard. If his orders filled, they filled. If they don’t, they don’t. They’ll fill the next day. He’s buying good companies that he knows were going to come back around. Occasionally one of them doesn’t, and he’ll take a very big loss. But his gains make up for it. He has patience. Sometimes his orders fill the same day, sometimes they don’t. He doesn’t really care. I wanted to care a little more, and try and get more … I think there’s potentially get more returns if you take advantage of more of the intraday swings. But you obviously have to protect your losses to do that.
Clay: No, well said. Okay. So your dad, for the most part he has just got a really good skill at picking good companies. Obviously as you said, he’s not perfect, because he’s taken some big losses too. But at the core, he is more likely than not picking companies that will head back up. I’m assuming he’s looking for more than just 1% of the upside? Or is that where you got your idea from was, “As soon as I get in, I’m only looking for 1%.” Or would he get a lot more of the upside?
Marc: Yeah. His exit is more based on the price movement, what he’s seen and what’s possible. And my 1% was arbitrary. It was just something I thought I’d be happy with.
Clay: Okay. Right. Okay. So that makes sense on why he could still take losses, and big losses. But he was also not just capping himself at 1%, like you said it was just an arbitrary number that, “Yeah, 1% sounds good.”
Marc: Yeah. And he’s also not going all in on any one trade, which I was doing at the time. I was putting it all in one basket. And he’s got many, many of these going on at the same time.
Clay: Okay. Yeah, he is definitely old school. But that’s one way to do it, and there’s many ways to do it. Now you got into CTU around Thanksgiving. Out of curiosity, how did you even come across Clay Trader and the site? Or was it the … I mean, how did you even come into kind of the Clay Trader verse, if you will, to begin with?
Marc: I must’ve searched something on YouTube. And I remember one of your videos, your fireside chats popped up. And I thought, “Here’s a guy who’s doing this, what I envision doing. Doing this every day, trading.” So I watched the video. And I don’t remember how the trail led from there. But somehow I ended up listening to The Stock Trading Reality Podcast, and looked at CTU and thought, “Well … ” I think it was $2000 or something like that at the time. And thought, “Well, if it’s got anything in it at all, it’s worth 2000 bucks.” So I signed up.
Clay: Marc, bless your heart. I wish some people are a little bit … I mean, you’re clearly a numbers guy. Because some people are like, “Okay. Well, it’s going to cost me this much.” It’s like, yeah, it is a cost. But if you look at it from another way of an investment. If I invest 2000, can something get me more than that? But that’s funny to hear you explain it, because you’re just like, “Well, yeah. It’s just a numbers thing. Do I think it can get me more than that?” So you got at CTU. Did you even do the inner circle first or anything? Or did you just go full bore CTU?
Marc: No. I just jumped into CTU. It didn’t make any sense to piecemeal it.
Clay: Well, you’re absolutely right. And once again, you’re a numbers guy. And sometimes … Which by the time this is live, a lot will be different than what things are right now as of the recording. Just because at the end of the day, too many people get confused or too many people don’t look at it the way that Marc looks at it. So we’re just going to force people to look at it as, “Hey listen, here’s the picture. Here’s the big picture. Don’t piecemeal stuff together, because you risk leaving stuff out and then you just end up paying more in the big picture. So just do this.” So for those of you that are listening to this now, that would be called The Trading Freedom Pathway Program that we offer, which is weird to say right now. Because as of right now as of the recording of this, it doesn’t quite exist yet.
Clay: But the whole idea is really essentially what Marc just said, where it’s like, “It doesn’t make any sense. Why would I do that? Why would I piecemeal it together.” And this way we’re really looking to try to clarify and simplify how to go about getting educated if you do choose Clay Trader as the site to do that. So you’re in CTU. Did you … Let me ask you this though, I feel … You’re on mainly every webinar. I feel like … Let me put it this way. I can’t remember the last time I didn’t see you on a webinar. I mean, you’re a pretty loyal attendee to the live webinars, right?
Marc: I try to be, but I do have a part-time job in the evenings as well. So sometimes that keeps me from it. But I watch them if I can’t make it.
Clay: Okay. But for the most part you’re there, right?
Marc: Yeah. Yep.
Clay: Okay. Okay. Marc, I’m just making sure that, because I see the name and I feel like I see your name on a routine basis. But I want to make sure that the markets aren’t driving me crazy, Marc. But it’s good to know that I still have some sort of a mental aptitude here. Has that always been the case? I guess that’s all that came from. You joined, did you just immediately start going to the webinars? Did you go through the courses? Were you still trading with real money? So I guess pick things back up with, you joined CTU, and then what?
Marc: I joined CTU. I intentionally did it the weekend of Thanksgiving, because I knew I’d have a nice four, five days there to really dive in. Get an overview of what everything is, and how to make the best use of it. And I probably started paper trading within a week or two after getting CTU. And didn’t continue paper trading very long. Decided to keep studying, but I think I was in the chat most days listening, hearing what’s said, realizing how much I needed to learn. And then finally in the beginning of January, I started paper trading with an account that would be simulated with the balance I would open one with. And on Think or Swim, and I think I actually closed the E-Trade account and transferred the money to TD at that point too. And paper traded for about a week and a half in January. And finally got tired of seeing all these gains on paper. I thought, “I’m ready to trade. I haven’t had a significant loss. I’m making nice steady daily gains.” And I go live.
Clay: And at that time you were … Correct me if I’m wrong, you weren’t trading exactly how you’re looking to trade right now? Or is that not right?
Marc: Correct. I had come up with a strategy that was working fairly well at the time. I had gone back, looked at charts, and I based things on probabilities if this happens. A lot of it’s based around the price will revert to the mean at some time. And so I created a strategy that had fairly good results in the beginning.
