Episode 020: Patrick McKay – How Much Does Volume Matter?

Patrick McKay is another OTC trader that we brought onto our podcast because of the diverse knowledge base that he is able to share with us and all of you. As we have mentioned in the past, OTC trading is really no different than trading any other kind of stock, be it a low float or a blue chip. The main difference is they move a bit slower (for the most part) and simply require a bit more patience.

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If you have ever heard of OTCMethod.com or OTCre.com, then you may know a bit about Patrick already. Patrick is the head trader at OTCMethod.com and helped create OTCre.com which is a popular scanning tool for the OTC market. His fundamental checklist approach allows all traders to attack the markets in a structured way, taking the fear out of the OTC markets. In the episode of Beyond the PDT, Patrick explains his story and the plethora of tips he learned along the way to becoming a consistently profitable day trader.

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How Did Patrick Get Started Trading?

When Patrick first got into trading, he was not trading NYSE, OTC’s, or NASDAQ’s – instead, he was trading only the Canadian markets. While trading these markets, he was trading stocks that were similar to OTC’s in the way they demonstrated price action and even in the way in which they are listed. Simply put, Patrick was used to the style of trading that OTC’s demonstrate before he even made the switch over to American markets.

Eventually, he decided to give the American markets a shot and while he did and still does trade other types of stocks besides OTC, he has to make sure that the trade or the ticker is something that he feels very comfortable with. Because of this, he labels himself as primarily a full-time OTC trader.

Furthermore, it is important to note that because Patrick lives in Canada and started trading in Canada, the PDT was something in which he never had to deal with.

Importance of Time Frames in Patrick’s Trading

Patrick does not consider himself specifically a day-trader by any means. While he mentioned to us that there are plenty of times that his trades may start off as simply a day trade based on his bias, they often can turn into strong swing trades. In this episode, Patrick tells us that “oftentimes, good swing trades start off as good day trades.” If the setup continues to present itself and he sees the potential for strong continuation, this often means that he will hold the stock for a certain period of time until he is ready to take profits.

Because of this, he is not bound to one- or two-time frames on his charts. Often times, day traders have a liking for the 1 min charts, the 3 min charts, and the 5 min charts. That is not to say that day traders do not use other charts to help identify trends and whatnot, but when they are looking for their exact entry, it is not uncommon to see them stick to a smaller timeframe.

The same can be said to an extent about Patrick’s trading. Because of his idea that the best swing trades start off as strong day trades, he is using a smaller time frame when he is entering a position during most cases. That said, as he sees that there is potential for continuation (depending on how long he plans to be in the trade for) he says that it is not uncommon for him to “zoom out” and look at a much larger timeframe. Essentially, when he is swinging a trade, there is a good chance he is going to be looking out on the daily chart for a while which he attributes as something that is very important for him to stay in a trade or know when to get out.

Is Volume Important?

We all know that volume is an important aspect of trading. Without volatility, it is very unlikely to see predictable moves in either direction. With that being said, Patrick mentions to us that volume is not what should be being looked at, it is the amount of money being traded per day, hour, minute, etc. If a stock is valued at $.0005 per share and is trading 5 million shares per day, that is equivalent to $2,500 worth of volume per day. Simply put, that is nothing.

While this is seemingly obvious stuff, it can get a bit more detailed. Patrick mentions to us that he has a checklist that he goes through before every trade to help gauge as to whether or not he is in the right spot to enter the trade. Furthermore, he has calculations to see how much money – not just volume – would need to be traded in the day to theoretically enable the price of the stock to move a certain amount. To Patrick, this is one of the most important aspects of his trades as it gives key insight as to what needs to be done in order to help the stock hit his price target.

So, yes, the volume is important, but only when talking about it in relativity to the amount of money that is being traded for that ticker per time frame.

Closing Thoughts

While this sounds repetitive as ever, this was another extremely insightful episode that we highly recommend you listen to if you have not had the time to yet. We only have so much that can be conveyed through a blog post, and while they serve as great recaps, you will get so much more knowledge from listening to the episode itself.

Patrick was extremely insightful and went over some basic aspects of trading in greater detail that may help you see something you have been missing for quite some time. Thank you all for the love and support and as mentioned in the beginning of this episode, we will begin with more podcasts in the beginning of September. Looking forward to Episode 21!

Like our podcast and our blog? Have any comments, questions, or concerns? Let us know what you think by filling out a comment below or by sending us an email!

Episode 019: Brian Lee – Trading with R’s

If you’ve been following our podcast for a while now, or have gone through and listened to every episode, you know that Brian Lee was on a few months ago. However, we decided to ask him to come back on a second time as his trading is better and more consistent than ever before. There is no doubt that Brian Lee has the potential to be a top trader in the day-trading community with the steps he is implementing as it stands. If you have now yet had time to listen to this episode, please make sure to free up some time as this episode has the potential to really give you some insight as to what risk management is and how to implement it into your trading.

Check out Episode 007 with Brian Lee

Before getting too far into this blog, thank you all for the love and support you all have shown our podcast. We love getting to talk to these traders and be able to share what we have heard with all of you. If you have any friends or know of anyone who is looking to gain an edge in their trading game, be sure to share our podcast with them! Our goal is to help everyone to one day make it Beyond the PDT.

Who is Brian Lee, Again?

Because we have already interviewed Brian once before, we’re going to keep this short and sweet. If you want to look a bit more into the last chat we had with him, you can find that here. Essentially, Brian used to be a professional video game player who played primarily DOTA 2 competitively for money. He was told this was something that he could not do, and while they did not come in first in the world championship the year they made it there, he still made it to the competition and was proving people wrong. However, he finally came to the point where he was ready to do something else with his life, and it was around this time that he discovered trading.

