Transcript

Clay: This is The Stock Trading Reality Podcast, episode 239.
Announcer: This is The Stock Trading Reality Podcast, where you get to see the realistic side of a trader’s journey. Get inspired and stay motivated by everyday, normal people who are currently on their journey to trading success. This is your host, he’s quite ignorant about where he lives, just ask him about Silver Lake Sand Dunes, ClayTrader.
Clay: Yeah, it’s actually quite sad. If anything, I hope that this maybe inspires you as a listener to get out Google and maybe run a search because, who knows? Maybe you have some really, really awesome stuff within let’s call it an hour, maybe a couple-hour radius, let’s call it this, anything that’s drivable within one day, so you can drive there and drive home in one day and it’s no big deal. But for me, the Silver Lake Sand Dunes are slightly over an hour north and they are awesome and really the best way to put it was when we saw them and my oldest daughter, Joy… because there’s a lake there and then across the lake are all these dunes. And the best way to really summarize it is, my daughter Joy, who is seven, she says, “Daddy, is that another country over there?” And I thought, “You know? I can actually see why you would think that that’s another country, because it looks like the Sahara Desert over there.” But no, that’s still Michigan.
Clay: Point being, I don’t know. I bet you have some pretty cool things around where you live and shame on me for now realizing this. Some friends were like, “Hey, let’s go do some camping up there.” I’m like, “Where?” “Silver Lake.” I’m like, “Okay.” And we got up there and yeah, it was a good time and apparently… now, I guess my one little excuse card kind of, even though I’ve lived here for basically 10 years now, is I didn’t grow up in this area. I grew up in Ohio. But, like I said, full disclosure, I have still been up here for basically a decade now so I think that excuse is quickly fading. But yeah, I don’t know. What do you have around you? Get out Google, maybe you have some really cool stuff that you were just never aware of. And, if so, it makes for a really cost-effective vacation and a cost-effective means of entertainment if you can just drive somewhere and experience it and all that good stuff.
Clay: Speaking of locations, we are going way, way, way far away. We’re going to Australia. And our guest Ron, and I made the comment, and I’m still racking my brain and I still think it’s accurate like I told him, but I’m pretty sure he is our first Australian guest ever. And as soon as I heard the accent, I’m like, “Oh, wow. I didn’t realize we were going down under,” but we did. And just to really show how awesome our community is, how dedicated and how… just the environment of, “Hey, you know what? Yeah, let’s all try to help each other get better.”
Clay: It was 3:00 a.m. local time, so 3:00 a.m. Eastern Time, where I was, for him. So he was literally in the middle of the night. He got up to help record and to help offer up this content for everybody to hear. So, Ron, again, I thanked you a bunch of times afterwards and during it, but I thank you again, Ron. That was a very kind gesture on your part to literally get up at 3:00 a.m. your time to record this and share your journey with us. So without further ado, we’re going to Australia to hear about Ron and his journey. Ron, welcome to the show.
Ron: Thank you. And yeah, good morning.
Clay: Now, you never really told me, you just said it was 3:00 a.m. where you are. But do I-
Ron: Yeah.
Clay: Are you Australian? Is that the accent I-
Ron: Yes, sir. I’m Australian. Yeah.
Clay: Well, I’m kind of honored and I’m hopeful you’re honored too, because this is episode 240-something and you’re the first Australian to ever be on the show. So, I mean-
Ron: Yeah, well…
Clay: G’day, mate.
Ron: Yeah, g’day. Yes.
Clay: Now I have a question. Do Australians actually say, “G’day, mate”? Or is that just something that us American got out of the movies or something?
Ron: The answer to that is, bloody oath, mate. That’s what we say. It’s how we talk. We do say, “G’day, mate.” Yeah. It’s pretty normal. And yeah, you have to get used to it, I guess, if you start talking to Aussies a bit.
Clay: Well, I’m just… I don’t know, I’m a little intimidated right now. I’m speaking to… I guess this is just the power of the Internet. I’m literally talking to somebody all the way on the other side of the world down under and, I mean, here we are.
Ron: Yeah.
Clay: So the Internet, pretty crazy place. Well-
Ron: It’s absolutely amazing, isn’t it? That we can do this. Back in the ’80s I used to talk via CB to the States. You were yelling into your mic trying to get the sound across. But this is just amazing. And the communications we have available these days are just mind-boggling, isn’t it?
Clay: It really is crazy. And yeah, to think that even before then you’d have to send a letter to even talk with somebody, but now our conversations is being recorded. Yeah, it is really quite a crazy thing that technology has brought about.
Ron: Yeah.
Clay: But I guess we’re just going to start this at the very beginning on a kind of get to know you a little bit better.
Ron: Okay.
Clay: But where did this whole market journey start for you? Where did you first hear about the markets?
Ron: Oh, golly, yeah.
Clay: What was going on? And, kind of, what got you interested enough to decide that you wanted to get more hands-on with it?
Ron: Gee. I first started trading about 10 years ago. Forex trading. And why did I start? Thought I was going to make a million dollars. Still think so. Does it help?
Clay: Where did you first hear about it though? Because I’m assuming at some point in life you had no idea what the Forex market, what stock markets-
Ron: Ah, okay. Yes.
Clay: … nothing were even about. So, I mean, did you first hear about them when you were back in school or, I mean, did you have some sort of family member that brought them up? Where was your first introduction to actually even learning about these things known as the markets?
Ron: Well, my first remembrance of anything market wise was reading The Age newspaper here. And the back two or three pages had what they called the All Ordinaries on it. And it was always stocks and shares, like four cents and 10 cents and two cents and all that. There was just hundreds and hundreds of them. And I suppose that worldwide, I never really knew in those days, but I would’ve been just a fairly young kid, maybe still in primary school when I first saw that.
Ron: But the thing that, I think, that prompted me to get interested in any kind of share market or Forex was, in my early 20s, which was back in the ’70s, a friend of mine, [Elby 00:07:17], a friend of Dad’s, actually, was my childhood mate at the time, he’d been to an insurance company and he got a job with them. There was a room in Melbourne, and there was like 10 guys there with computers, trading the markets. And he was talking about it and that really intrigued me, in those days. And then, of course, how they were all communicating in those days I have no idea, but in the ’90s, of course, we got Internet and that sort of brought about… so by 2000-something, must’ve been 2006 or ‘7, I got an interest and opened my first Forex account.
