Via Clay Trader

Consistency is the magic pill to trading success and this episode’s guest has found that pill. Long time community member, best known as RDTrader12 (“RD”), has gone through many ups and downs in his journey. He’s shared many of them on previous appearances on the show, but now he’s back to give us an update on where he currently is on his journey. Not only do the markets shift, but so does life in general. Because of this, RD had to do some reworking of trade strategies he uses in order to best fit his life. Overall, RD is a shining example of what is possible when you find and establish consistency within your trading. Him and I go down several interesting rabbit holes of topic, so buckle up… it’s going to be a valuable ride!


Clay: This is the Stock Trading Reality Podcast episode 233.
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, Sugar Cookies, yes please, Clay Trader.
Clay: Now the key here is it’s got to be soft and have frosting on it. I suppose you could accuse me of being high maintenance, and I don’t think I could really offer up much of a defense, but I’m not a fan of the hard cookies. I like just soft cookies, but when it comes to sugar cookies, soft with frosting, I can easily eat a whole packet of those. I have no shame in that other than the fact of it’s not like I do it every night. If you’re looking to diversify your sweets, I mean nothing is going to top donuts for me. Whether we’re talking income streams or retirement portfolios, diversification is key. That is part of the sweets too.
Clay: Again, I am not advocating that you do this twice a day every night or multiple times a week, but just every now and then it’s totally fine to get some sweets. I think that I look at it as it helps just keeping eating healthy much easier because if you know that in a few days I will have a sugar cookie that’s soft and has some frosting, it just makes eating healthy a little bit easier for me at least. Maybe some people can go cold turkey, but I just love donuts. I love sugar. I’m never going to be able to quite cut those out. If you’re looking, like I said, to diversify or maybe you’re thinking I’m with you Clay, a soft sugar cookie with frosting. Lofthouse I think is the name at our local, it’s called Meyer. For you in the Mid West, I think Michigan, Ohio, Indiana, Kentucky, you know what I mean when I say Meyer. Meyer has this brand called Lofthouse. Maybe they are other places too, but they are so good. If you have Lofthouse cookies, pick up a pack. They are fantastic.
Clay: For today’s discussion, very excited for it, RD is somebody that’s been around the community for a very, very long time. At the beginning of our talk, we try to figure out how many times he’s actually been on the podcast. It’s either been four or five times, but as you saw from the title of the podcast, he is doing things right. He has been profitable. He has been consistent for multiple years now. He’s somebody that has a very good talent at building off of what somebody else is saying. I say something and then he says, “Well Clay, I’d like to add on to it.” What he adds on is just, I mean it’s great stuff. There’s so much great rabbit holes we go down. There’s many great talking points. Just remember, as you go through it, sit back and realize this person knows how to speak very wisely about these topics. This person knows how to actually go about figuring out a new strategy and figuring out and adapting to certain situations. He explains it very well, but that’s what it takes to be a trader. Not that this is rocket science, but we make this point later on, it is more than just signing up for Hot Stocks and stuff like that.
Clay: Just keep that in the back of your mind as you listen to him. This is somebody that’s done it the right way that by no means is proclaiming to be a perfect trader because, as we discuss, nobody ever reaches perfect trader status. This is how a real trader is going to conduct themselves. This is how a real trader is going to kind of view situations and go about implementing certain thought processes. Just keep that in mind as you listen to all the rabbit holes. Keep that in mind kind of from an overarching context of things. Without further ado, let’s hear about RD and get an update on his journey and how things have been going.
Clay: RD, welcome back.
RD: Hey Clay. How are you?
Clay: I’m am good and I didn’t really do my homework. What are we at? Is this like your fourth or fifth appearance on the show? Do you have any idea?
RD: I think it’s possibly the fourth.
Clay: Because you’ve done, how many group ones have you been a part of? I know you’ve for sure at least been a part of one.
RD: Yeah, I think this is my fourth podcast. I think two solos and then we have that [inaudible] special with me and [inaudible 00:04:31].
Clay: Were you ever, I think you were on one with Wilson too at some point, which was-
RD: Oh yeah.
Clay: I have no idea what-
RD: Not IT. It was me, Hooch, and Wilson. Sorry, Nate.
Clay: Wilson is going to be highly insulted that you just confused him with IT Nate.
RD: Very much.
Clay: Well played on your part. We’re actually just going to go with that was not a mistake and that’s exactly how you meant it. For listeners’ sake out there, I probably went through this in the introduction, but just to make sure, RD has been around, when did you first sign up? Were you one of the first 300? I can’t remember. You had to have been at least close to it.
RD: I was really close. I came in, I believe, right after the initial 300.
Clay: For listeners’ sake, when I first started, I had no idea if any of this would work or if anybody would be interested back in 2013, so it used to be just hey $99 gives you lifetime membership. Then all of a sudden people were actually signing up and I thought let’s just end this lifetime membership. We did that after the 300th person signed up. That’s kind of the original 300 that we refer to every now and then, but as we just discussed, RD, this is now his fourth or fifth podcast. RD, I guess, how many times have we hung out? We hung out in Denver.
RD: Florida.
Clay: We’ve hung out in Florida. Were you at any of the other meet ups?
RD: No. Those were the only two.
Clay: All right. RD, I don’t know if he considers me a friend. I consider him a friend, but yes, we did originally meet in an internet chat room and then we’ve hung out in person. You’ve got a good golf swing. You can definitely drive the ball. You didn’t win in Denver, though, so I’m not quite sure. Well, I know what happened. Robin just smacked everybody around, but that’s okay. She was definitely on the ball. I guess, I don’t even know really where to start as far as where you want to pick things up. How things have just been going trading wise? From the chat room things seem to be going pretty well.
RD: Yeah, things really have. I would say just from a fundamental view I’ve been trading a lot differently than probably the other times we’ve talked. It’s been a really slow progression of change over the course of the last few years. I think every podcast we’ve talked about it where as a lot of people came in with the marijuana pot stock boom, you know penny stocks, that’s obviously what got me into it as I’ve discussed many other times, but the progression has been pretty natural from there into small caps and then the options where I’ve really pretty much lived for the last I would say three, three and a half years of trading. The biggest transition, as you know, I work a lot. I’m blessed enough to have a pretty good job, so obviously trading cannot take priority over that. Really over the last year with the amount of travel I’ve had to do, I’ve really progressed more from inter day trading to more of a swing trading method with options. That’s really what the biggest difference from the last time we spoke, and it’s really been working out well.
RD: It’s actually been a very natural progression. Really fits work life balance well and the amount of time I can [inaudible] actually in front of a screen. A lot of things have been going good for the last six to eight months for sure.
Clay: Awesome. That brings up a good talking point that I think a lot of people maybe aren’t necessarily at that bridge right now, but they very well could be approaching that bridge. That is the whole work trade type balance. I know for you, you got to a bridge where it’s like I really love the trading stuff. I have a passion for it. I’m good at it, but this job that’s being offered, that would bring in quite a bit of nice guaranteed money. As we always say, the guaranteed trade out there is sticker symbol JOB. You approach one of these JOB sticker symbols that was pretty solid. Can you kind of walk listeners through how that played out because, like I said, I imagine some people are probably at that bridge right now and maybe some people eventually approach it because I know you’ve taken, like you just said, focus on the job itself. Can you dive a little bit deeper into what you considered and just kind of how that all worked out?