It is not to say that his discovery of trading came without some downfalls. While he has only been trading full-time for about 2 years, his real consistency has come in the past few months as he learned to incorporate risk management into his trading in a way that he has never seen before.

What Changed From the Last Talk?

Back when we last talked to Brian, his goal was to have a roughly 3:1 risk-reward return per trade. While a lot of traders like to flash numbers around for their P/L, we rarely know what they were risking per trade. Ultimately, those who are able to risk a very minimal amount of their account per trade and make a much larger gain are going to be the ones who come out on top. We have said it multiple times before as well as we’ve heard it ourselves – anyone can find a pattern that works for them, but that does not mean everyone can make money. Being able to make money consistently does not come from just finding a pattern – it comes from understanding how to manage your risk effectively and efficiently in every trade.

Going back to what has changed in Brian’s trading since the last time we talked to him, he now has a much better understanding of how to get more reward out of every trade. As opposed to the 3:1 return he used to look for, he now looks for returns that are upwards of 10 on some trades when he can find them. In fact, just a month or two ago, he had a 40:1 risk/reward month – a very impressive feat. Want to know what is more impressive though? A 40:1 risk/reward week that he had following the end of that month. That is nothing short of amazing – congratulations, Brian!

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How Has He Learned to Get Significantly More Reward?

At the end of the day, the stock is going to move in whatever direction it wants. Before Brian found a way to increase his risk, he was not scalping at all either – he was capturing meats of moves. However, he realized that by increasing size and effectively adding/selling, he would be able to change and manipulate the entire structure of his trades for the better. Because Brian is primarily a short-biased trader, it is evident that the best way for him to go about adding is to add on a pop, which is exactly what he is working on doing to give him these better returns. What he will do is formulate the size and the price of which he wants to add size on to in a calculator that he made, and it will tell him how much more he should risk and his projected return if it hits his price target.

Essentially, the point here is that he is able to shoot for the same price target, but by adding size in ideal spots, he is able to increase the reward significantly without needing to increase the risk of his trade.

How Much Does Brian Risk Per Trade?

When talking to Brian about his risk structure, he mentioned that he likes to keep it very simple. For the most part, he likes to risk between 1-2% of his account per trade, though, there are times when he looks to risk 3% if the setup presents itself. Now, take that in really quick. Go back to where I mentioned that he made 40:1 R in 1 week now. Assume he risked only 1% of his account for every position he took that week and realize that he nearly grew his account by half in one single week, which may be a conservative number. He did not change the setups he was playing at all (well, he refined them a little bit, but that is not the reason for the change in his consistency.)

The point I am trying to get across here is that when you have a strategy that works for you, the possibilities for growth are endless. However, it all comes down to understanding how to properly manage your risk. If you are able to do this with a winning strategy, there is no reason you will not be able to find consistency in your trading.

 

Closing Thoughts

This episode with Brian Lee was one of the most insightful episodes that we have ever released when it comes to risk management. Matt and I personally were in awe after getting off the call with him, and we hope that after listening to this episode that you feel the same way.

Make sure to let us know what you think by shooting us a message over one of our social media or by going to the contact us page! We are very appreciative of the support and cannot thank you enough for listening to our podcast.

Like our podcast and our blog? Have any comments, questions, or concerns? Let us know what you think by filling out a comment below or by sending us an email!

Episode 018: Joe Callaway – Longing OTC Promotions

A few months ago, in our episode with Kyle, we learned about how he would short sell OTC promotion stocks that would make insane runs only to fall to their death in time. However, what we did not know is that it was also possible to find out what stocks are likely to be promoted before they even get pumped and play them on the long side. In this episode of Beyond the PDT, that is exactly what Matt and I learned from Joe.

Who is Joe?

Joe is a 29-year old trader who has been trading full-time for almost a year now. Originally, he began trading while he was pursuing his MBA as a way to make some money on the side but was struggling to find consistency in the market. Also, at this time, he had a plan to become a wealth manager of some type. In fact, this was the reason for him going to pursue his MBA. With that said, the trading bug got a hold of him as it did for a lot of us, and when he found the right person to help guide him along this trading journey, he decided this is something that he could see himself doing for the long haul.

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What Is Joe’s Strategy? What Stocks Does He Play?

Before digging too far into the strategy that was highlighted in this episode, it is important to note that Joe mentions he plays more than one setup and more than one type of stock. When interviewing him in the beginning, I was under the assumption myself that he only trade OTC promotion stocks. However, come to find out, Joe is much more well-versed in the market and is working on a number of different strategies as we speak.

Part of this is due to the fact that the OTC market has not been all to hot over the past few months, and more importantly, the SEC is cracking down on OTC promotion stocks which means they have not been as likely to run monstrously like they have in the past.

In this episode, Joe mentions that he does do some dip-buying of NASDAQ penny stocks as well as some shorter-term trading in the OTC market, somewhat similar to the style of trading that Dom Mastromatteo explained in his episode. However, what Joe has learned from a mentor and friend of his about longing OTC promotion stocks is why he is so successful trading full-time.

While Joe does not go too much into detail as to the exact specifications of what he looks for in an OTC promotion play – and understandably so – he does give us some information as to some basics of what he looks for. From the get-go, Joe tells us that all of the information that he needs to see if it looks like a stock is going to be pumped is in the filings. While this sounds foreign to an extent, there has been a lot of hype around reverse-split plays in the NASDAQ low float realm which seems to be very similar to this.