Clay: Were you working any sort of jobs or anything that had, I don’t know how they… I would assume you do something in Australia similarly where you work for a company and maybe they have a retirement plan or… did you have any of those sorts of things going on as you kind of grew up and had jobs and all that?
Ron: No, no. I never had a lot… I had a lot of different jobs, but nothing to do with the market, nothing to do with gambling in any form. I took up poker when I was about 55 years old and I used to think that people who bluffed were cheating.
Clay: Not a big fan of the bluffers, huh?
Ron: Well, not then, no. I’m right into it now, but… yeah, there’s just nothing. My father was electronic person and he didn’t think gambling or any kind of gaming was a good idea. So no, I had no experience with odds and that type of thing where you so make an educated guess and sort of go with it if you think it’s going to work and get out of it if you think it’s not. But none of that, so yeah, it was quite a learning curve for me and pretty hard.
Clay: So let me ask it this way, people in Australia, how do they save for retirement? I mean, do companies… because here in the United States you have a job and then sometimes that job will give you a little extra money that you can then put into the stock market and save and invest for retirement. Does Australia have anything like that?
Ron: No. They’ve just very recently introduced some self-managed superannuation, but super come in to Australian workplace probably 30, 35 years ago. Really not that long ago. And Super was not self-managed maybe at all until very, very recently, in the last probably five years, 10 years, maybe so. All it did, Super was just a… when they did introduce it, it was just a forced amount of money taken out of your pay and sent to some government department which became the superannuation. Yeah, so that’s just the way it is.
Clay: Okay, all right.
Ron: I’m seeing other people who are… obviously, I’ve watched every YouTube video ever made, so I know other people have these retirement accounts that they manage themselves, but very new thing here in Australia and be very few people doing it.
Clay: Okay. So that one makes sense then, where, I mean… because we’ve had past guests that come on and say, “Well, because of my work program that was set up, that kind of got me more interested in the stock market, but given that you didn’t have anything like that necessarily in Australia, then that would make sense. So, I guess, where exactly… I mean, you mentioned you’re… the insurance conference and those guys were doing some school stuff on their computers and all that. So did you just reach a point in life where you were like, “I have a set of money and I just want to get that money bigger”? Or, what kind of got you in the mindset of… I mean, of course, you wanted to make more money, but what led you into the actual Forex market in terms of, did you want to create another financial stream?
Ron: Yeah, yeah.
Clay: What exactly made you want to make more money in that regard?
Ron: Yeah. So I think the goal has always been to try and make some extra money so you can just be what you want to be and when you want to be. Once we got Internet was the only way I actually became interested, because before there was nothing ever advertised, or I never saw anything or any way to do it. And then, obviously, Internet started. We had a shop, a computer repair shop, my wife and I, back in the early ’90s. And then we started supplying… we started off at balls and board first and then we were one of the first places to have Internet here in our town where we lived. So, we supplied Internet to customers via phone lines and modems and all that sort of rubbish. And yeah, I guess those ads for brokers and trading and all that sort of started to pop up on your screens in those days.
Ron: So we closed business down in 2000. Not from any reason that… we didn’t particularly want to at the time, but it was a force closure. So we made sure we had Internet from then on and had Internet at home, so I was looking for a second way to make a living, and yeah. I’ve never actually made a living out of it, but I’ve kept at it and just kept trading. And yeah, been interesting.
Clay: So, I mean, that makes sense then. You had a business that was closed down and this was right around the time when the Internet was there, or was coming out.
Ron: Yeah.
Clay: So that would make sense. “My business is closed. Let’s look for some other ways to make money. Oh, there’s this Internet. Oh, there’s this thing called the market out there.” So my question would be, I guess, did you ever look at the Australian market or any of the other markets, or how did you end up just landing on Forex as opposed to-
Ron: Ah, okay.
Clay: … let’s just use the Australian stock market. Why Forex over the Australian stock market?
Ron: I can’t. I still haven’t found any way of actually trading in the Australian stock market. You can do it through a bank and you can place a trade today and you maybe get out of it in three or four days’ time. We can’t do what we do, you can’t do short-trader or any of those things with Australian stocks. They just don’t seem to be available to me. I haven’t found them anyway. I’ve looked and looked and looked, but I can’t find them. So-
Clay: Just so I understand right, you’re not able to… or at least that you’re aware of, you’re not able to trade the Australian market in a kind of a day-trading fashion-
Ron: No.
Clay: … where you’re getting in and out fast? There’s no brokers or anything that offer that?
Ron: No, no one offering that at all that I found. It’s purely, you buy shares that you want to buy and then it takes three days to get possession of them and then after those three days you could sell them. So I suppose theoretically you can trade, but they make like $20 a trade or something like that.
Clay: So there’s not… now, when I say E-Trade, do you know what E-Trade is? Does that-
Ron: I know what E-Trade is, yeah.
Clay: Okay. So there’s no Australian E-Trades or anything?
Ron: Not that I found, no. I’ve done a lot of searches.
Clay: Wow, thanks… huh, that’s interesting. I guess I just assumed that there was, but apparently… and, I mean, I would assume if there was O2, that you’d probably be seeing commercials for them on TV and stuff like too, like we have here on the States with Fidelity, E-Trade, all those sorts of different ones. But that is really… that’s kind of odd, actually, now that I think about it, but I wonder what the logic behind all of that is. But-
Ron: I don’t know. It just seems the banks have got a… just about any bank office, some kind of facility to buy and sell stocks here in Australia, but there’s no… I haven’t found anywhere that’s just like a short trader account or or, “Are you sure? Trader and trade 0.” But, I mean… even there’s a … is it IB? Is it? One of the-
Clay: Yeah, Interactive Brokers, that’s the one.
Ron: … big companies? Yeah, they are available for use by Australians, but it’s still the U.S. stock market you’re trading, but Australians can sign into it.