RD: Yeah. It was actually pretty simple for me. To be clear, don’t get me wrong, I’d love to be in a scenario where I didn’t have to work for a company and work more for myself. I’m taking steps everyday to get towards that goal. Obviously you kind of changed my mindset around that, Clay, with the things you do personally. The one thing about work is I do enjoy it. That’s one aspect of it. I’m in high margin medical software sales and a pretty competitive team. Played a lot of sports growing up, so from that aspect, I do enjoy work. The travel and things of that, that turns into a grind at times and dealing with these long sales cycle opportunities that are six to 12 months can be a grind.
RD: The main thing is just is it realistic. I would love to sit here and say I could trade full time and that’s how I make my living, or it’s just a piece, or one piece of the puzzle in which I make my living that doesn’t come from a W2 from a company, but to be realistic, account size and expected rate of return that I would need to do that, I mean with the amount I have in there currently is pretty unrealistic. For me, that was kind of the starting point. I love to trade, and I used to really think about how am I going to get to a point where I can do this full time. It’s not that, it’s still a goal and it’s still an opportunity out there, but just as it sits today, I don’t believe it’s going to be possible. I’m continuing to grow my account, do some other things, and Clay, again, just to use you as an example, real estate, getting some properties, things of that nature all in order.
RD: I think trading is going to be a nice fit to my long term goal. I think it’s going to be a nice secondary source of income for me. That’s what it’s been for the last three, really about four years. I think again, as I’ve talked in my other podcast, the first couple years I traded I was not profitable, but I have been profitable for almost four straight years now. It’s been getting a little bit bigger every year. A lot of positive things with trading. I kind of chipped my mindset away from how am I going to get where I can trade full time to I’ve got a good opportunity, I’ve got a great job, this is a great skill that I’ve absorbed and learned and I can use it as a great secondary source of income. That’s really where my mindset’s at today.
Clay: I really like how you said one of the first things you kind of go through when you’re at that bridge of do I just go full bore into training or do I keep some sort of guaranteed trade, ticker symbol JOB. It’s like do you even like the job? Yeah, sure, like you said, the traveling can grind on you a little bit, but overall you enjoy the job. For a listener out there, trading does not have to be, and I realize some people may try to portray it that, but trading doesn’t have to be full time trader or you’re just not a real trader. No. If you do something that you like or you have an opportunity that you like, then just use, I mean RD is a shining example of how trading can still be used as another stream of income. That’s kind of our motto around here is if your goal is to be just simply a full time trader and that’s it, I would challenge you all. How about you just make it one income stream of many? That’s really how you’re going to grow wealth over time.
Clay: The other thing, correct me if I’m wrong RD, maybe I’m barking up the wrong tree, but you’re saying it’s not really realistic for you to become a full time trader with just your account size and expected returns. I’m assuming if you really, really, really wanted to make it work, like every night I’m eating bread and water and I’m downsizing in every aspect of life, I feel like you could make it work. You would be very close to being able to make it work if you really just went bare bones type lifestyle?
RD: Yeah. I look at that example with a lot of different things, especially when I look at, because to me it’s a bigger conversation than just trading. When will I be able to make the transition from working for somebody else to working for myself essentially? Whether it’s trading passive income via cash flow from rental properties, et cetera, the point is there’s going to be a point in time in which I have to make that decision. Obviously, when that decision comes, the easiest way to look at it is if I live as frugally as possible what do I need. From a trading standpoint, for me to say I would need to, and let’s just use a $100,000 account theoretically.
RD: I’ll be honest, I don’t have a $100,000 in my account. I wish I did, but let’s just use that number theoretically. Say I needed $40,000 a year to live off of, just not even figuring taxes right now. I would need to make 40% return on my account value for that year just to survive. That’s breaking even because remember I’m pulling that money out of my account. Again, to me, I look at that and I say is that realistic? Could it happen? Yes. Is it probable to do that year after year? Again, for your account size to grow you would need to do over 40% of return.
RD: Again, as traders I think we understand that it is pretty plausible. It is possible to have. Again, these long term investors, that percentage seems pretty crazy, but as an active trader, I think Clay you have proven you can have really, really good returns. For me, I would rather wait until I’m in scenario in which I’ve got several hundred dollars of an account by working hard, doing my J-O-B and then I can really look and say now you only really need an expected of 15 to 20% to really maintain my lifestyle I’m willing to live, and then hopefully have enough leftover to continue to let my account grow.
Clay: There you go. You said the magic words. People are going to think this is scripted, but he made perfectly the point of why there is no universal answer to when do I go full time, how do I know if I can go full time, when will I know. RD said the magic words. To maintain his lifestyle. He’s got a certain, and his quote unquote lifestyle, his, how he, I like to call it the cost of contentment, what it costs him to be content, that’s different for everybody. I mean RD, he could cut out every single expense in his life, live in a small, small little apartment, literally eat like the cheapest of cheap food all the time. I’m not saying there’s anything wrong with that at all. If you are willing, if that is your cost of contentment as a trader, then you’re going to be able to go full time trader much sooner than, let’s just say a trader, I’m not saying this is RD, but a trader that they want to have Netflix, they want to go out to eat several times a week, they want to drive not a used car.
Clay: Again, that person, nothing wrong with them either, but to RD’s point, the words he used, to maintain or establish a lifestyle that he needs. That’s where you need to, that’s what the numbers need to revolve around. The question becomes for you as a listener is, I don’t know, what is my cost of contentment. What do I need to be happy? Once again, this is not me throwing Netflix under the bus. If you want to have Netflix, that’s totally fine. That just means that you’re going to have to make more money every month compared to somebody that’s saying I can be happy without Netflix. I’ll go on a walk outside.
Clay: That’s the name of the game. Could RD go full time? Yes. Would that allow him to maintain and give him his cost of contentment? It would not. That’s why he’s just being realistic and saying I want more money, I want more streams of income. Is that accurate for your explanation there RD?
RD: Yeah, it is. Again, also just one extra thought on top of that is what type of situation do you want to put yourself in. If in the best case scenario you feel like you can go full time, really think mentally what’s going to happen to you the first time something goes wrong. If you leave yourself no margin for error and you try to go for, once again, applause for trying. That’s the first step, but if you put yourself in a highly improbable situation and the first time something goes wrong, it’s almost like when you’re trading without a plan. It’s very similar where your mind is going to race, you’re going to make poor decisions because you’re under an emotional duress of the situation.
RD: That’s another factor that plays into it. I would rather be very comfortable, very, very secure type situation before I would try it. Again, that’s just another factor.
Clay: Well said. Absolutely. I mean that’s a good point. That’s actually probably a really good question to ask yourself, like RD said, if you’re thinking about let’s pretend things go wrong, and things going wrong could be something as I have a losing week or maybe I have a red month. In other words, not only can you not make enough money to pay the bills, but you actually have lost money. In that situation, how would you react? You can kind of almost role play that with the numbers or role play with yourself mentally as best as possible. To RD’s point, that’s a really good kind of test to figure out whether or not you’re being realistic with things.
