Clay Trader Podcast

STR 253: A College Kid Making His Way

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Via Clay Trader

This discussion is why I have a very hard time finding pity for people who seem to throw out excuses like candy. When you have a passion and drive for something, much is possible even when you may have many other “things” occurring. Community member Harmon tells us about his journey so far and how he’s been able to get involved in the markets even while being a college student (along with a whole lot more). He had some misjudgments at the start of the journey that we talk about, but that’s normal… the key is acknowledging them and then making adjustments. What adjustments needed to be made? How is his newly started live trading going? We talk about that and much more!

Transcript

Clay: This is The Stock Trading Reality Podcast, episode 253.
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. This is your host, he is jealous of you if you live near a Stan’s Donuts, ClayTrader.
Clay: Yes, I am very jealous. There is no other way to put it. It’s probably a good thing, though, because I would weight about 400 pounds if I lived that close to Stan’s Donuts. And I’m not a doughnut connoisseur, but I kind of am. I’ve traveled all over the country now at this point as… If you’re not familiar, at claytrader.com I do offer a trading community and part of that is I’ll go around and just do meet and greets where you can put a face with the name and all that sort of stuff. But a part of those trips, I always like to stop at the local doughnut shops and check things out, and Stan’s Donuts out in California, more specifically right around the Silicon Valley, let’s see…
Clay: I went out there because my brother-in-law works for Google, so when I went out there to visit, my nephew, sister, and then him, brother-in-law, I can’t remember, but I think it’s Santa Clara. I don’t know, you people from northern California… I think Santa Monica is southern California if I remember right, but Santa Clara I believe is where they live.
Clay: Regardless, though, Stan’s Donuts is in that general area and they’re fantastic. Their glazed doughnuts have got to be the… They are the best glazed doughnuts I’ve ever had and you go there early, there’s a line, they make them right in front of you, and yeah, it’s fantastic. If you are in that part of the country and you have never had Stan’s Donuts, even if you don’t like doughnuts, they’ll probably convert you to liking doughnuts, so I’d highly encourage you to check them out.
Clay: For our guest today, we are talking with Harmon, and I like Harmon, and I like people like Harmon because they’re on the younger age spectrum, and there’s nothing more that I respect than somebody that’s just saying, you know what? Let’s get things going right now. Let’s not wait until later on down the line, let’s just start right this second and let’s start our journey to taking control of finances, taking control of wealth building, really, just taking control of life and not coming up with excuses but just doing what needs to be done in order to get stuff done.
Clay: So, he’s a younger guy, but like I said, I’m always motivated by situations like this. I was younger when I got started in all of this, so Harmon, there’s no doubt in my mind he is on the right pathway. He is hustling, and grinding, and doing what he needs to do to take control and make life work for him, and that’s what we’re going to be seeing here. So, a lot of trading talk, a lot of kind of just, I don’t know if life talk is the right way, but I enjoyed the interview very much and I’m sure you will, too, so let’s get to Harmon and hear about his journey.
Clay: Harmon, welcome to the show.
Harmon: What’s going on?
Clay: Not much. Like we were talking before we got started, Harmon, for listeners’ sake, he’s ready to play ball. I mean, he’s a total guinea pig. Behind the scenes, we’re trying some new software to record these, and I don’t want to say it’s complicated, but it’s a little bit more involved. But Harmon was like, “Yeah, yeah. Let’s give it a try.” I guess worst case, Harmon, we go this entire show and it doesn’t get recorded and then I guess we’ll just have to like, script it out the next time and pretend like we’ve never talked to each other before.
Clay: But I think we’re good to go, so thank you for that and thank you for taking your time out of your afternoon here, which is on a Friday. So that’s the type of community members we have. People are willing to take some time out of their Friday. Most people are probably sleeping under their desk right now or doing who knows what on a Friday, but you’re here, you’re going to share your journey, and I’m excited to hear how it goes. But actually, I could be making this up, but I don’t want to forget. When I did the guide for The Trading Freedom Pathway, were you one of the people that edited it?
Harmon: What do you mean?
Clay: Okay, you weren’t then. Nevermind.
Harmon: No, no, yeah.
Clay: I have you confused with somebody else. I thought there was, maybe the name must have just started with an H. But I asked some, when I put out one part of the program I offer, it’s like a guide, and I was asking people, “Hey, is anybody willing to proofread this, because English isn’t my strong suit?” And we had some volunteers, and I thought maybe you were one of them, but apparently not. So, nevermind then. I wanted to thank you for that, but it wasn’t you, so we’ll move on from there.
Clay: So, where did all this actually start for you? You know, what got you interested in the markets, what sorts of things played out that got you to the point where you made the decision, you know what, I want to get a little bit more active with this?
Harmon: So, man, I guess all the way back to when I was a young lad, when I was looking up, I remember looking up at the TV, and watching the stock market and all these, the red, green, and person A talking about how the stocks are going to go to the moon, and the person B saying it’s going to go to the dirt, and being that little, right, I would look up to the TV.
Harmon: Of course, at the time, my parents were like, “Oh, Harmon, you need a lot of money to get involved in that.” So, I was like, what? Okay. So, I just waited. And in high school, right around my junior, senior year, I found a mentor, and then, he’s done life right. You know, he’s saved his retirement. Actually, he retires this year. And him and his wife are going to go and travel the country, and do what they want to do. So, he was a great person to get plugged into, especially at that age, because he taught me the power of compound interest, on investing. He wasn’t a trader or anything like that, but he was just heavily involved in investing in the market. In that sense, I was so, so, so fortunate to meet him.
Harmon: And then, as far as from there, from there to like, ClayTrader, when I graduated high school, I went to basic training and I came back, and I came back to college, lived life-
Clay: What batch?
Harmon: So, I joined the Army. Well, I’m in National Guard.
Clay: Well, thank you for your service.
Harmon: Thank you. But I joined the Tennessee Army National Guard out of high school. And then, from there, came back, went to my first year of college, and that’s whenever I bought the first payment of… So, that’s on the old program back in 2017 or 2018, or 2018-ish, I guess, around there. I was working [inaudible 00:06:26] orders that summer for National Guard, so I was like, just being a gopher for recruiters. They’d be like, “Hey, want a burger? Go pick up that packet, right? Hey, go do this. Hey, go do that.”
Harmon: So, anyways, so I was in the car a lot, and that’s where I started listening to your podcast. I was like, okay, this guy seems pretty legit, you know. So, from there, I started watching YouTube videos, and then that summer, I purchased the first payment plan of the old one, I guess, the old-
Clay: Yeah, the Four Things to Change Around goes back in 2018. Then, yeah, it definitely wasn’t what’s being offered now. Before I forget, about the mentor and the guy that really taught you, I mean, it sounds like it just set you on the right path.
Harmon: 100%.
Clay: And you said he’s retiring now, how old is the guy, ballpark?
Harmon: He’s, I want to say 60s, like early 60s or so. He was a night guard, and he was also a recruiter, and then he started teaching high school, like a JRTC program. I don’t know if you’re familiar with what that is. But I was one of the JRTC nerds in high school, and he was an instructor there, and he was a good guy. He was a good guy that wanted to teach the students the good morals. He didn’t teach you all those math, and science, and all that jazz. He was touching good life lessons.
Harmon: I truly believe he set me on the right path, not only financially, but just good common sense, and really helped me mature way past my peers for that age.
Clay: Yeah, I was going to say, I asked about the age because I’m always curious. You hear and you read the headlines, and it’s, oh, people, almost a woe-is-me type situation. Oh, people are going to be working until they’re 90 years old. And here this guy is, who, like you said, he taught you, he was doing things right with money, and he’s in his, we’ll just call it mid 60s. I mean, it sounds like he might even be in his early 60s. But here, in his mid 60s, retiring, and you said he now wants to travel the world?
Harmon: Yeah, I mean like, so, first off, what’s crazy about this is that you talk about the woe-is-me stuff, and him and his wife has never made over $80,000 in their life, like a year, never made over $80,000. So, I’m pretty sure it’s actually 70K, but we’re going to say 80K to round up, to be safe. But him and his wife have, he’s been in every single state in the United States. He likes to ride motorcycles, so he’s traveled the country with motorcycles. He’s even been to Canada. I mean, he has lived the life. Him and his wife go on vacation whenever they want to. Like, he is doing it, you know what I’m saying?
Harmon: But he’s not out here, like making, you know, $1 million trading a year. He’s not out here being some big CEO. He’s just a normal person that is living his life the way he wants to, you know what I’m saying? I hope to do that financially.
Clay: No, that’s awesome, and I’m glad. Because the point of this is not, hey, so sign up and start to do trading, because trading gives you the lifestyle. No, it’s the exact opposite. Here is a guy, and that’s a great number. We’ll call it, like you said, $80,000 a year. But because he, I would assume, actually saved his money, or at least some of his money, and didn’t spend it as fast as it came in, well, now they’re, who knows where they’re at? They’re probably millionaires.
Harmon: They are.
Clay: Like you said, compounding interest. But you don’t need to sit there, and none of this is not a sales pitch to get you into trading. It’s a sales pitch to, hey, anybody can do it, it being just be good with money in general.
Harmon: Yes, yes.
