Clay Trader Podcast
STR 220: It Happened Over Utah
Have you ever had a “Utah event”? I know I have and they aren’t very pleasant. My talk with community member John sheds a ton of light on some very common problems that many of us face as traders. These problems don’t make you stupid, they make you a human…. But, they still need to be addressed and “put under control” at all costs. Although John has struggled, he has now found himself a nice little sweet spot within the markets that has been treating him very nicely over the past couple of years. There are many ways to profit from the market, but one way is to simply get very specialized in one specific location of the market and excel at it. This is exactly what John has learned to do. We’ll talk about this and much more. Let’s go!
Announcer: This is a Stock Trading Reality podcast, episode 220.
Announcer: This is the Stock Trading Reality podcast. Where you get to see the realistic side of a traders journey. Get inspired, and stay motivated by everyday, normal people, who are currently on their journey to trading success. This is your host. If you haven’t checked his new site out, he wants you to. Clay Trader.
Clay: What are you doing? How have you not checked it out yet? It’s been that way for like, by the time this goes public, probably like a month now. So I suppose I’m passively aggressively, I don’t really even know if that was passive, but I’m aggressively calling you out. Go check out the site, claytrader.com, let us know your thoughts. If you see a typo or something, let us know. I think we’re getting it all buttoned up.
Clay: Launching an entire … it’s not a new site, it’s always been claytrader.com, but a new redesign and all of that, that takes a lot of work. I guess that’s why it’s so … this is version 4.0. this is the fourth redesign of the site. I’m really happy with it, but I would love to hear your thoughts. Just check it out, let us know what you think.
Clay: So for today, we have a great … or for this tonight, or for this morning, or for whenever you listen to this episode, we have a great guest, John. As … I don’t want to offer up a spoiler, but he does audiobooks, I found out. I guess that doesn’t spoil anything. So his voice is just, I don’t know, it was like mesmerizing almost. I want to say don’t listen to this while you drive, because he might put you to sleep, because his voice is so smooth. It’s some good stuff. But he’s also got a great journey, and have you ever been over Utah before? I’ll just leave it at that. It will make sense as you go through it.
Clay: I know I’ve been over Utah before in my journey, and maybe you’ve been over Utah too. Maybe that’s a sign that you need to start to change some things around. He has a great story that involves Utah, and it’s all the parallels that can be drawn from there. There’s many, of course we go down some rabbit holes with that. Overall though, John is very transparent, he’s very open, he’s not somebody that is trying to position or angle himself as a person that has all this success. He’s been doing great. He’s a specialist, and I won’t go down there, but he focuses on a very narrow, narrow, narrow part of the market, but it works, because this part of the market that he focuses on, it has allowed him to build up quite a bit of intuition, in regards to how certain things act.
Clay: With that, I don’t want to say he can tell the future, because nobody can tell the future. But once you get to know the personality of some areas of the market, and you get really specialized like John is, you can develop a “feel” for things, and that’s exactly what John has been doing for I want to say, if I remember right from the interview, basically the past two years, year and a half, somewhere right around there. He’s been doing very well with it.
Clay: I don’t want to keep talking about it, but I don’t want to offer up any spoilers, so let’s just get into John, and his journey.
Clay: John, welcome to the show.
John: Thank you Clay.
Clay: Now I would like for you to tell listeners what you told me I sounded like before we got this whole thing recording. You kind of flattered my ego a little bit, so I want to flatter it that much more. What did you say I sounded like?
John: You sound like a dream, Clay.
Clay: I’m going to tell my wife that later on. She’s not home right now. But I’m going to say, “You know what Abbey, I sound like a dream. I hope you realize that.” I don’t know what her reaction will be, but we’ll see what happens with it.
Clay: Anyways, we had a little technical difficulties, but John, the good old, just the window, right? Or did you have to close your entire browser? Or what was it?
John: I just closed the window, and opened it back up, and come back, and it was fine.
Clay: There we go. So was the window close, fixed the technical difficulties. So glad we got it figured out here. As I told John, as of the recording of this, I have to do a live webinar in an hour and ten minutes, but that will give us plenty of time still. We kind of rushed through the introduction, because I was like, “All right, John, here we go.” But he’s listened to past episodes, so he thinks he knows what he’s getting himself into, but we’ll find out.
Clay: First off, I wanted to thank you before I forgot. You sent in an email, and then you also posted on Facebook, I think last week. But thank you very much for taking the time to do that, I appreciated that. That’s always motivating stuff to hear from my end.
Clay: Where did this all start for you John? Where did you first hear about the markets worded? What all played out that brought them to your attention, and then also got you interested to the point of wanting to get more active with them?
John: Well, I’ve always known about the markets, and they were very intimidating to me earlier on. I’m a little over 40 now, I won’t be exact, because a lady never reveals her age. It was long enough ago, that I had a 401K at my former job. I always wondered where that money was going. They had the big, broad stroke funds. The [inaudible] cap, the mid-cap, the small-cap. It got me interested because I kept seeing losses. I might see a little gain, I’d see big losses, and I always wanted to know could I have a little more control over where my money was, and whether or not I’d be in control of my retirement. Whether if it was successful, or if it wasn’t.
John: The more I looked into it, the more I realized that when you have that 401K, you’re really at the mercy of someone else. Now that’s of course, that’s my opinion. But you don’t have an exact, precise control over where your money’s going, and what you’re investing in.
Clay: You made me laugh, because we’re cut from the same cloth. I like your mentality of listen … if my money’s going to crash and burn, I’d rather have it be because I had it crash and burn, not because of some other financial advisor, or some other funder, just whatever. That made me laugh. I feel the same way. If it’s going down, I’d rather be the captain of the ship that took it down. I’m so sorry to cut you off, but-
John: Exactly. No, that’s fine.