Clay: This is also why, and again I’m not saying it’s not possible, but when you’re scanning the internet and You Tube or social media and you see people standing in front of a Porsche, Lamborghini, Maserati and then off in the distance you see their private jet, and then in the other corner you see their yacht, I’m not saying that’s not real. Just imagine that if you want that in your life, you better be ready to make a whole lot of money. You better be ready to make a whole lot more than 40% return on that $100,000 if you even have that amount. Now you’re looking at hundreds and hundreds of percentages to afford that lifestyle where you can take on depreciating assets like that because literally, that’s always the funny part when I see these people out there doing the late night infomercial marketing tactic of you sell the dream.
Clay: All they sell are depreciating assets. I guess once in a while they’ll have a mansion there, so that’s a piece of real estate, but besides that, if you actually stop and think about it, do you know how good of a trader you’re going to have to be? Do you know how much money as a trader you’re going to have to make if you’re going to be able to not only afford those objects, especially when those objects go down in value? Isn’t that kind of crazy, RD, when you actually stop and think about it from just a real life perspective?
RD: Yeah. Another way to look at it, I agree with you 100%. I’ve always thought that the guy I would trust, if I ever saw a video and it was a guy standing there in just some blue jeans and a white t-shirt and maybe he was pointing at the four or five investment properties that he owned, and he did it over 15 years from trading, that to me is someone more realistic. When you see, I’m not going to name drop anybody specifically, but when you see some of these people out here and they’re standing next to this yellow Lamborghini that they probably rented for the picture by the way, but even if they did buy it-
Clay: We have no proof RD, for disclosure sake before somebody sends us a cease and desist, a, we didn’t name drop, b, we don’t have any proof that you more than likely just rented that for the day for a photo shoot along with the Airbnb house. We’re not saying that. RD, that’s not what he said. Continue on.
RD: My point is that just say it was somebody that, I guess it’s contradictory facts. If somebody was that good and made that much money in the stock market short of just getting lucky on a one-time deal, but over time was that good and was that successful in the stock market, I seriously doubt they would be the type of person to go out and just buy a Lamborghini with all of their winnings.
Clay: That’s good logic. That’s really good.
RD: I mean when you see these videos, and again I think it just plays on and I think everybody understands there’s a reason that get rich quick schemes sell. There’s a reason why the easy button type things sell because people in today’s culture want those type of things and they’re willing to pay a little bit of money to maybe think they can find something that’s going to get them there quicker. As all good things in life, there’s no free lunch on Wall Street as they say.
Clay: I don’t think there’s a free lunch anywhere, but I like that logic. If somebody, like the traders that RD and I know from the community, I mean the ones that actually make it, and I’m including RD in this. Think about it, RD is a really good trader. In fact, at least as of the recording of this, a few days ago I posted a screen shot that RD put up. RD, he’ll talk about losses when he takes them, so he’s not one of these guys like RD posted a bunch of green days and all of a sudden he’s just gone. No. That’s not how he works. He’ll post, in fact, point being that a few days ago RD posted a screenshot that showed he was only, he was wrong 60% of the time.
Clay: Let me say that. He was wrong 60% of the time, but he still made, I don’t remember the number, but like $700 or something on the day. My point is RD knows how to trade. He knows what’s he doing. He’s consistent. As we’ve already discovered, he works a full time job. He’s out there grinding. He’s looking to expand into real estate and stuff like that. It’s not like a successful trader is somebody that’s wearing Rolex watches and driving fancy cars. A true, I would say, successful trader as far as the ones that I know, I’m thinking of Hooch. Hooch is a fantastic trader. There’s no doubt about it. He still does stuff on the side to bring in income. He’s a normal guy. He’s got his wife and he’s got a kid, all that sort of stuff. By no means is any of this, out of the illusions out there that are created.
Clay: I love Wolf of Wall Street. That’s a crazy story, but that’s like, don’t you this RD, probably one of the worst movies that ever got put out because you have all of these, especially in the younger crowd, their testosterone is roaring and they think that’s the name of the game. I don’t know. That’s one of those movies that I enjoy, but I don’t know if it did more harm or good. I guess it is what it is.
Clay: Did you have any final thoughts on this topic because you definitely chimed in with some fantastic angles of perspective.
RD: Yeah. In regards to Wolf of Wall Street, I think what it does, I’m not saying the events that happened were not true. They probably were, right? It was a unique time in the market. Obviously regulations and things changed that, but I think unfortunately what it does is it gives pros and cons. The positive is it gets people interested in the stock market. I’m all for anything that gets people invested in the stock market, interested, especially young people because it’s what I love and I want there to continue to be volume. As many people as can get involved, great. The problem is I think it takes people down the wrong path immediately. It takes them down the penny stock path. It takes them down the path of not really seeking education. Again, get rich quick. Again, that’s kind of my problem with the movie is I just think about where it leads people. Even though it initially gets them in the right place, it leads them down the wrong path in some ways.
Clay: Well said. Beautifully said in fact. I would agree. Good to get people interested, but then it’s almost a two-edged sword because we could go into the philosophical debate. Is it even worth getting them interested if they’re getting them interested in something and then taking them down the wrong path? I’m not Aristotle. RD is not Socrates, so we will not go down the philosophical questions there.
Clay: I guess what kind of lead you to where you are right now trading? I mean, like you said, I think every time you’ve been on here you’ve been kind of trading something differently. The one common denominator is it seems like you’ve always been really consistent in terms of, so this is where I want to take it. Just talking about losses because, again for listeners’ sake, on the blog, years ago, probably like two or three years ago now I did an article on RD where again he sent me like a bunch of his screenshots of his results. He was wrong like, I don’t know, 55% of the time or something like that, yet he still walked away after several months with well over $1,000 in profits. I think it was like three or four thousand dollars.
Clay: Point here being there was a bunch of losses in there. I talked about his screenshot that I posted a few days ago on social media showing more losses. He was wrong 60% of the time. This is my round about way of asking, from as far back as I can remember, you’ve always seemed to be one of these people kind of in a rare category where, and maybe I’m wrong, but it seems like losses have never really, I don’t want to say have been easy to take, but they’ve never really presented a massive challenge like they do for some people. How do you, mentally speaking, I mean do you have mind tricks you could share? Mentally speaking, how do you just take losses? I don’t want to say you have a good attitude about it. It’s not like you’re happy, but it’s not like you all of a sudden changed strategies. All of a sudden, I took a loss, it doesn’t work. I need to go reinvent the wheel.
Clay: You know what I’m getting at. Pick it up. Let’s just talk losses.
RD: Yeah. For me it goes back a long ways to once upon a time, and this is back, I mean this has to be four years ago. I’ll never forget that I lost, back then I was, again, for the first two years I traded I was not profitable. The last, going to be four in a row now, I have been. In those first two years, part of the reason I wasn’t profitable was I took really big losses. There’s one that always sticks out in my mind in particular. I think it was Apple. Again, I actually saved pictures of this to remind myself. I think it was Apple. I was trading it on a Friday. It was one of those things where my trade plan I had set in place, it went to my stop loss and I said, you know what, there’s this next level. Let me just drop this down.