The idea here is that these OTC companies are very heavily struggling and that they are in need of some cash. Hence, while the stock may be fundamentally worth nothing, they are finding ways to hype up their ticker perhaps through ticker name changes, new PR’s, etc., of which Joe looks for in filings. Furthermore, there are also technical indications that may help to justify getting into a position.

Risks to This Strategy?

This may sound like a bit of a loaded question as there are risks to all types of strategies across the board. With that said, because this is such a unique strategy that we have not yet seen before, it brings about the question as to the different types of risks that may be associated with this strategy as opposed to more orthodox ones.

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One of the risks that comes along with this strategy is that it may take being down a bit before the stock is truly promoted. In this episode, Joe mentions that there have been times where he has been down upwards of 50% on his starter position before the stock makes the run he was looking for. While to some this may seem careless and lacking risk management, we also know that many times Joe starts with small positions and will add when he can if he is right.

To further back this up, the runs that these OTC promotion plays make can make up for being down so much in the beginning as well. While 50% does seem to be quite the hit, when the stock runs up 600-1000%, it is nothing to worry about. Because of the nature of the strategy and not many people fully understanding how it works, it allows for some insane gains.

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What’s Next for Joe?

As mentioned earlier in this post, Joe told us that the SEC is beginning to hammer down on these OTC companies and their promotions. There have been a lot of companies that are getting halted because of their promotions, and when this happens, the price of the stock often opens up near lows whenever the SEC decides to unhalt them. Not only does this means that the companies are not making the same runs as they used to it, it also means that people are beginning to heavily short these OTC promotion stocks. This is what Kyle does for his style of trading.

Because of this, Joe mentioned to us that he is beginning to look a bit more into the short-side – and understandably so. While it is not to say that trading is easy in any fashion, shorting these OTC promotion plays may be a bit easier in the eyes of Joe. As time goes on, he hopes to find consistency on the short side and possible refine some of his other strategies as well.

Closing Thoughts

It goes without saying that Joe’s strategy is one we have never heard of before. In fact, we did not know it was possible to find promotions before they happen in the OTC market. With that said, this is not a strategy that seems suitable for a lot of beginner traders as it does require a lot of knowledge about the fundamental analysis side of trading – which unless the trader is studying finance or something of the sort – it is not likely that this is something they are going to have a lot of knowledge about. Regardless, though, this is an episode you are going to want to listen to the full episode of, so make sure to check it out on one of the many platforms we release on! Thanks for all of the support, and we will see you on next week’s episode.

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Episode 017: JTrader – A Trader’s Path to Overall Success

In this week’s episode of Beyond the PDT, Matt and I had the pleasure of talking to J Trader. He is a very well-seasoned veteran in the trading community and has been trading for nearly 20 years now. With all of this experience, it is clear that there are a lot of great bits on knowledge to be picked up in this episode.

However, as I say every time, it is nearly impossible for us to fit everything into just this blog post. If you have time, be sure to check out the full episode which can be found here. These interviews have genuinely helped both Matt’s trading and mine, and we think that there are great lessons to be learned regarding risk management, discipline, and even some trading strategies you may not be familiar with. We hope that with these episodes, we can help you in your attempt to make it Beyond the PDT.

How Did J Trader Begin His Trading Journey?

Having been involved with trading for so long now, it made us wonder as to how he actually got into it to begin with. Because of the time frame, he did not have a lot of resources out on the internet which made it much harder for a lot of people who wanted to start trading back then to get a true start at it. However, J Trader was in a relatively unique situation in which his parents were both involved in the markets having worked for some large firms in New York City when J was very young.

Upon moving to Rome, J Trader would walk with his father down the street and every so often they would stop in front of screens that had tickers reading on them. His father would tell him, even when he was only 8 or 9, that he needed to learn to invest when he got older. Around the age of 19, J Trader began versing himself in the markets with the help of his network, and from there he became who he is today.

What Types of Stocks Does J Trader Trade? Does He Have a Bias?

J Trader tells us in this interview that he does not play one particular type of stock or one setup either. In fact, he even tells us in this episode that he plays options as well and over the course of his 20-year career, he has traded a number of other markets. At the time, though, his primary plays are both in the options market and with small cap, low float runners. The reason for this is because he – like many of us – love the volatility that come with these small cap plays.

It is the same reason that he trades options frequently as well, though, as there is the potential for a lot of upside when the opportunity presents itself. When it comes to options, he particularly plays stocks like TSLA, AMZN, NFLX, etc., of which have a lot of volume and decent range on the day.

That all being said, there are times when he plays large caps as well. The reason that he tends to stick to small cap low float stocks is because of the volatility that comes along with them. However, this is not to say that large caps do not get volatility and when they do, J Trader will play them as well.

Regarding J Trader’s bias, he does not have one that he focuses on 100% of the time. Because of the nature of low float stocks, we know that most of them fail and the inevitable edge is generally short (when patience is able to be attained.) That being said, it is also clear that there can be a very strong edge going long when these low floats have news. Seeing that J Trader has been doing this for such a long time now, he has recognized how to attack both long and short with these low float runners and is able to play both sides of the run.

Does J Trader Have a Strategy?

As Matt mentions in the beginning of the episode, J Trader has what he calls his “J Lines” of which are a particular and undisclosed indicator that he uses to gauge some of his trades. He has not told us whether or not this is the only indicator he uses, nor has he told us if this is his only strategy. However, they are simply a set of lines that have the ability to give confirmation and a set/defined risk level to play off of.