Clay: Just put in trading all the way to the side, just save. Have a strategy, have a plan of action. Compounding interest is a crazy thing, and the line that always gets me, “Well, the rich keep getting richer.” Do you know what’s that called in mathematics? That’s called compounding interest, okay? That’s all that is. In fact, they should probably just change that in math, like a textbook should just be, okay, today we’ll learn about the concept of the rich getting richer.
Clay: Because that’s all compounding interest is, is you could call it the exact same thing. That’s why they get richer, because it’s the way the math works. If you save some money and you keep saving it over time, bigger amounts get bigger, and then bigger amounts get that much bigger. It truly is like pushing a snowball downhill. Doesn’t happen overnight, but it happens. So, that’s good stuff. That’s…
Harmon: Yeah, [crosstalk 00:10:32].
Clay: Shout out to your… I don’t know if you ever… What was his first name?
Harmon: So, we call him Sergeant Frasier. Sergeant Frasier, we try. Sergeant Frasier is the man.
Clay: There you go. He sounds like the man, and I hope he enjoys his world travels, because at age 65, none of this, all right, and I’m assuming he’s probably in decent shape and stuff like that, I mean, given if he was in the… So, I mean, all this I can’t stand. We’re turning this into a rant, but I don’t really care. I mean, I can’t stand like, oh well, I want to have fun money now while I’m young and I… I assure you, if you stay healthy in your youth, if you work out, if you exercise, if you eat right, when you’re in your 60s and 70s, of course you’re not going to be doing back flips per se, but I mean, people use the excuse of, oh, well, when I get in my 60s, I’m not going to be able to enjoy anything.
Clay: What are you talking about? That’s the worst… That’s such a weak… Like, get that weak sauce out of here. It’s a terrible excuse. I mean, yeah, if you sit around in your 20s, 30s, and 40s on the couch, watching Netflix and eating cheese puffs. Yeah, maybe you won’t be able to… But, anyways.
Harmon: Well, I think it goes back to like, I saw that your last podcast, you’re talking about the soon, or your fun fact was the cuss word of soon, right?
Clay: Oh yeah, so I don’t even, oh.
Harmon: So, I think it’s really what it is, like, I want to do that soon, or I’ll do that soon. And then you get 40, and you get 50, then you get 60, and you’re like, well, I guess I should probably do that now, but…
Clay: Exactly, and soon should have been taken advantage of a long, long way. But you’re absolutely right. The S word, there’s no nastier word out there, no dirtier cuss word than soon. No, just do it now, all right? Just do it now. And, anyways. So, this guy is clearly good, because he’s sent us off on a tangent, but it was a very practical tangent, because as much as this podcast is about trading, you don’t need to do trading in order to build wealth. You don’t need to do trading in order to have success in life. You just need to have a plan, and just keep on with the plan, and be consistent about it, and compounding interest, the rich get richer, will take over.
Clay: All right, I have no idea. You have some notes, so where do you want to go in your notes, I guess?
Harmon: Yeah, so-
Clay: Because I’ve kind of, that tangent, that rabbit hole sent me way off course, so I don’t really know where we’re at. But I’m glad that you showed up with some notes, so where would you like to take it from here, then?
Harmon: So, in the story, I bought the first payment plan. So, the whole summer, I went through robotic trading, and the score sharpening, and the RVR. And before you ask, I did print out the worksheets, I did write on the worksheets and stuff like that. That’s the question you always ask people.
Clay: Yeah, it is, and do you still have them?
Harmon: I do, actually. It’s in my folder at my closet in my mom’s house.
Clay: Okay, if we ever meet, just bring them. I always love to see people’s, I love to see the notes and just see how people interpret what I was saying. But good, you passed that with flying colors, and you printed them out and wrote on them. Did you have lots of notes or, I mean…
Harmon: It was kind of funny, because like, so, like I said, I was working eight hours. So, I was, during my day work, it’s like an eight to five. So, I would, depending on the day, I usually am in a vehicle, driving people to the airport to go for basic training, or coming back, or running packets, doing something like that. So, when I wasn’t on the road, I was in the office.
Harmon: So, I finally asked for a small little desk in a little corner. So, I was over there with my laptop, and then all the little worksheets spread out on my desk, like writing on them, and like, drawing arrows, and being like, okay, here’s the support, here’s the resistance, great, here’s, you know? So, it was so funny, because I was just like, looking back on it, it’s crazy that like, during that time was when it all started. You know, thinking about where I am now, like just now starting a life trading, and I’m like, wow, I started at a corner desk in a recruiter’s office, doing all this stuff.
Clay: Did anybody ever see what you were doing and think you were going insane, like trying to crack some sort of secret code, or was it always just you were kind of, nobody took notice of what was going on?
Harmon: Yeah, so, actually, my [inaudible 00:14:30] or my boss, just to make it easier in terms. My boss kind of noticed and he asked me about it. He was actually interested, and he hopefully was going to get involved soon. So, it was like, how he was always asking me questions about it. But I guess that was the only person. I mean, other people were like, “Oh, what you’re doing? Oh, that’s cool. Yeah, whatever.” They never reacted crazy.
Clay: I mean, can you imagine it, though?
Harmon: Just kind of questions.
Clay: You have no idea what’s going on, and you see some guy on a desk with all these papers spread out, with these weird… You don’t even know what they are. Like, what is he looking at? I guess, like the matrix. But yeah, he’s drawing arrows out of them and he’s taking notes. I mean, you would look like a crazy person. I’m picturing you as like, have you ever seen A Beautiful Mind?
Harmon: No, I have not.
Clay: Well, I mean, you need to get on that ASAP, okay?
Harmon: Oh, okay.
Clay: You’ve got to learn about some game theory with John Nash. Steve Nash was a basketball player.
Harmon: I’ll put it on my to-do list right now.
Clay: Yeah, put it on your to-do list, preferably tonight, it’s Friday, so Friday night. Are you married or have a girlfriend or anything?
Harmon: Yeah, I have a girlfriend, yeah.
Clay: Oh, there you go, movie night. Tell her, “You know what, Baby-cakes.” Is that what you call her, Baby-cakes?
Harmon: 1,000%.
Clay: You say, “Baby-cakes, listen, we’re watching A Beautiful Mind tonight.” And it’ll be, she’ll enjoy it too. But anyways, all right, well, you’re studying, you’re beast mode-ing, you’re taking notes, and I’ll let you pick it up… and this is all happening in the recruitment office, right?
Harmon: Yeah, so, let me give you a year to it. It’s really like the summer of 2018, I’m pretty sure, because yeah, now is 2019. So, yeah, about the summer of 2018 is when this all was happening. And from there, so, because I was young and I didn’t even know what I wanted to do, I’m entrepreneurial so I wanted to do something entrepreneurial, and I was focused on training, and I had school, of course. So, it was kind of like I would say I grew so much my first two years at school. Like, so, so much.
Harmon: So, at the time I had business called the Budget Nerd, which, what I wanted to do with it was help college kids with their personal finances, actually, and to like, build a system, to build a plan, so that way they can use their money efficiently, and reduce stress, and eliminate money stress. So that was my first ever business that I opened. And then, I did that for six months, so that was from January of 2019, I guess, to June-ish, July, I guess whenever summer started.
Harmon: So, I closed that, and I was like, okay, well, what do I want to do now? Then, I always like was looking at charts. So, during that time, during that six months, trading wasn’t really on my list, because I was going to school, starting the business, doing ROTC stuff, doing Guard stuff. So-
Clay: Well, perfect. I’m going to cut you off right there, because you just listed off a bunch of stuff you were doing. What were you studying in school?
Harmon: So, I’m a finance major.
Clay: Okay.
Harmon: But at the time, though, that’s why I grew so much, because like, I went to college, I wanted to be a lawyer and save the world. And then, I talked to a lot of lawyers. I was like, wow, this is not what I wanted to do. Starting from there to business, and then that’s where the entrepreneurial bug got me. Because I have always been entrepreneurial, so looked at things in a different way. And then, during that self discovery of, I don’t want to be a lawyer, I don’t want to be involved in politics, I got into more of the business side.
Harmon: And then, from there it was between accounting or finance. And I talked to so many people about the difference, anywhere from consultants to like, bankers, to accountants, to CPAs, to auditors, and that’s what landed me into finance, so.
Clay: And my point with that was, good background, and I love how you did the homework. You didn’t just randomly choose something. But keep in mind, listeners, this is why I’m a crusty, grumpy old guy, and I get grumpier by the day. I don’t want to hear your excuses. Think about all the things Harmon listed off that he was doing while he was in school, and it’s not like he was doing some major where all you had to do was wake up, and show up, and oh, it’s rainbows and butterflies, here you go, you get a passing grade.
Clay: No, it was finance, which requires some, I mean, you’ve got to think. There’s math, there’s stuff involved with a finance major. So, he was doing all of this, or he had that going on as a student, and he’s starting side hustles as a business. You’re looking at charts, you got the ROTC stuff, which by the way, yes, I’m very familiar with that. I remember that at Ohio State. You’d always have the guys running around super early in the morning.
Clay: But point being to listeners, this is why Harmon is another data point now that I have, of, I’m sorry but I don’t want to hear your excuses on why you can’t do something or why you got to use that cuss word of soon. Just think about the context here. So, I started to derail you, but you have all this stuff going on while you’re doing a finance major. So, pick it back up from there.