Clay: … that’s good stuff, I feel the exact same way.
John: So I thought after … I’d end up being laid off from … I was at the airline, I was laid off, and moved to another job here, who also had a 401K. Of course I rolled it in, and all that money was down at the new one. For the longest time I just didn’t even look at it. It’s one of those things where you get into the 9:00 to 5:00, you get in the rut, and the routine. It’s coming out of your check, you don’t miss it, you don’t know it’s there, and it just goes. I think a lot of people fall into that category, where they just get comfortable with somebody else’s problem, I’ll be taken care of.
John: Then I want to say around in 2013ish, I started really looking at it, because we changed who controlled our 401K. So I had a lot of time on my hands, I sat down, I started really looking at what had happened. I look back, and sometime around 2008, 2009, there was a significant loss in my account, all in one month. It was about a 10% loss in one month, straight down. I called them up, and I said, “Hey, I know this is six years later, but what happened in this month right here to where there was such a severe drop in my money?” Because it is my money, that’s what it all boils down to.
John: The person on the other end of line couldn’t explain it. They asked me if I had taken a loan on my 401K, which I’m adamantly against. You don’t pay yourself back with interest, that’s just something to make you feel good. So they couldn’t explain it, and finally I got fed up with it. I said, “Well, these ticker symbols that are next to these funds, why can I not find those in any of the markets, or on any website, or anything else?”
John: I was told those are internal ticker symbols, and those are for their specific funds only. That opened my eyes right there. That you have no control over your money, you have some. I’m sorry, I don’t want to be out of line there, but it showed me how little I knew about where my money was going, and how little I can see and track, and hold people accountable for where my money is going in that 401K.
John: So at that point, I really woke up, and I said, “You know what, if I’m going to do this, I need to learn about it. I need to learn every aspect of it.” If you’re going to play this game, then you better know every rule, because this is a good way to lose everything you’ve got.
Clay: It is, it is. You’re right, it’s your money so you can control it. But I do know the essence of what you’re saying is it’s not like your company, or it’s not like … the company … literally there’s like, okay, good, we just got this company to give us their 401K. It’s not like we’re going to shop around. We’re just putting it all into our own funds, or they called them internal funds. I totally get what you’re saying is, yeah it’s still your money in the sense of you have the choice to do that. But wow, that’s pretty rigid in terms of … I’m not a lawyer, I’m assuming it’s not a conflict of interest on their part. It just seems like oh yeah, we got our money. No, why would we look around? No, we’re just going to put it in our funds. I don’t care if other funds out perform us. We’re just putting it in our funds, because we get fees and commissions that way.
Clay: So that was a great story. That’s a great kind of wake up story in terms of … so for you listeners out there, I don’t think John, I’m certainly not, neither of us are trying to spill doom and gloom here, but just maybe take a glance at your 401. Maybe take a glance at your IRA. How much control is there? How much flexibility is worth in that, because that’s scary. 10%, and then nobody can really explain it. But yeah, you’re absolutely right.
Clay: Also, in regards to … if you don’t treat this game, treat this business, treat this … please don’t treat it like a hobby listeners. I can’t say enough … I want to get into the market as a hobby. Okay, well this is going to be a hobby that’s going to eat your lunch, son. If you’re going to get into the markets, you got to … I like the way you put it. You got to learn the rules. You got to learn how this stuff works. So where did you go from there? Because it sounds like you understood the right way to approach it from the get go. So pick it up from that point.
John: Well, I was mad. I was mad at myself, and mad at the whole system that I had been paying into for the better part of my career. I don’t know about you, but when something makes me mad, I’m going to learn all I can about it, and I’m going to seek revenge in my own way.
John: So what I did, I started where I guess everybody starts, Googled it up. That’s the right thing to do I guess. I started from bare bones. What is a stock? The easiest, simplest thing, what is a stock? What does it mean to have a sheet, or what used to be a sheet of paper that says you own part of that company. What does it all mean?
John: I learned everything I could about stocks. Then I found out that the people who have that 401K program where I work, they had an entire library of educational programs. Short videos, cartoons because I’m simple, and I like cartoons. So-
Clay: I’m with you man, I’m with you. Give me those cartoons.
John: If you can break it down to where it’s in a cartoon form, and squeeze as much information as you can in, in about 10 to 15 minutes, you’ve got my attention. You’ve got a subscriber, a thumbs up, or whatever else I can put on your sheet. Which in a second, will lead me to your videos.
John: So I did all those, and all the way up to a point where it got to 4X, and what not. Because I knew that was way out of my league at that time. From there, I said, “All right, I know what they’re teaching as a provider, and as a manager of a 401K.” So then I went to YouTube. I just put a search in, the exact same way I had done on Google. What is a stock? I believe you had a video pop up, and it was an early one, it was a very early one. It was right before your arms filled out the sleeves … because you went through that-
Clay: Wrecking ball stage?
John: Yeah, you were a beast bro. The seems were hurting. It was before that, and you kept it-
Clay: Let me ask this, was I in front of the white board, or the chalkboard?
John: I believe you were in front of the chalkboard, and you were getting ready to go to the white board.
Clay: That is old school. Chalkboard hasn’t been around for years now. Okay, that’s good context for me. So this is old school video.
John: Yeah, we’re talking ’16ish, I’m thinking … I went back and tried to find where I had made the purchase, but I couldn’t find it anywhere. It’s ’15, ’16, somewhere in that region.
Clay: Probably ’15 would be my guess.
John: That sounds about right, late ’15. So it was chalkboard, obviously it suggests the next video, and so on. So that’s what I did. I basically went into the rabbit hole that is Clay Trader on YouTube.
