Transcript

Clay: This is The Stock Trading Reality Podcast, episode 259.
Announcer: This is The Stock Trading Reality Podcast, where you get to see the realistic side of a trader’s journey. Get inspired and stay motivated by everyday normal people, who are currently on their journey to trading success. And this is your host, 4:47 am Eastern is his go to wake up time. ClayTrader.
Clay: Now I really want to encourage you, just try it once. Just try it once, 4:47 am, for me Eastern time, but 4:47 am your local time. It’s a magical time, here’s why, because you want to start by 5:00, but if you wake up at 5:00 that means you got to wake up, maybe you got to get some coffee started, maybe you got to empty your bladder. There’s some things that need to happen so you’re not technically starting at 5:00. If you give yourself those 13 minutes, you can get your coffee, you can wake up, you can shake off the cobwebs, you can get a whole lot done in 13 minutes, and you can start usually even a couple of minutes before 5:00 am. 5:00 am, great things happen at 5:00 AM.
Clay: For somebody like me, father of four kids, the oldest being seven, I work from home so the house can get a little boisterous at times. It can get a little noisy, it can get a little bit exciting. Sometimes I don’t want all that excitement, I just want quiet, and that’s what 4:47 AM brings to you. That’s what 5:00 AM brings to you. Quiet, and just being… if you’re after productivity, I’m telling you just give it a try. Give it a try once, and by the time it gets to 8:00, you’re going to see how much you can get done.
Clay: I laugh because the show producer IT Nate, he’s working on it, but he’s been starting his days at 6:00. But he also plays basketball on certain mornings at 5:30 AM, it starts. He made the comment recently, he’s like, “Wow, I’ve already gotten so much done, I can’t believe it’s only 9:00 AM.” I’m like, “Exactly. Exactly Nate, that is the power of getting up early.” You can get so much done because your brain is clear, your brain isn’t worn down, your brain hasn’t gone through any drama or anything. All it’s gone through is peace and quiet. You can get so much done, and then you look at the clock and you’re thinking, “Wait a second, it’s only 8:00? It’s only 9:00 and I’ve already gotten all that stuff done?”
Clay: For me, I like it because at 8:00 AM that’s when I start in the chat room community, that’s when I start to get active, that’s when I start checking emails and doing customer service stuff. For me, from 5:00 to 8:00 is just external things. Whether that be real estate, or whether it may be for ClayTrader.com, maybe a course or a YouTube video, or just anything. I’m not active in the chat room, nobody’s even, well we have some people that are active in the chat room that early, but very few. My goal is, I just want to get stuff done before 8:00 AM is when I consider starting my “day”, as far as getting active, starting to scan for stocks and all that sort of stuff.
Clay: That’s three hours for me, and the amount that you can get done in three hours is amazing. So yeah, as I continue to rant and rave about it, maybe I should just do a whole podcast about 4:47 AM. But just try it once, 4:47 give yourself 13 minutes so you can get started right there at 5:00 AM. I’m telling you, great things all occur at 5:00 AM in the morning.
Clay: Moving onto our guest, long time member, this was his third episode that he was on. Hamlet is his name, in the chatroom he goes by Crusader. As a little reference point, he talks about Columbus quite a bit. Columbus is just one of the meetups that we’ve done, so at ClayTrader.com I’ve been all over the country, and I meet up with members and we do what we call our meet and greets. People just get up, network, hang out. A way to put a face to a name and all that sort of stuff. He came to the Columbus Ohio one, and that’s what he’s referring to there, because that’s kind of a launch pad to where things occur.
Clay: As you see from the title of this podcast, things got rough. I’ve mentioned this several times, but I don’t care I’m going to mention it one more time before it gets started, I have nothing but respect for Hamlet. I have nothing but admiration for his honesty, for his transparency, for his willingness to put himself out there. It’s not like he’s sitting here bragging about how great things have done, it’s quite the opposite. But there are so many learning lessons as part of this, like I said, no judgements on my part, nothing but respect, and it is good, I will offer up a little spoiler that he’s back on track, and he’s back to where he was growing in account, doing things the right way. We talked about all that, however, so many great learning lessons in here. From just a nasty situation, and a situation that can happen, so just be aware of it.
Clay: A little note, there were a couple technical difficulties at the start, so if it seems like things are all the sudden just choppy for a second, that is just IT Nate patching things together. But I promise that was just towards the beginning, then after that everything’s fine. But no, it’s not your imagination if things seem to be choppy all the sudden, we just had to patch some things together and we did our best, but that just happens sometimes when you’re doing these technical things. Like I said, get through the first 10 minutes, and everything will be completely fine. With that being said, let’s hear about Hamlet and his not so pretty journey, but a journey filled with all sorts of nuggets of wisdom.
Clay: Hamlet, welcome back to the show.
Hamlet: Oh thank you Clay, it’s great to be back here again.
Clay: I was going to say this is your third time here, but we just had a little recording issue so we just had to start all over again. Luckily we discovered it only a couple of minutes in, so I don’t know, maybe this is like your fourth time back now. I guess we’ll keep it as your third time back, so thank you for the patience to get this started again. For full disclosure sake, Hamlet and I have been through this introduction part once before just like two minutes ago. Regardless, for you as listeners out there, very, very excited for this. I do know in a broad sense what Hamlet’s going to be talking about. He sent me an email when he volunteered to come back on.