Harmon: Yeah, so, I guess we can go to this past semester. So, let’s start in August or so, my past semester. So, I was doing, like I said, school, ROTC, Guard. I work with some other people on Tech’s campus. I go to Tennessee Tech, so. And then, a bit of trading, because I always loved the market, ever since I was a little kid, like I mentioned earlier. So, I was like, Harmon, you should totally get a start. You’ve been doing this for the past, I’ve been reading books like that since high school. So, I was like, Harmon, you should really give this a shot, and I gave it this year a shot.
Harmon: It was at the time I closed the Budget Nerd. I spent, oh man, that was a good learning experience right there, opening your first business and like, learning so much from that. I spent, I’m going to say, close to $1,000 on this marketing, setting up an LLC. Like, I just did the whole thing. Now, if I could do it all over again, I wouldn’t spend nearly that much. But you’re new, you just go out, and you buy everything, you get bit. You have to think you have to have all the best stuff.
Harmon: But anyways, so, I was like, Harmon, you should give it a shot. You should view it as like a business. You know what I’m saying, it’s like you always say, view it as a business. And I was like, well, Harmon, you could view your losses as your cost, your cost of business. Because with the Budget Nerd, you spent almost 1,000 bucks, so why don’t you give it to something that you really love and enjoy, that you’ve been doing on and off for the past, what, three years since high school? So, do it, Harmon.
Harmon: So, this past semester I’ve just been like, watching the videos again, relearning it all, and fine-tuning everything. And then, I went live in the beginning/middle of November. It was like one or two contracts. So, that’s where I am right now today.
Clay: Okay, well, let’s rewind a little bit.
Harmon: Go for it.
Clay: And, you picked up, you invested in the program, you started to learn, and you mentioned contracts, so I’m not sure if that’s relative to options or futures, but how did you land on… Well, first off, what are you trading? Are these options or are these futures that you’re trading?
Harmon: Yes, it’s options.
Clay: Okay, options. So, I guess, fill in the gaps. How did you go from, hey, I want to give it a try, hey, I invested in this guy’s program, how did you go from all of that to all of a sudden landing at, I want to do options trading?
Harmon: Sure, so, I bought your program back in 2018 at summer, so I’ve had the program this whole time. So, I’ve been doing like, I’ve been watching a video here and there, and then watching, looking at charts and like, trading view while I was in class and bored, and stuff like that. So, I guess as far as from where… I always knew options were interesting ever since I started your courses, mainly from listening to the podcast, listening to like, [Chaz 00:21:55] and other people talk about the power of options. You could option farm, you could like, day trade options. You’d need to worry about the pattern day trader rule.
Harmon: So, really, as I go through all the courses, I was interested in options, I might say, I guess from the beginning. Does that answer the question of how I got-
Clay: It does. So, you had a good idea going in that your ending spot, you wanted to be at the options. But you also realized, well, I realize, and this is a good learning point to listeners out there, because I get it all the time, they’re like, I want to learn options, and the first question I know is, and it sounds like a stupid question but it’s true, is, well, do you know how to answer the question, what direction do I think this stock is going to move? And people are like, no. Then I’m like, well, then you’re getting too far ahead of yourself.
Clay: Before you even focus on options, you need to learn about that question first, and that’s where charts come into play, and that’s why technical analysis and charts is valid for anything, because anything that has a value, and that value changes over time, well, you need to be able to answer the question at the start of, do I think this price is going to go up, down, or just go sideways? Because if you can’t answer that, well, then who cares if you know how to trade options? You’re not going to be very good at it just because you know what a call and a put is. That’s nice, but that only takes you so far.
Clay: But it sounds like, I mean, not sounds like, you did, you first learnt how to answer that question, and that’s why you’re learning all about the charts and technical analysis, and then you moved in the options, and that would make sense. Now, how long did this, and I realize you said you’re doing a video here, there, or whatever. How long did this actually all kind of take you to go from the point where you invested to, I guess, where you are right now, where you’re trading live with options.
Clay: And it sounds like you’re going to be a good example, I might be wrong here, of, you know what, you don’t have to rush through stuff. Just watch a video here, watch a video there. There’s truly no rush. So, I mean, am I kind of barking up the right tree? It took you awhile, but that’s just because you were going totally at your own pace?
Harmon: Yes, 100%. Because I mean, if we go back to 2018, where I was in the recruiting office, I did robotic trading, then the score sharpening, and then the risk versus reward. But I didn’t really touch any other… I’m looking at your courses right now, I’m looking at them. But yeah, I didn’t do options simplified, I didn’t do the advanced options. So, I guess in 2018, that summer, I blazed through robotic trading, score sharpening, and then risk versus reward.
Harmon: And then, over time, so I guess we’ll say until this past, this summer, okay, this past summer, I went through level two, some of the other videos. And then, this semester, I watched the options videos. I guess, by that point, I guess the way to put it is like, I had the technical analysis part down, as far as the reading the chart, the prices are going to go up or down. So, I actually didn’t know which avenue I wanted to pursue, between like, options, the FOREX, the whatever.
Harmon: So, I watched all those videos to see if anything else would change my mind, and I was like, okay, options is what I want to do. So I watched all the options videos, and then that’s where we are. So I guess you could say a year and a half, two years out, [inaudible 00:25:11].
Clay: Okay, cool. No, that does. There’s no rush. And at least for the program that I offer, because it’s a lifetime membership, I know other programs, you have to keep paying, and paying, and paying if you want to stay, have access to everything. But at least with what I offer, it’s lifetime, so you can do what Harmon does and just take your time, and just go with the flow.
Clay: I’m curious, though, and I don’t know, maybe we’ve had finance majors on here before, or people, but I don’t remember. I’m curious, though, what, I guess, because it sounds like you’re in an interesting situation. You’re learning about the markets from a trading perspective, but then you’re also, I would assume, learning about the markets from more of a textbook, theoretical, college perspective. So, what was your impression kind of of the markets?
Clay: I would assume you probably learn something about options, quote-unquote, in those textbooks, but that was probably just a whole lot more theoretical about things, because a lot of people are always asking, “So, do I have to go to college and learn how to trade? Do I have to become like a finance major?” And I’m like, no, no, no, no. You can learn about the stock market in college, but it’s going to be from a much different angle. But hey, now we have a finance major. So, walk us through kind of that. It sounds like almost a dual perspective of kind of what you’re hearing about the stock market. So, I mean, how did you learn about all this sort of stuff from the college perspective?
Harmon: Yeah, so, I’m only a junior and I actually just hit my first true, you know how college is, where your first two years, you’ve got to take your gen eds and all other dumb stuff, and then you’re finally getting plugged, the concept that you want to study, which is like your finance. So, I had my first finance course this past semester, just finished it. Took my final on Tuesday.
Harmon: So, I guess the real contrast is technical versus fundamental, is the most basic way you can contrast it. Because like, you know, with what we do here at CTU and ClayTrader, and you learn the technicals. Look at the charts, it’s all about the chart. But like, in college and in the classroom, you learn all about the fundamentals. Which, I mean, both sides have their vantage point, you know what I’m saying?
Harmon: It’s like, obviously if you’re like a company that has millions of dollars in gross revenue, and like, maybe a steady profit, are you really going to want to go to a chart and just look at the chart all the time? I mean, no, there’s probably different ways you want to use your money, and it’s a little different, because you just have so much more money that you are trying to use, you know? Which is what I have learnt going through the courses, like going to the actual classes in college, I guess, like go to the lessons, is that like, because obviously, coming from like, CTU and looking at the charts, I was like, okay, this finance stuff is going to be cool.
Harmon: But at the end of the day, it’s not about the chart. That’s how young, that’s how like, I guess, naïve I was. But going through my first finance course, I saw the difference. You know, like, I guess this is the best way to put it. It’s like, college is fundamental. Here, you learn technical charts, which is actually how to trade and how you can do it on your own at your own scale. Does that answer the question for you?
Clay: No, that’s perfect, and I think that’s not a thing I know, that’s a good answer for people that are wondering. So, do I need to go to college? If I want to be a trader, is finance a good major? And I mean, to those people that are wondering, that’s great, I’m glad you’re thinking about it. That’s a good, logical thought process to have. But to Harmon’s point, college finance, college stock market stuff is definitely geared towards, hey, should I put my money in this for the next, insert amount of time, which is longer than usually a day, or is definitely longer than five minutes, and definitely longer than a minute, like some of the day traders out there.
Clay: So, that’s kind of the mindset, and what you’re going to learn is, is this a good decision for my money or my client’s money, or is this a good company? You know, if I’m working for some sort of big investment bank, and we need to do our due diligence to potentially make an investment in here, here would be an investment, meaning we’re going to hold onto this for awhile. I mean, I’m not saying it’s 40 years, but it’s going to be more than four days and probably more than four weeks, because I realize there’s hedge funds out there and they’re always going through positions.
Clay: So, that was a perfect explanation, is it’s going to be much more fundamentals and trying to figure out how safe is my money, is the risk worth it based on what I think is going to happen, so let’s dig through management profiles, and their past history, and cashflow statements, and all that, whereas trading is more, what do I think the price is going to do in the next very small amount of time, more times than unless you’re doing a swing trader perspective.
Clay: Have you had anything where, because I don’t know if this is true, but it seems like a lot of the professors, whatever you want to call, they almost kind of look down on charts, like, charts, that doesn’t work, it’s all in the fundamentals. Have you had any of that?