RD: I bought some calls. You need to remember this was four years ago. Brand new to options. My whole point was I had about $500 in my account and I literally lost $430 on that trade in a matter of about two hours. I remember sitting there at my screen, just staring at it just numb. Didn’t even know what happened. That, to me, was probably the best thing going forward because really now every time I think about moving or adjusting a trade plan in a proper way, and believe me, this is the one thing I want to point out with trading is you can regress. Don’t ever think you can’t regress because you can, but every day you have to make a decision when you have trades and make sure you’re following your rules. To me, it’s kind of like rubbing salt in the wound. I have that really good example in the back of my mind of when that happened.
RD: It was, like I said, a very emotional response to a loss. I think that’s why it sticks with me so much, especially back then. I did not have the job that I have now. I mean $500 back then, holy smokes. I was devastated. I mean it was one of those things that I went and laid on the couch. I was very emotional moment. To your point now, I mean it’s a lot of things, and it’s just developed over the years. It went from I’m not taking these big losses and that’s really helping my account as far as the trajectory and growth of it over time. That was kind of step one. Step two was just getting smarter. Don’t get me wrong. That’s why I brought up the whole regression point. The thing about trading, you’re never going to get to a point where you’re perfect. You can always make the same mistake that you made years ago. Even if you haven’t made it for years, it can still happen, whether it’s just, the example is yesterday.
RD: You accidentally buy instead of sell. It cost me $30 yesterday. I had a Netflix [inaudible] or something like that. I went to sell and actually hit the buy button instead of sell. By the time I realized it, it had already moved and I sold them both for $30 loss. Mistakes happen that create losses, but I think more of what you’re driving at is these big losses. A, the first step is to just avoid them. You can avoid them by simply having a trade plan. If you know roughly, even trading options with the outcome is a little bit variable especially if you’re using a market stop loss, you still know in the ballpark of what you’re going to lose if the trade goes against you. That’s step one. Control your risk from a planning standpoint.
RD: The other thing I’ve been doing more so lately because I’ve been more swing trading and overnight holds, which again can go greatly in your favor or against it as we’ve seen in the last two weeks, is really just controlling my risk by position size. I mean that’s really the easiest thing to do. That’s why I love buying options directionally. I don’t do any advanced option strategies besides on paper right now. When I actually execute a trade, it’s buying a call and the beautiful thing about that is you can really control your loss just simply by the position size.
Clay: That’s some good stuff. This doesn’t mean much to you because that episode hasn’t aired yet, but for listeners out there, you loyal ones that listen every single week, think back to Lisa. Think back to the rabbit hole we went down and how I made the point that voices are never going to stop showing up. The voices, that’s just how we’re wired. That’s how we are. Those voices will show up. You can’t fall into the trap of looking at things like a rule break voice showed up therefore I am a bad trader. No. A rule break showed up and I listened to that voice. There is what makes you a bad trader.
Clay: RD, would you agree with me that the voices never, never actually leave you alone, but the key to actually becoming consistent and successful as a trader is you need to be able to just first off, a, be able to identify those voices and then b, just not listen to them? It sounds like that’s pretty much what you were saying without saying it.
RD: Right. It’s exactly what you just said. They’re never going to go away. That’s why you hear the word discipline associated with training so much because you need to constantly have some foundation or like a grounding, something to ground you back to a specific area so you can remember that. Again, I mean it’s human nature. Clay, I know you talk about this a lot through all different avenues of CTU and [inaudible] webinars and stuff, but the market is counterintuitive to the human, the natural human tendencies I would say. What happens is knowing that it’s coming from that fundamental point of view, every day you’re going to be challenged. Every day, especially if you’re in front of the screen, and that’s another thing swing has helped me with because I’m not actually sitting in front of the screen as much.
RD: If you’re sitting in front of the screen, you’re watching those candles. Man, they will start playing games with you. It doesn’t matter. It doesn’t matter. Some of the best trades I’ve ever had have been in pennies for my stop loss. Again, because I set that plan in place before the trade, I knew that was a good key area. Again, there’s been times in my, again, I think about when I first started trading where I would take that same trade and right before it gets to my stop loss, I’m like this looks terrible. I’m going to hop out. I’m going to save myself some money. Then you hop out and it immediately reverses and goes all the way to your target.
RD: Trade plans can help you avoid those mental pitfalls, but yes, regression is a real thing. Discipline is kind of your saving grace on getting through those challenging times.
Clay: That’s a great point. I’m always focused mainly, and I think that’s what we really always talk about is a stop loss is great because it will get you out of [inaudible 00:31:43]. It will keep your losses controlled. All that is true. All that is very important, but listeners’ sake, I was kind of going through some of the old blog articles. Behind the scenes we’re working on some stuff, but point being I came across an article that I titled how assuming cost me 230%. It was exactly what RD just described about the stop loss where I had a stop loss and the price was coming, coming, coming towards it. Then all of a sudden I was just like it’s going to hit me, so I might as well hop out right now and just save myself a few extra bucks because it’s clearly going to hit me.
Clay: I hopped out and then, what RD said, it totally went in my favor and I would have had literally an opportunity at 230% on the trade, but I missed out because I didn’t actually follow the rule of estoppel in the sense of that’s your line in the sand. Just stay there. If I would have actually just stayed and respected my plan in the stop loss, not from a risk management perspective, but just from a keep myself in the trade, keep myself, don’t hop out of the trade perspective. That would have been one that, it really, I hung myself out to dry. Good point there that there is kind of the two fold to that stop loss. Sometimes it’s not a matter of controlling risk. It’s just to keep you in the freaking trade so you don’t play games with yourself.
Clay: It sounds like you’ve done what I’ve done before, so I’m not alone there.
RD: Right. No. Exactly. I like to, I mean people think about it like being mechanical, being robotic as you say, getting in trades. Again, that’s the one thing. I look at my rules as ways to protect me from myself. I’ve heard a lot of really successful traders that I’ve studies, shows like Market Wizards and really mainstream popular books. A lot of people say it, and it’s so true, you really put rules in place to protect you from yourself, to protect you from, it’s almost like seeing shadows at night. You get into these trades and these candles start moving. You start seeing things that aren’t really there.
RD: I’ve done exactly what you, like I said, the example that you just laid out, I mean I’ve assumed. Especially if you get a trade, it bleeds out. As we know, with options you have theta and gamma risks that come into play, especially if you’re trading front [inaudible 00:33:59]. You get a little bit of sideways action, now you’re really thinking about your trade even though the price hasn’t moved because of the theta and gamma risks that are involved. Definitely, especially as an options trader, you have some extra factors that could help you make some poor decisions to move your stop losses, take them out, et cetera.
Clay: I like that. That is a good way of looking at it. The rules are just designed there to protect you from yourself because, to your point, the markets are very counter intuitive to the way our brains are kind of wired. That’s why, to bring this all full circle, just because the voices show up, don’t listen to them. To steal RD’s point, they’ll try to make you regress. They’ll try to make you break those rules. Then all of a sudden that can be a domino effect. Maybe you start to question yourself, and it becomes a feeding frenzy of emotions. If you just, you said you printed out that picture. Is it like hanging by like your computer, or you just keep it somewhere on your phone? Where do you keep this Apple trade picture?
RD: Oh, no. I just keep it in my, everyday all the screenshots I take and reports I get from my broker, I just put them in a trading folder. I have it. [inaudible] on my third or fourth computer since that happened, but I make sure that folder is very easy to find.