Clay: I will be playing dumb in some senses, but when it comes to the nitty gritty details, I’m just like you. This is going to be a genuine conversation, and I look forward to hearing what he’s talking about. I will say that I guess I don’t know for sure, but there’s going to be some great learning lessons in here. There’s going to be some things that people can walk away from, and even if you’ve never traded before, listen to what’s about to be talked about because this is very possible, and it can happen. There’s no drama here, there’s no exaggerations. These things can and will happen if you don’t keep your guard up and go about things in a strategic manner. Like I said, I have a broad idea of what we’re going to be talking about, but I’m really excited to hear the nitty gritty details.
Clay: Hamlet, I’m going to hand you over the ball, and I’ll let you figure out where you think it makes the most sense to start all this from. So like I said, I’ll let you take over and you can start things off wherever you think it’s going to make the most logical sense.
Hamlet: Great, great. Thank you. Like you said, it’s been my third time back here, I’ve been part of the group since the end of 2015, beginning of 2016. That’s around the time I became a member. As you know, I took all the courses, I had early success. I had success for a while, but I don’t know if you remember the Columbus meet up.
Clay: Of course. That was a great time.
Hamlet: Yeah, it was a great time. I mainly, when I started trading back then, mainly doing options, mainly doing stocks, things like that. Once we were at the Columbus meet up, and I’m going to keep bringing it up because it was sort of a key point for me. I discovered that you could trade futures pretty much around the clock, I think it’s only an hour and a half where you can’t trade them, pretty much. That’s something that really interested me, futures and things like that, they’re really technical, they could be more technical as far as the patterns, the trading and all the things you teach about the charts. Trading futures is great for that.
Hamlet: There’s also many other factors that obviously go into playing here. Pretty much back in, I believe it was two years ago, 2017, my account it was well over 30,000. I started it with 20,000, I ended up taking it up all the way to 40,000 I believe. Then I started trading futures. Futures, I learned the hard way but futures can be very addicting trading tool. The reason for it in my experience was that like I said before, you could trade futures 22 and a half hours a day. That’s how pretty much the story begins, when I was transitioning trading stocks, and stock options to futures.
Hamlet: The first thing that I started doing is pretty much I was ignoring the charts, and the main problem I’d find, is when you ignore the charts, you’re pretty much trading blind. When you start trading out of anger, and revenge trading, and things like that, it could get really ugly. It can snowball into bigger, and bigger, and bigger losses. That’s how it started with me, with the futures trading. I started with options, and it would move slowly, but it would still go against me and I would hold it, and keep holding it. I was, at this point, just because out of, I don’t know what was going on with me at that time, but maybe out of anger, and out of so many other feelings that you feel, I’m sure people listening here can relate to it. Once opposition goes against you, sometimes you can get pretty hard headed.
Clay: Absolutely. I have a question here from just listening in. Maybe I’m wrong, but it sounds like the problem wasn’t the futures, it sounds like that wasn’t the main core issue. The core issue was as you admitted, you just started ignoring the chart. My question is, what made you start to ignore the chart, where do you think that all the sudden happened, because clearly, like you said you have been growing your account, growing your account, using the chart. Then all the sudden you stopped listening to the chart, or in your words, you started to ignore the chart. Any idea what caused that to happen?
Hamlet: Yeah, I started messing around with oil. I think one day I had a $6,000 loss, just one day. It was one of those where I was like, I couldn’t even believe that. It’s not that futures did it, it’s just that the way futures move, futures move very quickly, and if you’re holding a contract and if you don’t have stock loss, you don’t have anything in place to mitigate your risks. That’s exactly what I started doing, it was anger, and it was just complete disarray of all the things that I was learning. That’s why I say I was pretty much ashamed, because I knew better.
Hamlet: It was mainly the stubbornness that I thought I was just keep holding, average down, and just keep holding. Eventually it was going to go down, but what happened in that time, it was just the market was just roaring up. It was just a slow climb up, up, up. Sometimes, because I could see the ISI, I could see all these different indicators just flashing, over bought, all these different things. But like you said before, and a lot of other people that have knowledge of this have said the market can be very rational, and the market can stay, or a stock can stay over bought, or over sold for a very long period of time.
Hamlet: It was just that anger, and that stubbornness that, “How can I be wrong for two months in a row?” Holding options contract for two months in a row, at that point it wasn’t even trading, it was just hoping to, “Maybe I can break even the next month, or the next two weeks.” It was just that hope, hope. At that point it wasn’t technical trading, it wasn’t none of that. It was incredible.
Clay: This was the oil trade that you lost $6,000 in?
Hamlet: Yeah, that’s where everything began. I was messing around with options.
Clay: This wasn’t a day trade, this was a multi month hold, if I’m understanding that right. You were holding onto this…
Hamlet: It started out as a day trade.
Clay: Oh, it’s one of these that started. Okay, and I only laugh because I think any honest trader has been there before, where something starts off as one thing, and then all the sudden everything goes off the rail, and all the sudden you’re making up a new plan as it goes. The stereotypical one, which again I’ve been there, is a day trade all the sudden, “Oh well actually this is a swing trade now.” Then all of the sudden it becomes an investment and things get nasty. I don’t laugh at him, I laugh at the idea because I think 99.9% of traders have been there in one form or another.
Clay: Up until this oil trade, was this your first ever futures trade that you did?