Harmon: Not yet. So, actually I’m pretty interested, because like, next semester I’m taking investments, or the principles of investments, some class like that. It’s like, okay, so in my school, you can kind of go two track with finance. You can go the heavy investment side or you can go more the banking side. So, obviously investments kind of leads you to those analyst roles, banking leads you more into, well, banking, being loan officers and stuff like that.
Harmon: I’m more interested in the investment side, so next semester I have my first class of going through the fundamentals, going through the cash flow statements, going through all the stuff, and really looking at the ratios, and making those kind of decisions. So, it’s going to be interesting, because I have the technical side of point of view, so I’ll probably ask some pointed questions maybe at the professor, like what do you think about this, what do you think about this.
Harmon: But so far, no. Nobody’s been like, oh, charts are stupid, it’s all black magic. You’re an idiot if you look at it now.
Clay: When you walk into that first class, I want you to just chuck your books across the room, and just yell at the professor, “What do you think about the cup and handle?” That’s what I want you, the first question to be, and just see what he says. Just give all of us technical traders a good name for ourselves, and I’m sure you’ll get a great grade in that class too, but it’ll be a good story, at least.
Harmon: I’ll wait for him to be like, because if I’m at the whiteboard, I’ll be like, “Where is the bowl and pen? I’m not seeing that. Where’s that at?”
Clay: Excuse me, sir, when will we get into candlesticks? And I feel like that might not, I don’t think you’re going to be learning about… Maybe you will, at, I will assume maybe a very surface, a surface level. But the short answer to all of this is, no, if you want to be a trader, you do not need to go get a finance degree or an accounting degree.
Harmon: Yeah, definitely not.
Clay: But if you want to be more so working for the Goldman Sachs of the world in investment banking, yeah, you’re probably going to want some sort of finance degree or something that involves numbers. Now, bringing back to your options, I mean, was the only reason you wanted to get into options because you heard about it on the podcast and you said, or is it more a function of, hey, I just don’t have a ton of money, so options are going to allow me to get active with money? But did that have any influence in it, or is it strictly just because, I guess, why options, if there are any other reasons other than, oh, I heard some people talk about it on the podcast?
Harmon: Yeah, so, I tried a set of options, and then immediately, I put all my money into the options course, and I started to now play.
Clay: Well, I was hoping you would say to a crypto or something unknown, but I guess that’ll do.
Harmon: No, so, truthfully, first exposure was through the podcast, and obviously going through the courses. And I mean, I’m a pretty analytical guy. My girlfriend, when she listens to this, will probably laugh at that, because I’m definitely analytical, and I make pros and cons lists all the time. So, with options-
Clay: How did you not turn out to be an engineer, then? Pros and cons lists and all that stuff, you sound like a total engineer. I love it, though. That’s good stuff. That’s good decision making processes there. But anyway, sorry to cut you off. Sorry, you got me all excited with this whole pro and con list. So, Harmon’s girlfriend, you got yourself a keeper, okay?
Harmon: Hey, no, just got a shout out from Clay, look at that now. But, so I guess like, from pro and con list, options, there seem to be better pros and cons. And now, especially being like a 20 year old, with a two K account, I can’t be over here micro-sculpting like you do, Clay, with bigger position size, and you have so much of a capital with where you can do that. You know what I’m saying? Like, you can, I’ve watched your live trade videos. You have a capital in order to make these small moves, and to leverage it in your favor.
Harmon: Because obviously, you do have like a one share, like you’re never going to make money. It’s not going to work. With options, though, you can have like a smaller account, and through however you want to do it, whether it be technical analysis, fundamentals, or whatever, you can position yourself in the right place, and then take advantage of the leverage of options, but also, as I’ve learnt today and yesterday, they can also come right back and really kick your butt.
Harmon: So, which we’ll talk about that in a minute, Clay, if you’d like to. Today and yesterday, I took my two biggest losses yet. So, we can talk about that. But to answer your question about pro and cons, like why options, it just appears that it had so many more pros, less capital-
Clay: I’m curious, unless you have the sheet laying nearby, but I’m curious, what did you have listed as the pros, what did you have listed as the cons, because that would actually be a good kind of full disclosure to people about, yeah, nothing is perfect. So maybe something you say in your con would have somebody listening. So, do you have that or can you just remember off the top of your head?
Harmon: Yes, some of the things were like, obviously, capital, that’s the biggest thing, the pattern day trader rule. Do you want to explain the capital a little bit? I mean, I know, with capital, can you explain the options real fast, as far as how the capital work, Clay? Like, for one share of Apple, it’s $200, but an option might be-
Clay: Nah, that might be getting too far in the weeds.
Harmon: All right, got you. But so, with options, just less capital. You’re not affected by the PDT. So, if you don’t have a $25,000 account or more, you can only trade three times a week, I believe. And it’s just-
Clay: Well, to clarify that a little bit, the trading options is a way kind of around PDT rule, because it does not pertain to the PDT rule, assuming you have a cash account.
Harmon: Yeah, yeah.
Clay: But a problem still comes into play. You need to let that cash settle, which means it’ll be available the next day, right, or is it two days? I can’t remember. Is it the next day or two days?
Harmon: Mine is one day, so the next day.
Clay: Okay, that’s what I thought. So, again, yes, one way around the PDT rule is a cash account, trade options. But, there is that little but, there is still a cash settlement dynamics out there, which with options is still nice. It’s just one day, so you can do it again the next day, but there is still some limitations there within that. But overall, yeah, it’s one way that you can somewhat get around the PDT rule. So, continue on with what you were…
Clay: So, smaller capital, smaller amounts of money you need, no pattern day trader rule, what else did you have on that list?
Harmon: It’s like the leverage. Because obviously, if you only have, one contract is 100 shares, so that way you can still participate and still have the opportunity to make money. You’re not just buying like one share of a stock, and then hoping it moves dollars and dollars to make money. So, that’s the best pros.
Harmon: Obviously, at the end of the day, in the future, when I get a job and stuff like that, I would love to go purely equity, and do what you guys do in the actual stock market and like, buying actual shares. I’m doing it that way, because obviously, options don’t move exactly with the stock. So, I believe that if you trade just shares, it’ll be a little bit easier.
Harmon: But, anyways, the only cons, I guess, is like the leverage, which is like a good and bad thing. Other than that, I guess that’s about it.
Clay: Right, and I would say probably another, I don’t want to say a con, but just something to consider is like you noted, an option doesn’t move step, for step, for step like the underlying stock that it’s quote-unquote, mimicking, if you will. So, that’s something else that it’s not a total transition, but it’s still stuff that’s totally possible, because as I know you know, Harmon, there’s all sorts of people in the community that are using options are doing just fine with them. So, it’s definitely possible.
Clay: So, all right, well, you’ve gone through this list, and at what point, and we’re going to get to those losses, don’t you worry-
Harmon: No, I don’t worry.
Clay: At what point did you know that you were ready for real money? Did you have some sort of metric you were trying to hit? Did you have some sort of goals? What kind of carried you, what gave you the green light to start to use real money?
Harmon: So, I guess the green light was the day that I realized that, so, I have been paper trading, I guess, ever since after RVR. So, obviously, the quality of my paper trading has always varied, as far as, I’m going through on and off periods, I’m going to open up my spreadsheet right now. And it’s just like, let me look at it real fast, Clay. I’ll tell you.
Harmon: So, this has been going on for a long time. So, let’s see over here. So, August of 2018 was my first ever month of actual paper trading. At that time, I hadn’t been through the options course or anything like that, so I was just simply doing like, buy here, sell here, stop loss here, just doing what you learnt in the courses.
Harmon: But this past semester, I’ve been paper trading, and I caught myself not being realistic, not being, it was just different. I don’t know how to explain it. I always heard it on the podcast, but for me, you just know the feeling. You never know the feeling. You never know the feeling till you go live. And I guess I got tired of not knowing that feeling, so I was like, Harmon, just go live. So, I-
Clay: You wanted to meet the voices.
Harmon: Yes, I did. But I got tired of sitting here paper trading. And so, what I did this past semester is like, Friday, Saturday, Sunday, when I didn’t have homework, like whatever, I was here on my computer, pulling up Thinkorswim, going on demand, going back to like, Nvidia, or Apple, or Facebook, or any of these big ticker names, for the spy, and just trading off and on demand.
Harmon: So, originally my goal was to start in January. So, I’d start, this is, I guess, we’ll say again, September-ish of, you know, a couple months ago. I wanted to go from like, January, all the way through until present day, on demand, which is a feature I have through Thinkorswim. But as I started doing that, I was like, man, that’s just not, it’s not happening. It’s not like, it doesn’t feel right. It doesn’t feel right for me to sit here, and not have an inner circle where you get live alerts, to where you just…
Harmon: It’s not what I’ll actually be doing when I go live, so why am I doing it? You know what I’m saying? Does that make sense? Like…
Clay: No, it does.
Harmon: Okay, cool.
Clay: But I would say this as a warning. Keep in mind, listeners, that Harmon did still have a background in, a launch point of paper trading and getting a feel of things to the best of his ability.
Harmon: Yes, yes.
