LIVE WEBINAR: 1 Hour Trader Transformation

73 Days. Only 1 Losing Day. Possible? Yes! Let Me Show You...

This Free Event Reveals: How I transformed myself from an employee to being my own boss (and how you can too, even with no experience!)

Thursday - July 9th - @ 7:00 pm est

Listen To The

Podcast

Free

Training

Online Course

As traders we should love the fact that we can not control how high a price rises. Why? Well, that means we can not control how much money we make in a trade! How cool is that? We have a perfect example of this principle with fellow member Orval (better known as ‘Sandman’ in the community). Orval updates us on his journey which has improved dramatically since the last time he was on the show. It’s been a journey of hard work, dedication and consistency, but the time has been worth it. Orval has fully transitioned from paper trading to real money trading and yeah… I don’t want to ruin anything, but so far so good! Let’s get to it!

Transcript

Clay: This is The Stock Trading Reality Podcast, Episode 255.
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. He’s amazed his YouTube channel now has over 200,000 subscribers. ClayTrader.
Clay: All I can really say is thank you. Thank you very much if you are one of those 200,000 people. It’s quite frankly extremely humbling because I truly am just a normal, normal guy. I’m a dad of four kids. I have a great wife. I live in Michigan, west Michigan to be exact. I’ve realized that when you say Michigan, people automatically think Detroit, but no. I’m on the other side of the state, but yeah, I’m nothing special. I can barely speak. For those of you longtime listeners, you’ve heard me stumble over my words for years now and I’m not a public speaker. I’m not any of that sort of stuff. I just have fun. I love to do this stuff. It’s enjoyable, and to think that there is over 200,000 people that decided to subscribe to the YouTube channel. Yeah, very, very humble and I thank you for that.
Clay: If you’re not familiar with the YouTube channel and you’re interested, then all you got to do. Go to YouTube, search ClayTrader. Videos will pop up, but there’s live trade videos. There’s quick tip videos. There’s all sorts of different varieties of content there and if you decide that oh, this seems worthwhile, then yeah, please subscribe. If not, that’s fine too, but check it out if you’re interested. But regardless, if you are one of those 200,000 people that also listen to the podcast, thank you very much for not only supporting the YouTube channel but also for listening and supporting the podcast itself.
Clay: As for our guest, we have a great one. We are talking with a member from the community, Orval, and he goes by Sandman. Very, very active in the community and I would definitely consider a valuable asset to the community. One of these guys where he’s there networking, he’s asking questions, but he’s also always giving back. He’s helping out maybe newer traders. He’s given us insight, and that’s what truly makes him a quality person and like I said, a very valuable asset to the community.
Clay: But a fair warning. If you are somebody that enjoys excuses, enjoys maybe pulling out the victim card, enjoys … Well, you’re not going to like this interview because Orval is a monster. The guy’s a beast. He is beast-moding life, and I don’t want to ruin too much but I’ll just put it this way. He has a full time job, he’s got some side hustles going on, and he’s growing his trading account and he’s come a very, very long way since the last time he was on.
Clay: But the guy, he doesn’t have an excuse bone in his body. He is focused on solutions. Sure, he could maybe identify a problem, but he doesn’t dwell on the problem. He doesn’t feel sorry about the problem. He just gets out there and figures it out, and I’m sure you can tell from the title of the podcast. Yeah, $400 to $4,000 in one trade, and he’s going to talk about how he did it, what he’s using, what strategies, but what I found most fascinating, the most interesting is despite that success, he’s actually scaling things back a little bit, which is a huge sign of maturity and a huge sign of understanding how this trading stuff actually works. Because the one thing that gets a whole lot of people is they get too big too soon, and I’m not going to say it destroys their account. That might be a little bit too dramatic, but it can really set people back in a hurry if you go too fast.
Clay: So he’s had some great success, but like I said, he’s scaling things back so he’s going about things in a very logical and a very methodical manner and he just lays it out for us and he doesn’t try to act like he’s some sort of hot shot. He admits to some mistakes he’s made. He admits to some things that he wishes he would have avoided, but by him being honest and open about it, hey, that gives a learning opportunity to all of us of things that need to be avoided when you’re trading.
Clay: But yeah, he’s doing very well. It was fun to talk to him. So without further ado, let’s hear from Orval, or better known to community members, Sandman.
Clay: The Sandman is back. Welcome back, Orval.
Orval: Well thank you. Thank you for having me back.
Clay: We are in just groundbreaking territory right now. I probably should’ve done my homework. Maybe you know off the top of your head. Do you remember what episode you were last on?
Orval: I believe it’s 207.
Clay: 207. Moral of the story here though for listers is usually we wait for at least a year before we bring somebody else back, but, I don’t know what to call you. Should I call you Orval, or do you have a preference? Do you want me to call you Sandman or Orval, or does it not matter?
Orval: Just use Sandman, because that’s what I am in the inner circle. That way people know.
Clay: Alright, so Sandman. I’ll try my best, but for listeners, if I start saying Orval, Orval and Sandman, they’re one and the same. Sandman just being his chatroom alias.
Orval: Or you could just make up a name like we did. I think it was with Joel.