Hamlet: No, I was messing around with options, with futures options, which they move slower. It was just kind of the same thing I was doing with stock options, but with futures. I started getting more confident with that, and I started buying the contracts.
Clay: I guess what I’m trying to nail down is, I wonder where this… Had you been taking losses up until this point? Or had you just been always winning?
Hamlet: No, I was pretty consistent with either cutting my losses, just letting those losers go, moving on and finding my winning trades. Like I said, I grew a $20,000 account to a $40,000 account, and that was in a period of a couple years. Then everything started snowballing the other way once I started just completely ignoring everything around me, when it came to the education that I paid for, all these different things, just because I was just so stubborn. It was like, “I can’t believe I’m wrong. I’ve got to be right.” That’s just a terrible thing to do, because it just snowballs to big things, big losses.
Hamlet: That mindset of, “I couldn’t be wrong. How can this…” the feeling of hope, once you start hoping, you got to get out.
Clay: That’s a great quote. I guess what I’m just trying to nail down is, it’s bizarre how… What I could see have happening is if I was just winning, winning, winning, winning and then all the sudden I’m, “Oh, great I’m not going to win, I’m going to hold.” I can see why you’d just continue to break your rules if all you were doing was winning, but like you said, no you had been taking losses before. Trying to pinpoint why exactly at that moment in time did you all the sudden decide not to take the loss? You’d been taking losses before, I realize, “Well, I didn’t take the loss because I was being stubborn.” But here did the stubbornness come from, because apparently that stubbornness hadn’t been around previously, if you were able to take those losses.
Clay: That’s just what, you might not have an answer, but it seems like this stubbornness just came out of nowhere. You’d already been growing the account, I don’t know.
Hamlet: I got sort of desperate, but maybe that’s not the right word.
Clay: Insert any emotion, I wonder where that emotion came from. Up until that exact point, you had been growing your account, you had been doing stuff that works, you had been taking losses. I guess I wonder why at that point, all the sudden whatever emotion you want to call it, all of the sudden it came into the picture and you started really listening to it like you said, and then things just spun out of control. It’s fascinating how the human mind can work.
Hamlet: Yeah, it started with this one trade, and then it went from one, to two, to three, to four, to five, to this small losing streak. Then that started snowballing.
Clay: Walk listeners through the snowball. I know exactly what you mean, but for listeners like, I get it. You took a loss and a loss, and then it snowballed, but what exactly do you mean it snowballed? In what ways and forms did that look like for you?
Hamlet: Do you remember when the market, so the market was having crazy swings, on some of those days, I think it dropped 500 points, 600 points on some of those days. Then it would go back up, and people always buy the dip. I felt like I was always, my thing was when I got into this, I was shorting, shorting, shorting, I wasn’t even playing both sides. I was just playing one side, because I thought in my mind, the market was just going to go down. I don’t know why that got into my mind, it was the craziest thing.
Clay: How of curiosity, do you read headlines, and stuff like that?
Hamlet: I do.
Clay: I think that probably is, you probably latched onto some sort of headline, or you saw a group of headlines that were implying that the market’s got to be going down because these moves are crazy, and the market has moved up too much. I think I can see why you would start to ignore the charts, if all the sudden you let some sort of headline, or fundamental type idea creep in your mind. Maybe that’s not what happened, but from just hearing you talk, that seems to be a plausible explanation to where these thoughts about the market potentially was going to go down came from. You must have read some headlines, or something like that.
Hamlet: In the back of my mind too was like, “Okay, I just need to get back to breaking even, and then I’ll go back and I’ll listen to the charts again.” Which as crazy as that sounds, that was what was in my head. “I just need to back whatever it takes to break even,” and that’s how I really go in trouble. I started doing five and six day trades a day, and those were losing $600 each of those trades. There were some days it was just, I couldn’t believe how the account had gone from this to that. It was just a completely loss off of my marbles for a few months. Especially the snowballing part, was really, really terrible situation.
Clay: Let me ask this, you took those losses, and with your position sizing, did you begin to increase position size? Or were you decreasing position size? My guess is you probably started to trade even more contracts?
Hamlet: So yeah, it was one point that I had eight contracts, in one trade.
Clay: What did you normally do before that, to offer up as a reference point? Like a couple?
Hamlet: I think the most I did when I started trading futures, the most I did was two, maybe three, but that was too much. It was just one or two. I started doing that around the Columbus meetup, and I remember I was talking about it and everything.
Clay: And the big learning lesson here, and Hamlet, he’s not alone. In fact, ironically enough, the video I just recorded this morning that’ll be on the YouTube channel, is about this exact same thing. It’s human nature, it’s human tendency to take a loss, want to get that loss back, and then you all the sudden start increasing position size. Think about what Hamlet said, this summarizes the snowball, and how the snowball can spin out of control so fast. He was normally doing two, and even mentioned three was a little bit too much, so one or two. And by the end of this, how many did he say he was doing? Eight. He’s gone from his normal comfort zone of two contracts, to now being at eight which is, from a risk management position, that’s not what you want to do.
Clay: If you take losses, that’s okay, realize that tomorrow’s a new day, and reduce position size. Or at least keep it the same, definitely don’t increase it. I would imagine that was probably the big cause of those losses, just kept getting bigger and bigger didn’t they?