Clay: Okay. So had good results on paper. You went live. And I mean, how did that go then?
Marc: January I traded 14 days. And I had 11 845 in gains. And I didn’t … I had, let’s see, one, two, four losing days. Which one was a $118. One was 1100. One was $4.25, and one was $1084. So I averaged about $850 a day in gains throughout January, trading 14 days. I was ecstatic. I thought, “Wow. This is incredible. It’s only my first month.”
Clay: And those losses that you gave, even that $1000 one. I mean, when you’re only having four losing days, and one of them is a 1000, who really cares if you’re averaging 800 bucks for the other ones. All right, well what happened in February then?
Marc: Yeah. In my best day in January was 3752. So my losses were significantly less than even my good days. So then February 1st, I lose 3700.
Clay: Okay. What happened on February 1st then? Did you [crosstalk 00:25:42]-
Marc: That was actually-
Clay: … rule?
Marc: No. Well, I didn’t. Because the next day I actually held the shares overnight, and the next day I got it all back. It was a Microsoft trade. And again, investing … Not investing, but trading a company that I knew would come back around. So I held it overnight, and had it all right back the next day. But it kind of opened my eyes to think my strategy doesn’t always necessarily work in the same day. And the rest February went fairly good, up until February 8th. Well, I had my best day actually in February, which you probably remember. Thursday February 7th, the Grubhub earnings came out. And I think I traded-
Clay: That’s right.
Marc: … 36 000 shares of Grubhub that day. And I walk away with $5400. And I was on top of the world. I thought, “It’s just getting better.” I’m now up 17, $18 000 and I’ve only been trading for one month. One month and … Actual days is 30 days.
Clay: Okay. Well, keep on going. I’m waiting for … I mean, honestly I’m trying to wrack my brain. But I can’t remember … Obviously I know something goes off the rails. But I don’t remember the exact details of it. But now that bring up Grubhub, I do remember that being a very good day for you. But it does make sense thought. For context sake for listeners, when [inaudible] did the webinar with Marc a few weeks ago, it was kind of a running joke with Roku, which we were talking about. And he was like, “It’ll probably come back up. Oh, it’ll come back up. It’ll come back up.” And even afterwards, “Look. It came back up.”
Clay: But that makes sense, because Microsoft, this all makes so much more sense now. You had your whole strategy before you even got to CTU was predicated on the fact of, “Oh, it’s a good company. It’s a real company. It’ll come back up.” So this is like a light bulb for me. Now I get your mindset. I get why this is such a nagging thing with you, is because you’re just … I mean, you grew up with literally a father that was like, “Oh, yeah. Find a good companies. They’ll come back up.” It makes so much more sense now why make those comments, and why you’re always seeming like one of those guys who are like, “Oh, yeah. It’ll come back up.” Even though you know that … Okay. It just makes so much more sense. Listeners, this probably doesn’t mean a whole lot to you. But it was always been … Even last week I think we had a little conversation, right? Throughout an observation. Where I was like, “I don’t know where this little voice is coming from,” Marc. But it seems like you have that going on with you. But now I get it. I get it. It makes perfect sense to me. But anyways, you’re in February. Things were going well.
Marc: Yeah. And just to clarify, Roku is not a good company. They have a good product, but they don’t make money. They would not be one I would’ve fundamentally looked at and said, “Oh, I’d like to stick money in it.” But in that trade, I knew that my break even was well within the meat of where the trading activity have been for the last week. So I felt fairly comfortable that I had a good chance at it coming back. But continuing in February. So that day after the Grubhub earnings, you and Nate Wilson jumped in the chat and kind of told me I was playing with fire.
Clay: Yes. The 1000 shares.
Clay: Now I remember. Yeah. Mainly Wilson.
Clay: Mainly Nate Wilson I feel like-
Marc: Wilson jumped on me.
Clay: … was like, “Hey, man. I’ve been there before buddy. I’ve been there.” Yes. Now I remember. Fully remember. I remember that. Because even Nate and I talked afterwards like, “Man, [Odgegull 00:29:17],” whatever your screen name is, “Man, he’s killing it. But I hope he’s careful with the 1000 shares.” I vividly remember that now. So yeah.
Marc: Yeah. I hadn’t seen-
Clay: I’ll let you pick it back up. But I definitely do remember this now, yes.
Marc: I hadn’t seen Nate in the chat. And so here this guy just jumps in out of nowhere and I’m thinking, “Wow. I’m almost up 20K in 30 days. Who are you? What are you talking about? I just had my best day ever, and you’re telling me I’m playing with fire.” Well, the next day it kind of ate in the back of my mind. It’s like it … I had a lot of confidence right up until that point. And then the next day I ended up … Expedia had their earnings. And I lost 2800. Not terrible after a 5300 day. But definitely eye opening. But the next day-
Clay: Were you still doing a 100 shares at that point?
Marc: I can’t remember. Boy, looking back now if I was trading a 1000 shares on an earnings, day after earnings, I would be … That would be crazy.
Clay: Yeah. [inaudible] Expedia, that’s a 100 plus dollar stock if I’m-
Clay: … thinking right, isn’t it?
Marc: So I-
Clay: [crosstalk] crazy.
Marc: And probably not, actually. You probably asked me in the chat what I was doing. And I probably said 500. Or maybe that was later. I can’t remember. But I know at one point you had asked me how many shares I was trading. And then the next day I came back with a $388 gain, and thought things were going to be decent. And then I followed up with two more losses after that for 1300 and 7800. The 7800 was a huge eye opener. That was Twilio earnings, TWLL. And as I’ve learned since then, there’s some big boy stocks out there that can move. And Twilio is one of them.
Clay: Yeah. And it doesn’t want to let you get out when you want to get out either.