Clay: Now I have a question though. Is this some clever way of insulting me? Because you’re saying you like cartoons, so are you saying I’m like some cartoon character to you?
Clay: Or am I over thinking this insult that you seem to be throwing my way. Because one minute you’re talking you like cartoons, then you went to … I’m just giving you a hard time.
John: I like the … the one thing that kept me watching yours, as opposed to Mr. [inaudible 00:15:22]. The thing that kept me going back to your videos was the down to earth, it was real. Never once did you say that you were going to tell me when to buy, or what to buy. In that regard, I really did appreciate what you were doing. You kept it nice and simple. It wasn’t insulting. The level that you were teaching at, it was not insulting. You weren’t throwing things down from a position as if you were higher than everyone else. You were basically putting a hand out, and saying, “Hey, let me bring you to where I’m at, and if you want to go more, I offer these classes. But I’ll at least get you to where you’re not going to go out there and absolutely tank everything you’ve worked for.”
John: I thought that was a pretty solid thing to do. So the next thing I did was got to the point where I thought I was comfortable, and I think you know what’s coming next.
Clay: Please don’t say penny stocks.
John: Well, yes, of course.
Clay: I can always hold out hope, can’t I?
John: No, you can’t. What is this, podcast 200 and something?
Clay: There’s always a sliver of hope that you didn’t … all right, I know you’re going to tell me, but I’m very curious, how did you end up in penny stocks? Because I got to be upfront, right now it sounds like you’re going on a very logical … even putting aside that you came on my videos, it sounds like, “I need to know the rules.” And you started at the ground, what is a stock? So how did you end up in penny stocks John?
John: This is how it works. I think I had $500 that I had just put aside. I said, “This is going to be my learning money.” If that makes any sense whatsoever. Saying it out loud takes every bit of common sense out of it, and it sounds way different than when I was thinking it in my head. But I put $500 aside, and I said, “You know what, we’re going to open an account … ” I think at the time I think I was still with TD Ameritrade I think it was.
John: When I started out … and we’re just going to give it a shot. We’re going to see what we can do. Actually I didn’t start with penny stocks, I was staying away from them. Because I had seen the video where you were discussing penny stocks, and there is a technique of doing them. As opposed to thinking that these companies are real.
John: So I stayed away from those. I think I was doing a lot of AMD, yeah, I was doing a lot of AMD. I think it was down around the $10 mark at the time. I’d buy on one day and sell the next. In my mind, I was just the baddest trader in town. [inaudible] but I did okay.
Clay: What did you think you were doing? Where was your thought process coming from? Were you using charts? Or were you buying based off … at the time, I guess what was your strategy? How were you determining entry points, and exit points, and all of that?
John: I was strictly going off what I had learned off of your YouTube videos with the candlestick, and I kind of put together that if you got this big, green stick on the sheet, then tomorrow it has another big old green stick on the sheet, and chances are, the day after you’re probably going to get a little bit of green stick on the sheet.
John: At the time, that sounded like an incredible trade plan.
Clay: That might be the title of this podcast, maybe. Using the green stick method. I like that though. I see green sticks, I like it.
John: That’s it. I can honestly say that I saw your videos before I ever looked at a chart, and I don’t think I have ever made a purchase or a sale on any chart other than a candlestick chart. To be honest with you, I don’t even think I could read a different kind of chart. I don’t want to sound like a fan boy, but I’ve been a Clay Trader purist since the start. Other than the few things that we’ll discuss in a few minutes, which are going to get even more fun I’m sure.
John: Like I said, I was doing the AMD, not super cheap stocks. Maybe the $5 to $10 range. Very seldom I would do a $15 one. At some point I had dropped down, I think I had like $300 left. I said, “Well, I can take … let’s take $50 or whatever and let’s just throw it in this garbage stock over here.” Which was an Israeli pot company, I think it was. OWCP I think was the ticker symbol. I can’t remember what it was called.
Clay: That thing was a monster too. I know exactly what you’re … I didn’t know that they were an Israeli penny stock, but I definitely remember OWCP. I did many a videos on that one.
John: OWCP is an Israeli pot company, I bought a heap of it at … I think it was like .35 or .45. Within a week … it’s when it did that one big spike up to … I think it actually made it all the way up to $3 or something.
Clay: I don’t remember any of the details. The only detail I remember was the thing was a monster, and made some pretty crazy moves.
John: It jumped up super high. I sold way before it got to the top. But I sold, and I was able to bank I think it was $2100. You could not fit my head through a garage door. I was the baddest son of a gun in town. Look at me, I just turned $50 into $2000 and sign the yacht, sign the paperwork.
Clay: You’re a prodigy right? Is that what was going? You had that prodigy thing going on?
John: It’s funny because it was at that moment, once I realized that I was not going to get yacht, or a Ferrari [inaudible] ladies around my pool, that I stopped. I said, “Why did I do that? Why did that happen?” Not how did I do it, or why did I do it? How did that price go that high and why? How can I repeat it? When I couldn’t answer that question, I stopped. Because as fast as it came in, is as fast as it would disappear. If I made $50 into $2000, that means I could drop $2000 into being in debt up to my ears.
Clay: Okay, that’s super … I’m just trying to think. Because most people, I feel like they would do that, which is smart. How can I do this again? But I feel like most people, they can’t answer it, but the answer is wrong. They justify in some ways of oh yeah, I did it because of fill in the blank reason. But that’s not actually the reason. You were honest with yourself to the point where you were literally like, “I don’t know, and I can’t answer it. I don’t know how that happened.”