Hamlet: Oh yeah, huge cause of those losses. Not by any means I’m trying to say that futures are bad to trade, or if you trade futures you’re going to lose your account. This is not about that. This could happen with anything, any instrument that you trade, if you don’t do it responsibly. It just happened in my experience was with futures, and I sort of got into this addictive personality. The market is very thick to certain types of people, and I’m certainly one.
Hamlet: Can you imagine trading from five, six hours to trying to trade something 15, 17 hours, it’s crazy. It’s very hard to do especially with algorithmic trading, and things like that. There’s not liquidity overnight, there’s many factors that in my opinion I thought, just contributed to the dismantling of my account back then. I usually keep two accounts, I have my investing account, and then I have my day trading account. I just have longterm views on just stocks that I want to buy, to invest for the long term. I’m talking about the one that my huge loss was, was my day trading account.
Clay: And which was the $6,000 loss, right?
Hamlet: Yeah. All those losses were from that account.
Clay: Okay, and I really do like what you said about where you’re not throwing futures under the bus, you’re not saying that futures are evil, you’re saying the mental habits, pretty much how you were behaving, that was the problem. Not futures, your behavior in regards to futures was the problem. I thank you for making that distinction because I would hate to sit here and be thinking, “Okay, so Hamlet’s blaming futures when the problem was actually Hamlet, the guy in the mirror.” But no, you’re totally blaming the guy in the mirror, and it just happened to be while you were trading futures.
Clay: Futures can be very, very risky if you behave in the way that Hamlet was behaving, and yes those losses can definitely add up more. To Hamlet’s point, anything is very, very risky when you are behaving in the way that again, nothing but respect for Hamlet for being so candid and open to discuss the manner in which he was behaving. You mentioned dismantling your account, I guess go into the dismantling. How, if you’re willing to give the numbers and all that, define, how did the dismantling look when everything was said and done?
Hamlet: So everything just started, I remember trading until it had like $500. It’s hard to imagine that.
Clay: Not to rub it in, but it went from $40,000 to $500?
Hamlet: Yeah, and it eventually went to zero, and then I let it close. I had IB back then, Interactive Broker.
Clay: Okay, and how long did that actually take? From 40,000 down to zero?
Hamlet: It took three, four months.
Clay: Wow, that’s pretty crazy.
Hamlet: After the Columbus meeting.
Clay: Okay.
Hamlet: I’ll never forget that.
Clay: What’s crazy is it took you a lot longer than that to grow it from 20 to 40, right?
Hamlet: Oh yeah, it took me about two years.
Clay: There you go, that’s the tricky part of the market is, when you do things the right way, when you do things with a strategy, when you listen to the charts, and do what you’re learning, sure it’s not going to be fast money, it’s not going to be quick money but there’s a consistency there. There’s a process there that it will build, and build, and build, but it’s amazing how as soon as you stop doing what you’ve learned, stop doing what works, stop listening to the charts, it only took three to four months to wipe away over multiple years of gains.
Clay: All right, so many good learning lessons here, so thank you again for being open about this. All right, your account is at zero, you said you let Interactive Brokers close, pick back up your story from that point. Where did things go from there?
Hamlet: From there, I lost any interest, well, I didn’t lose interest but I was just very disappointed about trading, and I sort of stopped for a couple years. Pretty much until the week when I sent you that email, which has been three weeks now. I started a business, I started working on a startup, the name is Bound. That’s what I focus my energy after that, because my real passion was trading, and learning about all these things. Once I found you, and I started learning and all these things, but after that it was rough.
Hamlet: I completely shut everything down, I would still look at tickers everyday, I would still look at the market every single day. I just sort of gave up on it, from a day trading perspective, a sweep trading, I was just keeping an eye on my investment account, and started this business. We use electric Tesla’s to provide a city transportation between Boston and New York City. That’s been my main thing for the past two years. Then I said, “I have to get back to this, I owe it to myself. I need to get back to trading. I need to recover from that.” That’s when I said, “Okay, I’m going to open an account now.” I think I opened an account with $4,000, that’s my day trading account now.
Hamlet: I do have margin on it, but I’m up to $4,500. I’m taking all the courses again, I’m going back to what I used to do. Even if it takes me 15, 20, 30 years to accomplish my goals with this day trading account, I’ll get there. That’s one of the things I learned that, you got to be patient, the market will always be there, you can’t get out of control with trades and things like that.
Hamlet: Look, I’ve been trading for three weeks, I’ve had plenty of losers, but they’re $20, $40 losers. I think my worst loser was $60. I’ve got to get back to this, it’s like an addict, I take it everyday step by step, to see how can I get back to where I was back in 2017, before all the debacle started happening.
Clay: Okay, first off I’m very, very glad you’re back. Hamlet, we’ve met at Columbus, that’s what he keeps referring to, Hamlet is one of the members that we’ve hung in real life. I enjoyed his company, he’s a great guy, very nice guy. Obviously a very transparent and honest guy to be putting himself out there like this. You’re back with the $4,000 account, what are you back to doing? Where did you open up the account at? I can see a lot of new traders being like, “Okay,” he’s almost a new trader just getting started once again. Walk people through what exactly you’re trading, where your accounts at, and kind of the strategy and such that you’ve been using that’s grown your account up to the 4,500 from the 4,000 where it was at.