Clay: That is a goofy one. TWLO is a … I don’t know how to quantify goofy. It’s one of those where, I know Marc understands. I know Nate Wilson would understand when I say it’s just a goofy stock. But sometimes, you just almost have to experience it to understand what goofy means. But it’s a really weird one, like Marc said. And it can move too. But it’s got this dynamic to it where … I mean, it’s very, the [algos] are very heavy in it. And it’s weird how it screws with you in that sense. So not to steal your thunder, but to stand up for you a little bit, I get it. That one can be a really crazy one. And like you said, factor in earnings, and then it gets that much crazier. So is this a long or a short sided trader? Is this just a bunch of trades compacted together?
Marc: There’s probably a 100 trades in there. I mean … Yeah. Just trying to trade it all day long, and getting run over, and probably trying to wiggle my way out of it at that point. And yeah. I hadn’t seen a movement like that before. And of course I’m new at this. This is only my second month. I hadn’t been through an earnings season. So I’m learning a lot every day.
Clay: Do you wish in hindsight that maybe you would’ve done this strategy on paper through an earnings season first? Or do you think you would’ve just given yourself false confidence in the sense of, “Oh, yeah. I definitely have this.”
Marc: I’m not sure. I still paper trade all the time. I paper trade on the weekends. I’m not sure that a person really needs to wait for a big moment to turn things on live. Now definitely going live with a 1000 share orders on $100 stocks-
Marc: … when they’re highly volatile, maybe that’s not wise. But I think you can do a lot with just limiting size, going back studying tape on your weekends, and after you’ve made trades to see how things worked, what you can learn. So I kind of integrate paper trading with my live trading. But going back at that point, I was still up. I was still up on the year. I had taken one big loss and thought, “Well, I’ve learned something else. Stocks can really move. So let’s try and be a little more careful.”
Clay: And that’s an interesting point you made. I just want to point that out, because you’re absolutely right. There is a difference between, “I’m not going to quite paper trade it, because I need to have some skin in the game. But it’s going to be in a very modest fashion. It’s going to be in a very small, it’s going to be in a very controlled fashion.” Compared to what Marc said, going into highly volatile stocks with the 1000 share lots. That would be definitely on the extreme side. And that’s a point that kind of Marc just made. But that’s very, very … That’s very important. Because that’s always a topic that we come back and forth here is, some people don’t want to paper trade. They want to have some money in the game.
Clay: But this is definitely an example like Marc said, where I’m not going to sit there and say that you have to paper trade. But if you do want real money in the game, there’s definitely a difference a small, small controlled amount of money in the game, compared to 1000 share lots on highly volatile stocks that are even up over a 100. So TWLO was a $100 stock. Or even if it wasn’t, it was definitely $80 plus at the time. So that’s a whole nother monster in and of itself. But yeah, like you said, you’re still green. So where did things go from there?
Marc: So after Twilio I had a couple small losses. And then took another loss on Twilio a week later for 5500. Some other nice gains, $2000. And then Roku earnings. And now Roku was, just by looking at their financials, they don’t make any money. They’re not a financially sound company. And I had actually had a bearish view of Roku going into earnings. And there was a short squeeze and a lot of excitement around their subscriber numbers in their earnings release. And I’ve played this trade back, [inaudible] 20 or 30 times on Think or Swim on demand. Just trying to see if there’s actually a way to get out of it. But the price moves so fast to the upside. I mean, jumping two, $3. It just ran me right over. I never had a chance to get out of trying to scalp into runners on a rubber band.
Marc: And ended up losing, that was a 10 grand on Roku earnings. And watching it go up the whole way thinking, “Well, no way someone’s paying that for Roku.” And just kept think the same thing as it went up, and up, and up, and kept going up. I think it made a $10 move total on a $40, $49 stock. It was a pretty big move, 20%.
Clay: Yeah. That one moves for sure. Now, can you … If you think back to the trade in. And let’s just say you tossed aside everything else. And just looking at the chart. I’m not saying you could’ve ever gotten out for a break even, or anything like that. But had you just admitted when you should’ve admitted according to strictly the chart, do you have any idea what that loss would’ve been?
Marc: Yeah. Sometimes when I’ve replayed it, I can get out with a six to $800 loss.
Clay: Okay. All right.
Marc: I think the absolute worst case, if after consolidation. If I had set my stop where I should’ve, I think I’d be, what? 2200 bucks out.
Clay: Okay. And maybe you’ve considered this. Maybe you haven’t. But from me just … I mean, I’ve seen this time and time again. And I kind of always make the joke of, “Well, I want to be lazy. I don’t want to look at balance sheets and all that sort of stuff.” But what I’ve learned about myself, and I’m not saying this the case for you. But I think it could be influencing. But when I look at news releases, if I deem something from a fundamental perspective something is bearish. Like you said, you looked at Roku as a company like, “This seems they don’t make any money. Blah, blah, blah. So I have a bearish viewpoint going in.” Not necessarily from the chart, but from the fundamental point of view, it sounds to me, and I’ve had this happen to me where it skews your view of the chart. Because I mean, you even admitted, “There’s no way the people are going to keep buying. This company’s terrible. There’s no way. There’s no way. There’s no way.”
Clay: Whereas if you had just listened to the chart, you would’ve been out like you said, six, $800. But does that make sense where … It seems like your viewpoint on the trade was very heavily biased and corrupted by more of a fundamental aspect, where you’re just supposedly just trading the chart itself from a tactical analysis perspective. Does that make sense?
Marc: Very much so. Yeah, I mean that was exactly it. And I knew the whole time, “Well, it’s going to come back down, because it’s ridiculous where it’s priced. There’s no reason for it.” Well, I’ve learned since then of course, there’s no reason for a lot of things. Look at Beyond Meat. This morning it’s trading at 80 bucks.
Clay: That thing is a monster. Yeah.