Clay: I guess I don’t know what I’m asking, but that’s super interesting that you were able to be that self aware, and honest with yourself. To just flat out acknowledge, yeah, I don’t know how that happened. Fools gold is a real thing. So I guess the question is, how do you think you avoided the fools gold of you tricking yourself into thinking that it was actually skill, or that you were able … or that was all you? In other words, how did you reach to the conclusion that basically that’s why you came. You realized it was fools gold. I guess this is the worst question ever, but do you get what I’m saying?
John: Oh, I understand exactly what they’re asking. I think it’s just a matter of the kind of person I am. I always try to question myself, and when I couldn’t answer it at all, then I knew that I was in the wrong place. I think it almost goes back to … say my mother would ask. You’re doing that right there, but if somebody were to ask you why you’re doing that, would you be able to answer? That was more along things that I wasn’t supposed to be doing.
John: So this fell right in line, where I had this monstrous win, and I asked myself, “Why did you do that? What drove you to do that? And how did it happen?” I couldn’t answer it. So stop doing it. If you don’t have a good reason for what you’re doing, stop doing it. So you’ll be happy to-
Clay: I hope listeners are listening, that’s good stuff. Listeners, try to be honest with yourself. If you cannot answer how you made some sort of great trade in your heart of hearts, you might want to reassess, good stuff. So when you say you stopped, you mean you stopped with penny stocks, or you just stopped trading as a whole? Defined stopped.
John: Oh, I stopped completely. I withdrew all the way down, I think I left $50 in the account. I withdrew the $2100 and I basically just forwarded it over to you. And bought the CTU, the complete, the whole thing.
Clay: Were you ever inner circle first, or you just-
Clay: You didn’t even dip your toe in the water, you just jumped in both feet?
Clay: So how did you … I guess maybe I’m asking again, but because I hear it all the time is, “Well if I do that, then all I have is $50 left in my account, and I can’t trade.” How did you overcome that hurdle, I guess? I suppose you probably already answered it. It was just really a situation where you … I’m trying to think can I word this in a way. You just accepted the fact that you didn’t know what you were doing. At the core, that’s what it was. You accepted the fact that you literally did not know what you were doing, is that fair?
John: That’s absolutely correct. I had no clue what I was doing, and I realized that. It was almost … and it almost scared me. It made me feel uneasy because now I have this basically a handful of cash. I have no idea how I got it, and I don’t know if I can lose it. I don’t know what I don’t know. But yet I’m sitting here an does this belong to me? I don’t know, maybe it does, maybe it doesn’t. How did you get it? I have no idea.
Clay: I’m not saying this in a sense of if only more people would buy my stuff. I’m saying it in a sense of if only more people were self aware of … I just had X amount, and now it’s worth a whole lot more, but how exactly did that happen? Yeah, too many people are just … it’s skills. I’m just a prodigy, you’re self awareness is so refreshing.
Clay: All right, well you get the program, you go jump in feet first. This was, like we said, back in ’15ish we’re guessing, ’15, ’16ish?
John: ’15, ’16, yeah.
Clay: Okay so where did you go from there?
John: Every day-
Clay: You put yourself in a good spot, because now you only had $50, so it’s not like you could really even go and trade if you wanted to. So you kind of forced yourself into the education. Which is what I always argue. I’ll just let you pick it up, and take it from there.
John: Well, I got the program, and I started from course one, which I really can’t even remember. It’s been … I forget things very quickly. I did it in order. I think I did the penny stocks revival guide. I did second, if I’m not mistaken. The first one was robotic trading, I think.
Clay: Hey, your memory is still firing on all cylinders. I would be offended, but I did not realize that you … I have a bone to pick with you later. Why has it been this long … this is your first podcast when you’ve been around since ’15 or ’16. But we won’t go down that rabbit hole right now.
Clay: I’m not offended that you don’t remember, because in a very literal sense, you’re talking about like three or four years ago. That would make sense if you did robotic trading, or penny stocks survival guide one or two. But you did all the courses in order then?
John: I did every one of them in order. I actually stopped before I got into the advanced strategies and advanced options, and all that stuff. Because I wasn’t ready for that. I wasn’t ready to take on options. So instead of paper trading, which I probably should have. I refunded the account. I did only enough that I was willing to lose. I basically treated it as … basically like filling up a sippy cup. I’m only going to pour as much as I want to clean up.
John: So that’s what I did. I only funded it as much as I wanted to lose, or was willing. So much like I did with the stocks, I practiced with the diversification, and the different categories or whatever. I did okay, but I became an adrenaline junkie, which is very easy to do. It doesn’t take a very big win either. It’s super simple to do, and you’re brain kicks in and says, “Oh here you go buddy, here’s another OWCP right here.” And it’s not, they’re not there.
John: So before going into all the other courses and learning about options, I went down the exact same path that I did with the stocks. I had that education under my belt. Instead of staying in that comfort zone to where I knew the RVR, I knew all these things that I should be doing. But no, instead of going into the options classes, well I just started messing with options now. Very dumb.
Clay: Yeah, I was going to say, I would highly advise against messing around with options before truly learning about options. Here is just a reminder to listeners, oh, I know what a put is, I know what a call is, I’m ready to trade options. No, there’s a little bit more to it than that. So just please don’t fall into that rabbit hole.
Clay: Yes John, I agree, that wasn’t … you could have made a better decision. So I can’t wait to hear where this thing goes.
John: You did hear where it went. Because I sent you an email. It was an email to where I was the king of Gate C17 in the Atlanta airport.
Clay: I think I vaguely remember this.
John: You should, because you did a YouTube video on it.
Clay: Okay, yeah. I was going to say, now in my defense, I’ve done hundreds of YouTube videos now, but something is … you’re that guy?
John: That’s me.