Clay: But don’t be like, well, I heard this Harmon guy, and he wanted a feel, so, I have 500 bucks, let’s just start right from the get-go. Now, that’s a much different situation than experiencing paper trading and… because there are still lots of benefits to do paper trading. So, it’s apples and oranges. If you’re sitting there saying, “Hey, see that Harmon guy, he gave me the green light, it’s fine,” no, you’re blurring the lines there a little bit.
Clay: But that’s a great answer and that makes perfect sense, that eventually you do reach the point where it’s just, you know, I’m trying my best, but you just got to meet the voices in my head, because everybody keeps talking about there’s going to be voices at you when you put real money on. So, how can I meet those voices wisely is definitely a thing, and you don’t meet them wisely by all of a sudden throwing $50,000 into your account.
Clay: So, with that brings up my next question, how did you choose to initially dip your toe in the water? Was it a super small amount, and before, actually, you answer that, also let people know what broker and platform you’re using.
Harmon: Sure. So, I use TD Ameritrade, and I use the Thinkorswim, theirs. But before I entered that, I guess like a short note, because I remember when I just started out, when I was listening to this podcast, and like, so, for those of you that are out there starting out, take your time. It’s like, I had goals. When I first started robotic trading, on the very first day, I was like, okay, I’m going to finish this in a month, I’m going to do the next one in a month, I’m going to do the next one in a month. I’m going to get done with this in, we’ll say, six months, then I’ll do paper trading for six months, and then I want to start trading in a year.
Harmon: So, I had paper traded for over a year. So, August of 2018 was my first month that I have on my spreadsheet of actual paper trading. But like, if you ask me when I started, that would have like, never happened. If you told me that, I’d be like, no, that’s false. I’m going to start in a year, or you know, whatever. I guess, I just go along with the ride. Because like, this definitely takes time. You’ve got to change as you go through it.
Harmon: But to answer your question, Clay, how did I start, how did I dip my toe in the water, so right now, I’m using anywhere from to two to three contracts. So, my very first time I ever did it, I only used one contract. I guess-
Clay: Let’s do this. Answer it this way, how much money did you put into your account when you started?
Harmon: Oh, oh, okay, okay. So, I put, when I first opened up my TD Ameritrade account back in 2018, when I first bought the course and stuff like that, I put $50 into it. So then, this past semester, I put in $2,000. So, I have $2,050.
Clay: So, you started with $50?
Harmon: Yeah, but that was only to open up the account and just look at the stuff. So, that wasn’t really trading capital. That was just like, that was background, and so on.
Clay: No, that makes sense. In order to get access, you had to have some sort of money in your account, so it was $50. But the amount that you started with when you were ready to actually get going was $2,050.
Harmon: Was two K. Yeah. Yes, yeah. That’s what was in my account, but I was planning on $2,000.
Clay: Okay. Now, did you have, I realize that you just wanted to start to meet the voices and feel what it’s like to have real money on the line, but did you have at least a strategy that you felt comfortable with, because you had been using it on paper, or were you just kind of still, I guess, what was your strategy going in? And maybe it’s the same exact strategy you’re using right now, but what kind of was your ideal type of, hey, yeah, I’m going to trade options, but I’m going to trade options in this way to make money? So, what was your game plan going into the live, real money?
Harmon: Yeah, so, with paper trading, I always enjoyed the panic buys, and they’re like the bowl, like flags or pennants, whatever you’re going to call them. Like, they both pull to consolidation. I always really enjoyed those plays. But going to like, live trading, again, the voices is different. You’re going to actually make money, but you’re also going to lose money on the other side.
Harmon: So, I wanted to go, this is kind of going into the losses today and yesterday as well. But I told myself, “Okay, Harmon, you’re going to come in and you’re only going to do like, bull flags, bull pennants. That’s what you want to enjoy.” But with that, those take time to set up, and I am, right now, I am trading like I’ll be trading next semester, when I want to fully go live, I can start doing this, would be next semester.
Harmon: But I can only trade Monday, Wednesday, and Friday, because Tuesday, Thursday I have class at like, I don’t know, at nine or eight, I can’t remember now. But on Monday, Wednesday, Friday, though, I don’t have class until 10. So, my goal is to start at, so, I’m Central Standard Time, so, the market opens at 8:30. So, I want to trade from like 8:30 until 9:00, 9:15 the latest, and then close everything down and then go to school.
Harmon: So, right now when I trade, I set a timer on my phone, like I have an alarm that goes off Monday, Wednesday, Friday at 9:00 AM, saying time to wrap it up. Because my goal is to get in the habit of only trading for 30 minutes, getting up, going to school. Because I know myself. If I don’t, I’ll sit here and skip class, and say, “Ah, whatever.”
Harmon: So, does that answer your question of like, how I’m starting?
Clay: It does, and it makes me feel better, because I will not confirm nor deny, but when I was getting involved, I may or may not have skipped some of my engineering classes. I cannot confirm nor deny in case mom is listening, but then again, I was paying for it my own, so I guess I could technically do whatever I wanted. But still, for the younger listeners, I do not convey skipping classes, especially, especially if you have taken a loan out for them or if somebody else is paying for them. Then you better go, because that was the one thing that allowed me to still sleep at night is, well, I mean, I am paying for this. There’s no loans associated with any of this.
Clay: But for listeners out there, I had a book business in… So that’s why I like Harmon. He’s out there hustling, he’s tried a business. I had a business selling books in college, which is kind of what spring boarded me into all this trading stuff. But that’s… Actually, I don’t know what episode it is. I’ve done an episode on my story, but I don’t remember off the top of my head.
Harmon: [crosstalk 00:45:56]
Clay: But regardless, that makes me feel better, that you, well, I don’t know, have you ever skipped classes? It sounds like this is all done in order so that you don’t skip classes.
Harmon: Well, mom, if you’re listening, I’ve never skipped-
Clay: No, I don’t want you to confirm or deny. I mean-
Harmon: No, to my knowledge, I’ve never… I mean, not yet. If I were to start live trading-
Clay: Don’t skip classes. Don’t skip classes.
Harmon: I’ve only, yeah, I’ve only just started. So, no, I’ve not had the opportunity to skip classes.
Clay: Yeah, don’t do that. Only bums skip class, and yes, I was a bum. Even though I was paying for it, that was still a bum move on my part. But as you know, this stuff is like, addicting, it’s great, and once you see the potential, and you’re like, wow, this is like, crazy stuff, it can be tempting, especially… I don’t want to go learn about force vectors and like, I got to draw these arrows on this box, and, anyways, all you engineers, you’ll get the dynamics, and statics, and all that good stuff.
Clay: But, so, I guess, do we need to plug in any gaps now, or can we go and talk about the losses, or do you want to talk about other things before we get to losses? I mean…
Harmon: Yeah, maybe we can just go on to talk about the actual live trading, and how the voices definitely are real.
Clay: Yeah, yeah, let’s talk about, let’s go to the live trading. Yeah, good, let’s go there. So, let’s talk live trading.
Harmon: Okay. So, let me pull up my spreadsheet real fast. So, for November, I made $15.67. So, the week one, I made 22. Week two, I lost $13, and the third week, I lost 33 cents. And then, the fourth week, I made $7. So, my first month, I felt pretty good. I was like, hey, I’m in the green. I actually have my first ever trading check laying right next to me, for $12, that I had sent to me because I want to frame it. It’s a personal milestone.
Clay: That’s cool. I like that idea.
Harmon: Yeah, yeah, it’s cool, man. But, so, this month, I started out, well, I can pull up my account real fast. Well, whatever. Yesterday was my first ever big loss. So like, paper trading, I said, “Hey, I’m only going to lose $10 per contract, so it’d be 20, right?” So, from paper to live, though, it’s a little bit different with your stop losses, and also like, with options, I didn’t even know how much they moved or didn’t move with the market or with the actual stock, so it’s been a learning process that I’ve been learning how to, like with the entries, for instance, it’s like I’ll have a chart. I’ll say, okay, right here, on this moving average, I want to get in, or right here, on the [inaudible 00:48:28] level, I want to get in, whatever.
Harmon: So like, I’ll send an order out, but then I’ll notice that the price won’t even hit my order, but it hit the part on the chart, but didn’t hit my order for the option. So it’s been a learning process of how to actually get in, when to get in, like, how do you not get in, and the options just like, keep on going down against you. So, I’ve been learning that part.
Harmon: On the flip side, you have the stop loss, which, again, the options don’t move exactly with the stock. So, you’ve got to set a stop loss somewhere, and it’s a smart place on the chart, but then it might go against my $20 mark, or $30 mark, or whatever. So, I’ve been trying to, juggling, like, I’m going to set my stop loss from the chart, and then whatever the option price is at that time, I’ll get out. Because I don’t want to set like $20, and then have the option move against me 10 points or whatever, if I’m doing two contracts, and then I get out. But it really is like, makes no sense to get out.
Harmon: So, I took a $40 loss yesterday and a 60-
Clay: Which you did post to the chatroom. I remember you posting that, yup.
Harmon: I did. I lost like, actually, in total today, I lost 70. I’m pretty sure in the chat I posted earlier, like 61, 63, but I took a Roku trade before I got on here, that appeared to be a crest point. I don’t know what it’s doing now. But-
Clay: At 1.39?
Harmon: Yeah, mm-hmm (affirmative).
Clay: Yeah, it flushed.
Harmon: Did it really?
Clay: Yeah, it’s gone down as low as 1.3760.