Marc: It’s crazy.
Clay: No, I don’t know anything about the company. I don’t want to know. So don’t tell me they’re a terrible company. Because that may just influence my decision. So are you working on that though? Because this sounds like … I mean, I don’t know. Let me ask you this. Have you looked at the books of Beyond Meat? Have you looked at the numbers and all that sort of stuff?
Marc: I haven’t. I haven’t.
Marc: Lyft is another one. They lose 17 bucks for every ride they give. And they’re beat up. And people are still paying 60 bucks a share for the stock, which is incredible. But no, I haven’t been looking at the fundamentals as much recently.
Clay: Okay. Let me ask you this though. So if you got into a Lyft trade, and then it started to go against you, and go against you, would that voice still show up? We’ll call it the fundamental voice that is saying, “Hey, Marc. Listen. Yeah, it’s going against you on the chart. But I mean, they lose $17 every ride. I mean, this company is way over valued.” I mean, do you think that voice would still show up? Or is that a voice that you’ve learned to since kind of to squish and just totally ignore?
Marc: I would hope not, but I did it again last week on Twilio, again on their earnings. Which was very disappointing, because I thought I was completely past it. But the trading is amazing to me how it’s the psychological aspect on what happens when you’re in a trade. And the things you do that you know you shouldn’t do, but you do anyhow. It’s just incredible. And no matter how much you practice or think you can get away from it, it can still happen, at least for me it seems. But last week was very interesting, because I watched Twilio consolidate, had a chance to get out. It came to within 10 cents of my break even. And had my orders in to get out after I knew the trade had gone wrong.
Marc: It just had to come up a little bit more, and it didn’t. And then I watched it pull back, and watched it pull back. And started trading it down there in its range to get my average down. And it just kept grinding down, until finally I pulled the … I set a stop at a point where I thought, “Well, if it breaks this, it’s ridiculous. It’s going to keep going far lower.” And ended up getting stopped out for, I think it was a $6500 loss. But I didn’t care about the money as much as I was so discouraged by myself that I knew better. And yet somehow I still let that happen.
Clay: Well, it sounds like you entered … I mean, it sounds like we know … Let me, I’ll add a little bit more context here. Marc has sent me emails in the past. One where he … It was a good chunky email. And he mapped out everything. And there was an arrow that was like, “I should’ve bet out here.” And I was like, “Yes, exactly.” According to my understanding, you have your strategy which is pretty similar to mine. I’m like, “Yeah, you’re absolutely right. You should’ve been out there.” To Marc’s point is it’s not like he’s out there randomly doing stuff. Like I said, am I going to say it’s exactly like mine? No. I mean, there’s … Looking at his orders, we’re a little bit different there where he would place his orders compared to mine.
Clay: But as far as in this situation where his stop should’ve been and where he should’ve just waved the white flag, yeah, he was right on. I would’ve had mine in the same exact spot. But it sounds like that it’s the fundamental voice that keeps screwing with you. Because correct me if I’m wrong, but you said it kind of happened again last week with this fundamental voice where you’re pretty familiar with Twilio, whatever they’re … See, that’s how extreme my [inaudible] is. I don’t even know what necessarily … I have no idea what they do. I don’t even know necessarily their company’s name. But TWLO, you’re pretty familiar with their books it sounds like.
Clay: [crosstalk 00:42:15].
Marc: Yeah. And they’re [inaudible] integration was going well. They actually raised their projections.
Clay: Okay, yeah. That’s what I mean. Who cares? I mean-
Clay: … here is honestly, and this is my two cents. You’re a plenty successful guy, you can take with it what you want. But I would say in all honesty, if you know anything about the books, you’re no longer allowed to trade the ticker anymore. If I were you, I would like, “All right. I’m only trading tickers.” That I look at the ticker and say, “I don’t know what company that is. And I certainly have no idea what sector they’re in. And I definitely have no idea what their books look like.” Because if you stop and think about it, if that is your premise, “And also, I’m not going to read any news releases.” If that is your mindset going in, total ignorance, then think about it. What is … You back yourself into the corner where the only thing that you can rely on are not your opinions, because you don’t know anything about it. But it’s the chart itself.
Clay: So if it were me, that’s what I would do. If I know the books on anything, or if I even have an opinion on something, nope. I got to take it off the list. Until enough time passes where you’re like, “You know, I haven’t checked in with Roku for a long time. I don’t know. Maybe they are a good company. Maybe they are turning profit. Oh man, I haven’t looked at Lyft for a while. Maybe Lyft is turning a profit now.” I mean, like you said. That’s my two cents. But because there’s no doubt about it, you know how to read a chart. You know where you should be doing things. You know when you should be waving the white flag and all that. But it’s that fundamental voice, man. That’s what’s throwing you off. It’s not a matter of, “I don’t know why I do what I do.” I do. It’s because you’re getting influenced by the books, this fundamental thing.
Clay: Does that make sense?
Marc: Completely. There’s-
Marc: … another aspect to it that I thought of after Twilio last week. So my trading is a very high win rate. I don’t lose very often. I mean, I can count up all my … I’ve had five, eight, 11 losses of any significance since January. So every other day has been green. And I don’t end up getting stopped out very often. And when I was thinking of Twilio last week, I thought that’s almost a problem in the strategy for me in that well for one, I don’t get a chance to practice the situation of when I do get run over. You’re just not in that situation very often. I’m usually in and out.
Marc: I mean, I have one trade two weeks. I was in and out in the same second. TOS filled the order. I was amazed. The buyer and the seller were both within the exact same second. If I’m in a trade for more than 10 seconds a lot of times, it seems like an eternity. So I don’t get a lot of chance to practice the bad situations. And then I’m not used to stopping out, because I’m so used to winning. Every trade turns into a winner that I almost didn’t know how to handle it when I do get stuck in a loser. So I decided to compliment that strategy with more of a slower paced RVR, where I do get stopped out. So that I accept it more as just a natural part of the strategy, and won’t be as determined to try and will one back into a winner. Just take the loss and move on.