Hamlet: Yeah, so I have a Robin Hood account, and then I also have a TD Ameritrade. I love that platform, it’s the best platform to trade options, in my opinion. I have those two accounts, and I use those, I like Robin Hood because there’s no commission to trade options. There’s a downside to Robin Hood, you can’t make calls, make puts, you can’t short stocks. That’s why I have TD Ameritrade, they compensate each other in that sense.
Hamlet: The data is so valuable from Sink or Swim. Right now I’m doing options, that’s what I’m mainly doing. Either selling them, or buying them depending on the IV, and you can take options simplified, or you take the more advanced course. That’s where I learned all that stuff, but it’s mainly options. I do a few trades with actual shares as well, but I have to be 100%, not 100% but a lot of things need to be indicating for me to… The reason I’m doing that is just because now that I’m starting up again with options, if it goes against me, I have more room. A little more room to get out, or go in and things like that. Options allows you to maximize your investment on capital.
Hamlet: That’s why I love options.
Clay: You answered some of my questions preemptively, it’s like you knew what was coming, but you mentioned that you’ve already had several losses. That was going to be the big question, all right you’ve been back for three weeks, have you had any losses? Because if you haven’t then that doesn’t really tell us much, because maybe you’re just getting a bunch of wins because you’re breaking rules, and these rule breaks happen to be working out for you. But you have been taking losses, which is good. That’s actually a great sign, as counterintuitive as that may sound to you as a listener.
Clay: My question goes back to the $60 loser, you mentioned a lot being $20 and so on, and then a $60 one, let’s walk through that. Let’s make sure that you don’t have any sort of evil voices trying to creep their way back into your thoughts. What occurred with that $60 loss that you took?
Hamlet: It was actually yesterday with a Tesla put. I think I held it a little too long yesterday, and then that was the reason why the $73 loss, I should have taken maybe a 25, or a $35 loss. Sometimes, like I said, it’s like an addict again, sometimes the hard headed thing comes back. I was like, “Need to sell it, need to sell it.” Look, I sold it, and then I woke up this morning, I looked at everything, I analyzed the trade I was going to do with Tesla again. I got all my money back plus doubled it, I lost $73 yesterday, today in the morning I made $130.
Clay: It just really rubs salt in the wounds, imagine how much more you’d be up had you just honored that loss in the first place, and had it been a 20 or $30 loss. Now imagine how much more you’d be up, right?
Hamlet: Right. Yesterday even though I held a little too long, but I was still proud that I cut it loose in the midst of trying to get stubborn. It was one of those where I was like, “Okay, everyday you got to stick to your plan, you got to stick to your plan, you got to stick to your plan.”
Clay: How are you determining, you made the comment, “I held it a little too long,” too long relative to what? Are you looking at certain areas on the chart? How are you defining when you should be selling? In this situation you held too long, I guess what metrics are you using to tell you when you should actually be taking the loss?
Hamlet: I was using the charts, and when I meant that I held too long, I thought I had a place where I had a stop, which I canceled. I let it go a little under, I’m just going to put [inaudible] average on the five minute chart. That’s where my stop was going to be. Then it went a little bit below it, it eventually stopped because it hit the lower boundary band, and then it bounced up and things like that. I just held a little too long, and that should have not happened.
Hamlet: I still sold it, I didn’t take the complete loss. I didn’t get into that mindset, “Oh, I got to be right, got to be right. I’m going to hold it one more day.” I still stuck to my plan of a day trade, I just maybe, which is wrong, you got to stick to your plan. Especially if you’re looking at something on the chart, you got to stick to that. It just happens sometimes, but I’m still glad I followed through with it.
Clay: No, you’re absolutely trending in the right direction. I realize you’re aware of this, but it’s always a fine line because being disciplined, the next step is being a little undisciplined, like you just were. You were a little undisciplined, but you were still disciplined. The problem is, the next step after being a little undisciplined, is even more undisciplined, and that’s where I don’t want to see you fall into that category.
Clay: I don’t want to see you take that next step from a little undisciplined to something a whole lot worse. If you can bring yourself back into always being disciplined, then at least the next step is just slightly. That’s great that you recognize, and you didn’t make the jump from disciplined, to all the sudden you’re off the rails, “No, I refuse to be wrong. I’m going to hold,” because as you just disclosed, that’s great you were able to not only wipe away that loss, but still put yourself well into the green.
Clay: I’m curious about that trade, you said that trade was today?
Hamlet: The loss was yesterday.
Clay: Yesterday, but the win was today then?
Hamlet: The win was today.
Clay: Awesome, so they should be fresh on your mind. What was the winning trade? Walk listeners through that.
Hamlet: Tesla, I watch things on free market, how they move and things like that. I saw an opportunity of if it will open at that certain level, it was going to be way outside the Bollinger Bands. It was just going to be way over bought, and over extended. I was looking at certain indicators, like I said I love the Bollinger Bands, and the three main simple moving averages that I use. 50, the 100, and the 200, depending on the time period you’re using. I like the five minute chart if I’m doing, two minute, five minute for day trades. I always look at the 15, 30 minute too.
Hamlet: Tesla opened way up there, and I bought a put right when it opened. It came all the way down, I was thinking that I was going to get out at the 100 A moving average, that’s around the time just looking at the history of the past few days, that’s where it sort of stops before. It didn’t exactly do that, if I was being greedy I could have held a little longer, but it just hit my target and I was out with my winnings. Including the loss from yesterday, plus almost double it. But like you said, it could have been bigger if I would have been more disciplined yesterday, and cut the loser a little faster.