Clay: Okay, all right. It’s still vague, it’s still foggy but … was it a fools gold video? Or what?
John: Well, I wouldn’t say it so much fools god. I think I just got lucky. I guess you could say fools gold. So what it was was an apple launch coming out on earnings. I think I had bought five contracts or something, five [inaudible] contracts. That morning, market opened, monstrous jump, and I cashed in. I ended up banking about a grand or $1500.
John: Once again, here I am. We were actually headed out to San Francisco. We were flying from Atlanta to San Francisco. Oh sorry, I’m in Savannah. We were going … Savannah is where I bought the call options. When we landed in Atlanta, we were transferring and switching gates, and that’s where I saw [inaudible] I’ve got this big win. So let’s sell it.
John: So here I am Mr. Big bad stock trader, beak knocking all around the gate area. What do I do? I just turn right around, and I dump a bunch of it in … matter of fact, I think I dumped all of it into Facebook options. No clue, I can’t remember if it was a call or a [inaudible 00:33:28]. But when we landed in San Francisco, a significant amount of time later, they were worth .03 a piece.
John: I said, “Well, there’s that.” So yeah, you might have been cool in Atlanta, but in San Francisco, you aren’t spit. So that’s how I felt. I basically just wanted to die right there. I said, “Man, I’ve lost all this.” We had a thousand to the good, and now I have actually tanked the account completely. So somewhere around 30,000 feet, maybe over Utah’ish, something terrible happened in the world of Facebook, and my account went to nothing.
John: First thing I did when I landed, is tried to … you try to keep it together, you’re like, “All right, no problem. I just lost everything, just blew up my account, big deal.” But it is a big deal, because that’s your account. It’s kind of your thing. Losing sucks man. There’s no two ways about it. Losing trade sucks. When you look at it, and you can’t say, “Well, at least I put forth the effort, and I tried. I did everything that I could, and put everything in my favor.” When you can’t say that, it sucks even worse. Because now you’re just an idiot. That’s exactly what I was when I stepped off that plane. I looked down, and my contracts were worth .03 a piece. I was an idiot for not doing what I knew I should be doing, number one. With just watching the candlesticks on the chart.
John: Number two, I had no business being in options anyway. Even if I had made a positive trade before. It doesn’t matter. You’ve got no business being there yet. You can be there, you’ll get there. The market’s not going anywhere. You could walk away from it today, come back five years from now. Chances are, those prices are going to be pretty similar. There’s no rush, there’s no hurry, there’s no push. Nobody’s going anywhere. But your money will, your money will cruise right on out the door, it doesn’t mind. Apparently it has a train to catch, and it’s willing to make train.
Clay: The market is a sick savage. It loves to give people hope. It’s easy, there’s a little bit more, and then boom, thank you. Thank you come again.
John: But it’s fair, it’s very fair.
Clay: It is fair, it is. But the way … like you said, the way the mind works, and the market knows this is it gave you the win, and then you just poured just that much more into the Facebook. Just like that, gone.
Clay: It got you for your whole account.
John: It’s gone, and it took it’s friends with it.
Clay: Exactly. Of course it’s easy to say in hindsight, “Well, John, you should have just put in like $500, why did you throw everything in?” Because that’s how the market, that’s how the voices, that’s how the human mind … if you’ve never done this, it’s easy to sit here and armchair a quarterback. I totally get where John’s coming from. Because I don’t know how to describe it unless you’ve traded, and had a big win, or something like that.
Clay: Look at me, the market’s like, “Good, keep thinking that way. Here, take another little win real quick.” All right, well you blow up that account. Where did it go from that point then?
John: Well, I tried not to think about it for a long time. I just let the … I think at that point I had like $20 in the account. When I say I blew it up, I did it like a pro. So it just sat there with $20, $25 in it for probably six to eight months. In that time, if I was awake, I had earbuds in and I was listening to either your podcast, one of your YouTube videos, one of the courses, something. Every minute. To the point where you’re the voice I heard when I woke up. You’re the voice I was listening to when I went to sleep, which is why I said, “Your voice, it’s like a dream.”
Clay: That makes sense now. I’m not going to tell my wife that part now. I’m just going to make it sound like I have … my voice is silky smooth, that type of dream. That makes good sense.
John: And that’s how it was. Not to make things weird, but we drove together. You and I showered together, you and I slept together. You and I did everything together. Wherever I was, there you were, right in my ear, constantly. Whether it was fools gold, markets, fair, penny saved penny earned. I kept seeing the little kid with the sign. If you’re tired of seeing me, that means it’s sinking in.
Clay: A kid with a sign.
John: You know what I’m talking about.
Clay: Oh yeah, that’s a classic.
John: And that’s how it was. That’s what I needed. Everybody might not need that. Not everybody’s going to want to hear you all the time. But that is what I needed. It goes back to being self aware. Only you know what’s going to work for you, because you’ve been you your whole life, whether you like it or not. And you’ve experienced everything that you’ve been through. So only you are going to know what works for you as far as learning, and what you need. There’s been times where I had to go back to that. Even to this day, five years later. I still open my notebook. There has been times through there that I have almost blown up the account again.
John: But through going through those courses and learning everything about everything that you have to offer, you don’t have as much of that risk … you’re able to mitigate that risk. You’re able to set it up to where you might lose, but you’re not going to lose everything unless the sun falls from the sky. But there’s so many safeguards in place. If you don’t know about those, or you’re not willing to take the time to learn about those, or pay for a program that points those out, and let’s you know that hey, you don’t have to lose your house. You don’t have to lose your car. You don’t have to pawn titles, you don’t have to do any of that craziness. You just have to be smart about what you’re doing, and learn, and listen to somebody who’s been there.