Clay: Yeah, we won’t revisit that, but well played. Yes. I do try my best to remember people’s names, but anyways. Alright, but it hasn’t been a year, and yet Sandman is back. We’ve never done this and I’m always up for feedback. So if you think, “Ah, that’s too soon to bring somebody back,” or if you thought, “Wow, that was great. Yeah, you should bring people back more often,” there’s no need to wait a year and I have no reasoning other to use a year other than just it’s an arbitrary point of a year.
Clay: But like I said, we’re trying something new here and Sandman was willing to do it, but he has had quite a bit of changes I think from the last time we spoke, so we should have plenty of good stuff to talk about. But to the best of your ability Sandman, where were you the last time we were talking and we left things off? Like I said, I realize that you may not have it exactly, but in a general sense, just give a summary of where you were previously and what we had talked about and all that from our previous discussion.
Orval: We had talked about how I got into the inner circle and how I got into CTU and how I’d stepped away for approximately a year when I got promoted because I wanted to focus on that, and work, and make sure that I had all that locked down where it needed to be. Then I started focusing on my health again, and that gave me more energy to be awake during the trading hours of the day, and so I started looking at this stuff again and I never had really stepped away. I knew I paid the money to get into the CTU, so I knew I wanted to come back to it.
Orval: And so, that time had passed and I had gotten back into studying at CTU and going through the courses again, and I had been away for so long that I decided just to start all over, and started making my way through the courses. I had done I believe the robotic trading again, and I was going to go through and do the skill sharpening and a couple of the other courses again. That’s I think where we left off. I wasn’t paper trading yet. I certainly wasn’t live trading yet at that point.
Clay: Okay, and I got to bring this up just because this is what I always remember about Sandman, and I realize it’s repetitive from the previous but I still remember Sandman. He was around the community. He was talking, and I mean he’s a good guy, whatever, and contributing, but he just, he hadn’t gotten ClayTrader University. He hadn’t quite taken that step, and then just out of nowhere, he’s like, “Hey, I need my badge.” Because whenever you join ClayTrader University, there’s a little badge that shows up next to your name so people can have a little bit more context, and it kind of caught me off guard. I was like, “Wait, what?” And he’s like, “Yeah, I joined.” So Sandman, he’s one of these guys where apparently when he makes a decision, he goes.
Orval: Well, what that was was someone had come in. It was a new member to the inner circle had come in, and they asked a couple questions and also I think they got into an argument with you or somebody else, and they started making some bad remarks about it. And I kind of interacted with them a little bit, and they were just so pessimistic and you could tell they had an agenda when they came in, and for whatever reason it just ticked me off. I said, “You know, here. I’m clicking the button,” and I just paid for it with my PayPal.
Clay: That’s right. Because you just showed up all of a sudden like, “Well I’m in.” I was like, “What do you mean you’re in?” It was just one of those that you just took action, and I always remembered how all of a sudden it went from the 180, and that was good stuff and that’s always what I associate Sandman with. Then of course I know you’re a police officer too.
Orval: Correct.
Clay: Are you on the job right now?
Orval: Oh no. I can’t do this on the job.
Clay: I was going to say I hope not, but if you were, I guess if we just heard sirens all of a sudden we’d just-
Orval: Yeah, if I got to go real fast you’ll understand.
Clay: Yeah, or take us along with, because that’d be pretty cool. That’s an idea for a pod-, but that probably wouldn’t be allowed. I’m pretty sure you can’t take-
Orval: Probably not, no.
Clay: Yeah, anyways.
Orval: You can do a ride-along.
Clay: I would love to do it. Well, I’ve done ride-alongs before. Where are you at again? You’re down south, right?
Orval: Down by Champaign, yes.
Clay: Okay. Champaign, Illinois?
Orval: Correct.
Clay: Oh, so you’re actually relatively close. I thought you were down south as in like the deep south, but I didn’t realize you were in Illinois. So I don’t know. So can I come down and do a ride-along at some point?
Orval: Yeah. Just got to fill out the proper form, get your background check done. You can do a ride-along.
Clay: You have to do a background check for that?
Orval: Correct.
Clay: Oh. I did a couple in Kansas-
Orval: They’re not going to let a felon ride along with the police.
Clay: That’s true. I did it in Kansas City. Maybe I had a background check and I don’t remember ever doing that, but anyways, I will keep that in mind because I did two in Kansas City. Probably one of the funnest experiences I’ve had. That was pure intensity.
Orval: We’re not that big. We might not be that busy, but yeah, it’s fun.
Clay: It doesn’t matter. What you don’t consider busy, for us common, for us mere mortals we consider, at least for me it was quite the adrenaline rush. But alright, well you traded. I’m pretty sure you were trading options even when we spoke last. Is that accurate?
Orval: No, I wasn’t trading anything live. In fact, I would rarely take a paper trade if I saw something, but it was very, very few and far between at that time.
Clay: Okay, perfect. So I guess let’s pick up from there. The last we spoke, the last people heard from you, you were not trading live. I won’t say you didn’t even know about options, but you were just not trading live at all, so I’ll let you pick things up from there and you can kind of carry, start to fill in those gaps from where you are at right now.