Furthermore, by using these lines he is able to develop the bias that he would like to use for the particular trade. That said, this is the same way that a lot of people use something as simple as VWAP – they are nothing more than a set of indicators that work for him.

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Psychology and Small Account Advice

J Trader and I have a very similar outlook on discipline when it comes to trading. This is something that I have even posted about on Instagram within the past few weeks. The idea is that finding success in trading simple comes down to your mindset. Hard work and consistency are what makes a strong trader, but this is hard to do when you do not work hard or have consistency elsewhere in your life.

Like myself, J Trader works out quite a bit. I personally like to think of this as something that is very similar to trading. A lot of people want to do it for fast results, but they do not know how to stay consistent with it. Furthermore, some people may be great at going to the gym every day but have an awful diet and are not disciplined in that regard. It takes working hard even when you don’t want to in order to find success in something like working out, and J Trader tells us the same is applied to trading.

Those who can find consistency elsewhere in their life paired with hard work are likely to have a better shot succeeding at trading because they will know how to apply those same values to their trading.

For small account growth, J Trader tells us that it is something that is very possible. However, because of the short-term mindset, people want to grow their $2,000 accounts into $1,000,000 accounts which is simply not possible. Instead, he recommends that we all look to take those small accounts and turn them into a more achievable number such as $10,000, and from there turn that into $20,000, etc. With time, goals will be achieved.

 

Closing Thoughts

Simply put, this was a fantastic interview. There was so much great advice that was given throughout and it is one you are not going to want to miss. J Trader is so experienced, and we feel that there is a lot that can rub off on you if you are able to apply what he has mentioned to your trading. We hope you enjoyed this week’s episode and that through these interviews, we are helping you find ways to make it Beyond the PDT!

Like our podcast and our blog? Have any comments, questions, or concerns? Let us know what you think by filling out a comment below or by sending us an email!

 

Episode 016: John Papa – Maximum Logarithmic Scale of Wealth

John Papa is a very well-known name in the trading community as a new trader who is beginning to find true success in his trading. While he did go through a bit of a losing streak during his first 6-7 months trading as many new traders do, he learned the power of tracking data on his trades to help him better his trading ability in the future. Being about 2 years into his journey, he has found a lot of recent success after having developed a number of strategies to help him diversify his trading overall.

In this episode, we talked to John Papa about how he got started, what he does to become more consistent, how he sizes, and the different style of trades that he plays. There is a lot to learn in this episode and we highly recommend checking out the whole episode if you have time!

How Did John Papa Begin Trading?

We have talked to many traders in the past few months who were introduced to the market by Tim Sykes, and John Papa was no exception. In the beginning, John thought that Sykes looked to be a bit sketchy in the sense that he was always promoting a lot of materialistic items. However, after some time, John realized there was likely validity to making money in the stock market and decided to give Sykes a try.

However, in the very beginning (for the first few months of his trading journey) he tried to simply follow alerts for trades and make money that way. Of course, as many of us know, that simply does not work out for any extended periods of time. It was right around this time that John began to realize that he was going to have to put some serious work in if he wanted to find success.

In doing so, he began watching a lot of videos that Sykes had available on his site and learned a lot from the videos by Tim Grittani. While he was beginning to learn a lot, he also was trading a lot of different setups for no apparent reason. It was not until he began to focus on tracking data that he would see changes in his trading.

How Tracking Data Helped John Papa to Become More Consistent

In this interview, John Papa tells us that the tracking of data allowed him to see what setups were working best for him. Because he was trying to trade so many different strategies and was not doing a whole lot of tracking when he first started, he had no way to see what was working for him and what was not.

With time, he began by tracking very simply data such as the time of the day that he entered, the prices of the entries and exits, and whether he was long or short. Eventually, he began tracking the setup that he was trading to see what worked for him. This allowed him to find the setups that were making him not only the most money but were delivering him with the highest win percentage.

How Does John Papa Trade Today?

In this episode, we talked a bit about some of the styles that John trades frequently. Overall, he has four main strategies that he looks to use; a long and short setup on OTC stocks, as well as a long and short setup for NASDAQ listed stocks. With that being said, we really focused on his long setup for listed stocks in this episode, of which he learned from Roland Wolf’s DVD.

The setup essentially involves finding recent reverse split stocks, as these are normally the ones that will look to release news and drive their price up. What John does with these recent reverse split stocks is simplistic in nature but takes a lot of work to find the perfect setups as well as great timing to ensure that there are good entries and exits.

While we did not go too much into the strategy in terms of the specifics in the episode, the idea is that John has a list of stocks that he is watching for after digging through some filings that have recently gone through reverse splits. When he has a good watchlist, he will then look to buy in the premarket if and when they release news. It allows him to get in with relatively minimal risk with very high returns. If you are interested in learning more about this strategy, click here.

 

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John Papa’s Idea on Sizing

John has a very interesting take on sizing. While many of the traders that we have talked to in the past have essentially said that you should begin sizing up with experience, John Papa uses the Kelly Criterion for his sizing decisions. Unfortunately, that could be a whole blog article in itself for those who do not know what the Kelly Criterion is. That being said, if you want to learn more about the Kelly Criterion, click here to read up on it.

The reason that John uses this is because it allows his results to be very consistent. Think of it this way – if you have high conviction with one trade and use massive size but it does not work, you are going to take a massive loss. On the other hand, if you don’t have much conviction on another trade and take small size but end up with a massive percentage win, it is going to bring about skewed results. To this, John believes that the Kelly Criterion has helped him to remain consistent in his trading and uses it to this day to determine position size based on his account.