Clay: I’m all for stuff like that.
RD: Yeah. Three clicks, $430 bucks and it was back on, looks like, yeah I saved the picture in June of ’14.
Clay: That’s awesome. Think about that. This is five years later now that RD is still trading, still making money. Just because you take a big loss, please don’t let that be the time, or maybe an annoying loss. Maybe you just need to get out the screenshot utensil or program or whatever it’s called, and snap that screenshot. Maybe that will be the thing that really kind of hits you in the face in the sense of, all right, I’m going to make a change and I’m going to use this little screenshot here to remind myself of what can happen when you don’t honor the rules.
Clay: Way back when did you find yourself, because we see it all the time, we see people come in the chat room and they’re like this, that and the other. Then you ask a little bit more about their trade. Finally you’re like don’t get me wrong, that’s great you have a trade plan and it’s great you have a stop loss, but none of that actually makes sense. It’s not a very logical risk. It doesn’t really, you know, things could be better. Things could be more streamlined. Do you think that had quite a bit to do with it at first or was it literally just a matter of you had the right plans in place, they were all logical plans, but it was just the voices that were causing you to break things?
RD: I mean initially it was actually the former. Obviously when you first start trading you don’t understand trade plans, how their positioned and how to create them, especially when you’re doing it and you’re very new to it and you’re trying to write it down. Now, especially with trading options and trading in general is an art. I’m not saying I still don’t write down some of my trade plans, but now I really understand relative to what my risk is and I can do it pretty quickly either mentally or just on a scribble note on the side. When I first started training, there really wasn’t a structured plan. I kind of new this is a good spot to buy, this is a good spot to sell, but there really was no risk. There is really on risk assessment in there.
RD: It was I think I’m going to buy here because it’s a good spot to buy. Then the momentum of the trade would go against me and all of a sudden you’re just paralyzed. You don’t really know what to do. That’s really what it is. Really our jobs, I mean as a trader you’re not really trading to make money. You’re really a risk mitigator. You’re really trying to assess and manage your risk as best as possible. That’s what the trade plan will help you do.
RD: Initially it was no trade plan. Then obviously all the [inaudible] that opens you up to unexpectedness. Then obviously as you start creating a trade plan and start to refine it, make sure you’re following it and following that process.
Clay: Well said. That is something that as a listener, first off, if you just walked away I better start using stop losses or I better start treating those stop losses and honoring them. That’s good. That’s definitely a great first step. You need to take things, that next step and say are my trade plans even structured the right way because there’s more to it than just having a stop loss. Once more, I’m not saying, I commend you that at least you know manage risk and try to control and all of that, but there’s that next layer that’s going to get you over the hump of should you even be taking the risk in the first place and different regards to that.
Clay: Again, please walk away. Definitely start using a stop loss or keep honoring the stop losses, but also really question yourself on whether or not your trade plans are structured the way that they should be.
Clay: I’m just asking this out of curiosity because I really don’t know. I’m assuming it was work stuff, but you were gone from the chat room for quite a while. Now you’ve just showed up within the past couple weeks, which has been awesome. Love having you around and here we are talking and doing the podcast. Did you step away from trading just because you needed a break from it, or was this just simply a function of work, or if it’s just none of my business because it’s personal stuff, you can tell me that too. I won’t be offended. We’re friends.
Clay: What kind of brought you back to the markets, or at least brought you back to the chat room?
RD: It really wasn’t anything in particular other than I was just working a lot. The problem with, again, unfortunately my work, what you’re referencing is really the start of this transition. It kind of happened to me about a year ago. I said I’m going to start learning how to do a new type of training.
RD: Let me back up a second. I guess to answer your question in short is that it was just the style of training I was accustomed to doing and the style of training I was trying to do was not conducive to what my daily schedule was. AKA I was a day trader. That’s all I really did for about two years. Some [inaudible] holes, but not really. That was really, what happened though was I took the new job and there was so much travel, it was trying to bring my laptop with an extra screen and trying to do it from my hotel room on spotty internet. There was a lot of challenges involved with it.
RD: Unless they disappeared, it wasn’t so much that I disappeared willingly, it’s just I’d be on the road, I’d be working. That got me to a point where I realized I’ve really enjoyed the market in general. It’s a passion of mind. I know that much. I know I need to adapt and learn some type of way. I need to learn some type of way to capitalize on my schedule. Obviously that lead me into more of what I call an intermediate time frame, anywhere from one to six week hold times. I would argue one day at the six week holds depending on the situation, but what I had to do is I had to learn and adjust my strategy to fit my day-to-day.
RD: I knew the job was staying for sure. That was a given. The next step was how do I adjust my trading to fit that. It took a while honestly. Like I said, probably about a year ago, I had my first stretch where I unfortunately was tied up, very busy with work for a couple of weeks and kind of was not around as a product of that. Then it happened again last fall, as you referenced. I finally just got to a point where I started day trading options. I know the market environment was pretty conducive for swing trading. That’s one thing I wanted to mention as well, Clay, back to what we talked about earlier on if you’re going to try to go full time trading and you think you can get these massive returns on a smaller account, always remember that every couple years it seems like the market changes.
RD: End of ’14 all the way through 2016 it was pretty flat. The last couple years has been pretty good. I bring that point up because again I kind of had to realize my lifestyle was changing. I had to look at what the market was offering at the time, and it was very trendy, very directional type trades. It was great for swing trading, great for intermediate time frame. Really that’s when I started working on probably around last Thanksgiving, spent about three months paper trading. I think I popped in and shared some of my results when I was doing that. It really was not so much paper trading for the trade plan things of that nature and, again, not to be boastful, but I feel like that aspect of it I really have down.
RD: I was really paper training because I’m trying to figure out the right amount of time to buy the option with. I know a lot of stuff in your course has helped me with understanding theta decay, gamma risks and things like that, but it really just boiled down to how much time, what’s my time horizon for the trade, how do I figure out what strike or what expiration date to go with, how far [inaudible] or money do I wan to go, et cetera. Really I spent a couple months really fact figuring and those types of things and worked out best for me. Then once I did that, I really started executing trades.
RD: Again, shifting from a two five-minute, 15 minute chart day-to-day experience for many years and then shifting over to where I’m looking at nothing but hourly charts or higher, all the way up to the monthly, it was a very different experience for me, and then understanding the nuance with options and how sensitive you are to global news and stuff that happens [inaudible] after trading hours. That’s really, in a nutshell, why I had some time off and really the mental state it got me into and kind of how I combated that and now kind of what really has got me to where I am today and doing what I’m doing. Still day trading a little bit when I’m here. Like today, last couple days, I’ve been able to day trade which has been great because I’m at home.
RD: Now it doesn’t bother me. If I have to go out to work for two weeks, I can still participate and be involved in the community, but mainly just be involved in the market and still be generating that secondary income.
Clay: Awesome. You mentioned, you were trying to tote your extra monitor around and sketchy internet, but I would imagine that was probably a pretty difficult maybe self-realization that, you know RD, this isn’t quite working out. How long did it take for you to kind of realize and acknowledge that fact, and was there some sort of horror story, or was it just kind of you needing to fess up? The reason for the question is, I see it all the time. People are like you’re starting to realize something, but you’re not really admitting that you need to just take hold of what you’re realizing because sometimes people, it’s like standing right in front of them and they don’t grab it.