John: Maybe somebody out there will be listening to me, and they’ll say, “Well, that idiot there, look at him. He just lost everything over Utah.” Well, you know what, that’s one person that’s not going to lose everything over Utah.
Clay: That’s why I do this show. You never know. To me, even if sitting here and talking with John, I’m having a great time, but even if I was having a miserable time, but someone says, “You know what, that miserable hour you spent with John, that saved one person from doing something stupid that would have cost them a whole lot of money.” That was still an hour well spent.
Clay: Because exactly, that’s the whole point of this. I’m stupid, John’s stupid, we’re all stupid. The secret to trading is, admitting you’re stupid and then trying to mitigate the stupid. That’s what trading is. If you think you’re too smart for the market, then the market’s going to eat you up. But we’re all done.
John: Every one of us.
Clay: Get your mind wrapped around that. We’re all going to lose money over Utah at some point. That’s essentially what it boils down. So if you think, “Well, I’m not dumb.” That’s good. I’m going to enjoy, the market’s going to enjoy taking your money in the market, because stupid people take money from the people that think they’re smart. That’s kind of the way I look at is. Because the people that are stupid, and know they’re stupid, those are the humble people that are going to work hard. The people that think they’re way too smart, they’re the overconfident, and they’re losing their money over Utah. We’ve all been where you’re … in that situation. That’s some good stuff, but you’re absolutely right.
Clay: I guess where are you? I’ll let you still … because I don’t want to jump too far in the timeline, but it sounds like you are just in beast mode, learning mode. I was washing your back, you were washing my back. We were mowing the lawn together. We were doing everything together.
John: I forgot about that.
Clay: So when did you step back into the markets?
John: I think I stepped back in about early to mid 2018. Maybe February, March 2018. That’s about right. I came into a little bit of money and I said, “Well, this is basically a windfall money, and I’ll put it in a trading account.” Even with the money in there, I didn’t really trade with it too much. Just because you get so used to not doing it. Just like you get used to doing it, you get used to not doing it. I kind of felt like I had lost the pulse.
John: You’ll get to where you can kind of feel the pulse of the market, and you can say, “Okay, well these patterns are repeating. Or these, the same … ” everything that’s taught in the courses. You get used to seeing these things. I think the term I heard last is you become intimate with certain ticker symbols. You get the feel for how they operate, and how they move. So I became intimate with SPY. So that’s basically what I’ve been doing for the last year. It’s not super exciting, but I’ve been doing SPY options for the last year and a half.
John: That’s kind of the meat and potatoes of all my trading right now. It’s not super fabulous or glitzy, or glamorous.
Clay: It’s not supposed to … which I know you know. The problem is when people are … I’m going to steal this term. They’re peacocking walking around, oh yeah, I’m doing this, and I’m doing that. It’s like, “Yeah, I get it, that sounds great. Yeah, that thing is super volatile. Oh wow, you did that with that?” That’s a great story, it’s pretty glamorous, but it’s like a ticking time bomb before you go boom.
Clay: I would say well done John, that’s what you want. You don’t want glamorous, you want just something that just works. And for listeners sake, it is definitely possible, the way John is describing it. Ticker symbol SPY, which is just a big ETF. You can literally become a “specialist” in that. Because it’s so liquid, it’s so … you can just get to know what that is. So it’s totally possible to just stay focused on one single ETF, or one single stock. Just a little basket of them.
Clay: Are you day trading it? Are you swing trading it? What exactly … tell us a little bit more about this non-glamorous approach that you have with SPY.
John: All right. Well, I always try to dress up and look nice for the market, so that’s the glamorous part of it. But what I have is I just buy single options, puts and calls, very basic. I do a day trade. Sometimes I’ll be on there for 10, 15 minutes, sometimes I have to watch it play out over an hour and a half, two hours. I don’t hold any over night. Because I learn the hard way that if you’re buying the options as a day trade, don’t hold them overnight, because that is not what your plan was. There’s a plan, there are rules, and you need to stick to your rules.
John: If you bought an option contract, or something that you thought you were going to dump in 15 minutes, well if it went against you to the point where you’re holding it overnight, then chances are you’re not sticking to your plan. You don’t have stop losses in place.
Clay: I would agree. That sounds like it’s gotten hope written all over it at that point.
John: And I’m going to tell you, hope is not an abundance in the market. They don’t have a ETF for that, I looked.
Clay: I may or may not have looked for that one quite a bit too. It sounds like you have a normal job. 9:00 to 5:00 or some sort or form of that.
John: I do, yes sir.
Clay: So when are you fitting in, how are you fitting in? Basically for most people, how do I trade if I have a job? So walk people through your daily routine of how you’re able to make these day trades with a full time job.
John: You are not going to like this at all. I don’t suggest this to anyone out there. I use cellphone, and iPad. I have the chart on the iPad, I have my order sheet ready to go on the cellphone, and when the market opens, I wait 15, 20 minutes to make sure I don’t have any leftover … you’ll get some very very volatile moves there right at the gate. As soon as the bell rings, you’re going to get some super volatile moves.
John: Instead of just throwing your hat in the ring, and hoping for the best, I wait for it to settle out just a hair. Any off the cuff news, headlines, that might swing it tremendously, which I have been burned on that. If you think that the news doesn’t affect the stocks, you’re fooling yourself. And it can go either way.
John: So I try to let that kind of play out and everything settle down. Once it settles down, then I just kind of reassess it, and then I’ll make my play depending on what the chart tells me to do. Some days I don’t do any, because that in itself is a play. You can either buy, you can sell, or you can do nothing. Sometimes do nothing is the best play you can make. The most profitable is to do nothing.