Closing Thoughts

This was a great episode regarding a different aspect of risk management and learning how John Papa looks to take his trades. This is one of the most interesting views on sizing that Matt and I have heard yet and it is absolutely something that may benefit some new traders.

On top of this, John gave us some great insight as to his trading strategies. If you want to learn about all of the strategies that were mentioned in this episode, be sure to check it out and give the whole thing a listen!

Episode 015 : Madaz Money – Two Dimensional Trading

Madaz is one of the most consistent traders in the game with one of the greatest stories we have heard yet. He started off like many of us, as will be talked about to follow, and has made a name for himself on Twitter because of his consistency and transparency. For those looking to learn a bit more about Madaz, check out his website or his YouTube channel as there are a lot of great lessons to be learned from both his chatroom and his videos. While no one episode will make you a successful trader, learning the lessons from all of these episodes and some top-level traders may help you to make it Beyond the PDT.

Who is Madaz Money? How Did he Get Started?

Again, Madaz is one of the most well-known traders on Twitter because of his insane consistency in the market. Furthermore, it is even better than he started trading like many of us – working a full-time job wanting more. As an engineer graduating from college during the 2008 financial crisis, he was not making as much money as he was hoping to. With that being said, he had a friend at work who was into the stock market who seemed to be doing well for himself. This was the beginning of Max’s journey.

While his friend happened to end up knowing nothing about the market, and appeared to have gotten pretty lucky, Madaz knew there was a way to learn. After studying charts and working on his trading game for a few months, he began to find some consistency. At the time, he grew his $6,000 account, of which was under the PDT, to over $40,000. This is tough for a new trader, but it is possible and Madaz is living proof.

At the time, though, he ended up taking a massive loss, bringing his $40,000 account back down near where he started. Many people would have given up at this point, but he knew that this was nothing more than a setback and that trading was a true possibility. The loss taught him discipline and from there, he grew his account to back over the PDT and never looked back.

What is Madaz’s Style?

Another aspect of Madaz that is very well-known is his extremely unique style of trading. As a day-trader, we have a few options. Some hold their position for hours and even may be swing traders, and others are scalpers, being in positions for a few minutes to an hour. Madaz, on the other hand, is more of a micro-scalper, sometimes only being in his position for a matter of seconds.

The reason he does this is to capture the meat of the move and to ideally minimize his risk of halts and other news events that may mess up the trade. Because of his style of trading, he is very reliant on Level 2 and the tape. We wanted to get some insight as to what he did to learn it and got the answer we were expecting – tons of screen time. Very similar to those like Harry Hoss, he recommends recording your screen and playing it back at lower levels during big moves to see the change in the action and simply train your eyes. With time, you will begin to see differences in how the stock moves based on the L2 and tape.

The NoBlowUpChallenge

Madaz made a name for himself on Twitter after starting what he called the NoBlowUpChallenge after a large loss last year. Within the course of 2 days, Madaz lost over $100,000 due to revenge trading and using too much size. That said, he still ended the year green and simply worked on sizing appropriately which has helped him tremendously in his consistency. This has been something that I personally (Bryce) have used to help find consistency as of lately, as oversizing makes the trade too much about the money and not enough about the quality of the trade.

After starting the NoBlowUpChallenge (rules that he still uses to his trading to this day), Max has found tremendous consistency – he even went on a 40+ day green streak earlier this year. When he realizes a shift in the market again, he will begin sizing down until he sees the setups that work for him.

Journaling Trades

Madaz told us in this episode that he is a big proponent of journaling your trades. This is how he has found consistency in his trading especially as of late, as it allows him to see where he is making mistakes and allows him to adjust. It was actually because of his journaling that he was able to create rules for the NoBlowUpChallenge. After seeing the mistakes that he made over time that created such a large loss, he knew exactly what he needed to change in order to find consistency.

At the very least, journaling trades allows traders to see what they are consistently doing well and what they are not doing well with over the course of a long period of time. For those who are able to have the discipline to make changes based on this, they are likely to find success.

Some traders are proponents of tracking data, and while Madaz is also big on tracking data on your setups, it seems that the best data to track may be your trading habits. At the end of the day, any setup can work, but your ability to follow your rules is what is going to make you money in the long run. Journaling your trades will allow you to see what is working and if used correctly, can have a HUGE impact on the success of your trading.

 

Closing Thoughts

As I’m sure you see, we talked a lot about consistency in this episode as well as journaling. The two are clearly correlated for those who are able to understand their mistakes and learn from them, and Matt and I think that this can have a huge impact on your trading. Both Matt and I have seen a great change in our trading because of the psychological changes we’ve made and have been able to stick to simply from learning from top-level traders that we have talked to and hope you are all able to as well.

Madaz was a great guest to have on and seeing as he is one of the most consistent traders in the game, we feel as though there is a lot to learn from in this episode. We had a pleasure talking to him and hope that you all could learn a lot too!

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Episode 014 : Ricky Analog – The Dark Side of Fundamental Analysis

Ricky Analog is often known on Twitter as one of the most well-versed traders for his understanding of fundamental analysis. He also is one of the traders at StockTraders.net. Although we went into this interview expecting him to be a fully fundamental-based trader, we learned that fundamentals make up a mere 10% of his overall thought process on a given trade, with technical making up about 90% of his trading. With that being said, he tells us why he feels as though fundamental analysis is still vital for his trading, as well as how he got started trading out of college.

Overall, this is an episode you are going to want to listen to if you have the time to! While these blogs help for a quick recap, the lessons learned in these episodes far outweigh the knowledge we can portray in our blog posts!