Orval: Well I knew we had talked about my plans going forward, and I remember mentioning during that podcast that options attracted me. I liked the idea of having a small known risk and then being able to use the leverage of options to make larger returns, and so I knew I wanted to go in that direction. So I went through robotic trading. Again, like I said, I did that all over again. I did the skill sharpening course all over again. I went through RvR, and I don’t think I had gone through that completely the first time but I went through all that all over again. I’ve done most of your advanced options course. I’m working on trampoline trading. I’ve got that about half done now, and we had discussed at that time that I would just kind of go by feel and at some point I would start taking paper trades and just see how that worked out, and I had no definite plans for how long that would last and when I would start doing live trading.
Orval: So I want to say it was sometime around August when, I think it was early August when I started doing my paper trading, and I just did it on my thinkorswim platform. They let you have a paper trading account. You get to use the live data, and my intention at that time was I just wanted to prove to myself how consistent I could be, so I started doing the paper trading and it was difficult at first.
Clay: Who were you using for paper trade? Not to cut you off, but just because I know people will be wondering.
Orval: Thinkorswim. It’s a TD Ameritrade.
Clay: Okay, cool. Just want to throw that out there for people, so he’s using thinkorswim platform.
Orval: Yeah, they had my account. I mean, it’s strange because I started off years and years ago with H and R Block and then moved it to Scottrade and Scottrade got sold to TD Ameritrade, and of course now we know TD Ameritrade is being bought up by Charles Schwab. So I don’t know, maybe I’m just the bad luck charm when it comes to that, with companies being bought out.
Clay: Yeah, you’re like a magnet for acquisitions.
Orval: Right. And so it’s difficult. I kind of thought about this. It seems to me that trading is like learning a new language, and not only are you learning a new language and how to read it and speak it, but you’re also learning a whole new alphabet. The candlesticks and the supports and resistances and the moving averages and all the other indicators that go with it. So maybe there are some savants out there that can learn this stuff a lot easier than I can, but it’s taken me hundreds and hundreds and hundreds of hours and you know, that’s a testament to the amount of content that you have in CTU also because all of that’s available there. But it’s taken me hundreds of hours of studying to learn this, and then hundreds and hundreds of more hours of paper trading. So that’s kind of where I got to, and then-
Clay: So it’s safe to say you like this stuff.
Orval: Oh yeah.
Clay: You have a passion for it from a general speaking. I mean I’m glad you bring that up because a lot of people need to hear that stuff. They just see the glitz and the glamor. They see people selling the dream, and a lot of people don’t quite realize that yes, the upside potential is awesome. It’s amazing. There is so much opportunity in the market, but you better have a true passion. You better find this stuff interesting on the surface because yeah, you’re going … I mean I’m not going to say somebody is going to need to do hundreds and hundreds and hundreds of hours like you do, because we all learn differently, but if somebody thinks that they’re going to scroll up and then in 90 days or whatever, just be a profitable trader, I don’t know, I’m sure Sandman has got some great oceanfront property in Nebraska he’ll sell you, and I’ll sell you a nice one right next door in Iowa, because that’s not quite how this works. Am I barking up the right tree with that logic? Would you agree?
Orval: Oh, absolutely. Absolutely. Like I said, maybe there are some people who can come out there and just take a quick look at this stuff and learn it and be successful with it. I think that’s going to be a rare exception. It’s certainly not me. I like to think that I’m reasonably intelligent, but it’s taken me a lot of effort and I don’t want to scare anybody away. You have to understand, I’m doing this while I’m working a full time job. I work a lot of overtime on my full time job, and I work a second job and I’m working this in around all of that, and I’m still able to get it done.
Clay: Again, it all circles back to because Sandman, he actually likes this stuff and when you like something, it’s not difficult to fit it in. Now yes, there’s challenges to it, but that’s why if you’re just showing up because oh, I want to make as much money as fast as possible, you will burn out so fast. You’ll never fit it in. You’ll always come up with excuses on why you can’t study, and you’ll just, “Ah, studying’s too hard. I’m just going to put my money in the market.” And then really you’re gambling and then you lose it all, and then you don’t want to fess up to people that you didn’t do it the right way. Now all of a sudden, well the markets are manipulated, or it’s just all gambling, and blah blah blah. Then people like Sandman and myself have to explain to people, well sure it can be treated like gambling, but I mean it can also be treated not as gambling.
Clay: So moral of the story, you have to have a true passion for this stuff and for your long time listeners, you’ve heard this time and time again, but it really is true, and that’s a good little real life example of why you have to have passion for it because you can make it happen. I mean, Sandman is working all sorts of jobs and stuff going on, yet he’s still able to fit it in. So when you were doing paper trading, were you doing the size account that you were going to do with live trading, or did you do something where you’re walking around with a $50,000 account?
Orval: Yeah, and that’s probably a mistake that I made. I probably should have reduced the paper trade account size because you can do that on thinkorswim. I guess they have certain increments, but I probably should have reduced it. Instead of doing that, I just took small positions, and I wanted to take a lot of small positions just so that I could get the experience and learn how to do this. And I should also say I wasn’t doing equities. I was doing options. I jumped right into the options trading market, because I already knew I wanted to learn that, and so I would find chart setups that I liked and then I would look at the option chain and I wanted to learn how the option prices, the premiums related to the chart and the setup and how it would move over time and the expiries and everything that goes along with that.
Clay: Why options over stocks? Or I guess really, why options over any of the other vehicles that are out there? So I guess just, why options?