Harmon: Ouch. Well, I got out because we had the podcast. So, you’re welcome, Clay. I got out. I was like, okay-
Clay: Are you blaming me for the Roku loss?
Harmon: No, no, I’m playing, I’m playing. Well, I was like, okay, I’m doing the podcast, I should probably turn this off. You’re definitely not experienced enough to be able to do trading and a podcast. So, to those of you that like, actually talk and trade at the same time, props to you, man.
Clay: No, I’m with you.
Harmon: That’s hard.
Clay: I’m thoroughly like, they’re like, and it’s not like they’re stumbling through their sentences. They say like a flawless sentence, one sentence that I could only wish to ever say, because I can barely put two words together. And then they’re like, oh yeah, I just closed a trade. I’m like, wait a second, you were closing a trade as you said that perfectly beautiful sentence?
Clay: So, I’m with you, buddy. That’s not in my skill set. I need to be kind of locked in. But, oh well, it is what it is. And I’m guessing the little, because it did break, and it bounced back up against you, so I can see how maybe that would’ve spooked you out and maybe caused a stop loss. But yeah, then it totally rolled back over.
Harmon: Wait, I had my Roku trading here real fast. I had my stop loss on the 15 minute. Like, above the-
Clay: Oh, you’re using the 15 minute? Okay.
Harmon: I’m using the five and 15, but I’m using the five. At first I had the moving averages, but whenever it started to break down a little bit, I move it down. The 15, I had a better area I wanted to use anyways. But then I got like 9:50 or whatever time it was. I was like, okay, I’d better get out. So… Yeah.
Clay: I mean, overall your ideal, I mean, overall, it worked out. But it might have been a little different had you not had the podcast. But I mean, it definitely was not random, what you were doing, because that was certainly an area that made a whole lot of sense. But it did, it got a little goofy right before the eventual flush actually happened. But, I mean, that happens. Now-
Harmon: But today, I’m sorry, go ahead.
Clay: No, go ahead.
Harmon: Right, I think, talking about natural losses, yesterday, I lost $41 but I didn’t break my rules. Like, it was a good loss. I would take that trade again, you know? I forgot the actual, I’m really bad about forgetting the actual takers. But anyways, it was a good setup. I believed in it. It just didn’t work out my way.
Harmon: But like, today, it was BIDU. I actually have over here in my notes, my little journal. I said, “I remember BIDU. Don’t want to feel that sweaty again.” Because I was in a trade, and I broke like, all my rules. I broke, actually, if we have time I’ll pull up Thinkorswim, and I can walk you through. Is that okay?
Clay: Yeah, yeah.
Harmon: Is that cool?
Clay: Yeah.
Harmon: Okay.
Clay: So, this was BIDU that you were looking at to trade?
Harmon: Mm-hmm (affirmative). Pretty sure there was an alert or something like that in the chatroom today. Truthfully, I can’t remember.
Clay: But your notes said what, don’t get all sweaty, that’s what you wrote down?
Harmon: My actual note was, “You have to be furiously cautious of risk, not profits.” I mean, I set a little dash, “Remember BIDU? Don’t want to feel that sweat again.” Because like, today was the first time I ever actually started sweating in a trade, and I noticed myself. I was like, Harmon, this is not cool. You should not, like, this is physical signs that you are screwing up, you know? [crosstalk 00:53:10]
Clay: Yes, your body is literally telling you that something is not quite right.
Harmon: Like, all of November, and up until today, I’ve never felt that way before, which tells me that like, I’ve been making smart, not like the best, but I’m saying like, I’ve been making the right trades. You know, it’s like, when you’re making a trade, you know if you feel good or not about it.
Harmon: So, the day I, let’s see here. Is BIDU on the, I think it’s a long play. And on the, so, I drew the extensions, not sure what they’re called. Yeah, or the trace-nts, from the bottom of that hammer or the dodgy down there, to the very top of the green bowl. So like, 1.2275-ish, to like 1.19-ish. Okay?
Harmon: So, what happened was it came down, our came down. I said, okay, I’ll get in at, at first it’s a moving average, because at the time, it was consolidating. First I’ll stay right there, I believe, because I didn’t look at the Y-axis and say, wow, this thing could actually move, so I should be more cautious of risk and get a better entry, which is again one of my little, so, on my monitors I have little post-it notes, and one of the post-it notes is, “You make money on entry, and entry equals everything.”
Harmon: So, I already violated one rule right there. I got in at the MA and not the retracement, which is a better entry for over extension. But as you see, it came all the way through all three. Okay? Here’s where our second mistake came in. I told you I was only trading with one to two contracts, or two to three. Lately, I’ve been doing two to three to get used to whenever I go live in January, where I’ll be trading with three.
Harmon: So, I went all the way down, and I got nervous, and I panicked. I bought one contract to the MA, one MO contract at every single level. So, I had four contracts, which isn’t a huge amount of contracts, but for myself, never doing that before, I knew I was screwing up.
Clay: So, you originally bought four, is that what you said?
Harmon: No, so I bought one at the MA, and then I bought another one, another one, and another one. So, I didn’t originally, so, I didn’t-
Clay: Okay, so you ended up with four.
Harmon: Yeah.
Clay: And the most you had ever had before then was-
Harmon: Was like, three.
Clay: Okay. So, clearly, all of a sudden-
Harmon: I was breaking my rules.
Clay: Yeah, and the reason you were clearly feeling this, what was, because now all of a sudden, there’s more risk involved, because you had even more, which then, yeah, everything kind of falls apart. But I’m glad to hear, would you say that loss itself was $60?
Harmon: Yes, 60-something dollars, 61 or something like that.
Clay: And that’s a good lesson to learn for… That’s money well spent. $67 to learn about just how much, when you go too much size, can really affect you, as opposed to $670, or $6,700.
Harmon: Correct.
Clay: So, yeah, I’m glad that this is all occurring with much smaller amounts, and I’m also glad, and this is the big difference, that you’re learning the right lessons. Because I see it all the time. Oh yeah, I’m losing money and I learnt a lesson. Oh yeah, what lesson did they learn? And they learnt something that’s totally irrelevant, or sometimes the lesson they think they learnt is totally wrong and is just going to create more problems.
Clay: And that’s the problem, when you don’t know what you don’t know, you don’t even know necessarily what lesson you’re supposed to learn, and a lot of times, people just default to the, oh well, I shouldn’t have held that long. What does that even mean? Like, what… Okay, so how are you defining time? How long should you have held? When should you have gotten out? Like, you can’t just make broad statements about, well, that’s what I learnt, I shouldn’t hold that long. Yeah, but you know, that doesn’t solve anything in terms of how you actually fix the problem, in terms of, well, when should you have actually gotten out?
Clay: But to you, to listen to you speak, yeah, you’re down and you realize that you totally changed around your risk profile, and when that sort of stuff happens, well, you start to sweat, and things don’t go the way that you prefer them to go. So, I’m glad that you’re learning the lessons that you’re actually supposed to be learning. But given how much work and time you’ve put in upfront with the learning and the paper trading, it makes sense how that’s the case.
Clay: Now, psychologically, how are you doing right now? Are you scared to trade, are you hesitant? Do you feel like you want to revenge-trade? What’s the psychology right now? How does it feel after taking these couple of trades?
Harmon: That’s a good question. So, I’m reading the book, Trading in the Zone, and in that, it has five truths. And the five truths I have on the sticky note, it says, one, anything can happen, two, you’re not going to see the future, and three, it’s a random distribution between wins and losses, and four, an edge equals a higher probability, and then five, every moment equals unique.
Harmon: So, I repeat this to myself after a loser, I repeat after a winner, because I have to keep in mind that everything is unique, right? So, as far as nervousness, or hesitance, or whatever, I was telling Ella, my girlfriend, actually before I started trading today. I said, “Man, I’m kind of nervous, but I shouldn’t be, because I took that loss yesterday.” Yesterday I took that $40 loss, but it was controlled and it was a good loss. That sounds kind of weird, but it was. It was a good loss.
Harmon: So, going into today, I was like, man, yesterday I loss $40, which at the time was the most I’d ever lost before. So I was kind of nervous going ahead of it. I was like, okay, Harmon, you go in with a really good setup, and then follow with a good setup. Well, today, I rushed it. It was like, the BIDU trade, I rushed it. I didn’t get in right, and traded-
Clay: You revenge-traded, because you wanted to make up for the $40 loss. That’s totally normal.
Harmon: Sure, I guess some-
Clay: Totally normal.
Harmon: At the moment, though, I wasn’t thinking… my thought process wasn’t, oh, I’m going to revenge-trade, I want to make up for that 40 bucks.
Clay: Well, of course the voice in your mind, they’re sneakier than that. They’re not going to be like, “Hey, Harmon, let’s revenge-trade today, buddy.” No, of course not. They’re not going to, they’re a little bit sneakier.
Harmon: Yeah, which today, they definitely got me, I have to say. But it’s definitely hard, biting the bullet. I’m like, yeah, sure, I can go over this piece of paper, and like, read these five truths that I got from some book, but at the end of the day, though, it’s like, I lost freaking $60. Like, dang it, man. It’s supposed to be the other end of that. It’s supposed to be a making $60, not losing it.