Who is Ricky Analog?

Ricky began trading about five years ago now after having created a passive business that him and his business partner have been working on since college. The type of business that him and his partner run is online retail, doing a lot of business through Amazon’s FBA program. However, once the business started generating passive income for him and his partner, he decided that he wanted to try something new. Because of this, him and his business partner funded a $10,000-$15,000 E*Trade account but blew it up very quick during the first pot stock boom.

After they blew up this account, his partner decided he did not want to continue trading but Ricky wanted to keep learning about trading because of the possibilities it could bring him. For 2.5 years, Ricky was an unprofitable and inconsistent in his trading, but after learning a bit of fundamental analysis during the second half of his first year and learning from respectable traders, his trading vastly changed.

How Did Ricky Learn Fundamental Analysis?

After joining a trading room – the Spartan Trade room to be exact – he learned from some of the good traders in there that fundamental analysis has a lot of value. He would ask some of the traders in the room how to read filings but was given very short answers that did not provide a lot of help initially. However, he told us that these short responses forced him to learn on his own and that he owes a lot of gratitude to them for forcing him to learn on his own.

This goes back to a very important idea that many times new traders fail to understand. There is no shortcut to success – most new traders are expected to be given the holy grail, but even when you are given a successful strategy, very rarely does anyone use it correctly without putting in their own work to refine it. For Ricky, he learned filings by simply reading thousands of them over the course of his trading career. After seeing the same words and filings enough times, he began to understand what they all meant. If you are interested in getting a very solid start to learning fundamental analysis, consider checking out Ricky’s YouTube channel, where he has a number of in-depth fundamental analysis videos!

Why is Technical Analysis More Important in Ricky’s Trading?

When he explained this to us, he made it clear that this applies mainly to low-float stocks. Understandably, as many of us know, these are junk companies who usually have no real business and are burning a lot of cash. Because of this, they need to raise money through offerings and through being able to exercise their warrants, so they will release press releases to pump the price of the stock up in order to get out of their positions or to file offerings.

However, this does not mean that the areas in which these warrants are able to be exercised will act ass resistance. While this does help to give Ricky a bias on a trade, technical analysis will always give a better idea for intraday action. Very rarely do one of these low-float junk companies become a real company, so fundamentally, it can be assumed that the price will fall. However, technical analysis will give a better understand as to where the value of the stock is going to be throughout the day.

Ricky’s Tip to Becoming Consistent

When we asked about how he recommends new traders start off, Ricky told us that he recommends taking data on every single trade you take. This is no new news by any means – we have talked to a number of other traders in the past who have highlighted how important it is to track the trades you take. He recommends looking at the strategies that are working for you and focusing on those – much easier said than done, of course. With that being said, by getting as much data as you can on the trades you are taking (and properly applying it to your trading), you should be able to work on finding consistency in your own trading.

Closing Thoughts

Ricky provided some of the most insightful information we have heard yet. Again, if you have not had time to listen to this one, it is not one you are going to want to miss. While we went into this interview expecting Ricky to be very heavy on fundamentals, but we learned that technical analysis is still a massive part of his trading.

We had a great conversation with Ricky and absolutely learned a ton. Hopefully through episodes like this, you are all learning a lot too!

Like our podcast and our blog? Have any comments, questions, or concerns? Let us know what you think by filling out a comment below or by sending us an email!

Episode 013: Agent 47 – Keep Your Guard Up

This week’s episode of Beyond the PDT was another great one, where we got the pleasure of speaking with Agent 47. Agent is a trader with the MIC group and has found consistency in trading nearly everything that is running. Simply put, Agent plays stocks that have volatility, be it low float runners, large caps with earnings, or anything in between. Needless to say, he is a successful trader who dropped a lot of great nuggets throughout the episode. Matt and I found one of the best lessons he had to be learning to de-associate trading with money. Once he was able to forget about the money aspect of trading, he was able to focus more on taking trades for the purpose of taking good trades as opposed to taking trades for the sole purpose of making money.

Like in our last episode with Tim Bohen, Agent 47 tells us that he uses trading as another stream of income – he is not necessarily a full-time trader. That being said, they have both shown us that it is possible to trade as well as have other ways of making money. However, the real matters talked about in this week’s episode were heavily based on trading psychology, which is ultimately what makes a successful trader. If you have time and have not already, be sure to give this week’s episode a listen!

Who Is Agent 47?

As mentioned earlier, Agent 47 is a member of the My Investing Club, which has presented us with a number of successful traders to talk to in our past episodes. While he had a bit of a rocky start with them, not knowing if he wanted to continue being in a chatroom, he soon realized that there was a lot of valuable information being brought in from strong traders that he could be learning from. Low-and-behold, he began learning different methods of trading from these traders and was able to expand his trading palette.

Moving on to the personal side of Agent 47, he is a trader originally from Pakistan who moved to Norway to study at university some time back. He went to school for finance as the school he attended had the number two business school in the country of Europe. As with many of the other traders we have talked to who have also been finance majors, it has helped them in trading in some way or another, whether that be by being able to understand stocks better from a fundamental standpoint, or simply by having a better understanding of numbers and the market in general.

While we never really got into what Agent 47 does besides trading, he does have other streams of income on top of trading as well. This is something that has helped him to be able to detach himself from money a bit, as he knows he will be able to still have money coming in if he was not to be successful trading. We will get into this a bit more in the following, but this is something that has helped him to become a consistent trader.