Clay: How long did it take you to make, because if I put myself in your shoes, that’s got to be a pretty big buzz kill to be like I have this routine, I’m day trading, and boom, boom, boom, it’s great. Oh. All right. Maybe, have things changed? Not at all. Things haven’t changed. I can make it work. How did that all kind of play out for you for more, I don’t know, maybe it’s very anti-climactic and you’re like, no it was a very cold turkey experience. I just one day decided not going to happen.
Clay: How did that actually play out?
RD: That’s a good question. It’s somewhere in between cold turkey and anti-climactic. It really just was kind of a death by a thousand cuts. I mean it was a blessing in disguise. Before I tell the story, I will say it was a blessing in disguise. It was just the simple fact that I liked day trading. It was what I was used to. Again, if you remember what I said earlier, when I first started trading I wasn’t profitable. Then all of a sudden I get to an environment where I was profitable doing this particular activity. I didn’t really want to move away from that. It wasn’t that I didn’t want to try new things, but once again, if it’s not broke, don’t fix it.
Clay: Exactly.
RD: It was, from there it was death by a thousand cuts. It was driving down the interstate and all of a sudden I’ve got alerts going off. Now I’m either trying to not really trade while I drive, but find a place to pull over, trying to manage it, try to get involved. The worst thing was having positions on and then, again this is kind of a mixture between day trading and swing trading. Sometimes I’ll have a position on and I need to manage it or move my stop loss stuff in the middle of a meeting and that meeting goes two hours. By the time I come out, it’s been up and down. I’ve lost all my profit window. So many things that would just happen just simply because I’m in situations where I’m not able to do, like I’m in so many situations where I’m not even able to step away for even just a few minutes.
RD: Again, it took me back to a place where I was like I have to completely get away from having to actively managing trades. I need to be able to on a daily basis set targets, and bracket orders are extremely helpful for that, but I need to be able to manage it. If I’m out of pocket for three or four hours, it’s not going to kill me. That’s really what got me to this point.
Clay: That sounds like annoyance was probably a driving force that maybe made the decision a little bit easier. I don’t even know how you could focus. You’d be like in a meeting, this freaking meeting was supposed to be an hour. I should be out checking my trades and we are at one hour and 57 minutes and 32 seconds. That doesn’t sound-
RD: The biggest thing was this, like day trading wise, I would be in the hotel room. A lot of times, and again I could structure my schedule if there wasn’t a pre-set meeting. I’d get an hour, hour and a half. The problem was, if I was in a position and say it was running, I just didn’t want to cut it. You could use trailing stop losses and stuff, but we both know with options that could get crazy. I’d be like I’ll just manage my stop loss like a manual stop loss and I’ll just check it here in 30 minutes. Then say the trading continues and you’re in this big winner. The next thing you know, you come out of the meeting and it was you were up 400% and then all of a sudden you end up getting executed for plus 150 because you just couldn’t look at your phone for 30 seconds.
RD: That’s what happened to me as well. Not only from a losing standpoint, but from a winning standpoint. You know me, when I like to day trade I like to use a five minute stop loss method, methodology. Again, it’s kind of hard to do that every five minutes if you’re in a meeting. Yeah, annoyance was a good way to put it, but again it really was all a blessing in disguise. It really kind of all lead up to the point at which I am today. A lot of good came from it.
Clay: It’s amazing how if you just are always kind of in communication with the person in the mirror and you’re not sitting there always blaming external forces or playing some sort of victim card or somehow implying in your mental framework that there’s just nothing I can do because I am, and then you insert blank into external force. For you, you’re just like this isn’t quite working out, but what can I do, and you’ve gone and figured it out. There’s power how kind of those things work out for the better. It’s been a blessing that it happened. Well, the only reason it happened is because you looked and blamed the person in the mirror and decided the person in the mirror could change the situation. Had you just had a totally different mentality, then I don’t think it would have worked out for the better.
Clay: Realize that listeners. There’s a very toxic mindset out there when you just don’t think that you can do anything or you don’t think you can provide a solution to the problem. When you flip that mindset around, it’s amazing how things just work out for the better and the pieces seem to all of a sudden just click together. It’s weird how that works out to somebody with the mindset of I can’t afford that rather than a how can I afford that. There’s such a big difference in those mindsets.
Clay: I want to kind of move into, because we have a lot of people that have full time jobs or work. How does your strategy actually pertain with that? I mean is this something, I know there’s swing trades, and like you said they are longer term trades. Is this something where positions are just checked at lunch time or do they not even need to be checked everyday? I guess walk listeners through what your daily routine looks like as somebody that’s traveling with a full time job.
RD: It’s kind of whatever you want. I know that’s not a good answer for you, but I mean really it just depends.
Clay: That’s a terrible answer. Yes. Please, please, put your RD spin on this and make this a little better answer. I know what you mean, but yeah.
RD: The main thing is, yes, if I am tied up all day, in most scenarios, and again I know when I’m going to be tied up all day, I can put myself in a situation where I don’t need to look at my phone, whether that’s like I said [inaudible] really helped me. I use interactive brokers. Especially if I know there’s an area on the chart that I’m really interested in purchasing, I can set up my trade plans ahead of time with advanced orders. That really allows me to not have to look at my phone at all for execution. I call them fishing orders. Put them out there. If they hit, they hit. If they don’t, you can come back after work that night, et cetera, and you cancel them. The same thing even when you’re managing a winning trade. With swing trading especially when I’m not so worried about theta because I am further out in expiration, and I’m not so worried about the decay factor or even really gamma for that matter because really that spikes on front week, I can really be a lot more accepting of I’ve got a profit target. Again, bracket order, right?
RD: The beautiful thing with a bracket order is I can move my stop loss up from the value of the option behind it, but I can keep that profit target. Again, if I’m accepting that this is either going to go to target or it’s going to go stop loss, why do I need to look at it? The moment it’s in and I’m in the trade, one of two outcomes is going to happen. Now that’s not to say that after a day or two things don’t change and I adjust some things along as it’s still within my trade plan, but as far as from a day-to-day, at some point everybody’s going to be able to look at their phone or their trade platform at least once a day I would imagine From that standpoint, set up the orders 5, 6, 7 a.m., whatever you need to do. Come back tonight and check it. If you’re accepting of those two outcomes, there’s no reason to look at your phone at all.
Clay: I like that.
RD: I’m pretty much, yeah.
Clay: Pretty much because you have foresight into what your days are looking like or may not look like, you have different strategies within your tool belt that you’ll deploy. Is that kind of a fair representation that you’re looking at your calendar, it’s going to be a lot of meetings today, therefore I need to do strategy A, or maybe you’re looking, I don’t have that many meetings at all, therefore I’m going to do meeting strategy B. Is that kind of how it works out?