Clay: Now, I’m looking at the chart and it was definitely a gap and trap this morning, no doubt about that. What a pretty nasty move, but then again, the entire market this morning was basically a gap and trap. For listeners out there, when I say this morning, I mean the morning that Hamlet and I are recording this, so don’t go and look at the market today, I’m not referring to when you’re listening to this, just as of the recording.
Clay: I’m looking at the chart here, when would your stop loss, when would your risk put come into place, saying, “You know what? I’m wrong”? Are you looking at a certain area on the chart, but at one point would you have admitted, now of course in this situation it did work, but how would you have defined when you would have needed to take a loss on Tesla had it not gone in your favor?
Hamlet: At that point, since it’s all new territory, I was going to use the Fibonacci extensions. Just because from the last move, and just figure out from there my stop loss. Remember, I bought a put right up there when it opened, and it just didn’t go, it was a pretty good trade, it didn’t go any higher than that. I was thinking my out point was probably going to be 436, 437 somewhere around there.
Clay: I like how you use, that’s one thing I was curious about because Tesla is at all time highs, as of right now. I was wondering how you would determine that. That would make sense if you got out the Fibonacci, and did some Fibonacci extensions and all that good stuff. That would make sense how that could help narrow things down to figure out where you’d want to put a stop.
Clay: Good, little miniature quiz right there and I’d say, “All right, that was a good pass Hamlet,” but yeah, to back up what Hamlet’s saying, Tesla opened at let’s see, we’ll call it 435 open. Went up as high as 435.30 so went up 30 cents, and then just flushed all the way down to 400, we’ll call it 2650 within the first 20, 30 minutes. I was curious, “Did it actually go up and Hamlet was not disciplined?” No, it didn’t go up so Hamlet, his stop loss would have never been threatened at all.
Clay: How are you finding the tickers that you’re trading right now? Is it always Tesla, or are you willing to trade different things? I know some option traders, they have four or five tickers and they’ll only trade those. Are you open to trading more than that? Probably the better way to ask this question is what is your selection criteria? What is your selection process to what you actually want to trade?
Hamlet: Well, I look at the track room a lot, your initial alerts. Then I like to trade things that are very liquid, just because obviously you can get in and out very easy. I like Tesla, I like American Airlines as well, some of those stops are cyclical just because how the whole cycle works. Mainly it’s just liquid stocks, I’m all for liquidity and trading those stocks. For options, those are really the best stocks to trade, the ones that are real liquid. I’m talking about Apple, Facebook, Tesla, some can be very volatile and you have to be very careful. I have other ones, I like [Snap 00:43:21], other ones that move a little slower, and things like that.
Hamlet: Those can help too, when you’re just starting out trading. Things that move slower, allows you to think a little better. As you get more experience, you can start trading the big guys. Like I said, I use all my analysis is based on technical trading. I own a business, and I know how to look at balance sheets, I know how to look at P & L’s and I know how to look at income statements, and that’s all great but for day trading, and swing trading, and thinks like that in my opinion, buy and sell signals come from the chart.
Hamlet: It’s just the way it is, at least for me. Even though you can look at an income statement, and all these things all you want, but at the end of the day a lot of the big guys even have to look at a chart to find out their entry and their exit points too. Charts are a great thing.
Clay: Absolutely, and I’m with you. I’ll read headlines, but I do very, very little in terms of, because I found out they pollute, they corrupt my chart visions. I’m looking at a chart, and the chart’s telling me one thing, but then all the sudden, “Well, according to that headline, according to that income statement, according to this that or the other, this is actually a good stock.” No, that’s not the analysis method that you’re using.
Clay: I realize some people can blend fundamental analysis and technical analysis together, me, I’ve just had too many fundamental ideas corrupt what I’m seeing on the chart. That just presents a problem, and I don’t like problem’s in my trading. I’m with Hamlet, just give me the chart and I’ll make my decisions based solely on the chart.
Clay: You had mentioned earlier that you use multiple time frames, what would you say is your core time frame that you’re using? Would that be the two minute and five minute? What do you find yourself most times looking at to make the big decisions?
Hamlet: If I’m day trading, I’m taking a glance at the daily to see what’s going on there, but I’m using the two, the five, the 30, and the daily when I’m day trading. Mainly, once I’m in the position, the two and the five are the main ones because I’m either in or out. I try not to be in a trade more than an hour, just because day trades, it’s to me, I want to find a good situation, get in, take my profits and get out. Just from my experience, and for all the things I’m recovering right now.
Hamlet: Right now I’m doing a swing trade with Uber. I’ve had it for two weeks, I picked it up at 2975, and swing trading I just use the daily, the 30 minute, and weekly and monthly. I use that for any sort of swing trade, which is more than a week or so. Sometimes, I like to buy at the end of the market, if I see something attractive on the charts, maybe let it go the very next day. Sometimes I use that strategy but you’ve got to pick, that’s sometimes very difficult. I do it when there’s low volatility because you know how the market can be from one day to another.
Clay: Absolutely. Be honest, you’re doing a swing trade with Uber, this Uber didn’t start off as a day trade, did it?
Hamlet: Absolutely not.
Clay: Great, just from one friend to another, trying to hold you accountable, want to make sure this wasn’t intended to be a 60 second trade, and all the sudden it’s become a 60 day trade. It sounds like it was intended to be a swing trade from the start.