Clay: No, and I totally relate. Because I also have the high win rate. And it can be goofy. But I don’t know when it happens. But there reaches a point where you’re like, “Yeah. Taking this loss is terrible. Yeah, it’s annoying.” But how long would the strategy, assuming I’m disciplined take to make up for? And it’s like, “Actually not that long, because it is a high win rate strategy. So I’ll just get out right now.” So to me as a number guy, that’s kind of how I always envisioned it. Let’s say best case, it actually bounces and I make some money on it. Okay. But worst case, if it just totally flushes. Well then now how many days is it going to take me to get that back, compared to how many days it would be right now. And, “Right now,” is like, “Oh yeah. That’s a matter of just a few days. That’s not a big deal.
Clay: Let me just get out right now.” So to me it’s a numbers game of trying to keep that hole … Nobody wants to be in a hole. But I’d rather have it be a hole that I can maybe use a step ladder for to get out of, rather than having to use some sort of elevator, because the thing has just totally spun out of control. But-
Clay: [crosstalk 00:46:43].
Marc: While I’m in that Twilio trade last week, I’m watching all these other charts with these big moves that I could be trading. But here I’m stuck sitting in Twilio, so it’s getting even worse.
Clay: I’ve been there plenty of times too where like, “Dang it.” You’re waiting to like, “Is this … ” Even the situations where you still should be in the trade, because it hasn’t quite hit your stop loss, and it’s consolidating all day. And you’re like, “Okay.” But then you see other stocks moving, and you’re like, “Oh, crap. Oh, crap. And now I’m missing out my opportunity costs. I’m missing out on those.” But yeah, it definitely gets worse when you know you’ve already broken rules. And then you see other things. So like you said, it’s a matter of … Well not only, could you have kept the hole much smaller. But you could’ve also been already digging your way out of it, because you have these opportunities. So now not only is the hole getting bigger, but you’re missing out on other opportunities that can really just get really, really nasty. But I can totally relate there. It sounds like though you’re working on something with the psychology. But that’s like you said, we’re all different. The way I make … Because that’s a valid point.
Clay: Yeah. It is super hard to take a stop loss when the strategy … When you don’t really take that many losses within the strategy itself. But I just try to picture it as a, “You know what? How many days will it take me to get out of the hole right now?” And usually that number is just … It’s not like, “Wow, that’s going to take me a month.” No, it’s nothing like that. Now it could get to a month if start breaking rules. But that’s a question that iv learned to ask myself to make taking a stop loss easier is, “How many days is it going to take me to get out of this hole right now?” And I’m like, “Oh, that’s it? I can do that. Sell.” And I just walk away. Whether or not that works for you, I don’t know. But that’s kind of the idea. This is just talking out loud. But yeah, if you need to just flat out taking losses with your RVR, like you … Kind of a blend. I mean, you got to do what works for you.
Clay: Would you say?
Marc: There’s other reasons for the RVR too. Because in the other strategy when I’m sitting there watching, waiting for a big move so that I can catch it at a support level, or resistance, or moving average or something. And just take 10, 15, 20 cents and I watch the move which was 70 cents. And I know the cliff is coming, or I know the ascending-
Clay: Yeah. Yes.
Marc: … triangle sitting right there. I’m like, “I could’ve had 80 cents if I played the other side.” So just wanting to put more of that in my arsenal too, because I mean, I watched the charts. I predict those moves and they happen the majority of the time, and I get my little scalp. But I think I should be playing the other side too. Or at least adding some of that in.
Clay: And that’s a valid … In fact I mean, because I had the same thing. I’m like, “Oh, yeah. I totally called that move. And I was prepared for it, and I got my scalp from it.” But it’s, you just kind of reminded me, “Yeah, Clay. You could also just play the other side and gotten more than the scalp.” And it’s like, “Oh, yeah. That’s true. There is always that other side.” But I’m trying not to be an old dog, but that is a more than valid observation, like you said. As you said, it was like, “Oh, yeah. That’s a good point.” I mean, we’ll call ourselves, “Us scalpers,” we’re pretty good at, “Hey. Hey, this thing. We could be getting a move here. We could be getting a scalpable moved.” And totally blind ourselves to the fact of, “Yeah, bozo. You could be getting in right now for the move you’re thinking is going to come. And oh, yeah. They’re dead. It happened.” So that makes sense. And you’re trying to take more from the move than what a typical scalp would allow for. Are you still-
Marc: Here’s another point on that thought that Carl pointed out in the chat. So at one point where I should’ve set the stop loss on the Twilio trade last week to have been out. Instead I watched it cliff and fall, and break down further. If I had simply clicked reverse. I mean, I saw it-
Marc: … coming. I knew it was going to come. If I clicked reverse, I would’ve been positive on the trade again, because it continued to bleed out the rest of the day. But I didn’t. So I need to get those trades in my playbook. I need to be more adapt. I mean, I should’ve got out of that one. But I shouldn’t ignore the new opportunity that it’s presenting to me and take advantage of that, just because I’m stuck in the back roads trade that I shouldn’t be in.
Clay: Absolutely. And that’s something that I still need to … It’s a fine line between, “Am I revenge trading right now? Or am I totally flipping things around?”