 

How Did Agent 47 Get Started Trading

When Agent first got into trading, he was not as well-versed as he is today. Small-cap low float stocks were not something that were in his arsenal. In fact, when he first got into the market, he was purely interested in long-term investing, which is the same way that a lot of us first began trading. However, once he began to see plays that would make large intraday moves, especially earnings plays, he realized there were other ways to make money in the market.

Because of this, he first started off trading large cap’s earning plays for a while, but then through learning about other types of short-term trading, began to trade whatever he saw that had volatility. The reason he began trading faster moving stocks, he says, is partially because of who he is as a person. “I am not the kind of guy that could play GTA, I’m more of a Modern Warfare kind of guy.” What he meant by this is that he simply is not a patient person, as many of us aren’t, and this has had an impact on how he trades.

Fundamentals and Technical Analysis

Being a finance major, it is expected that Agent 47 has a decent understanding of fundamentals. Because of this, we asked him how much technical analysis versus fundamentals impacts his trading decisions. His response was simple, but very important. While fundamentals do play a large role in the overall price of the stock, that does not mean that the stock price is going to be representative of its fundamental value on an intraday term. For stocks that Agent swings, he says he uses a bit of fundamental analysis to get a gauge as to where he thinks the fundamental value of the stock is going to be over a period of time, but during the day, momentum traders have the ability to take the price of the stock far away from the fundamental value of it.

For that reason, Agent says that during intraday trades, fundamentals are not as large of a contributor to his decisions. That being said, he is not by any means saying that fundamental analysis is not important, rather, that technical analysis to him is simply more important in terms of intra-day trading.

Psychological Aspect of Agent’s Trading

In terms of psychology, this was one of the more interesting interviews we have had so far. Agent 47 told us about how he typically only trades for about an hour a day, and in order to stay fresh and on top of his game, he likes to break his trading into different intervals of time. Instead of looking at his trading as a one-hour block of time, he breaks it up into 15-minute intervals. From what he mentioned, he got this from the idea of boxing and how it is broken up into rounds, and that he looks to do the same thing with his trading. After every 15-minute interval of time, he takes a step back and refreshes his mindset. If he took a bad trade in the first interval, the next interval was a time to look at his next trade with a fresh mindset.

Closing Thoughts

This episode with Agent 47 was a great one that both Matt and I were able to take a lot away from. The information he dropped in this episode was extremely important for all traders who are looking to find consistency in their trading to hear, and if you have not, definitely be sure to check out the full podcast episode. We look forward to bringing you next week’s episode with Ricky Analog, where we will go into more detail about fundamental analysis!

Like our podcast and our blog? Have any comments, questions, or concerns? Let us know what you think by filling out a comment below or by sending us an email!

Episode 012 : Tim Bohen – Supplemental Part-Time Income

Tim Bohen is the head trader at StockstoTrade Pro, a cohost of the Steady Trade Podcast, and one of the owners of StockstoTrade. With his heavy background in the market, he has found a lot of success both trading as well as teaching others to trade. In this interview, he tells us about not only how he got into trading and what he does, but also about how he teaches others to trade. Furthermore, he goes into detail about how he thinks of trading as something that should be used to supplement income as opposed to doing it full-time. While we all realize that there are a lot of full-time traders, he simply believes that the capital made from trading can and should be used to either supplement other income, or to create other streams of income.

How Did Tim Get Started Trading?

Like many of us, Tim had some interest in the stock market from an early age. After having founded a successful business back in the 1990’s and finding success in the late 90’s to early 2000’s, Tim decided he wanted to get into trading stocks after he had some more time. Not really knowing where to go, he started watching CNBC and attempted to invest long-term. However, he realized that he would only see a few percentage points gained on his account every year if he was lucky, and sure enough, the financial crisis happened in 2007-2008 which brought a lot of volatility to the markets.

Tim then realized that this volatility had the potential to make people a lot of money who understood what they were doing with it. After doing some searching on the internet, he came across Tim Sykes and became one of his first students. This all actually came from an Amazon suggestion for Tim’s book, but after having read it, he learned that there were cheaper priced stocks that were very volatile. From here, he then learned how to short-sell through Tim Sykes, and from here, used trading as a way to supplement his income, only truly trading part-time. For him, this was the best way to not only grow his account and live the lifestyle that he desired.

Tim’s Role in StockstoTrade

As of 2016, Tim Bohen has been a big part of StockstoTrade, being one of the lead traders over there. Because of his success as a part-time trader, he wants to teach others to be able to do the same thing. While it is many of our dreams to be a full-time trader one day, the fact of the matter is that many people do not have the means or the knowledge to be able to do this full-time. Especially for those who want to trade but have a full-time job, it is near impossible to quit that until you have found massive consistency in your trading.

At StockstoTrade, Tim teaches people that they should be “busting their asses” at work while they learn to trade. Again, the idea here is that Tim wants people to know that successful trading does not have to be done full-time and can even be done at work. However, this does not mean that work should not be taken seriously either. It simply means that you do not have to give up your primary source of income to become a successful trader.

Tim also highlights that he feels as though something that is lacking with trading platforms is the lack of education. StockstoTrade is something that is more than just a charting program, and Tim tells us that he does two webinars every day for those in the StockstoTrade Pro program. He does this in order to deliver some kind of education to those who are looking to be a successful trader while still having a great platform to trade with.

For Those Under the PDT

Like me and Matt, we know that many of you are trying to grow your account from under the PDT. However, this is something that is very difficult to do, and is also a reason that Bohen mentions that it is near impossible for a lot of people like ourselves to become full-time right out of the gates. Being a full-time trader while under the PDT is near impossible as well as it is to grow your account from under the PDT and then become a full-time trader. While it is not impossible, and Tim mentions that there are unicorns, it is simple not something that everyone should expect.