Hamlet: Right, right. Right now my main focus is to stay disciplined. Look, what I’ve learned is if I stay disciplined, I win. If I get stubborn, and I start going off the rails, it’s just a losing combination. I struggle with that, that’s a change that I decided I’m going to make. If I want to keep trading, that’s what I need to do, otherwise I won’t be able to trade. There won’t be an account that can hold all those crazy things. I’m pretty much paying attention to all the education that I’ve gotten from you, and from everything else I’ve learned.
Clay: That’s a great quote when you’re saying, it’s amazing that when I’m disciplined, I win. When I’m disciplined I see progress. The tricky part about that, because I can see somebody saying, “Well, jeez if the key is discipline, and you win, then why would you ever not be disciplined?” The tricky part becomes, because it’s a slow and steady burn. As much as everybody wishes it could be some sort of overnight thing, or, “Hey next week you’re going to have a bunch of money,” that’s not how it works. That’s the tricky part is discipline, of course in combination with true knowledge, and a true strategy, yeah that’s how you win. You are disciplined. It’s not going to be making piles of money hand over fist.
Clay: It’s a slow and steady progress, that you can eventually scale bigger and bigger. What gets a lot of people, and what got Hamlet, and what’s gotten me before and gotten countless others is, it’s just not quite quick enough. You’re not happy with the speed, you want it to go just a little bit faster, and then sometimes that’s all it takes is you trying to get it a little bit faster, things can totally fall off the rails, and spin out of control. Of course that’s not what we want.
Clay: I’m curious, because you are a business owner, and there’s a lot of people that listen to this that not are necessarily business owners, but they have full time jobs, and they’re having job. I guess walk listeners through when exactly you’re doing your homework, when exactly are you managing being a business owner, having another “job”, and also being a trader in the market. How do you handle both?
Hamlet: I’m lucky in a sense that I could run the business from my home office. Obviously I have all my trading from my home office, but I like to do my homework when the market closes, right after the market closes. Unless there’s earnings and things like that, if I want to do something with any of that, I usually just right after 4:30, I start looking at all the movers, all the laggers. I just go and even scan the chat room for alerts, and I start looking for, I have a couple of lists, longs and shorts, ideas for my next trading day.
Hamlet: That’s pretty much how I do my homework. Before the market opens, I wake up at 6:00 so I just get up and I start doing my homework there. What I’m mainly doing is looking for attractive charts that I think there could be a possibility I could make money there. Whether it’s going short, or going long, it doesn’t matter. I’m just looking for opportunities. Again, I just want to touch on the point that you said before, don’t think that if you just be disciplined, and if you’re disciplined you’re going to be successful, that’s not exactly the case. What I was referring to is in my experience, just because just the way I trade and things like that, just my personality. For me, I’ve got to take it trade by trade because one trade for me can ruin two, three weeks to a month. Just the way my personality is, and how I can like I said before, completely get stubborn and hold it too long, or even let the option expire, and then I’m out $700.
Hamlet: For me, that’s what works. If I can avoid that, I can be successful doing this. I’m confident in my abilities, and the technical trading, people live off of it. People live off this market, the problem is I think the losers and winners, I figure out what is my real problem when I do this. It’s just that I got to win all the time. That’s not a winning strategy, you have to let the losers go, and just concentrate on the next trade, and just have a new way of looking at things everyday. Just got a short memory. That’s what works for me, but I just want to say that might not be what works for the next guy.
Clay: I’m going to very respectively disagree with you, what you just mapped out, is exactly how everybody should act. If you get stubborn, and decide you don’t want to lose, you’re account will blow up. If you want to not listen to your rules, your account will blow up. I don’t care what your strategy is, I don’t care what you’re trading, everything that Hamlet just talked about, it applies to everybody. I know that works for you, but you are a human being, I’m a human being so what you just described would work for me, and everybody else.
Clay: I do know what you mean in terms of the nooks and crannies of it, but from a broad sense, listen to what Hamlet said. Scroll back, that’s the truth for anybody no matter what style of trader you are, what you’re trading. If you get stubborn, if you stop listening to your rules, if you do anything that he listed, it will bite you and it’s not going to work out. You definitely need to be disciplined.
Clay: Now of course, you have to be disciplined within the context of an actual strategy and actual rules and all that. If you’re disciplined playing the game of hockey with a baseball bat, that’s great you’re disciplined but you don’t actually have a true strategy because well, you can see where I’m going with that analogy. There’s some differences there but what you described, bravo, because that is something that transcends any style, any investment product that you’re trading. That was some good stuff.
Clay: I’m looking at the time, we’ve got to wrap things up. I did want to ask you, you made the comment about, did you want to say something?
Hamlet: Yeah, another thing I just wanted to quickly add, another thing that I’ve incorporated into my trading, and this is nothing fancy, I have a notebook. Before a trade I write down what I’m seeing that I either want to go short or long on that, I write down what type of trade it is, and then whether it’s a winning trade or losing trade, then I go back there and take some other notes. Just so I know. That’s what I’m trying to do on every trade, just keeping that diary notebook on that. That’ll keep me more honest, and I think it’ll help me also in the future.