Clay: Interesting. I mean, that’s-
Ron: But I haven’t found any that actually tried… I mean, I’ll see the odd Australian stock come up on the U.S. stock market, so they must be registered with the U.S. stock market. But there’s now… I’ve never found, and I’ve looked extensively trying to find it, anything that offers Australian stocks to trade on a screen where you can just go, “I’m going to trade debt for five minutes and get out of it.” Or for a day and get out of it. There’s just nothing. And the only thing I’ve been able to find is the banks do it and it takes just three days to get you to trade in. So no way you’re going to get it out again. [inaudible] Another three days, so you’d be looking at a long-term trading system.
Clay: Like you said, theoretically-
Ron: I’m not saying it’s impossible to do.
Clay: Right. And, like you said, theoretically perhaps, but yeah, that seems like a pretty big leap from theory to reality.
Ron: Yeah.
Clay: Well, that makes good sense then why you decided to choose Forex. Well, let me ask you this then. Since you do have access to the American markets through Interactive Brokers, why Forex over something such as the American broker or the American market?
Ron: Ah, okay. I’ve had Forex for 10 years.
Clay: So you’re just a creature of, “If it ain’t broke, don’t fix it?”
Ron: No, I’ve just been trying to work out how to trade Forex for 10 years. Maybe a bit longer. My first trade in Forex, it just went, “Boom,” and I went down. I had a $300 account, right, just a little mini account on some Russian site. It might’ve been pound-USD or something, and I put this trade on because I’d watched every video I could find or information I could find and decided I was dunking this trade. And it just went against me, and I blew that $300 in about three hours.
Clay: Do you remember the trade that you took? Was it long or short?
Ron: I think I probably took it long and it went short. I remember it going down and I remember saying to my wife, “How can it do this?” Like, I’ve read the… I’ve done what the course said to do. And I said, “How can it do this?” I went, “What do I do? What do I do?” And I see, was it you commenting in one of your videos recently, you… so this guy was doing X sales in dollars and he was saying, “What do you do?” Well, that’s exactly what I did. I just sat there and watched it disintegrate and could not push the off button. It’s amazing. I’m funny that way.
Clay: Yeah, especially, do you remember… I’m assuming you were using probably some sort of leverage too on the $300?
Ron: Oh, yeah. Yeah, yeah. Yeah.
Clay: Yeah.
Ron: Yeah, they beat leverage. I mean, even the account today that I’m with is a… actually, it’s a broker available here in Australia. I got someone I can actually ring up and talk to in Melbourne, so it’s not so bad. But yeah, I think there’s quite a bit of leverage on it. So, I run a very small trade size now to compensate for that.
Clay: Let’s go back-
Ron: I abide [crosstalk] since, you know?
Clay: Let’s go back to that first trade though, because this is… I mean, we can all relate to that first trade, or one of the first trades where pretty much you summed it up perfectly. “Wait, what’s going on? What do I do? What just happened?”
Ron: Yeah, yeah. Yeah. You have-
Clay: All those thoughts. I think there’s two types of traders out there. People that have had those thoughts early on and then there’s liars. So, I mean, I think everybody can definitely relate to that. So, I guess, what was the learning lesson? And just let me take a step back. For our listeners’ sake out there, in the world of Forex, there is a lot of leverage that can be used, because they’re very, very liquid markets. So Ron’s $300, no exaggeration on his part, it could definitely have been gone extremely, extremely quickly, like it was, because of all that leverage that the Forex market affords you to take, which is why you have to be very careful with it. But my question to you, Ron, is, the $300 is poof, gone, I mean, was there a lesson that you learned from that? Kind of, how did you walk away? What was your thought process in terms of, “Okay, well, that didn’t work. I need to kind of…” and then fill in the blank. Did you try something different or did you just… I mean, where did you go from that after that kind of first-
Ron: I just reloaded the account and had another go, which I subsequently lost. No, there was no lesson learnt at all by me. I was just… I think now I can see the things I did wrong, but, I mean, at the time I’d done a course, or bought a course, or done something, and I’d had these ideas. And, I mean, all the courses teach you these things. They teach you candlesticks, they teach you crossovers on moving averages or statistics and all that. There’s all these different things you’re taught. You read them and you think they’re gospel, and the trouble is, they’re not, the potentials. And when you first start, you don’t realize that just because a setup says it’s going to work, that it’s not going to work sometimes or maybe won’t work 10 times in a row. I think that was the hard part for me to learn and took me a very long time to sort it out. So I ended up getting out of the Russian account and didn’t do anything for probably three or four years.
Ron: And then we started a new business in electronic which my wife and I run today, and I had some spare capital so I got back in and I ended up with… what they themselves? Let’s have a look. Oh, Go Traders, they call themselves. [crosstalk]
Clay: Okay. I got a quick question. So when you say you stepped away from the market for two or for several years, I mean, was that literally just kind of, you didn’t look at the markets at all or were you every now and then checking in? Or just, in a very literal sense, you were like, “No. Forex, see you later,” and then you didn’t even pay attention to it at all?
Ron: Oh, no, no. I always had something open or I was always looking and checking and… there’s no day goes by I don’t look at something on the market these days. And so I say, we did start our business about 12 years ago and that’s got very busy in the last few years and kept me working very hard for six months a year. And so it sort of felt… you know, if you’re working your guts out all day long, you can’t be trading all day long as well. Doesn’t sort of fit together very well. But I’ve got my time managed a bit better now and I don’t have to work quite as hard. So I sort of allocate the first two hours of the U.S. market to me day during the week and the Forex I trade off my phone. I have a computer set up with Forex on it and I just have that permanently on. But I have the phone set up as well, and so I’m checking the phone and that during the day and, of course, the evening, see what everything’s doing, see if my trades are going right or wrong.
Clay: What are you looking as far as Forex is concerned? Do you have any favorite pairings you like to trade? Or are you kind of open to trade whatever? How does that look for you in terms of your approach?
Ron: I trade micro and I buy… my size is .02 and I might have eight different currencies open at any given time.