Clay: A penny saved is a penny earned. I couldn’t agree more with that. I’m just curious, let’s say you were on your computer, or you had a computer and you had all the monitors. Do you think you would venture into the first 20 minutes of the day?
John: No. I actually had a chance to do that for about two weeks, I had a vacation. I had the levels two’s up and everything else. It was … again, I am not a super complicated man. I’m very simple. I try to keep everything easy. I’m a cartoon kind of guy. When you have that much going on, that quick, with that much money at stake, I’ll let them have it. I’ll wait the 15 minutes.
John: The trading day is a long day. 15 minutes, no problem. You can have that, I can wait. Let it settle out. Let things calm down to where I’m comfortable. I’m not saying that everybody has to wait. Some people thrive in that first maelstrom of activity, it’s not for me. I like to stay where I’m comfortable. The first 15 minutes or so, not super comfortable for me, so I just stay out of it.
Clay: It doesn’t sound … honestly, I don’t have any … now if you were like, “I’m trying to look at charts and this, that, and the other.” On your phone. But an iPad for charts, and hearing you let things settle down. That’s adding some layers of context, which I don’t really see anything … I guess the proof’s in the pudding. Have you been absolutely roasted because you’ve had these moves? It sounds like you’re factoring in the fact that you can’t operate super quickly because you’re doing stuff on the phone. But just letting, like you said, the market slow down. So it’s not like you’re throwing yourself into some high volatility slug fest. By definition, like you said, you let things slow down.
Clay: It sounds like you’re being smart about how you’re approaching all of this. Are you like sneaking around in the bathroom at work? How does this work with your phone?
John: Oh no, it’s just right there at my desk, I just do it. [inaudible 00:51:02], it’s fine. The job I have allows me to do that, it’s not an issue. It doesn’t take away … here’s the beauty of it. I actually don’t take my first break. I wait until the time where I [inaudible] for my trading. So that everybody’s cool as far as any kind of schedule. If something’s going on, I just don’t trade. Like I said, trading day is a long day, what’s another 10, 15 minutes, not that big of a deal.
John: I also utilize trailing stock, stock limits, and everything else. As soon as I put my order in. So even if I do it, and if something comes up, it’s fine. I can put turn it off, and I can rest easy knowing that the worst that’s going to happen is I pull .10 off of whatever the highest was before it dropped back down, and get my [inaudible] done.
John: It’s all about having your safety’s and your stops, and all your safeguards in place. Because if you don’t, you really should just hand the money over to the guy next to you, I’m sure he’ll do something that may be better than just throwing it to some mystery person in the market. Because if you’re not going to put stops, and you’re not going to actually have a trade plan, there’s no use in even being in there. Just hand your money to somebody else, and let them go get some [inaudible] or something, I don’t know.
Clay: Absolutely. With a job, just knowing that your trailing stops, or are in place, I’m sure that makes life a whole lot easier. Whereas if you’re sitting at a meeting saying, “Uh oh, I don’t have a stop loss in. I hope I’m not getting roasted right now.” Just from a mental piece of mind point of view, that’s the way to go. I don’t know any sort of argument you can make on why you wouldn’t want to be protecting your downside, and doing all that stuff like you’ve been doing.
Clay: As far as … do you have any certain set ups you like to play, or are you kind of flexible in terms of … because clearly you’re only on SPY, like you said. So do you like any sort of chart patterns, or are you kind of just keeping an eye out for really whatever kind of makes sense at that moment in time? Or do you only have a certain, rigid set of patterns you’re willing to put money into?
John: I’ll play it pretty much however it comes. As long as it’s a pattern that is going to make a move. Whether up or down, it really doesn’t make a difference to me. I found that the more I do it, the more that I can see, I guess you called it chart vision at one time. Where you get that feeling that somethings not going … this doesn’t look like it’s going to go in my direction. You can actually see that several candles prior to it happening. You basically see everything kind of lining up.
John: On the flip side of that, there are times where everything’s lining up to move in your direction. So you can say, if you don’t already have a position on, you can say, well this is … here’s a support line. Here’s an area of support, and we’re coming up to a launch point. Let’s do this, and go ahead and set this in. A lot of times you’re right, sometimes you’re not right. But with stops in place, you’re going to be all right.
Clay: I could see a listener saying, “I don’t know, it sounds like he’s trading by the seat of his … ” it’s not like … the seat of the pants, that’s the saying. “It sounds like he’s trading by the seat of his pants. He’s making this up.” You have to keep in mind, this is why he made the comments earlier about getting intimate. Because ticker symbols, especially SPY, these things have personalities. If you watch them, and watch them, and watch them, you develop … and it’s hard to … you just develop an intuition towards them. Your brain is literally just … especially in John’s case. If that is all he literally watches, I don’t doubt any of this for a second, because I know how this works. You get to know the personality of these things.
Clay: If that is literally all he’s done for the past year and a half’ish, then there’s no doubt in my mind that he can, “Okay, it’s starting to act like this. It’s like he’s a chart whisperer for the SPY.” That’s the benefit of taking the SPY out for a candlelight dinner. Getting to know her a little bit better, and you’ll have an idea of how she’s going to react if you do certain things, and all that sort of stuff.
Clay: All I could really say is, if John and I sound like we’re crazy people, probably just mainly me, go out there and just start watching, and watching, and watching. The same thing, and you’ll see they have personalities. It does make a whole lot of sense.
Clay: As far as your chart is concerned, do you have a whole bunch of indicators, are you … you already did mention you’re a simple fellow, so I’m assuming that you have a very limited amount of data. And if that assumptions right, what sort of data do you actually have on your chart?