Orval: Because I know that number one, I’m starting off with a smaller account. I like the idea, and there’s a lot of different options strategies and they’re all covered in your course. I like the idea of going just long options, you know, long puts or long calls, because it allows me to have a small known risk. I can set a stop that’s either logical with the chart, or a stop for 50% of my position, or whatever strategy you want to use. But I know what my risk is, I know what my maximum loss is, and then depending on how you play it, you could have theoretically, maybe not realistically, but at least theoretically you could have unlimited gains. So I like having a small risk to a large reward possibility.
Clay: I think it’s an underrated thing. I’m not going to say you’re the only one that’s done it, but a lot of times they just look at the gains. Oh, well you can make so much. Which is true, but I love how Sandman is sitting here saying, “I just liked the fact that it was like a completely known risk whereas even if things went totally wrong and I became a total moron and broke all my stop losses and all that, I still know what the loss could be.” And because of options and because they allow you to get in with smaller amounts, yeah, you can know what that loss is going to be and it’s totally controlled and known upfront, and I think that’s sometimes a hidden gem about options. Now of course you can easily just lose everything too, maximum loss, if you’re an idiot about it but this is also under the context of you’re going in with a structured education and approach of all this.
Clay: So my question becomes, you’re paper trading, you’re paper trading, you’re paper trading. And we can circle back if you want to make any other points, but in your mind did you have some sort of goal? Did you have some sort of metric? How did you know when you were ready to transition from paper trading to using real money?
Orval: It wasn’t like I flipped a switch and then one day I went from paper trading to my live account, and this kind of gets into where I’m at now too. It’s strange because when I first started CTU, I would hear talk from people in the inner circle and a little bit in the CTU courses about finding setups you like and finding a strategy you like, and of course we have to all decide what our own risk tolerance is.
Orval: When I first started the courses I thought, well I don’t know what any of that is. I’m not sure what a setup is that I’m going to like. Over time paper trading, that’s where I started to develop a sense of seeing setups that I liked and the risk tolerance that I was comfortable with, and I would find certain setups on stocks from time to time that just really met the criteria that I was looking for and looked really, really strong, and instead of taking a paper trade on those, I started taking live trades here and there, so maybe one or two live trades a week. And this was maybe a month into my paper trading where I started doing that.
Orval: Then as I started taking those live trades and being very, very selective with which ones I took live, they became successful, and successful, and successful, one after another. Now, I did have a couple small losses here and there, but I started seeing the success that I was having and so I started looking for more and more of those strong setups. The ones that weren’t so strong that I wasn’t so sure of, I just kept taking those as paper trades and I could see the difference between those. The success I was having there in my paper account versus what I was having in my live account, and so that started guiding me as to what I wanted to look for in a chart setup even more and helped me move along to the point where now I pretty much abandoned my paper account entirely and I just look for really strong setups that meet the criteria that I developed over time and I’m doing everything live.
Clay: That’s super fascinating. Alright, so setups that you felt and you looked upon with authority, you were like, “Okay, I’ll put money in,” but the ones you were unsure of, you just paper traded.
Orval: Yep.
Clay: That’s an interesting way to collect data, and I’m assuming you had some where maybe you thought, “Wow, you know, I was feeling really strong about that, but I probably shouldn’t have.” Or on the flip side maybe you were saying, “Well, I wasn’t feeling that strong about it, but I don’t know. Maybe I should feel more strong about it because every time I take it in my paper account, it actually turns out right.” I mean, that’s an interesting dynamic and I don’t know if we’ve ever had … Maybe we’ve had other people do apply it. It’s been a while. I mean, how did that work together? Because were you always switching things back and forth? I guess what I’m getting at is, how did you define the word, “Oh, that’s a strong setup” as opposed to something you were unsure about? What made something strong compared to something that you just wanted to do a paper trade?
Orval: I use certain indicators. I use the moving averages, the 50 to 200 and a 100. I use CCI. I use stochastics with some modified settings that are different than what’s typically the defaults out there, and I look for certain setups. A lot of what I’m doing is probably along the lines of your trampoline trading, so I’m looking for the bounce play. I would encourage, and I can’t make this strong enough, but I would encourage everybody who’s willing to learn how to do this to go out there and paper trade an account, whether you do it on actual paper writing it down or whether you do it within your own account on your platform, and I would encourage that also because it helps you learn the platform of course, but just taking setup after setup and seeing what worked and what didn’t and learning over time after literally hundreds of different setups in different trades and learning what works and what doesn’t is what really helped me develop what I’m doing right now.
Orval: If I hadn’t done that paper turning, I’d be guessing with my money. Every time you enter a trade, it’s an educated guess, assuming you have the education. But I’d just be guessing with my money. I don’t think I’d have anywhere near the percentage of successes versus failures that I do right now if I hadn’t done the paper trading over a period of time, and that helped me learn what works and what doesn’t.
Clay: So a lot of times you were just … I’m assuming you made the determination, “Yeah, I just, I need to get rid of this because every single time I take the trade under these circumstances, it’s just not working or it barely works or it never works. So let me twist and turn with that.” Is that pretty much how that paper trading account worked is you would notice that sometimes, every single time you basically took a certain setup, it just wasn’t giving you the results you wanted?