RD: Yeah. I mean that definitely is a good way to put it for sure. Usually in the mornings I look, especially because I’m home. Even when I’m home, for example this afternoon I’ve got three or four straight hours of meetings. Even if I’m sitting at my computer, I know I’m not going to be able to be very active. In the morning, I typically look at my schedule and I know what’s going to happen. I’m trying to manage my, I call them fishing orders, on a daily basis. I’m really looking, especially when you’re trading on a daily chart, which is the premise of, well daily and weekly charts are really what I try to focus on in this method. Again, every day they are updating. Really, until the candle closes, sometimes right before close if I’m available I can check it out, which is good at times, but you’re pretty much looking at it after the close of the candle to see what happens.
RD: Again, you can be a little bit of foresight and you can put some fishing orders out there. If you think that Tesla’s a couple blocks above the 50 SNA and you think you’re going to be speculative when it gets there regardless of going on, you can set that fishing order the night before. Looking at my calendar helps. It doesn’t matter what you’re doing. If you think that you can look at your phone, I mean I hate to even say this but I would argue just once or twice a week even. Sounds crazy, but if you were just to sit down once a week and use weekly candles and have a very long time horizon on your trades and be way out in expiration with options, or just buying common stock, whatever you prefer, there’s no reason you couldn’t make trade plans based off the weekly chart. You just have to understand that’s your time horizon and the time associated with letting that trade play out.
Clay: Well said. That’s the beautiful thing about charts. When your main tool is tactical analysis, I mean they really do allow you to mold and shape a strategy that’s based on not only your personal risk talent as a trader, but a very literal real world perspective, which is why I’m kind of pressing RD so much on this because I know it pertains to most listeners. The people that have maybe not necessarily jobs, but if you have a family or you have just all sorts of stuff going on, you literally could manipulat the time. With charts, you can get a puppet master, a time and you could just use a weekly chart, for example. You can make it work. There’s just so many ways to maneuver within the market themselves. That’s a great way to look at it.
Clay: The other reason, my ulterior motive for kind of going through all this, is notice how RD is talking about how he approaches this, what he’s done, what he’s focused on. Maybe you’re thinking, wow, that’s a lot of stuff. He considers quite a few things. After he’s considered those things, then he’s got to do all those other things. Yeah. That’s actually what trading is. Trading is not like, do you have a job? Sign up for my alert service and we’ll tell you exactly what to do with the job and all you got to do is be sure you can check your text messages. I get it. I understand. That’s such a beautiful sales pitch and it would be great if RD could just say for my sake, I signed up for the inner circle and I have a full time job and you send me text alerts. I’m currently lighting up my cigar with Benjamin Franklins right now because all I do is check my, that would be so good. Unfortunately, we’re just going to keep it real around here.
Clay: This whole interview, just think about the way RD has conducted himself and explained things. You think there’s a lot that goes into it. Yeah, there is a lot. I always argue that there’s many pieces that go into it, but as far as each individual piece, would you agree with this RD that there are a lot of pieces, but each individual piece, and assuming you learn them at a piece at a time and then learn how to structure all those pieces, the pieces themselves are very, very simple, are very, very straightforward, but things get a little bit murkier when you got to understand how to put all the pieces together. Would you agree with that or am I barking up the wrong tree?
RD: No, I would agree with that. If you break it down to components, each component as you say is fairly simple. Really, especially if you understand the instrument in which you’re trading whether it’s options, common stock, commodities, et cetera. Once you understand the vehicle that you’re trading and the nuances associated with that, it makes it a lot easier. Obviously trade plans, like you said, you can break these things down into as many components as you want to. Like you said, putting them together and understanding how they all flow and how they’re all part of the process, I mean even from a time perspective and research, I would argue that’s a component. I think you hit the nail on the head a minute ago when you said that I think some people think they’re going to show up and they’re just going to open their charts in the morning and the bell is going to ring and there’s going to be all this information they can read immediately or they’re going to see.
RD: It really doesn’t work like that. You really, I think the successful people look at this as a secondary source of income. They look at, the word job has a negative connotation. That’s why I like to use the word passion. People who are passionate about this, they don’t mind to spend time. Heck, for example, we are in a very volatile market right now. As of today, today is August 6th, and we are in the midst of the tariff news and rate cut. Volatility is extremely high. I don’t know what the [inaudible] is at today, but I’m sure it’s up in the teens. I spent over four hours on Saturday night, Saturday night, looking at charts because there’s so many good opportunities out there right now. I want to try to leverage and maximize that opportunity. I’m trading charts that I haven’t traded before just because their just so good risk and risk reward scenarios playing out on a lot of these charts that, for example, sometimes there are what we call mud stocks that don’t have a lot of volatility. Those charts have volatility right now.
RD: Your options, [inaudible] play on words, but your options as an option trader if you will are really expansive with the volatility of the market. Again, that takes more of your time. You’re not going to be able to understand, assess, research and find those opportunities by just turning on your platform at 8:25 in the morning and then hoping something good happens. You’re going to put the work in up front and you’re going to understand those things and you’re going to have alerts set. I don’t have to have all these charts up. I use TD America. It’s sink or swim for my platform. I can right click, set an alert. Bam, the moment the alert hits the next day, if it hits a certain price point, I can pull that chart up and I immediately understand why I set that alert and what I was looking for, or I can just set a fishing order at midnight. I did that the other day. I put a fishing order on [Vive] or something like that. It filled at 9:20 something the next morning. I completely forgot about it and then it filled and I was in a great spot from a risk, risk reward standpoint.
RD: Time is a component. All the aspects that you talked about are components. Do not get it twisted. If you are going to be successful, you’re going to spend time. I’ll flip it back to you, Clay. How much time do you think you spend? You’re a very active in and out trader, very inter day trader and I would argue, how much time do you spend every morning looking for plays and charts?
Clay: This is where I was going to turn this into a talking point, more so a lot of that has to do with your strategy. Me? Because I’m just scalping in and out, I can wake up in the morning 30 minutes beforehand, go through some things, and I’m ready to go but that’s because I’m scalping. I want to be done within 90 minutes. Maybe you’re thinking that sounds great, that’s what I want to do. That’s fine. You can make that a goal, but it’s not like I just woke up, and to RD’s point, spent no time and all of a sudden I’m able to do this. No. There was a lot of time and effort and headaches and blood, sweat and tears that allowed for my strategy to be in play. Yeah, the amount of time is going to be there in one form or another. RD’s time is he was prepping over the weekend. That’s awesome and that’s so motivating. If you’re thinking, “Did he just say he was doing that on a Saturday night? I got clubs to go to. I got to go and who knows what, drive my leased whatever fancy car is out there and I got to go to the clubs on Saturday night. I don’t got time for that.”
Clay: You know what? RD and myself look forward to taking your money in the market because you are just chasing the dream my friend and you’re not actually taking this as serious as it needs to be.
RD: I would say this. I would say you’re downplaying. I know how much time you put into this. While you may not spend a lot of time researching, you invest, and you’ve done it for years, what over a decade now? Like you said, blood, sweat and tears. You have invested your time into this and you bore those fruits of labor.
Clay: Yes. My strategy comes in the form of time, front loaded time. I mean so much time. Ridiculous amount of time. Time where I still remember I’d get home from Honeywell when I worked a job there and I would just be like, to an unhealthy extent, just pouring over charts and pouring over charts. By no means am I saying, hey, you know what, with my strategy you can be done within 90 minutes. That’s true, but how do you get to the point of being done within 90 minutes? A whole lot of time and figuring things out and making the tweaks that best fit for your risk tolerance because there is no doubt about it, I had all sorts of time front loaded. Now, once you get to the point, because I’m just day trading, I’ve just got to figure out what’s actually volatile for that morning. That’s kind of what I’m interested in.