John: I think I’m running 20 and 200 SMA’s. Obviously it’s a candlestick chart … I think it’s the 12 and 200. It’s either the 20 and 200, or 12 and 200. Regardless, it’s basically the same. I run a small watch list down the left side with the top ten SMP 500 holdings, so that I can keep an eye out on the price action there. I have volume indicators down low. I have an index, the SMP 500, the big index down at the bottom so that I can keep an eye on that. Usually in a few seconds, which can make all the difference in the world. Put your position on, get a few second head start [inaudible 00:57:13].
John: But that’s pretty much it. Candlesticks, SMA’s. I think I had the Mcafee on there for a little while. I found that … and even though I took the class, and I know what it’s supposed to say. I know what it means. Number one, I didn’t use it that much, and when I did, I ended up spending too much time looking down there and said, “Screw this.” And just took it off.
John: So volume, price, SMA’s and all the SMP [inaudible 00:57:44].
Clay: I know what you mean. It’s paralysis by analysis at some point. It becomes a matter of … it’s not like I don’t think you’re useful Mr. MCD, it’s just that maybe you’re too useful because you keep distracting me. Then I’m missing out on trades. I’m just … go away Mr. MCD. It can totally be that.
Clay: That’s where it all comes back to it’s about you. We’re all going to be different. You maybe you think is crazy. How does he not have the MCD, how can he call it a distraction? Because he’s not you, that’s how, okay. That’s really the way trading is, and that’s why if anybody’s ever out there saying, “I have a one size fits all system for everybody, and this is exactly how you’re supposed to trade.” I would run the other way very, very quickly.
Clay: Now, if they’re teaching you a framework and tools on how to build something for you in your situation, well that’s very different. But somebody saying, “Hey, I made a bunch of money doing exactly this, so come and do exactly this.” I’m not refuting the fact that it may work for them, but you are not them. So that doesn’t mean it could work for you.
Clay: Well, John, I got 15 minutes before the webinar, but we’re almost at an hour, which is what I like to aim for this. I’m definitely going to have to have you back. This is the good … you’re very methodical in your thinking, and I like it. Minus the penny stock thing, and minus the randomly going to options. Besides that, though, I like the way your brain operates. That also makes me feel better because I’ve done some stupid things with my brain too. At least … what is it, misery loves company? I think that’s the saying.
John: If you don’t ever screw up, you never tried nothing.
Clay: Absolutely. Always the story that stands out, which is exactly that. One of my first jobs was a bat boy. Maybe I’ve told this before, but regardless, bat boy for the Toledo Mud Hens, which is the AAA team. Meaning if you graduate from the Toledo Mud Hens, that means you’re all of a sudden, you’re a professional baseball player for the Detroit Tigers. But anyway, I was a bat boy for them. You’d be helping during batting practice get balls, and stuff.
Clay: I remember a couple of me and my buddy … we were standing with one of the guys. This guy, he used to play in the major leagues. He was down because he was hurt, so he was rehabbing. We were like, “Hey, so have you ever dropped a fly ball?” And he looked at us, and he said, “Do you know who’s never dropped a fly ball?” And we were like, “Who?” “The guy that never plays.” That just blew … I’m like, “Holy crap, that’s so right.” Yeah, everybody screws up. It is easy to not drop a fly ball if you never play. That’s always kind of stuck with me. It’s like, dang that’s good stuff.
Clay: This was also good stuff John. So if I could give you the time machine, and you could go back to the start and give yourself one bit of advice, what would that advice be?
John: Don’t wait, just learn, and get in there, and be active. Learn where your money’s going. Learn about what you’re doing with it. Learn if that’s what you want your money to do. Because it is yours, and you should have a choice as to where it goes.
Clay: Well said. That story … that’s some real life stuff there, in terms of … If you get nothing out of this podcast listeners, maybe just give your 401K a look, maybe just give whatever your investment stuff is, you might want to give it a little bit of a glance. Because that’s some real life stuff where as you heard for John, that was the big light bulb moment for him.
Clay: Now for the fun stuff here. Now John, what is your favorite movie?
John: Favorite movie is The Big Lebowski.
Clay: Okay, all right. It’s hard to argue against that one. That’s kind of a cult classic I would say for sure. Favorite food?
John: Favorite food is going to be the chicken schawarma from La Shish, in Detroit.
Clay: But you’re in Atlanta, right?
John: I am actually in Savannah. I did two years in Detroit. Sorry, I shouldn’t say it like that, because it makes it sound like prison.
Clay: It does, all right, I’m talking to a criminal, he might shank me pretty soon.
John: I worked up in Detroit for a couple of years, and while I was up there, I was introduced to all kinds of Arabic food, and fell in love with the chicken schawarma there at La Shish.
Clay: Awesome. So I’m sure if there’s any Detroit listeners, there you go. You just got a food recommendation from somebody that’s now living down in Savannah.
Clay: Now before you go listeners, a final few things. First off, if you’re listening to this on iTunes, or any of the other podcast players, subscribe so you’re alerted to whenever there’s new episodes that are put out. Also, especially on iTunes, if you could leave us a rating, and leave us a comment, that really helps us out. That really goes a long way. As much as for I’d love you to join the community and invest in the courses, and that sort of stuff. Even if you don’t, that’s fine. But if you wouldn’t mind at least leaving us a rating, and better yet leaving us a comment if you enjoy these episodes. That really helps us out and goes a long way. So we would appreciate it.
Clay: If you are listening on the site itself, so at claytrader.com on the show notes page, then there’s a chat box there. Feel free to reach out to us if you have questions, or comments, or whatever. Me and Nate, we man the box. So very well may be there, we may not. But if not, we’ll always just email you back. So that’s another way you can communicate with us, if you had some sort of question or comment, or whatever.
Clay: Thank you very much for being a listener, and we will see you back next week.
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