Orval: Correct. Either that or I’d just abandon that strategy and I’d look for some other strategy because, well, this one’s not working. I’m not doing it with real money, so it’s not really hurting me, and I’m glad I’m not. So let’s try something else.
Clay: I don’t know if this will make sense. I don’t know if I’m asking the right way, but how did you take paper trading so seriously to know? Because what I’ve found and what I see is, you make the comment, “Well I would just abandon it,” and okay, that’s great, but a lot of times people don’t take it serious and they don’t even realize it should be abandoned, or they don’t realize that the results they’re getting are actually accurate. But I mean, what was your mental preparation? How did you treat it so seriously? Because I know you did, so I don’t know if that makes sense or you if you can even answer it.
Orval: I’m looking at this with an eye towards, everybody should be. Obviously I’m looking at this with an eye towards going live and using real money. Well, I’ve got a lot of money saved in different places, but it’s not going to be accessible to me til I retire and when I fully fund my accounts, which I haven’t even really done yet with my live accounts. I mean, I’ve made some very good gains with them, but I haven’t fully funded them to get above the PDT rule, but I can’t afford to use a strategy or have a flawed strategy that’s going to cost me a large amount of money, even if it’s a death by a thousand cuts because I don’t want to blow my account and I’m very adverse to wasting money, to throwing money down in places where it’s not going to do me any good and I don’t get any benefit out of it.
Orval: I know what it’s like to be poor. I’ve worked very hard. I’ve got a lot of money saved for my retirement. I’ve got a lot of pensions eventually. Kind of a little side note. When we talked last time, I can’t remember when we did our last podcast. Was that February? I think it was.
Clay: Yeah, that sounds about right. Give or take.
Orval: Okay, so now here we are here in mid December. I know I told you at that time we had a little under 200,000 in our retirement accounts besides our pensions, and looking at a Friday, I’m up over 226,000.
Clay: Nice.
Orval: So, pretty nice gain in a year and some of that is of course my live trading account that’s contributed to that. So I’ve always been very careful with money and I only buy things that I think are very worth my time having gone out and earned that money, and I didn’t want to get into live trading and then just go out there and just start throwing money and wasting it and throwing it away. I can’t afford to do that. That didn’t make any sense to me.
Orval: Trading is like having a business. That’s how I want to treat this. I want this to be my business on the side, and paper trading was like being able to practice with your business with fake customers. Where else can you do that other than this type of thing?
Clay: That’s a great analogy. That’s a fantastic analogy. Experiment with customers, see what customers like, see how customers react to these situations, see how customers react to maybe that idea, and they’re not real customers. That’s great stuff. It’s fascinating how you almost have to be, and I say this with all due respect because I’m the same way, but you almost have to be a cheapskate in some senses where you don’t want to just frivolously spend your money and use your money for this, that, and the other.
Clay: I’m not saying you can never have fun, but yeah, the big threat that Sandman used for motivation was a threat of, “Well, I like money. I’ve worked hard for this money, and I realize that this money could disappear and I don’t want that to happen. So let me make sure that I take this paper trading literally as serious as possible,” and maybe that sounds like common sense, but for you listeners out there, I’ve been doing this since 2013 now and some people I come across, either just they’re just filthy rich and they don’t care about their money, or I think it’s more of, they don’t quite understand that this whole trading thing is not a video game. It’s not like a bank account where it’s FDIC insured up to a certain amount. No, if you lose the money, there is no reset button. There is no government situation that’s going to say, “Hey, don’t worry. It’s insured.” And those people, I feel like they don’t take trading as seriously because either they just don’t know or they’re just, whatever. It’s just money and they’re just doing it to have fun. But, like you said-
Orval: They’re gambling. That’s the same thing that they do when you go to Vegas, which is why I’ve never been. I don’t gamble.
Clay: And I’m the same wat, but that’s just a fascinating dynamic about, you got to be almost a cheapskate in some senses, but you can’t be too much of a cheapskate because you also have to understand that well, you could lose money and being a cheapskate, you don’t want to lose money, so it’s definitely a give and take. I suppose, welcome to the challenging world of the mental battle that is trading, but I think Sandman, what he did and what helps him, and I don’t want to speak for him, but he made the comment, “Well I want to treat this like a business,” because that’s what trading actually is, and this is a point we talk about time and time again, but if you get into trading, guess what. You are now officially the CEO of your trading business, and you need to treat it like that. Do you do anything? Do you look at your losses as a cost of doing business or does that factor in?
Orval: I look at it as a cost of education. “Okay, dummy, that didn’t work.” And, “Maybe you should’ve set your stop loss tighter,” or, “You didn’t read it right.” You’re not always going to be right. It doesn’t matter. That’s the other thing. Don’t fall in love with the chart, because no matter how great the setup looks, you’re not always going to be right, and you have to swallow your pride and you have to admit, “Hey, I was wrong.” Get out of it, and move on to the next one. Because otherwise you fall in love with that chart, and it’s going to get you. It will come around and get you.
Clay: I’m nitpicking here on the philosophy of things, but I would say that you didn’t do the wrong thing. You did the right thing because the chart set up, if it’s a beautiful, beautiful chart set up, you did the right thing by taking the trade. But because there are no guarantees in the market, sometimes the most beautiful, beautiful setups just don’t work out, so that doesn’t mean you did anything wrong at all.
Orval: Sure. Yeah.