However, for those who are looking to grow their account from under the PDT, Tim says that they should have a very growth-oriented mindset. This does not mean to hit for home runs and look for exponential growth on one trade, but rather to have a very strict and precise process to your trading. With only a few trades a week, you need to make sure you are trading the best of the best setups, and this means that it is much better to take a few small winners than to take a huge loss that kills all of your growth.

Advice For New Traders Today

Back when Tim Bohen first started trading, he was a very short-biased trader. However, the same is not to be said today. While he still will take short positions, he also realizes that for new traders especially, the edge is on the long side. This of course does depend on the type of stocks that one is looking to trade, but with a lot of low-float and OTC stocks, there has been a lot of edge longing recently.

This goes back to some of the past interviews we have had lately with a lot of new traders having found the OTC market and making money with simple OTC breakout plays. The patterns are working very well right now and there is some volatility that is beginning to pick up in the OTC market which is great for those who are just getting into the game.

Shying away from strategy, Tim also suggests that new traders who may be struggling to find consistency take a step back and learn the processes and strategies that work best for them while they save up some money by cutting expenses. Even saving a few hundred dollars every month will give a couple thousand by the end of a year to be able to trade with and also gives the trader a lot of time to study and learn.

Closing Thoughts

Matt and I had a great time talking to Tim about what he does and his thoughts on trading as a whole. It was a very unique perspective coming from a successful trader that trading does not need to be a full-time focus necessarily. In fact, he recommends that people trade part-time until they have the means to go full-time as well. This should give a lot of people hope, though, in the sense that it is possible to find success in trading even while being at a job and having other commitments. Of course, we all know it is not going to be easy as there are a lot of commitments that need to be made such as learning, studying, financial means, etc., that go into finding success. Nonetheless, we learned a lot of great information in this episode and hope you did as well!

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Episode 011: James Freedlender – Side Chicks and Fantasy Orders

It is without a doubt that James was one of our most interesting interviewees thus far. Having started in a much different fashion than most, James knew out of high school that college was not for him and took it upon himself to make his own business. During this time, he learned the power of patience and discipline, of which taught him a lot of lessons for trading as well. Stating that he treats his trading like his business, he has found a lot of recent success since joining MIC and is now a consistent and profitable trader. With the lessons he has talked about during our interview, we hope they can be a part of what helps you to make it Beyond the PDT.

 

Who is James?

James Freedlender is a 25-year-old trader who has found recent success since joining My Investing Club. However, aside from his trading he also runs a successful old-fashioned, high end men’s barber shop. He tells us in our interview that he felt many people were not able to find the same barber shops that their parents grew up with since many people are turning to places like supercuts or simply going to salons, and because of this he came up with a business model revolving around these older style barbershops. Finding success in this he has opened up a number of other locations and is looking to continue scaling at a reasonable rate that works for him.

As a trader, James focuses on a few different strategies revolving mainly around low-float stocks. However, he has mentioned that a lot of his success would be by shorting overextended runners, but not on the first day. His primary goal would be to find what he calls “side-chick” plays, meaning ones that had run the day prior but also ones that have been forgotten about. Many times, day-two movers will spike the second day, especially if gapping down in the pre-market, only for them to fail because of shorts loading the boat and bag-holders getting out of their position. James takes advantage of these side-chick plays that people often forget about to make his money trading.

What Has Contributed to James’ Recent Success?

In My Investing Club, they preach something that a lot of people should work on taking advantage of; Trading Accountability Buddies. Known as TAB, these trading buddies essentially help to review trades and keep each other accountable for the trades that they have made. James has a TAB in the group with a trader named Davone, and after having both learned from each other and talking with each other, they have been doing well as of recently. In fact, James recently went 32/33 for green days, something that he has never done before. Before joining MIC, James was consistently losing money, but since, he has been profitable and is doing very well.

Other Factors of Success:

Besides having simply joined MIC and having a Trading Accountability Buddy, there are other factors that James attributes to his success. One of them is that of having fantasy orders, which is essentially an order placed at a price that may be unrealistic, but if it does hit that area then he will be very happy with the price he paid for the stock. Essentially, this is a great way to avoid FOMO and lower the risk in a trade drastically. Often times, new traders have a price they want to get in at but are not able to allow themselves to wait that long to get in a trade, and more often than not they get out near the price they should have gotten in at, only to see the stock end up moving in the favor they wanted it to.

However, James also tells us that discipline is among one of the most important things that he has learned. Of course, part of this is from having had his business, but the example he talked to us about that really hit home had to do with sizing up. He notes that one of the most important aspects of success is using appropriate size and realizing that size is earned. This is a marathon, not a sprint, and this means that size should only be added when consistency is there. He views his business inn the same manner, realizing that it is producing enough funds to open a lot more locations, but also realizing that he is not in a spot where he feels the business is ready to open all of those. As time goes on and he proves to himself that he will be able to continue to do business at the same pace, he will then look to add locations. The same should be applied to trading, and that when one finally begins to see consistency is when they should look to start sizing up.

Closing Thoughts

James was a great interviewee and is one we look forward to hopefully talking to again in the future! He is a very genuine guy who seems to enjoy going out of his way to help others along their journey. If you have not yet, be sure to check out the full episode at BeyondthePDT.com as this is one you will not want to miss. We hope this taught you a bit about discipline and risk management and can’t wait to see you guys in the next episode!

Like our podcast and our blog? Have any comments, questions, or concerns? Let us know what you think by filling out a comment below or by sending us an email!