Clay: So you are open to whatever then? It’s not like you just want to trade some sort of pairing, you’ll trade whatever is giving you the type of setup you’re looking for? Is that-
Ron: Yeah, yeah. I’ve thought of trading just one pair, but… what was the one I had? Was it… pound/USD hasn’t even moved in the last 24 hours. Let me look. One of them I had was hardly moving. Oh, I don’t know which one it is now. Must’ve moved already. But yeah, sometimes stocks just don’t seem to move. They just sit still. Oh, not stocks. Shares, sorry. Golly. Currencies. They can go pretty flat for a while, so I tend to trade several. I have the minimum buy. Almost a minimum. I can get it at a one cent buy in, honest, but I got a .02. And then I’m trying to get rid of the trades that I don’t like, but stop losses even at [inaudible] small sizes like $40. And take profits can be operating the same or bigger. But sometimes if I get the inkling that… because so many pairs are U.S. related, if there’s a strong swing one way either for or against the U.S., I might dump the losing trades a bit earlier. But yes, my normal stop loss is about 40 bucks on a take [crosstalk]
Clay: Okay. How long are you looking to be in a trade for? Are these swing trades or are these day trading [inaudible 00:26:22]? I mean, what is-
Ron: Yeah, mostly-
Clay: I guess, what is your ideal situation?
Ron: I usually close out all trades on a Friday unless I’ve got one or two. But if I’ve got half a dozen running old, I’ll just dump them all on Friday and get out of them. But I have run losing trades for several months and had, would you believe, two cents minus $200 or $300, and had to wait for it to come back. It’s probably not a real good idea, and anyone that’s trading the way most people trade, like they probably buy like a dollar-size or $10-size or something, you can’t do that unless you got like millions of dollars in your account. But having a very small account and very small trade size you can sort of wing it a bit. I try and go with the weekly trends, but sometimes I just get it wrong or all the way the trends are running just change. So yeah, I don’t know. Does that make sense?
Clay: So you mentioned stop losses in $40 and then you are referring to winging it and then kind of just waiting for things to turn around and all that. So I guess-
Ron: I have done that, but I try not to do that anymore.
Clay: Oh, okay. So that comment was in regards to more of your past when you were learning how to do things.
Ron: Yeah, yeah.
Clay: Okay, all right. That-
Ron: But still my stop loss, my main stop loss even with the two-cent buy is $40. So I took trades yesterday, for instance, and there’s quite a few there. I took them during the course of day, put another one on again today and, of course, the market’s done everything opposite to what I thought. So my worst trade currently is $18 minus $22 is currently the worst trade. But that’s USD/Swiss, so I’m not going to buy on that, and I still reckon that’s a buy, but it’s come back and it’s hit the 50 EMA. So on the daily chat… I don’t know, I’m still on the liquidity. Yeah.
Clay: So you are… it sounds like you-
Ron: It’s $200 on the weekly.
Clay: Okay. So it sounds like your primary tool, your decision-making method is based around technical analysis. Is that what you’re using to drive all your decisions?
Ron: Yeah. Yeah, yeah, yeah. I mean, with Trump in there as president over there, it’s made the U.S. strong, but just because the U.S. dollar’s strong, and you listen to people talking about it and they say, “Oh yeah, it’s strong.” You watch them on TV or whatever and they say, “Oh yeah, the U.S. dollar’s strong.” It can still go so far against it it’s not funny. So whilst we think there’s a bias towards the U.S. improving in the dollar range, improving in value, it doesn’t mean that stocks can’t go against it. And… sorry, try to kind of go against you on the U.S.
Ron: So I’ve got a buy on the USD/Swiss, and yet it’s technically going up, but it’s down $22 on my trade at the moment. So it’ll turn around, it’ll probably be back up in a moment. And I find that there’s such large swings dollar wise even with such a small entry. A pair can trade $20 in an hour. Like, the way you can change $20 in an hour. So that’s why I have that such a high stop loss for such a small trade, because I just can’t be here as often as sitting here. It might be just hop on and sit down and watch it for an hour and a half, two hours straight.
Clay: Right. You got other stuff. You’re running a business. So that makes sense.
Ron: Yeah. Yeah, I’m building electronics and making circuit boards and doing loads of stuff. And so I’ve got lots to do, so I can’t watch it. And I tried putting signals on them. You can put alerts up. But I miss them so often, so it’s better to just trade the way I’m doing. I can manage it. If something goes too far against me, I just dump it. But the other trade says, of all the trades winning and losing, it balances out a bit. And so I tend to try to lose as a way when they get too big and keep the winners, let the winners run. Come Friday, lately I’ve been doing really well at it and it’s been well in front and come Friday I shut down everything including losers so there’s nothing out at the weekend. And sometimes on the weekends it’s a big market change during the weekend, and you’ll be grateful you got out. I mean, unless you had a trade going the right way, I suppose, but it seems they can gap quite severely over the weekend.
Clay: Right, yeah. Exactly. You never know what… you just never know, especially in this day and age of Twitter and everything else, who may say what and then the landscape can change in a hurry. Now, my understanding, right, where Friday you are just… because, you know, I’ll close down the losers, but, theoretically, if a loser hits $40 before Friday, then you would cut at that point, right?
Ron: Yeah, it’s gone. Yeah, yeah.
Clay: Okay.
Ron: That is the absolutely cut-off. And, I mean, I don’t say I don’t cut them off at $10 or $12 or $20 or whatever when they lose. But I’ve got to have a reason for it. I’ve got to say, “Oh, well, I think the trade’s changed. It’s not going my way anymore.” And that does happen. I go through all my trades on the week by going through every currency on my screen. I’ve got about eight or nine there. And I just click on them, and I have it set to weekly. I have a look at it and I make decisions. So then once I’ve made those decisions about what I think, I’ll then go down to daily and then to hourly and then see if I’ve got a position to buy… you know, whether I’m going to make a trade or not.
Ron: And I might make two or three trades one day and another two or three the next and so on. But it’s very hard to get it right. It seems that Forex markets, the banks, the big players are playing these things do try to exploit you. And I hear so many people say, “Oh, it doesn’t matter what I trade. Someone’s here taking advantage of it.” And it is. It’s very much like that, and Forex is just as bad as any stock I’ve tried to trade.