Clay: In fact, you did what was right. You hopped into a high probability trade setup, everything was in your favor, but maybe in that one particular instance it didn’t work out. So I would argue even with that loss, there is really no lesson to learn from that other than hey, you know what? The market’s unpredictable.
Orval: Respect your stop loss. Respect your stop loss
Clay: It’s respect the stop loss because I don’t care how beautiful something is, but it doesn’t mean that there’s anything necessarily wrong because that’s just, well, that’s just how the market is. I have no idea how we got to this point. It’s been a great conversation. I’m enjoying it. Oh, we were talking about paper trading. So you were experimenting, experimenting, experimenting. How long did all this go on before you really started to feel like you had some good firm confidence behind your decisions and confidence behind your strategy? How long did this dual paper trading, but you also had some real money take place and go on for?
Orval: I want to say I mostly paper traded for a month and a half, maybe two months. So we’re talking August, September, middle October [inaudible] but during that time I was very, very picky about my live trades and I don’t think I had a single loser during that time. Even I knew that was unrealistic. I know I’m going to take a loss from time to time. It’s just going to happen. There’s no perfect trading system, but you mentioned confidence and I know I’d talked about that a couple of times in the inner circle. That’s what I really wanted to build up, and I don’t know what metric you can use to measure that. Where do you make a decision? Everybody has to decide for themselves. I didn’t have a certain percentage of winners versus losers. It wasn’t like it was 51 plus percent or something like that.
Orval: I just, I had to have an internal feeling of, okay, I have a system down. I have a strategy developed. I know what I like. I know what I’m looking for. I know it’s not always going to work, but when I see this, then I’m going to, provided I have the capital, I’m going to go for it, and we’ll see what happens. And you have to be smart about it. You have to be realistic with your entry, realistic with your stop loss, your profit targets, and let the chips fall where they may.
Orval: As time went on, I saw my confidence grew more and more in what I was doing because my account was growing, and so I started switching more and more over to live trades and now like I said, eventually now and I’m to the point where I’ve forgotten about my paper trade account entirely. I don’t even open that one anymore. I just open my live trade account when I sit down in the morning.
Clay: That’s good stuff because you’re right. When you bring that up it’s like, yeah, I guess that’s true. It’s not like one morning you wake up and you’re like, “And I’m confident now,” and even if you’re using metrics, it’s like, okay, so you have to be right 60% of the time and then your confident? So that means if you’re at 59% of the time, you’re not confident but if you go up to 60, oh, you are confident. So that’s so true. It really is just a feel and a personal preference type thing, and I suppose the best way … Now, you never had any losses when you were doing paper trading?
Orval: No, I had some losses in my paper account. What I was saying during that time when I was doing almost all paper and very few live accounts, all of my live trades were winners.
Clay: Okay. Oh, I got you. So you knew … Oh, perfect. So I think this is, and I’m curious on your thoughts, I would say that a good way to have confidence, and again there’s no black and white way is, in a weird way, you have to take some losses. You to have losses along the way, because if you never have any losses to Sandman’s point, yeah, something’s off. Meaning you are either breaking a bunch of rules within your paper trading that keep everything winners or just something’s not quite right.
Clay: So I think a good form of confidence would be that you do have some losses, but the key being, “Hey, I just took some losses. Hey, I just took another loss and look, my account is actually still green, and oh look, now I’m back in even further green, and awe, I took another loss. But wow, the account, sure there’s a little bit of a pullback because that’s what a loss does, but the uptrend remains intact.” I think that’s the best way to find confidence is you actually have to experience, you have to go through some losses to make sure that it’s a viable strategy because if you take one loss and then everything’s gone, okay, well this isn’t actually really a good strategy. So I mean, I’m assuming that when you did take those losses paper trading, they were ones that still allowed for your overall account to be in an uptrend?
Orval: Oh yes. Yeah, no doubt about it. Because I was educated and because I was smart about being faithful to the stop loss. If I had not had either one of those then no, it wouldn’t have turned out that way.
Clay: I mean, do you think that had something to do with it probably, where you were taking losses but you after experiencing … Because I mean that’s something all traders, especially as a new trader, like “Oh great, there’s these things out there called losses. If I lose money, what’s that actually going to do in my account?” It’s almost like, yeah, I mean I’m thinking back and don’t you police officers part of training you have to get sprayed with pepper spray just so you can see how it feels, how it works.
Orval: Yeah, so you can fight through it.
Clay: Yeah, so you can fight through, so I almost feel like there’s kind of a, and feel free to call me out if this is the worst analogy ever, but it seems like that’s kind of like the loss is the pepper spray and you’re like, “Okay,” when the pepper spray and the anticipation is almost worse but after you get over it, you’re like, “Okay, yeah. I took the pepper spray, I took some losses, but guess what. I’m still going. I’m still fighting in the direction that I need to be.” So I don’t know. Would you agree with that? Or maybe you can shape and mold it a little bit better.
Orval: I would agree that the anticipation of it is worse than the actual thing for pepper spray and the taser.
Clay: So you guys have to do the taser too?
Orval: Yes.
Clay: Oh man.
Orval: Yeah. A five-second lightning ride. Yeah. Taser by the way hurts worse than pepper spray but once it’s done, it’s done. Pepper sprays is a gift that keeps on giving.
