[Interview] Inside The Mind Of An Up-and-Coming Day Trader
This is an interview I did several years ago with a fellow trader, whose website is no longer up and running. I thought I'd post it here since it offers insight into my trading journey. We talk about my trading education, struggles, nightly preparation, philosophy, and more.
When, how, and why did you get started with trading?
I was reading Rich Dad Poor Dad during a break at work, and I couldn't get Robert Kiyosaki's idea for quick money out of my head. The idea churned in my mind as he talked about buying the stock of small companies, and selling into the mania that typically followed an initial public offering.
The office was getting stuffy, so I decided to go for lunch and do some research on small cap stocks. I knew absolutely nothing about the stock market, but Robert made it sound easy. Simply buy low priced stocks that react to a solid catalyst (an IPO in his case).
It wasn't long before the internet directed me to the blog of Timothy Sykes. He appeared to be the champion of the penny stock niche, so I signed up for his 7 free lessons to learn more.
I spent countless hours over the next two years going through Tim's educational material trying to find a way to apply his experience and expertise to my lifestyle goals. I wanted to find a reliable system to make some extra cash, grow my net worth over time, and eventually leave my day job.
What kind of obstacles came in your way as you started as a new trader?
When I first started trading, I had no idea what emotional and psychological struggles I would be confronted with. My heart would race, and my palms would sweat when I started to even consider opening a position. The volatility was a rollercoaster for me, and if I had a losing trade, it would wreck my psychological state. I can't even count the number of times I sat with my head in my hands wondering if I could carry on trading.
I eventually made it through the turmoil by listening to interviews where successful traders would talk about psychology, emotions, and taking losses (this one and this one stick out in my mind, but there were many more). As I learned to detach, my relationship with money gradually shifted into a "soldiers in my army" mindset, and I wanted to build the biggest and strongest army I could. This meant being more selective with my trades, and making the stock earn MY money, not the other way around.
I remember asking Sykes in a challenge webinar about how to keep my emotions in check, and he said something like "Dude, go see a psychologist". He was spot on, emotions don't belong in trading. You just have to learn from your mistakes and move on.
What is your primary trading philosophy/strategy?
It took me a while (about 2 years), but I finally landed on buying earnings winners. I tried a lot of different trading strategies, from buying pre-promotion stocks, to shorting pump and dumps, to day trading momentum stocks. I experienced another mindset shift when I joined Tim Syke's long term newsletter in December 2013, and that is when I finally started to see consistent gains. Once I started trading with a swing approach, my stress level started to dwindle, and my account balance started to grow.
What does your preparation routine look like?
My routine is pretty simple. I let the plays come to me, and that helps me to be more patient and selective in where I put my money. I check the scans on #AirApp every night, then add any stocks to my watchlist that look like they are producing patterns I like to trade. If a pattern is forming, and a stock is reaching an important technical level, I'll set a price alert. Since I work full time, I'm heavily dependent on price alerts. Because a positive earnings announcement can cause some great volatility in lower priced stocks, I may keep a symbol on my watchlist for a month or two, just waiting and watching for a favorable opportunity (big dip or secondary breakout). I rarely buy on day 1 of the earnings reaction.. The real advantage comes after the stock has digested the reaction, and the momentum day-traders have moved on to the next hot stock.
What DVDs, courses, books did you use to start learning?
I've watched several of Tim's DVDs 10 times over, and have been through his 1,000+ video lesson library several times as well. When I first started, I studied like a crazy person. Every lunch break at work, every morning, every night, and every waking moment in between was spent watching videos. I studied about 8-10 hours a day, plus 20 hours on the weekend for an entire year. It was the hardest thing I've ever done, but it gave me a massive advantage. I probably cut the curve to consistent profitability down from 10-15 years to 2-5.
I like Tim's early videos the most, especially when he covers earnings winners, because he's still figuring out that strategy, and you can learn from his trial and error without risking your own money. A lot of his newer lessons are still good, but his teaching style has changed a lot over the years.
I raised about $5k from different investors to join Tim's trading challenge in September of 2012, and started with $500 in my suretrader account. I blew that account many, many times by trading with leverage until I gained control of my emotions and started taking smaller size while letting small gains add up (all told, I lost about $5k, which was a lot of money to me at the time). It was like learning to ride a bike. Every time you get back up off the ground, you stay on the bike a little longer before you fall again. I would have a few good trades, then lose everything, but each time I refunded my account I would stay afloat a little longer.
I now have several brokerage accounts totaling about $40k. I only trade part time, so I don't use all of it for trading; I invest in other businesses as well as my own. Ultimately you have to learn what you want out of life, plot a path to get there, and let nothing stand in your way.
If there is one thing you could’ve done differently starting off, what would that be?
I would have discontinued my newsletter subscriptions sooner. The mentorship and videos were absolutely vital for me at the beginning, but the watchlists and chatrooms were an unnecessary distraction when it was time for me to grow from my own experience. I was consistently profitable with Tim's earnings strategy, but I didn't start to thrive until I left the influence of other traders behind me. I still take frequent breaks from social media for this reason.
What advice do you want to give the new traders out there?
I see a lot of new traders on social media acting like they know everything, while they still have yet to make a real trade. My advice is to stay humble, or the market will humble you. You also have to make yourself. Learn from the experts, but you can only ride with training wheels for so long.
I like traders who use their experience and talents to help others. I've been influenced the most by Tim Sykes (@timothySykes), Michael Goode (@goodetrades), Nate Michaud (@InvestorsLive), Gregg Sciabica (@lx21), "Trader Stewie" (@traderstewie), "Modern Rock" (@modern_rock) among many others.
Favorite Quote/Advice on Life?
"Discipline Equals Freedom"