Clay: So you have traded stock before then?
Ron: Only in the last two years I’ve been trying to trade stocks, yeah.
Clay: Okay. Well, what got you interested in stocks?
Ron: Forex.
Clay: So you just wanted more opportunities then?
Ron: Yeah, actually, Tim got me interested in stocks.
Clay: Ah, yes. Timmy. Good old Timmy. So was it-
Ron: [crosstalk] he’s got a $40,000 a month advertising budget on YouTube.
Clay: He’s got something going on, but… all right. So what, during your stocks was, “Oh wow, I can make even more money with stocks,” or was it because you were just thinking, “I want a little bit more diversity of opportunities”? Because in Forex, yeah, there’s a limited amount of pairings. So, I mean, it’s not like stock market where you have thousands of ticker symbols. Or was it maybe a little bit of both, the glamor got your eye and then also wanted more opportunities? I guess, walk me through your little stock journey as far as what you started… I’m assuming you must’ve gotten this on micro cap, small-cap type, puny stocks at the start?
Ron: Yeah, yeah, I’m sure. Sure I did, yeah. When I first tried stocks, well, it was Timmy’s fault. So I saw his heads, and I don’t like the way he does it, but still, it’s persuasive enough, I guess. So I got interested and I subscribed to his chat room, trading room that he had at the time. And I started running a free one called… let me just dig it out for you. TradingView. Around Trading View on a computer.
Ron: I subscribed to Tim and I set it up on laptop and played around. Actually, I think, long-term I lost money, but I could see what he was talking about. His list that he gave out seemed to work for me, so I was trying that out. And then I signed up at SureTrader and did a few trades, but then I lost interest in them. I decided that wasn’t what I wanted. So I went looking around and found other people to follow or what have you, try and learn from. Bought a few small courses and bits and pieces along the way. Found your stuff on the way and ended up signing up to your trading room. I have not made a profitable trade, actually, since I signed up to your trading room. That’s nothing against you though, it’s just a observation. I haven’t made many profitable trades on the stock trading. Again, I tend to get it 100% wrong. So…
Clay: I’m curious. So walk me through a trade that you get 100% wrong. What are you looking at and you see, and then what decision does that cause you to make? So, I mean, what-
Ron: Oh, okay. I’m better at it now than I was, but I would look at what the hot stocks were. Obviously, I’ve watched… what’s his name? Ross’s videos. I tried that style of trading. That is not for me. I can’t do it. I can’t get out quick enough or get in quick enough or whatever he does.
Clay: Yeah, you’re not alone, so don’t feel bad about that. Yeah.
Ron: Yeah. Oh, no, I figured that out. I figured that. But, you watch this [inaudible] fob and a 93,000 in fob and $93 into God knows how much. And so yeah, you go, “Oh, well, I can do that.” But the problem is, if you haven’t got 10 years of experience, there’s no way you’re going to do that. I’ve watched a few of these other guys online that claim to be gurus and they’re doing $500 account trades in… I had a look, account 500 to 5,000 or whatever, and they just can’t do it. So yeah, he’s in the very special… as they say, he’s not doing everything above board. I really don’t know.
Ron: So I’ve tried that type of trade. I pick a trade and it might go up and I go, “Oh, cool.” And then it goes up and so, because, again, playing micro accounts $10 is a really good trade and you should get out. But, you see it go to 12 and you’re like, “Oh, hang on, if I wait up, it’ll go to 15.” And then you go, “Oh, no. It might get to 20.” So it gets to $15.50 and then next thing you know it’s going down to 10 and you go, “Oh, it’s going to hit a bump, and go back up and then you end up closing out, maybe break even or it zips down below and then you go, “Oh, let’s hit the 8 EMA.” I’ll sit and watch this and then, of course, it just bleeds off and you die. And then you close your trade out for loss.
Clay: So I sounds like the problem, if I’m understanding right, is not the trade itself. It’s, you were in the green and you just didn’t take the gauge, right?
Ron: Yeah, you’re not taking, not taking it and you’ve got to take it. And that’s been quite a hard lesson to learn. Currently I run the paper trading on the TradingView now as a standard practice, but I don’t even think I’ve took a trade on TradingView today. I didn’t take any trades today. So I’m getting more selective, obviously, and I watch you guys, but no one prints much on your website about the trades. Certainly don’t say what they’re trading, but…
Clay: And now, have you been… do you go in the pit rooms for work?
Ron: Yeah, I have a look in the pit and I don’t say anything there, because I figure I’m not qualified to say anything. But I just want to see if you’re looking at the same things I’m looking at and, yeah, pretty much. I don’t look at the spot. I mean, I look at the spot but I would certainly wouldn’t come start trading it. But I’ve traded Roku, some good and some bad, even with real money. And what else you got on there today?
Clay: So I guess-
Ron: I looked at Snap today, but I didn’t try it.
Clay: So how did you trade Roku? We’ll take that as an example, since that-
Ron: Oh, not for a while. I’ll have a look at my history. Hang on.
Clay: Well, let me ask, this is probably a better question, you made a comment that you’re trying to get more selective, which is good. So what are you actually using to help get selective? What exactly are you looking for? Maybe a better way to ask it, how would you classify your trading strategy? Like, what sort of setups are you looking for and how are you determining whether or not the risk makes sense to the reward? So, I guess, walk through a typical thought process of how you’re structuring your trade plan in terms of what you’re looking for, what you need to see, what the risks need to make? How are you defining all those different parameters?
Ron: Firstly, I have a micro account. On my particular account, on what I call my real account, which is SureTrader which has been shut for a week for whatever reason, it’s two dollars in and two dollars out for my trades on SureTrader. And that’s up to just over a hundred shares. And then I think it gets to a thousand shares as I [inaudible] $5 out. So firstly, I find a trade that I can make better than $5 on with a minimum amount of shares. So I try and look for a trade, for instance, if the swing, if I expect it to go a dollar, then the minimum amount of shares I could trade and break even or not losing would be five shares. But I might try and get 10 shares. If I expected it to go two dollars, I’d be happy with maybe five shares. So the goal is to make $10-plus. But this is-
Clay: So let me ask this real quick, so-
Ron: This is my current reasoning, right? But back my first time I didn’t understand it at all.