Clay: I know notebooks have come up before, they help a lot of people. I realize that diaries almost seem like something only girls do, but no diaries for traders, or a notebook if you don’t want to call it a diary, there is certainly a time and place. Feelings and emotions play a large role, and what I’ve said a million times and will continue to say, if you’ve never traded with real money, then I understand, I get it, “What are you talking about feelings and emotions? When I’m in my simulator I’ve got nothing, I’ve got nerves of steel.” Yeah, well like I said, before you cast full judgements, I’d encourage you to put some real money on the line, and you’ll see what I mean about feelings and emotions.
Clay: My final question though, as you mentioned earlier, you’re looking for interesting opportunities, and I don’t expect you to list everything out, but using the chart, what would catch your eye for an interesting opportunity? What exactly are some of the setups and such that you’re looking for?
Hamlet: I love the [inaudible] chart, that’s one of my favorite things. I look for different types of candles that will indicate [dojees 00:56:54], hanging man, things like that. I’m just not looking for one, I’m looking for little patterns. I’m also looking at the overall trend, that’s the first thing you need to look. I look at other indicators, I look at the implied volatility a lot, but I love the Iris eye, and the simple moving averages. Believe it or not, those things work. The 50, the 100’s and the 200, those are my main things, and the Bollinger bands. That way I know when things are over extended, either to one side or the other.
Hamlet: Those are the main things I focus on, when I look at the chart. Fibonacci’s a big thing, I look at whether that [dojee] or that certain type of candle, whether it was formed in big volume or it was formed in low volume, things like that. All of those indicators that you teach in all those courses, those things, a lot of the times, those are self… How do you say that?
Clay: Self fulfilling prophecies.
Hamlet: Self fulfilling prophecies. Exactly. It’s all about finding a good set up. Once you find a good set up, I also try to find a set up where my risk is mitigated. I have a good stop loss, a good resistant level, or things like that. Those are the things I mainly look for. Indicators, volume, and just a group of candles. Some sort of rate that I could have a real educated guess on where the stock is going next.
Clay: So as a listener, if you’re saying, “Wow, that was a lot of stuff.” Yes, unfortunately coming up with a trade plan, and coming up with a trade that makes sense for you, takes a little bit more than signing up for some buy and sell service. I get it, that’s a great sales pitch from their end, “Hey, don’t do all that work. That’s a lot of work, you just heard what Hamlet said, it’s almost like he’s got to be able to think for himself. Just sign up for this service and we’ll send you text alerts.” Please, if only trading were that easy.
Clay: Those people’s business model is preying upon the fact of quick, of easy, of you don’t have to do anything. Yes, that’s very attractive, and that’s their whole business model. That’s the emotion that they’re trying to prey upon, but Hamlet’s answer there was beautiful. You may be thinking, “Wow, that’s kind of a lot of stuff he…” Yeah, yeah. You got to be able to think for yourself, trading takes a lot more than pulling out your cellphone, and looking at a text alert that somebody sent you.
Hamlet: There’s nothing better than opening something up, in this case it’s charts or whatever stock you want to trade, and actually knowing what in the world is going on.
Clay: It’s freeing.
Hamlet: It is. You might not know exactly where the stock is going 100% for sure, but you have an idea, a clue, an educated guess, and that’s all you need.
Clay: Absolutely. It’s not rocket science, but it’s also something that doesn’t happen overnight. That’s totally fine, it’s totally possible to get to that point where you have that good educated guess. It’s not a gamble, it’s not random, it’s not you just blindfolding yourself and throwing a dart. No, there’s no guarantees, but there are ways to make well informed, well educated decisions, which Hamlet proved is possible when he grew his account. But then he also proved, its fascinating how if you’re not happy with the speed at which things are going, things can start to spin off the tracks a little bit.
Clay: Hamlet, looking at the time here, we’re basically going to nail it. Hamlet, thank you very much for your openness, for your candidness, just being transparent, shooting straight. And for volunteering to come on here, this is your third appearance, I’m assuming and hoping there will be a fourth appearance. Thank you very much for taking some time out of your afternoon as a fellow business owner.
Hamlet: Appreciate it Clay. Thank you so much. It was really good to be here, and this story pretty much nobody knows. I just sent you that email, and I was going to get it off my chest here because I feel like this is the right audience for it, if there is ever a right audience for something like this.
Clay: If people want to have success, then this is definitely the right audience. What you talked about is, there’s truly no ulterior motives, it’s literally basically a train wreck of a story, which can happen if you let the voice in, if you let certain things occur. For listeners, there’s zero doubt in my mind, that there’s going to be several listeners that this is going to help. That are going to be like, “Oh, yeah I probably shouldn’t do that because I remember that Hamlet guy,” and right there you just helped somebody out which is a pretty cool feeling in and of itself.
Clay: Thank you again Hamlet, I really appreciate you hanging out.
Hamlet: Thank you Clay, I appreciate it. See you next time.
Clay: Yeah, for sure. For you listeners out there, before you go, a final few things. First off, if you’re listening at ClayTrader.com in the show and notes page, make sure to leave us comments, questions. There’s a little chat box in the bottom right hand corner, so you can reach out. We love to hear from people, especially when they say, “Hey I listen to the podcast.” Always fun to hear from fellow listeners out there. If you’re listening on iTunes or Spotify or any of the other podcast players, make sure to subscribe. Especially on iTunes, if you could leave us a rating, or better yet a written review, that really helps out and goes a long way, and I really do appreciate it. I thank you in advance.
Clay: Thank you though, for all of you as listeners, thank you to Hamlet. We will see you all back next week.
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