Clay: It’s very giving.
Orval: Yeah, and then when you take a shower later on, you get it again.
Clay: Anyway, well. But I mean, did you find that where took some losses and then you were like, “Hey, hey, I’m still standing?”
Orval: I would say this. I helped teach new police recruits at the police academy associated with the University of Illinois here, and one of the things that I teach them is that you often learn a lot more through your mistakes and your failures than you do through your successes, as long as you learn from it and you don’t repeat it. That’s one thing that I repeat to the students over and over and over again during the classes. We expect them to make mistakes. To err is human. It’s going to happen. You’re not always going to be right. Just don’t be dumb about it, learn from it, and try not to make the same mistake again, and that’s how you improve. That’s how you make yourself better.
Clay: That’s good stuff, and I agree. In the world of trading, as long as one of those mistakes and losses doesn’t wipe everything away, well then that’s okay. That’s an a mistake you can afford to make every now and then, because to the point, there is no perfect trader. I don’t care how perfect a setup is. It’s still may not work out, but just make sure that when it doesn’t work out, it doesn’t wipe away all your gains because then there is something severely wrong.
Orval: Correct.
Clay: But if you keep the account trending upwards, that is the name of the game. So you are mainly on, well, I mean did I understand right? You’ve pretty much tossed your paper trading account to the side now and you’re doing all real money trading?
Orval: Correct. Now, I think one of the problems that I’ve come across is that I have tended now to take some of the trades that I would have just taken in my paper trade account before and I’m now tending to take some of those in my live trading account, and so I’ve got a couple options coming up on expiry here where I may end up taking a loss here this Friday, but it’ll be a controlled loss and if it is, it is. I’m still very much green on my account. I’ve more than tripled my account just since just before Thanksgiving doing live trades, so that’s good.
Clay: Can you walk us through one of those trades that, and we’ll put a link in the show notes on the page but I did a video that had, because Sandman was kind enough to send me some of his results and I made a little video of it just showing how, yeah, you don’t need a ton of money to get started. You do need a strategy and all that, but so for those of you that are maybe curious and want even more context, there is a YouTube video on the channel with Sandman and some of his results that he sent me over.
Clay: So I’m not playing totally … Or I am playing dumb here a little bit because I’m well aware that he’s had some good, solid trades but I mean, can you walk us through one of those solid trades start to finish? You don’t have to give me all the nitty gritty details of the strategy, but I guess just kind of walk us through a broad, you know, the trade and I think that’ll give people a good idea of your strategy and maybe how you find things, how you manage it, and all that good stuff.
Orval: The best one I’ve had so far is AMTD, which is ironically the ticker symbol for the broker that I use. It’s TD Ameritrade. When Charles Schwab here, when was this? It was back in late September. Yeah, late September I think is when they announced that they were going to go to commission free trading. AMTD got hit really hard. Their stock really took a dump, because they were going to be competing with another large major broker that now had no commissions and so the market probably correctly reacted and said, “Oh, well the value of this company is going to go down,” because AMTD relied more on their commissions for their income than Charles Schwab does.
Orval: I saw the huge drop in the ticker and that got my attention number one, and I thought it was a big overreaction, and this comes straight out of your rubber band trading. If you take a look at a AMTD on a weekly chart right around that time, the end of September, early October. In fact, I think I got in on October 1st. I bought long calls, and I don’t remember what my expiry was. I think maybe it was January. The January monthlies, but I bought long calls and I didn’t put a whole lot of money into it. With commissions it was like $399, so even if I lost half of that on a stop loss or whatever, it wasn’t going to destroy my account. My account was around $2,000 at the time, so it was a large percentage of my account but again, I know I hadn’t fully funded my account. I know that eventually I could put a lot more money in there, and I was willing to risk that much money based on a rubber band trade out of CTU, looking at this on a daily and a weekly chart.
Orval: Then if you take a look at where AMTD went from there, you can see if we’re on a weekly basis, it’s a nice march up. There’s some nice green candles there all the way up, up until the point, and of course I couldn’t have known this. I didn’t expect to make this kind of a return on it. I thought I’d make maybe a few hundred bucks. Maybe if I was lucky, I might double my money on it. That would’ve been nice. I would’ve been very happy with that, but then at one point I want to say this is going to be around November.
Clay: What happened, yeah, November 18th?
Orval: Yeah, November 18th. That’s when Charles Schwab announced that they were buying AMTD, so I guess it was a very smart and savvy market play for Charles Schwab to first announce they were going to go commission free knowing that would probably hurt their competitor’s stock, and then to buy them up on the cheap.
Clay: Savage.
Orval: Right, and so then AMTD just skyrocketed. Unfortunately for me, I was working my second job working at the university teaching students that day, so I’m working my second job and I hear about this and I can see the pre-market action and I know I’m just going to be stupidly in the money in this. I was actually down I want to say almost $200. I was in the negative almost $200, because theta was eating up my profits.
Clay: Oh, okay. Yeah. I was wondering what are you saying, because I’m looking at the chart and it definitely was a slow and steady grind.