Harmon: So, that’s where my note today came from. You have to be so cautious about the risk, like how much you’re risking, and not the profit. Because I think today, I saw too many dollar signs, again, probably from losing $40 yesterday. I wanted to make up for it, you know. I was like, [crosstalk 00:59:45]-
Clay: So kind of in the same way, but there’s no probably. That’s exactly what it was. Because I may or may not have been there many times before, where you have a losing day, and the next day, I just find myself being a little bit more aggressive and being a little… All of a sudden, I’m seeing all these, quote-unquote, opportunities. Now, they’re not really opportunities, but in the back of my mind it’s like, hey.
Clay: And then, so, yes, when you use the word, “I felt like I was getting too aggressive,” that makes perfect sense, because deep down, you want to get that loss back, because you’re upset about it, and that’s fine, that happens, that’s normal. But now the key for you is just to realize and recognize that voice. I don’t know what name you want to name that voice, but name that voice, and the next time they show up, be like, wait a second, I know what’s going on here. If anything, you should be reducing size the next day, just to make sure that if that voice does show up, well, you’re kind of battling back with not having as much position.
Clay: But you definitely want to increase position after a losing day that shakes you a little bit. That’s fine. It’s not like you’re unshakeable, and just because, to your point, you read a bullet list of words, I mean, yeah, that all sounds good in theory, but there’s always that thing from theory to actually-
Harmon: There is a lot.
Clay: To actually being out there. Yeah, if only it was easy as a bolded textbook definition. But-
Harmon: Mm-hmm (affirmative), that’s true, yeah.
Clay: It is what it is. My one question though is, not thinking about today, but that $40 loss that you took, how did that compare to your wins? So, what are your average wins looking like?
Harmon: So, what I do if I get a trade, I make, so, I set up about two contracts. So, I bought two contracts, and let’s say… 10, they’re $10. So, I instantly sell one or I put out a sell order for five, and then the other one I just ride until I get stopped out. I’ve been using the stop loss method of either A, the moving average, or B, the last candle, which one is the best one.
Harmon: I’m not tracking the actual average win. This kind of go into, I got a question I’ll ask you, Clay, as far as, how do you set like reasonable goals? Okay, so like, my goal is to be making, I’d love to replace my drill check. So, I got drill once a month. I make roughly $350 a month from that. I would love to be able to make like another drill check, if you will, per month.
Harmon: So like, what’s a reasonable goal of how to, I heard on a podcast of people setting goals and trying to meet them, like over-trading, rushing it, X, Y, and Z. So it kind of answers the question of like, average win or loss. I’m going to ballpark it, I’m not tracking it. Ballpark average of win, anywhere from 10 to 20-ish dollars. Like, yesterday with Apple, I lost 30 but then I made 30 right back, so I had a net loss of zero, or I think it’s like $2 after commissions.
Harmon: But a loser has been two to $3, three to $4, because I sold my first contract and the other ones just didn’t work out so I just got out. But again, yesterday it was $40. That’s just where it didn’t go in my favor, where I didn’t get my first contract off, I hit my stop loss. And today, today was just-
Clay: Yeah, today was just a bad trade. So, that’s what I wanted to focus on, just more so the ones where you were actually following your strategy. So, I would hope and I would assume your win percentage is definitely well above 50%. Are you winning a lot more than you lose?
Harmon: I would say so, yes, in usually like, smaller sizes. So-
Clay: Well, here’s what I’m getting at. If your potential, like you said, the $40 loss, you felt good about it. It just didn’t work out and you lost $40. That’s fine. But if your average wins are five, 10, $20, and you’re at risk at $40, that’s fine assuming that the $40 loss isn’t being like on a common occurrence, because you’ll never get ahead, then, compared to your wins. But if you are doing a lot more wins, then okay, as long as that $40 or that maximum loss rarely happens, well, that’s a different story. So, I guess that’s kind of what you will need to be aware of, is making sure that those bigger losses don’t become, I mean, if they happen too often, then obviously, they’re just going to eat up all your wins.
Harmon: No, I agree. I think it’s where, probably one, start tracking it, and then two, just be aware of it, and be aware of like, am I getting the right entry point, to where it’s going to put me in the higher probability of making a winning trade, compared to trying to dig back on losers.
Clay: Right, right, absolutely. And to answer your question about goals, don’t have any goals. Don’t have any sort of financial goals, because you already nailed it. You’re going to find yourself, oh crap, let’s call it $100. Oh man, I’m at $90. You’re going to be like, okay, well, I’m $10 short. Let’s go find something. And then, you’re going to start to imagine setups, you’re going to start to get way too aggressive in the spirit of making that $10, because you have this $100 thing locked in a place.
Clay: And then, all of a sudden, you’re going to be down at 75. And then, all of a sudden, you’re going to see even better solutions, because, oh, now I need to make 25. So you’re going to start to imagine, and you’re going to get that much more aggressive, and it just, the best goal is just to keep your account growing. Like, that spreadsheet, how does that look? Is it growing? Is it higher? Good. Go through those losses. Is one single loss wiping away a vast majority of gains? If so, okay, well, things need to be tweaked.
Clay: So, just work on a system. Just work on seeing where your account looks, and where it’s at each and every month, because like I said, you’re not stupid. Nobody’s stupid for saying, “I need to replace this number.” But as soon as you introduce this number, now all of a sudden, if you don’t quite get it, then your mind can also play the false delusion on you where you’re not working hard enough, you’re not good enough. Maybe you’re just not smart enough, because you couldn’t make this arbitrary number that you set for yourself. You just can play too many mind games with yourself.
Clay: So, for me, that’s how I would answer it, is, the goal should just be, can you keep your account afloat? First off, just, can you keep it around breakeven, and then from there, is it starting to grow and grow? And always be looking at the losers. When you do take a loss, what’s that shaping? How is that influencing everything? I mean, so, for an extreme example, if like, well, it was green on the month. Well, you had one loss that wiped away 95% of your gains, but you’re still-
Harmon: Got you.
Clay: I mean, that’s something that would be a massive red flag. So, I don’t know if that answers your question, but the best goal is no goal.
Harmon: Okay. So I guess, like, my followup question to that is like, how do you, I mean, full time traders do it? You know what I’m saying? Like, how do you guys who do this as a job make it to where, okay, let’s see if you can go to the best case scenario of you having your savings set back, you have like a whole year worth of savings, like, you are doing it right. Like, how do you guys, because obviously there’s a number that you’d like to hit. Obviously, if your bills are $1,000 and it’s like your full time job, you’d love to hit $1,000.
Harmon: So, how do you do that part? How do you do that?
Clay: Well, at some point you can introduce numbers. I’m not saying, because… But the first step is you have to build a system and you have to know that system works, and you have to know, and this is why you start small, right? Because you get this system, and then you start to play the game, if, okay, yeah, I’ve proven to myself that this is going to produce gains over time. Now, in your case, it could just be 25 bucks, 50 bucks, 75 bucks, 80 bucks, and that’s fine. But hey, look, it’s working, I’m taking losses, but they’re nothing that’s blowing anything up.
Clay: And then obviously it’s like, okay, so, how much would my size need to be to get to this amount that you want? And then, at that point, you start plugging stuff in and you build from that point. But you don’t want to build from the opposite point, where you just focus on what you need. No, just focus on, it’s like an assembly line, right? You figure out the assembly line first, and then you can figure out, all right, well, how much do we have to ramp this up? Okay, well, if we need to get to 100 cars, well, then we’re going to need X, Y, and Z amount of materials, and A, B, C worth of labor cost, and then you can work from there to actually get to that 100 cars.
Clay: But first, you just got to get an assembly line in place in the first place that can produce even one car. Does that make sense?
Harmon: Yeah, okay. So, I’m just taking notes real fast. You said don’t make goals, and then focus on a system first. And then, you kind of answered my second question already. I was going to ask you like, how do you scale properly. And you kind of answered it as far as, you got to make sure your system is right first.
Clay: Yeah, and you scale, just… So, from one contract to two, from two to three, from three to four, and that may sound slow, but it just… Once you get around, and this is all going to be different, but maybe at three, you go to five. But if at five, all of a sudden you got back sweat, and your armpits are sweating, okay, let’s go to four. As goofy as it sounds, just listen to your body. And that means something to you, right, because you have the experience.
Harmon: Yes, today and yesterday.
Clay: That sort of stuff. So, in a very literal sense, listen to your body. That’s going to tell you where your risk tolerance is at. But if you go from three to five, and you’re like, okay, yup, everything’s fine, then I don’t know, maybe go to eight. Holy crap, nope, down to seven, down to six, or maybe just stay at five, because you’re not ready yet. And before you know it, okay, the numbers start to add up more, and more, and more, and at that point you can say, “All right, well, how am I doing?” And you can just start to fine-tune things to get to whatever that number will be.
Harmon: Yeah, that’s true.
Clay: But I will also say that, and I’m not saying this is what you believe, but if you want to do this full time, it’s not a situation where you’re going to have a Lamborghini, a Porsche, and a Ferrari at your beach house down in Florida, while you’re hanging out in your Malibu penthouse, before you fly to your New York City overlooking, what’s the park there? Why can’t I think, the big park in New York City? What’s the name of that park?
Harmon: Good question. I was about to say Times Square. It’s definitely not that.
Clay: Yeah, not Times. What is the name of that park? It’s like, anyways, overlooking the big old park in New York City that I can’t… Like, you have to also have those expectations. I mean, I suppose that’s possible, but most traders I know, they’re just normal people. They’re not out there flashy, you know, lighting up cigars with $100 bills. I get what the movies suggest and all that.