Clay: For example, right now I’m watching ALLK. There is no way that I’d have any idea that ALLK would be acting as a beast as it is right now, but because I have scanners, because I have certain things that I’ve leaned to use, it took me all of about two seconds to know to look at ALLK. You got your chart up RD? Pull that sucker up there. Look at that two minute.
Clay: See it?
RD: I see the five. [inaudible 01:02:07]. Yeah.
Clay: The five is [inaudible 01:02:10].
RD: Over extended there. I’m surprised you weren’t on that.
Clay: Yeah, exactly. I mean that didn’t really take, I found that as I’m talking with RD here, but regardless, it’s a great talking point and it’s something that I don’t really want to talk about and sit here and be like there’s barely any time. No. No matter what strategy you use, there’s going to be time in one way or the other. That’s just kind of, I think the best way to illustrate that is really just RD four hours on a Saturday night. Just grinding man. That’s good motivation. That’s what it’s all about here. You’ve got to just grind.
RD: I think what you see is, the thing is once you’ve recognized the opportunity, especially like I referenced, trading was very difficult ’14, ’15, ’16 because the market sideways. There’s different strategies to leverage that, but as being like what I do is more of a directional trader, that’s a terrible environment. When I see these are high spikes in [inaudible] and volatility, I get excited because I know there’s a ton of opportunity going to be had the next few days. Recognizing that opportunity, I said I’m going to make sure I’m prepared and I’m going to spend time. I have. I spent time every night.
RD: I would also like to make one other point, Clay, if you don’t mind, especially around some of the things that have helped with all of those.
Clay: Please do.
RD: I think you and Chaz pointed this out to me way back on one of my other podcasts, but part of the way I said it was a blessing in disguise switching from, again because of my job and all the factors we talked about and how I got to where I am now with the trading and swing trading, one thing that really opened my eyes to why that was needed and why it was successful was trader view. What’s very interesting about trader view is you can get on there and you can essentially look and see, I mean you can essentially see what you’re doing. You upload your trades. It’s very intuitive. It tells you, it really tells you what’s going on. What I’ve noticed was my expected profits if you will on trades that were over a one day hold, meaning anything outside inter day, were shocking to be honest. I didn’t even realize how high they would be.
RD: I said that to say understanding your trading from a data standpoint as well and really looking and saying what am I doing, what can I do to understand how I can be successful trading can also help you. Again, the whole progression. I’m frustrated from having to shift away from day trading, shifting away from day trading, starting a journey down swing trading, and then obviously stepping back and looking at the data after it was over with and going this is actually one of the best things I ever did for my profit loss.
Clay: That’s actually a really good point because it’s a good sound bite. It’s like you always got to be making progression, you got to make sure you’re trending in the right direction. That sounds great. That’s very true, but when you actually boil it down, it’s like how do you actually progress? How do you know what direction to even head let alone actually make sure that direction is in an up trend. Like you said, data. That’s an excellent, excellent point. Thanks for bringing that up because when you pay attention, and there’s definitely sites out there, trader view is a great site that can give you that data. Some people all they need is a trade journal and they’re writing things down. That’s fine. That’s another form of data, but when you are trying to progress and you are trying to get things figured out, you need to actually know what’s going on because it’s one thing to say I’m progressing, I’m going to progress. That’s great. You’re going to progress. How?
Clay: I’m going to get better. How are you going to know if you’re getting better or getting worse? If my account goes up. How do you know your account’s not going up because of bad habits? That’s what I mean. You got to have data. RD, we’re at an hour and I know we wanted to be done, but do you have any other points that you wanted to drop because that was a fantastic one? I’ll let you keep rolling, man, if you have anything else, any other points that you wanted to make.
RD: No. I mean that was really it because again, I think that point plays in to what we said earlier where I think a lot of trading is counterintuitive to just natural human tendencies. Again, to separate yourself and protect yourself not only with trade plans and rules, look at the data. Look at the raw black and white data, and again, whatever service you choose to help you assess your trades and gives you time of day information, et cetera, it can just make you more successful and you can focus on the areas where you’re being successful versus not.
RD: That’s really it. The only thing I would say is don’t lose confidence. I know the hardest part of this game is staying alive for the first little bit. If you’re new to trading, invest in education, whether it’s Clay, I’m going to steal your line Clay. Whether it’s you, whether it’s somebody else, et cetera, you will spend less investing in education than you will in what you’ll use in your account without it. Please, I would just behoove anybody to get educated, try to learn a little bit about what you’re doing, and then be patient. If you can stay alive for a little bit, you can stay alive and be comfortable, it’s one of the best feelings in the world and you’ve learned a skill that is going to help add income and a cash flow stream or revenue stream, excuse me, to what you’re doing from a day-to-day basis. It’s a skill that you’re going to be able to take with you forever.
RD: Anyways, that’s my last bit.
Clay: I like it. In fact, I think you just gave me the idea for the name of the podcast, just staying alive. Because you’re right, that’s what it is. Just freaking stay alive. It will, I’m not going to say it’s guaranteed to work out, but you got to just stay alive. You got to tread water because too many people show up. You’ve heard the schpeels before. That’s fine. I don’t want to say every week, but if trading was really as easy and as straightforward as I’m just going to watch You Tube videos, can we all agree that the success rates would be at least a little bit higher than the five percent, the ten percent that they are? I mean if it were just that easy as a library book and You Tube videos, you would think that things would work out better. I’ll just leave it at that. Stay alive and whatever you got to do to stay alive, that is definitely your call.
Clay: RD, thanks for hanging out. Now it makes sense why you’ve been on so many podcasts because you bring a good perspective to things. I appreciate it.
RD: Thanks for having me. I’m glad I’m back in full force. Hopefully we get some information on the next meet up soon, Clay.
Clay: Yeah. Okay. Nice little, we’ll see. We’re working on it. I’m glad that you plan on being there because you’re fun to hang out with. I enjoyed spanking you in Top Golf in Denver. That was very pleasant. Thank you very much, RD. I really do appreciate you taking some time out of your schedule, which I know is very, very busy.
Clay: Now for you listeners out there, a final few things before we go. First off, if you are listening on iTunes or any other podcast players, make sure to subscribe so that you are aware of when new episodes are released. Especially on iTunes, if you could leave us a rating, that helps us and goes a long way. Especially a text review where you type up a review, that really, really helps out and we would appreciate that very much so. If you’re watching at on the show notes page, there is a live chat box right there, so feel free to reach out to us comments, questions, suggestions, whatever you may have, and we would definitely love to interact with you and hear from those of you that listen to the podcast here.
Clay: That’s all I have. Thanks again RD. Thank you to you as listeners. We will see you 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 trading and more, visit

READ ALSO  A Mystery – NorthmanTrader

Share This Post:

1 Hour Trader Transformation

“Let Me Show You How I Had ONLY 1 Losing Day Out of 73”

This Live and Free Event Reveals: How I transformed myself from an employee to being my own boss (and how you can too, even with no experience!)