Clay: [Hooch] is very, very good at that where he’ll take a loss and then all of a sudden he’s right back in. And he always jokes around about that same thing. It’s a fine line before revenge … But in all actuality, it’s not revenge trading, because like you described, “It’s forming a cliff. It’s forming a cliff. This thing’s going to flush to that cliff.” No, that’s not a revenge trade. That’s just flat out taking your loss, because you were wrong from the one side, and then all of a sudden … I mean, I’ve had it too where I had to wave the white flag, I’m out. And then I get back in. It feels like I’m revenge trading. But I have to remember, “No, this is all technically based.” It literally makes sense to be doing this right now according to the chart.
Clay: And I mean, not every single time. But sometimes all of a sudden I’m green again on the day. And it’s like, “Hey, I’m glad I did that.” But in other situations the hole all of a sudden becomes a hole that smaller in a very quick amount of time. So I would say that I’m glad you’re aware of it, and I’m glad you know to work on that. But yeah, it’s just a weird feeling, because you almost feel guilty like you’re doing something wrong and revenge trading it. But it can definitely work out. But it’s kind of crazy how you almost lose perspective at times. If you were to just step back and be like, “Oh, yeah. That’s actually a good point.”
Clay: But okay. I’m looking at the time. We still got a little bit of time left. Now something else, are you still going for the 20 cent moves, or have you changed that around?
Marc: I am.
Clay: For the scalping strategy that is. Okay.
Marc: So when I look back at my four months, I track all my trades and I tag them, so I know what type of setup I thought I was in, and I can look at the results. I’m a statistics kind of guy. I think that [crosstalk 00:52:39]-
Clay: No. You’re a numbers guy? I had … No, Marc. I had no idea.
Marc: It’s all about probabilities, and you got to get your occurrences in and just play your probabilities, play your edge as much as you can when you see your actual edge. And so when I go back and look at my four months of trading, I can chalk up all my losses of any significance to 11 trades. And five of those 11 were on earnings plays. Where the move was simply bigger than I had expected. And even in this earnings season, I watched a move the other day and it was three times the expected move. And it just gapped up there. I thought, “Wow. If I had an order in here, I could’ve been … ” This is after hours. I could’ve been steamrolled by three times in after hours. And it never came back down. And I thought, “Okay. So some of this is just risky behavior.” And a lot of it is around the earnings plays on these stocks that are known to move.
Marc: And the other place I’ve gotten burned is three of those were on simply low floaters. JMIA did it to me. I think it was JMIA or TIGR just a couple weeks ago where they don’t … Well, they’re both IPOs, recent IPOs. So they don’t have a lot of structure to the chart yet either. Which is part of what I blame it on. But they’ll blow right past what looks like a [inaudible] resistance. They’ll just completely ignore it, because the book is so thin. And they’re traded so thinly. So I can look at my 11 losses, eight of them which account for the majority of any losses, simply comes from playing earnings and playing these little floaters. And so those, I think … I still want to do my strategy. Because the strategy works very well. In four months having 11 losing days of any significance I think is pretty good.
Marc: My goal now is just to limit those losses. And the best way to do that is to play those with a little more sensitivity, smaller sizes on the earnings plays. And give them more room, wait to see the trade develop before I’m going to jump in blindly, because I think of a place that’s going to bounce. And same with the low floaters, just I’m going to give them a little more room. Because I’ve caught myself in the last couple of days just looking at TIGR, because I see it moving. And the place I would put my order in, I don’t. I put it in maybe at the next support, just so it has to make an even bigger move to get me, because I’ve seen it do that. And just to stay out of those dangerous situations. And I think that that’s the key to continuing that side of my strategy, is you just got [crosstalk 00:55:33]-
Clay: Can I get-
Marc: … very aware.
Clay: Can I give you my thoughts?
Clay: You can tell me to … Okay. I’m not quite sure, and I could be wrong. Like I said, just one trader talking to another out loud. I don’t know if necessarily agree that the problem is the earnings play. Or that the problem is the low float. Or that the problem is just how fast I moved in. And what I would refer to, to kind of try to illustrate this is, so on that Roku trade you took … What you say? A $10 000 loss?
Marc: On the earnings one. Yeah.
Clay: Okay. But you admitted that had you followed the chart-
Marc: That was a different trade though.
Clay: That was a different trade?
Marc: Well, the one that we went over in the webinar. But the 10K on the earnings, that one … Yeah, it would’ve been a $2700 if I had followed the chart. Which wouldn’t-
Clay: Okay. All right.
Marc: … be bad. Which wouldn’t be bad. But I [crosstalk 00:56:26]-
Clay: So that’s kind of my point is, let’s say that a super crazy one that you probably looked back and say, “I should’ve never been in that in the first place.” I would argue, I don’t know. Had that loss just been 2700, well that’s still got $7500 of gains in your pocket, because you never took that loss. So how does that start to influence your numbers? And then you look at another one, “Okay, yeah. Well, that one was $5500.” But, “Had I followed the rules which I knew where I should’ve been out.” And I say this with such confidence to remind listeners, Marc has sent me emails where he’s like, “Yeah, I should’ve been out there.” And I’m like, “Yeah, you’re absolutely right.”
Clay: So had you actually gotten out there, I would argue that it’s not a function of you being in the wrong stock that caused the $5500 loss. It was a function of you just not getting out when you were supposed to. Because on that one, that loss would’ve been a whole lot less. So now we’re looking at two trades. You’ve got an extra $7500 in your pocket. And you got an extra, I don’t know, let’s call it a few $1000 in your pocket. Well, now all of a sudden you have over $10 000 more in your pocket. So how does that start to make your year appear?
Clay: Like I said, I could be wrong. But just thinking out loud, I don’t know if the problem is the stock itself. I think it’s the fundamental voices that are causing you to break those rules.
Marc: And those are trades that I’d actually still be in. Because I waited and I watched them develop. The ones I’m thinking more about, like RH on earnings, I was playing it after hours. And it moved more than I expected. I built a bigger position. I was up 4K on the trade, and I missed my exit … Boy, it was just 10, 20, 50 cents or something. And I thought, “Okay. It’s going to hit it on the next bounce.” Next thing I know, it drops six or eight bucks.