Clay: What are you looking at that makes you think, “Oh, this could go a dollar. Oh, this could go two dollars.” What is making you come to that conclusion?
Ron: All right, so a previous high or a previous low depending on whether we’re going long or short. The trouble with short-trade is, nearly every trade you got to do has to be long. And the ones that are shortable probably aren’t worth shorting most of the time, but sometimes are. So if I’m looking at a… I’ve got a screen open in the UK it makes it five-minute chat. And its high would be $90 and its low currently is $84. So if I was shorting that or intending on shorting that, I’d look for the previous low, which is exactly $84, and then I’d say, “Well, if I was going to short that, I need it to move X amount of dollars so then I can do that with X amount of shares.
Ron: And with the market, [inaudible] you can have about three or four shares or if you use the lighting, you can maybe buy 10 or 15. But yeah, it took me a long time to learn that and understand it. So, for me, there’s managing the money into the trade and then getting the trade right. But I certainly didn’t think to short this particular stock this morning. I’ve got a red line drawn at the high. Obviously I marked it for a reason, so I was going through screeners and what have you and come up with this particular thing. And I’ve marked exactly on the high with a red line, but I didn’t get around to trading it or didn’t see to trade it when it opened. But it just opened up and bled right down. So it would’ve been a great short, but I never thought it up.
Ron: So I try and find the range that I want and then I just, how many share I’m going to buy to suit that range. So that if it moves one dollar or whatever I want it to move, that’ll give me my expenses covered. If I’m trading a small stock, like a two- or three-dollar stock, then obviously I buy quite a lot more shares because I’m expecting the money move five, 10 cents, 10 cents, 20 cents, whatever. And I want it to make at least five dollars to 10 dollars’ profit.
Ron: So I’d be looking for a similar movement and yeah, so I just scroll back, see where the recent highs or recent lows are and try and make a decision based on those. And then the beauty of this particular Trading View is, it has a tool. I think if you have a long position or a short position and you put it on screen, i don’t know if you ever tried it, and you can adjust it up and down, and it gives you a profit/loss ratio so you can have a look down here. And [inaudible 00:45:49], “Why that look?” So then you can try and trade it. And to me it just makes it a bit simpler when, obviously, it’s not necessary, but it just gives you a visual.
Ron: So yeah, I don’t know. I’m hoping we can make these sorts of trades work. My last few trades… I’ll just read out a few from the last week or two on the history, on the paper trader. $9 profit, 80 cent loss. $17 loss, $8 loss, $12 loss, $15 loss, $9 loss. $8 profit, 4.80 loss. 80 cents profit. I’ll close that out, because it come back on me and just got out of it. 7.90 profit, 9.80 loss. 22 profit. That’s usually final trade profit unless I’ve got some reason to stay there. $2 loss, 14.90 profit, and that was my last trade. Actually, that was today and it was on [inaudible 00:46:59], so there you go, I did trade it. Forgot I traded it. And so that was today, three hours ago, 14.90 profit. And I traded 10 shares short, so there you go. But it feels a whole lot longer.
Clay: Well, I like how you keep… yeah, it’s good that you’re keeping things documented. So it sounds like as of right now the whole stock stuff is just where you’re practicing, but then your Forex is where you’re putting more of your real money to work is that pretty much the breakdown right now is, Forex is-
Ron: Well, Forex, I’ve got it working. And as I said in that original thing that you did, I’ve doubled my account 12 months ago. And I dabbled in it about six months and I subsequently went and lost it all again. And I thought, “Gee, why did I do that? What’s going on?” And so then-
Clay: I’m glad you brought that up, because I was about to bring that up, because I was curious about doubling and then losing it all. So yes, please do answer that question. What exactly happened with that?
Ron: I’m not sure why I lost it all. I did increase my sizing from two cents to four cents, which obviously would double your losses. So I probably got nervous and turned my losses off too quick. So anyway, a long story short, yeah, I just lost it. It just went back down. And then I had to do some rethinking. And so I started trading the longer time frames and really looking for a good reason to trade long time frame. And then I’ve turned it… I went up to $2,000 and I went back down to $450, and I was $450 in this account about four or five months ago, and I’ve got it back up to just over a thousand on Friday. I got it to 1,030 on Friday.
Clay: I’m curious, are you doing the two cents or the four cents right now?
Ron: Back to the two cents, yeah.
Clay: Huh.
Ron: Yeah.
Clay: Ron, I think we might have a pattern here. I think it had everything to do with position sizing given all of a sudden you went back to two and also your account’s growing again.
Ron: Yeah, yeah.
Clay: I think, from an outsider listening in, I think I’d have to agree your hunch sounds like you may be on to something.
Ron: Yeah, yeah. Well, the trouble is, these things have a 400:1 or something leverage on whether you want them or not, I think, and it’s quite severe and it’s quite hard to understand a leverage, because you don’t see it. You can’t just say, “Oh, this is this.” You just see your chart and you just see your cents and your dollars and what have you. But yeah, keeping the trade size small works. I was trading few years back just on one cent, but I opted to two cents and that’s all right. That seems to work. But I met a guy, I was in town the other day, we had a coffee in the morning and we went into one of these… a new restaurant, this new shopping center being built, because this is just growing wildly out here where we live. We’re about 20ks out. Put that 30k. Say, 20 miles out of town in the bush, in the country. [inaudible] next door we got [inaudible] and what have you, and a pit of kangaroo.
Clay: And lots of poison snakes.
Ron: Oh, yeah. And we got a lizard that was injured on the driveway the other day, so Joy has took it in [crosstalk]
Clay: And spiders that just want to kill you. Everything in Australia wants to kill you, doesn’t it?
Ron: There’s no bad spiders here where I live.