Clay: But yeah, there is also the cut off point where it just becomes a matter of, well, what’s your standard of living? What are you going to be happy with from that point of view? And that’s going to also dictate a whole lot of stuff. And I’ve made this point before, that the piece of dirt you live on really influences just how easy or hard trading is. For somebody living down, I think, what was the state, I think Alabama, that person does not need to make as much as somebody living in New York City, because a dollar, so if both traders make a dollar, that’s great, but the purchasing power of a dollar in Alabama is so much more than the purchasing power of a dollar in New York City.
Clay: So, I’m not saying you can’t be successful in New York City, but you’re just going to have to make that much more money to actually be able to make something out of it, whereas if that person were to move down to Alabama, hey, they don’t need to make as much, because the cost of living is so much different. So, literally the piece of dirt you live on also influences what is it going to take. So, it’s your personal preference. If you’ve got to have a Lamborghini, that’s fine.
Clay: But just realize that, okay, well, it’s going to be that much more pressure on you to make that much more money, because well, if your standard of living is Lamborghini, well, there you go. But if you’re fine, you’re driving around a… I don’t know my cars. But does that all make sense? It just depends on a lot of different external variables.
Harmon: True.
Clay: Good, good. How long is this thing… Oh, we’re an hour and eight minutes. We got to wrap this thing up, man. This is-
Harmon: Look at that.
Clay: This, wow, we just beat… All right, well, we’ll have you back at another time so we can hear about this. This was a super easy interview. I didn’t even realize the time that it was. Good questions, by the way.
Harmon: Thank you.
Clay: All right, well, the time machine, I know you’re aware of the time machine. I would’ve lent you the time machine and you could go back to the start of all this, what would be one bit of advice that you would give yourself?
Harmon: On my notes here I have, “I truthfully do not know.” But I think through this conversation, I guess like, thinking about it more, it’d probably be, just be patient. You know, I guess I would say, accept it’s going to take, warrant a new plan. Because I plan to finish everything in one year and be trading in one year, but really, I have traded for a year, let’s say it’s a year and a half. And then, I’m going to go live now.
Harmon: So, I guess that’d be my advice to myself, is to say, “Calm down and truthfully believe that the market is going to be there.”
Clay: Yeah, and if it’s not there, there’s much bigger problems out there.
Harmon: That’s true.
Clay: So, I mean, that would be the least of your concerns at that point in time. But you know, that’s definitely a good answer. All right, well, I know that the answer to this first question is not going to be A Beautiful Mind, but you’re going to watch that tonight with, oh shoot, you said her name too. What was her name?
Harmon: Baby-cakes
Clay: What was that?
Harmon: Yup, Ella.
Clay: Ella?
Harmon: Ella, Ella is her name.
Clay: Ella Baby-cakes. I hope she’s not offended that she’s being referred to as…
Harmon: No, [crosstalk 01:13:08]
Clay: But Ella, is it Ella, who is called Baby-cakes by her boyfriend. But what is your favorite movie?
Harmon: Oh, me? So whenever I made these notes, I was like, dude, what’s my favorite movie going to be? Because I don’t watch a lot of movies. But I guess like, Shawshank Redemption is off the top of my head. Lone Survivor, any good action movie. I mean, if I’m feeling getting hit in the heart, like getting into romance, probably The Notebook. The Notebook makes me cry every time.
Clay: Hey, you know what? I mean, I don’t know if I’ve ever seen The Notebook, but-
Harmon: All right, that’s your job for Friday night.
Clay: Tonight?
Harmon: [crosstalk 01:13:44]
Clay: I don’t know. I don’t think we can show that to our children, because-
Harmon: The Notebook?
Clay: I don’t know, aren’t there some certain scenes in there that may not be appropriate for seven and below children? I feel like I don’t know if I want to have the-
Harmon: Maybe there’s like maybe one, but-
Clay: Well, that’s more than enough, then, right there. You’ll understand some day. I assure you, you will understand. And all right, well, what about your… You said you’re down in Tennessee. So, where is Tennessee Tech, is that what you said?
Harmon: Yes.
Clay: What city is that in?
Harmon: So, that’s in Cookeville, Tennessee. So, if you look at the Tennessee map, there’s Nashville, or just kind of middle Tennessee, I’d say, you have like, Knoxville, where it’s like to the east if you look at the map. Cookeville is like right in the middle. So it’s roughly like 45-ish minutes, an hour away from Nashville, and about an hour and a half, two hours from Knoxville.
Clay: And then where is it relative to Memphis?
Harmon: Very far away.
Clay: Okay. Because I’m curious, are you going to be, is your answer to this question going to be some sort of barbecue or what, but I don’t know how close you were to Memphis, because I know they-
Harmon: That is so funny.
Clay: But, so where are you at on the food spectrum of things?
Harmon: Pizza, hands down. I think definitely one day I will have my own pizza restaurant. I’ve always liked it, man. I’ve always enjoyed pizza more than anything else. I think it’s because like, okay, thinking about like, chicken, there’s only so many ways you can customize chicken. However, with pizza, you could have a different topping for every single week. And you can change the cheese, you can change out the sauce. You can do all kinds of things with pizza. So it never gets boring.
Clay: I mean, I’m not good at statistics, but however the combinations work, I can’t remember how that works. But yeah, there’s not infinite, but there’s got to be millions upon millions of combinations that you can do with just pizza toppings along. And I know, what is it, the mod pizza, whatever, they’re built on that exact premise. It’s like, no, you can do whatever you want. But you can’t go wrong. I mean, who doesn’t like pizza? Pizza’s fantastic.
Clay: And then, what do you like to do for hobbies and stuff?
Harmon: So, when I’m not at school or doing military stuff, I guess, it’ll be reading, playing video games with my friends, and then, I guess, looking at charts, but that’s about it. Hanging out with Ella, that’s about it.
Clay: There you go. Of course, Ella sounds like a fantastic, fantastic individual, and-
Harmon: She is.
Clay: Just watch A Beautiful Mind. I’m really building this up for you to be like… But based on how you’re talking, just remember, what spurred this was you sitting on your desk with all these papers spread around, and you’re drawing arrows and all that sort of stuff. That’s what brought it up. So it will make that much more sense if you watch the movie. But it’ll be a good time.
Clay: And then, final question here. Three words, and these three words would be what you would associate with a successful trader. So, what would those three words be?
Harmon: Yeah, I’m going to say, this is what I tell myself everyday, especially during hard times. Whether it be physically, mentally, emotionally, whatever. I have a little saying that, I say, I can, I will, persistence. Because I truthfully believe that you can learn how to trade, and you will through perfect practice and continued education, and persistence is key to it all. So, those are three words. Does that work?
Clay: That works, man.
Harmon: Okay, cool.
Clay: That was good stuff. I agree. I like that saying quite a bit. Well, Harmon, it’s been over an hour, and I’ve had a great, like I said, the time flew by. Will you come back at some point?
Harmon: 1,000%, yes.
Clay: Okay, excellent, because I’m very anxious to hear how all this goes for you. But I mean, you do pro and con lists. You will think things through. To anybody that’s putting that sort of effort into a thought process, that’s what it takes. So, good stuff, for sure. But Harmon, and I need to thank you because you volunteered to be here.
Harmon: I did.
Clay: You responded to the email, so I appreciate that. You definitely make Nate and I’s life much easier when people volunteer. So, I thank you for volunteering and I thank you for taking some time out of your Friday afternoon.
Harmon: Thanks Clay, thanks for having me on.
Clay: All right, and we’ll definitely have you back. Now, for you listeners out there, before you go, a final few requests. First off, if you’re listening at claytrader.com, on the show notes page, there’s a little chat box there. If you want to leave suggestions, feedback, questions, please, we love to hear from you. It’s always fun to hear and have somebody start off the conversation with, “Hey, I listened to the podcast,” or, “Hey, I listened to Harmon’s podcast.” And that’s great. We love to hear and interact with those of you listeners out there that do listen to this.
Clay: If you’re listening on iTunes, or Spotify, or any of those, or podcast players, be sure to subscribe, and especially on iTunes, if you could leave us a rating, that really helps us out, and even better yet, a written review goes a long way, and it helps us, and it’s going to want us to keep us doing this, because it just gets the word out that much more, and it’s just kind of a win-win for everybody. So we would greatly appreciate it.
Clay: But thank you again to all of you listeners, thank you Harmon, and we will see you all back next week.
Clay: Cut, nice, nice.
Harmon: Look at that. [crosstalk 01:18:39]
Clay: Good stuff. Beast mode. All right.
Harmon: Look at that.
Clay: Let’s see-
Harmon: When will it be posted? Like, how long do you guys have it scheduled out?
Clay: Give me one second to… That’s a good question. Actually, I can answer that if you… Let’s see. Podcast publishing. This will be on January 13th.
Harmon: That’s really cool. That’s cool.
Clay: Yeah, so we’re building up a buffer, and then I got another one at one.
Harmon: Look at you, the game day.
Clay: The buffer is under-
Announcer: This has been the Stock Trading Reality podcast. Thanks for taking the time to hang out. To learn more about Clay and the Clay Trader community, including the trading team, premium training, and more, visit claytrader.com.

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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!)



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