Clay: Yeah. RH is a-
Marc: Out of nowhere.
Clay: … crazy one. Oh, yeah.
Marc: Just gone. And I thought, “Wow. What just happened?” And so it’s the ones like that where there’s not … I guess, after hours. There’s not the volume. They’re not making-
Clay: I do see what you’re saying. And I would agree. I could see you saying, “I’m just going to stay away from after hour stocks.” I would say, all right. Yeah. That definitely makes sense.
Marc: On big movers like that. I’d trade Intel after hours. Because I know it’s not going to make an RH move. Or at least I think it’s not going to.
Clay: I was going to say, careful with what you know and don’t know. Yeah. I thought I’ve known a lot of things too, and then all of a sudden I’m like, “Well, I guess I didn’t know that. That was an expensive learning lesson.”
Marc: Yeah. And Twilio the other day, I should’ve let the trade develop more. I noticed you didn’t trade it on earnings, I think. I didn’t see [crosstalk 00:59:04]-
Clay: I know. I’m super conservative. I will definitely say this, there’s no doubt about it. You are more aggressive in your scalping strategy. And I don’t say that in that, “You’re wrong,” type of way. I’m just saying that is kind of why I would never say that Marc and I trade the exact same way. Because I can tell from his entry points, and the amount of trades he does, he’s just more aggressive. Again, not saying that’s wrong. That is just one of the ways where we have an overall general idea where we trade similarly. But he’s definitely different in regards, he’s more aggressive. I guess that’s the best way to put it. But he also definitely pulls in bigger gains. But I guess … And I do agree. But the other tricky part is, so how are you defining a bigger mover? Yeah, RH was a bigger mover. But was that because, did you know it was a bigger mover before you got into it?
Marc: No. No, I didn’t know. I didn’t know anything about that. I actually thought I was trading Red Hat when I first put the order in. And then it was later on when I saw the big move, and I see all the stuff about furniture and I’m like, “What the heck company is this anyhow?” So no, I knew absolutely nothing about it. I just saw that it had earnings, and they had a … I looked at the expected move, and I just tried to play it like I would anything else. And then later on, I learned more about how it moves. So somehow I got to figure out when … Right now I use the pharma stocks, the bio stocks. I know they can move. So I just have a little heightened sense of awareness around those. And Twilio, I need to have a heightened sense of awareness at least around earnings on it. But somehow I got to figure out which ones I’m not willing to play that I need to be less aggressive with. And I probably don’t have that in my strategy yet.
Clay: Yeah. I mean, the tricky part is as you say, “Well, I got to stay away from the big movers.” Well, how do you define it as a big mover? “Well, I just got roasted on it.” Well, okay. Well, the only reason you know it was a big mover is because … It’s kind of, your definition of big mover is coming from hindsight. To which you beautifully summarize thought, it’s like, “My main focal point right now is I got to be able to identify what has the potential to be the big mover.” And I think you know. I mean, the tape can be very, very … At level two’s, can be very … I mean, if it’s something like RH, that thing is crazy. In a matter of seconds it can be a $5 move all of a sudden. Whereas to your point, Intel, it’s like, “Okay. Yeah. That thing just made a 30 cent move.”
Clay: So there’s definitely differences there. But I mean, it’s a fine line. However you got to just almost ease into it and do a whole lot more observing. I mean, if you never seen a ticker before … I mean, definitely do not go and start to dig through the books, because I’m trying to keep you away from the fundamental voice. But then maybe just sit there and watch how it trade from a level two charting perspective, to kind of learn about the ticker, if you will. Not about the company, but just about how it kind of moves then. That’s kind of what I’ve learned to do is … Well, I’ve been doing it long enough where I can kind of figure out how something moves.
Clay: But at first, yeah, you definitely, “Oh, I’ve never seen that ticker before. I have no idea of the personality of that stock. Let me just watch how it trades.” And it sounds like that’s kind of what you’re doing already now, and starting to ease into it. But overall I mean, you’re definitely making progress in the right direction. And it’s just a matter of no more looking at the books, Marc. That’s really all I can tell you is, you’re not allowed to do anymore fundamental analysis on any of this stuff.
Marc: And no more big losses. So actually, I set a loss cap. Intraday loss cap for me at $500. Which initially seemed ridiculous. But right now if I go over 500 bucks, I’m done for the day.
Clay: Good. Good.
Marc: I have to walk away. Because when I look back, if I could get rid of those 11 trades for significant … That’s any loss that was over 1200 bucks. I’m looking at $67 000 in 11 trades. It’s a lot of money. So to me that doesn’t say that my strategy is bad. It means my strategy needs improvement on controlling losses. I need to eliminate the big losers. And another thing I’m doing to control that is expanding my playbook so that I have other options for trades throughout the day that I’m not looking to always force this one strategy on tickers, maybe when things may not … It may not actually fit. I have other plays that I could make. And so I’d be more willing to let a big move go by, because I see another opportunity over here.
Clay: No, yeah. That’s good stuff. I like the loss thing. I like the $500. That’s just a way to, “All right. Yeah. There’s always another day.” Because with the results that you can generate $500. I mean, I don’t want to say it’s a drop in the bucket. But it’s certainly more than possible and reasonable for you to be able to fight back from that.