Clay: Oh, everyone… you probably have poisonous kangaroos there too. I mean, it’s Australia. Every-
Ron: No, no. The kangaroos are very scary if they stand up. They’re very big. But we’ve got a pet kangaroo, which you’re not supposed to have, but we rescued it so it lives here with us. And she loves us, she thinks we’re great. But someone else dropped a kangaroo they’d rescued, and it was a boy, and he was in [inaudible 00:51:19]. He’s gone now, he died, but he’d stand up, and we’ve got like a six-foot high cyclone fence, and he’d stand up and then he’d just sort of stick on his tippy toes and he’d go, “I’m taller than you.” Very intimidating fellow. Very strong. Very strong abs.
Clay: Yeah, that’s what I’ve always read about kangaroos, is their… they got some muscles on them that can do some damage.
Ron: Yeah, yeah. Well, yeah, you see some of those pictures you see online, yeah. They’re quite muscly. And their arms are very strong and the claws are very real. And those feet, they can disembowel anything they jump up on. So yeah. So yeah.
Clay: So don’t mess with the kangaroo, that’s kind of the moral of the story, [crosstalk]
Ron: Don’t mess with kangaroo, no. They’re not an aggressive or dangerous animal, but if you mess with them, yeah, so they’ll fight you. I saw a video of a guy chasing one down the road with his car, and the kangaroo finally cracked and turned around and faced the car. So they will fight, if you push them to it. Yeah.
Clay: Yeah. I’ll remind myself never to push them to wanting to fight me. But I don’t know, what were we talking about before I derailed us in… something about you had some-
Ron: [crosstalk] snakes and spiders, yeah.
Clay: You had some ponies or something.
Ron: Yeah, we got two ponies. We build following alarms for horses, for the breeders.
Clay: Okay.
Ron: And so the alarm goes on the head. All the receiver goes inside the house and when the horse lays down, which, they don’t all lie down, but 99% lie down to have a foal, it sets out the alarm and the owners can go out and help and what have you. So we’ve got our alarms in studs all over… well, all around the world and in some very famous racehorse studs here in Australia as well. So we’ve done okay with it.
Clay: Yeah, that’s very, very-
Ron: But we’re certainly not rich by any stretch of imagination, I don’t think. I never think so.
Clay: Well, it sounds like, hey, if you’re content, that’s what matters and that’s the name of the game. So I guess looking at the time and knowing that I want to honor your wishes so you can get to bet here, I will start to wrap things up. I mean, what are some of your goals that you have going forward as far as just kind of, where you want your trading to be, what you’d like forward to look like, but, I mean, what are some goals as you sit right here where you would like to be… I don’t want to say six months from now, but just in the future? I’ll let you assign any time frames you think make the most sense, but talk goals going forward.
Ron: My goal is to build this Forex account and keep building it. And I’m pleased to say that it started coming back for me at this stage. It’s only minus $36 overall over what, 10 trades at the amount. So that’s not too bad. So it means that’ll keep coming back and… so I’m expecting to at least double this again in the next three to six months on my Forex. So if I can do that and if I can get it to double each year or thereabouts or even just get it to improve by a thousand dollars a year, I’d be quite happy and settled in the fact that I’m understanding what i’m doing.
Ron: With trading, with what I read out to you the day before, that’s where I’m at. It’s not good enough. Yeah. Some of those trades I take are profitable for a while and yeah, I sit on them too long. So I’ve got to get my mind around that. And, I mean, those results I read out, they were paper trading, so I still get stuck at, even though it’s not real money, into holding them too long when they’re… you know, they’re obviously in profit and I think the hardest thing to remember with the trading for me was just because something goes in the profit doesn’t mean it’s going to stay there. And if you look at some… I haven’t had time to get into real just studying their overall days, but most days that I look at, you’ll see, if you took a trade somewhere, you could be in profit, then out of profit, back in to profit, back out of profit and so on during the course of the day. So I only trade the first two hours, so if I don’t get out while it’s in profit, I’m probably a bit silly.
Ron: I would like to be able to say in six to eight months, maybe over the next year, six to eight months to a year, that I’m trading profitably and still trading profitably in both Forex and the U.S. stock market. That’s what I’d like to be able to say. And I don’t really mind if it’s profitable a hundred bucks a week or a hundred bucks a day. Doesn’t bother me that much, just that I’m profitable. Because if I’m consistently profitable, then I can develop that, I can figure that out to make it better.
Clay: Absolutely, yeah. That’s-
Ron: But it’s getting profitable is a hard part, and getting your mind around it. And just, as I always said to you, the cost of the trades and figuring it out, we’re not the first who started trading. I’m like everybody else. “Hang on, I’ll have a go at this.” And bang, in goes some money, and bang, out goes the money. And banging goes some more [inaudible] you see people do it. I’ve got a few different groups, I mean, and then you see newbies come in and they do the exact same thing and you think, “God, what’s wrong with you, guys?” I’ve done it myself, so there you go.
Clay: Yes, I think everybody has done it to one cent. It really just becomes a question of, how soon can that person realize that what they’re doing, they need to just tap the brakes and reassess what they’re doing. I think that’s the key question is, those who succeed are pretty quick at tapping those brakes. But I think you said it, and it was a great line about, “Just because something goes into the green doesn’t mean it’s going to say in the green.”
Ron: No, no. That’s just, yeah, really good.
Clay: And that was a great line, and that’s definitely something that, yeah, you got to remember, because-
Ron: Yeah, you got to take them off, yeah.
Clay: It sure does feel good when things are in the green, but, like you said, that doesn’t mean that that feeling’s going to last because it’s going to stay in the green. So I think that’s something definitely to build off of.
Ron: And the opposite applies, I think, in Forex. Forex is a different beast completely as far as I’m concerned to stocks. And just because it goes red on you doesn’t mean you’ve got your trade wrong. But you do have to have your stop losses and you do have to realize that there are people trading with million dollar accounts against you somewhere around the world in one of them big banks or whatever it is that they trade with. And yeah, they can make the market move. And the thing is, if we think about foreign exchange between, say, Australia and U.S., there’s obviously, every day there’s people, you and mes, wanting to travel to each country and businesses trading and all that, and all that money is going backwards and forwards.