Marc: The biggest thing I’ve learned in the last four months is, it’s super easy to go into the markets and make … You can pull 25 grand out of the market pretty easily. The difficult thing is to not lose a 100 grand while doing it, or 25 grand, or even risk. What was your risk in pulling that 25K out? And it’s a side I had never fully appreciated before. And I think it’s very easy to get by without fully appreciating the risk for quite a while, because sometimes you just get lucky that things never turn against you. I actually remember when I first joined CTU, and in the chat I had said to Carl, because Carl was giving me a bunch of crap about some of my trades. And I remember I told him, I said, “I think our sense of risk is a little different. Or our idea of risk is a little different from each other.” And now I understand it more fully just what the potential is, what things can do against you. And you can get away without protecting yourself from it for a long time, and think you have some great winners. But the real key is, how do you have great winners with only minimal losers?
Clay: Absolutely. And like you said, “Who is this Nate Wilson guy? I’m up 20 000, or whatever it is. Who are you?” But the thing is, that’s totally logical thought. I mean, at that point in time, why would you think otherwise? I mean, you’re new. You invested in your education. You’re reaping all sorts of rewards. I mean, you’re up literally thousands upon thousands of dollars. “Who is this guy to show up there and make some sort of suggestion? Let me see your gains, buddy. Let me see this. Let me see that.” So it’s not like you were stupid in behaving that way, because it makes logical sense.
Clay: But like you’ve admitted, the market can be very deceiving. Because yeah, you can be pulling money out. But are you actually doing it in a way that’s going to be long lasting? And that’s something where again, as listeners out there, I get it. Maybe you’re having those same thoughts, “Well, I’m up such and such. So this Marc and Clay guy, who are they? Who are they to be throwing up all this stuff?” That’s fine. You can keep going. You can keep doing what you’re doing. But for all you know, maybe you’re not necessarily doing a 1000 shares like Marc was. But you could be acting in another way where other people that have been there are saying, “You might want to tap the breaks a little bit.” Because that can be a very profitable experience to just not do something, and avoid getting hit by a train that many people have been hit by. But we’re at an hour, Marc. I don’t know where the time went. But you have a mic, so we’ll have to have you back on another time.
Clay: Yeah. I have no idea where this went. But real quick, we got some final questions. If I were to lend you with a time machine, and you were to go back in time and gave yourself one bit of advice, what would that bit of advice be?
Marc: Learn how to control losses.
Clay: I feel like that’s in a hole … I won’t go down that hole. I feel like that’s a philosophical conversation. Because you’re right, learn how to control losses. But there’s also many ways to go about that. But yeah, you’re absolutely right. Because losses and controlling them, and managing them definitely a very, very important part of trading. All right. Well, we got to move to the fun stuff here. You’re definitely coming back, because this was a good conversation. I’d like to go down to more rabbit holes. But I try to keep these things around an hour. What is your favorite food?
Marc: Probably burger and fries.
Clay: Okay. That was … There we go. That’s short and to the point, and nothing wrong with that. Burger and fries. Do you like anything on your fries? Like you’re a chili cheese type of guy? Or you just want some salt, or ketchup, or what?
Marc: A dip and a waffle fry, and seasoned sour cream is enough for me.
Clay: In what?
Marc: Seasoned sour cream.
Clay: Never heard of that one.
Clay: Sour cream? I’ve dipped my french fries in Frosty’s from Wendy’s. Have you ever done that?
Marc: No. I think I’ve heard you talk about that before though.
Clay: You should try it, though. You’ll grow a few new hairs on your chest. It’ll be a marvel experience. I mean, you’ll just walk away a new man for sure. I would highly recommend it. But all right.
Marc: Sounds amazing.
Clay: It is amazing. Thank you for humoring me with that. What about … You didn’t say desert? What do you like for desert?
Marc: Desert, I don’t eat a lot of deserts. Boy, I don’t know. Probably just a chocolate chip cookie.
Clay: You’re basically as America as it gets. Burger and fries, and a chocolate chop cookie. I’m surprised you didn’t say apple pie. I don’t know what I was thinking. I totally forgot. I didn’t totally forget. Lyft is taking a dump right now. I kind of caught my eye. I totally forgot to ask you the main question I care about. What is your favorite movie?
Marc: Scarface. Hands down.
Clay: Okay. Is it an American classic? I was going to say, “That’s an American classic.” But I don’t know if everybody would agree with that or not.
Marc: It’s got to be, isn’t it?
Clay: Is it too violent? I don’t know. Is the subject matter … I don’t know. I guess, listeners let us know, is Scarface … Would that be considered an American classic? I have no idea. Final question though. Three words, what would these words be, or what words would you use to describe and associate with a successful trader?
Marc: Patience, perseverance, and occurrences.
Clay: Very nice. Yeah. Especially that occurrences one. That’s a key word, because you don’t want to bail on a strategy too soon. And you got to make sure you give it enough time to work out. So yeah. I don’t know if we’ve had that one or not. Maybe we’ve had one of the options traders say that. But regardless, it’s still a great word nonetheless. Well Marc, thank you very much for hanging out. Are you going to be on the webinar tonight?
Marc: I will be.
Clay: Awesome. Perfect. Well, I’ll see you a little bit later then. But I appreciate you taking some time out of your afternoon. We’re recording this right in the middle of the day. So did you have your platform open or anything?
Marc: I did. I’m not really watching it though.
Clay: Okay. Yeah, there was some potentially … Oh, a nice little wolf candle now on the five minute on the SPY. We’ll see if it rolls over. Anyways though, Marc, thank you very much for hanging out. And we’ll see you … Well, like I said, we’ll see you tonight. For you listeners though, before you go, final few things. If you’re listening to this on the website, make sure to leave us a comment. And then also click the share button. And that really helps us out, and we appreciate it. If you are listening on iTunes or any of the other podcast players, then be sure to subscribe. That way you’re notified when new episodes are released. And also especially on iTunes, if you could leave us a rating and feedback, that helps us and goes a long way. And we really do appreciate it. So thank you again, Marc. I appreciate you taking time out of your day. Thank you to listeners. We will see you all back next week.
Announcer: 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.