Ron: However, they’re not the ones actually conducting Forex. The people conducting Forex are professional and they might be trading U.S. to Australian dollars here in Australia, but they’re waiting to get the best buying point. And yeah, they’re willing to wait. And when they see it where they wan that it, then they get in and they start buying, and then the reverse applies when the U.S. is trying to buy Australian dollars. They want their best buying point. So that’s why these maggots move so far and that’s why us idiot retail traders get caught in the mix. So if we can’t see what they’re doing, we’re on the wrong end of it.
Clay: No, you’re absolutely right. There are big, big players in the Forex market for sure. And yeah, main-
Ron: Yeah. Yeah, well, it’s not their money, but, I mean, the banks [crosstalk]
Clay: Right. There’s lots of, “Whose money it is?” I don’t know, but the amount of money, whosever it is, flying back and forth, like you said, is definitely very, very big. All right. Well, final question here for you. If I could give you a time machine and you could go back to the start of all this for you, what would be one bit of advice that you would give yourself?
Ron: Don’t believe the gurus.
Clay: I think that’s really… as short and sweet as it is, I think that’s all that needs to really be said. So there you go.
Ron: [crosstalk] just don’t believe the gurus.
Clay: Don’t believe everything your eyes see. I think that’s a-
Ron: No, and don’t believe everything they tell you. And I think the real key if you want to trade is work out how many shares or, if you’re doing Forex, how many pips it can go against you before you go broke. And try and budget that to at least a hundred trades before you go broke for something like that. Don’t budget to one trade. I started to say, just before, I went into town for a coffee with the wife and we went to this restaurant. I had my phone open with the trading on and I was looking at it, and I was up about $80 or $90 at the time, and I was feeling real pleased with myself. And the manager came over and said, “Oh, you’re trading?” And I said, “Yeah.” And he said, “Oh, I opened a Forex account last week.” He said, “I blew $6,000.” I was like, “Really?”
Clay: Wow.
Ron: How do you blow $6,000 in a week? Well, he did. So there you go. So yeah.
Clay: Well, yeah. That’s-
Ron: That’s how he did this. Yeah.
Clay: Yeah. It really is. It’s, if you don’t pay attention on what you need to be paying attention to, the market has no problem at all of separating you and your hard-earned money for sure.
Ron: Yeah. Yeah, oh, that’s for sure. Yeah. And whether it’s Forex or stocks and shares, exact same thing applies. You watch people like Guy Gentile who sells off three million shares of a stock and makes million dollars out of it overnight, and he’s just one man. Admittedly, he’s got a load of money. But there’s lots of people out there with a whole lot more money than you’ve ever dreamt of, and yeah, if you get on the wrong side of what they’re doing, you lose money. And they’re not trying to take your money, they’re just trying to do what they’re doing, like we are.
Clay: Exactly. That’s how the market is.
Ron: Yeah, yeah.
Clay: In order for somebody to make money, somebody else has lost some money. That’s just-
Ron: Yeah, yeah. For sure.
Clay: That’s just the way it goes. Well, Ron, I thoroughly enjoyed myself. It was great to talk with somebody from, quite literally, the other end of the world. And I appreciate you-
Ron: Yeah, yeah. Yeah, and we’re out in the back [crosstalk] too, but yeah.
Clay: I was going to say, “Taking time out of your day,” but really, taking time out of your morning given that it’s literally in the middle of the night there right now for you.
Ron: Yeah, it’s 4:00 a.m. now.
Clay: 4:00 a.m.?
Ron: Yeah, I’m going to get up.
Clay: And that’s what time you said you wanted to be at the bed, so I am-
Ron: Yeah, I got to be [crosstalk] work tomorrow. Yeah.
Clay: I truly appreciate it. You got to be the first person that said, “Yeah, I did the podcast at 3:00 a.m. to 4:00 a.m. local time,” but…
Ron: Yeah. [crosstalk]
Clay: That’s awesome and I appreciate it and I look forward to getting you [inaudible] in the community and all that. So, Ron, thank you very much for hanging out.
Ron: Thank you. Thanks for having me. And I hope you can use what I’ve said, or some of it, anyway. And yeah, it’s been a pleasure. It’s good.
Clay: Excellent.
Ron: I don’t have anyone to talk to about trading. No one I know wants to trade or wants to know anything about it, so this is the most I’ve talked about trading ever.
Clay: And there’s going to be a whole lot of people that want to hear it, because, hey, so you have talked to now a big audience of people that like to hear this sort of stuff. So what you said, especially, like I said, my favorite line was, “Just because something goes into the green, doesn’t mean it’s going to stay in the green.”
Ron: Yeah, that’s for sure. Yeah.
Clay: So that was… yeah, exactly. Well, before-
Ron: Yeah, and it’s a hard lesson to realize, because yeah, you watch one supernova or what Tim calls a supernova, and the parabolic curve going up when it goes from one dollar to a hundred dollar over two days or three days, and you think, “Oh, why can’t I be in the trade?” Well, just doesn’t work like that, does it?
Clay: Yeah, and those happen, but there’s a whole lot of them that don’t happen, that never get talked about.
Ron: Yeah, exactly. Yeah, yeah.
Clay: And those are where a lot of the gravestones reside of people.
Ron: That’s right.
Clay: Yeah. But the gurus sometimes, they conveniently forget to bring up all those times it doesn’t work.
Ron: They do, yeah. And they don’t care about your money management.
Clay: And that’s why… yes. Yeah, exactly. Well, Ron, thank you again and we’ll have to have you back at some time in the future and hear how your journey’s going. For you listeners out there real quick, final few things. If you are listening on iTunes or any of the other podcast players, please subscribe, and especially in iTunes, if you could leave us a rating or a written review, that helps us out quite a bit. If you are listening at claytrader.com on the Show Notes page, there’s a live chat box in the bottom right-hand corner, so if you want to offer up comments, suggestions, if you have any questions, reach out to us, just let us know, “Hey, I was listening to the podcast.” It’s always fun to hear from people that listen to the episodes and we’re more than willing to help you out however we can. So thank you to you as listeners, thank you, Ron, and we’ll see you all back next week.
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