Orval: Yeah, but I knew I was going to be very green, so right as the bell hit which is 8:30 my local time, I tried pulling this up on my phone. Now I’m not at home. I’m not in my regular platform where I normally do my trading. I very rarely do anything in my phone, but I’m trying to pull this up. I pull up my account statement and as soon as the bell hits, I’m up $7,200 in this trade on the day. And you know, so obviously you get a little bit of an emotional reaction out of that. I’ve got $400 into it and I’ve got a $7,200 profit.
Clay: You think? Yeah, no kidding. I would hope you’d have some sort of emotional reaction to that.
Orval: And then I’m watching. I’m watching the chart and it starts pulling back, pulling back, pulling back, and I’m thinking okay, I got to get out of this. I got to set a stop. I got to protect myself here, these profits, and I could not for whatever reason, I’ve never had the problem before or since, I could not get the order editor on the TD Ameritrade Android platform app to load, and I’m just watching this thing come back and back and back. By the time I finally got out of it, I scaled out and of course I’m trying to teach students. They’re going through scenarios and I’m trying to do this in between scenarios. I’m looking at this thing. I’m trying to set stop losses. I think I might’ve actually set a couple limit orders when I meant to set stop orders on this, and of course those executed immediately because I’m setting a limit order a little bit below what the actual price is.
Clay: Okay, yep. That would make sense then.
Orval: So that was my fault. That was my mistake and it happened a couple times. Then I realized, oh, hey dummy, don’t do that. That’s why these orders are executing so fast. But I tried to scale out the shares that I had, and I ended up up roughly $4,800 by the time I got out of it entirely. So for a $400 entry, a $4,800 profit. Not bad.
Clay: Not bad at all, and sure you can sit here and play the hindsight game and, “Well, but you were up 7,000.” Well, you know, sometimes life happens and you’re out there hustling and grinding at your other job, but so 400 to $4,000. Now, full disclaimer sake, Sandman was not out here, his strategy is not, “I am looking for thousands of percentage moves.”
Orval: Nope.
Clay: No, he just happened to be in the right spot at the right time. He got in at a logical spot. Everything was based using a chart. He had stop losses and-
Orval: Well, and you look at that. It was definitely a swing trade. That was my intention. I held it for a month and a half. Yep. Then the next week, I don’t know if you knew about this or not. I know I’ve sent you an updated profit and loss statement since then. I think it was Monday. I made 416 on trades that I closed. Tuesday it was either 860 or 880, and then Wednesday was another nice day for me. I made $1,738 on trades that I closed. Now remember, you have to remember that the day before this huge move up in AMTD, my account was roughly $2,000, and then I had a $4,800 profit and then a $416 or whatever it was profit, and then an $860 profit, and then a $1,738 profit the next day. That Friday I think I took a $414 loss on some SPY calls that didn’t work out for me, but my account is overall very, very green compared to where it was.
Clay: Excellent. Now that is a good segue because it’s always fun to talk about the winners, and that was a big winner, but let’s talk about some of your losses along the way, and I don’t know how close of the stats you keep, but do you have any sort of ballpark ideas of what is your normal winners looking like compared to your losses? How often do they happen? Do you have anything? Because I mean basically, let’s just talk about losses and we’ll talk about it in however form you want. Just so people know that yeah, losses happen. It’s not like options guarantees you make money or anything like that.
Orval: No, no.
Clay: So walk us through your losses and how they affect your account and how they … Well, clearly they’re not blowing up your account because you said your account is still plenty green, but talk losses here.
Orval: In fact, I think just a little segue. I think options are more difficult than just straight equities. You got the time factor and you got all the other Greeks and everything else that goes into it that you got to think about, so you’ve got a whole other many other layers to the onion that you have to worry about on that versus just the equities. Let me see. I’ll pull up my account here. Cost basis. That’s what I want. Yeah, so GOOS, G-O-O-S is one that I took a little bit of loss on, so this is … You might even laugh at it. I had a $9.36 loss on that trade. And actually, it was only one of many trades that I took on that, and there’s another one here.
Clay: So let me ask you this. How do you end up at a $9 loss? Was this something that started going your favor? Or I guess walk us through that trade. What were you thinking would happen and what ultimately happened?
Orval: This is actually a while ago. I don’t even recall what exactly happened. I think it was just one of my setups that didn’t go in the direction that I had planned for it to go and I had set a stop loss and just left it there and it ended up coming back and hitting my stop for a small negative on the account.
Clay: And you said $9, right?
Orval: Yeah, that was $9.36.
Clay: Alright, well if you’re losing $9 and you’re making 400, $500, I think you’ll be okay. Alright, well let’s talk another loss then.
Orval: HIIQ. I really liked, I remember this setup-
Clay: Oh, you told me about this. Yeah.
Orval: This was actually a while ago now. It was on one of your newsletters and I got looking at that and I really liked there was a very high short interest in this and a lot of days to cover, and I thought, well, the shorts could be right. The shorts could be wrong. But if they’re wrong and we get a short squeeze in here, this could really go in my favor strongly. I’m looking at my totals on this one and I’m about 50 bucks. I lost about $50 on that one because it didn’t go the direction I want. Basically I held it for long enough that theta ate up just about everything that I maybe could have made on it. It did this little slow march up for a little while and there was little blips to the positive here and there, but it really hasn’t gone anywhere since I took the trade, and then eventually I just got out of it because theta was just starting to eat my lunch and I didn’t want to take any more losses.
Clay: That’s actually a perfect segue from your previous comment about how, options are great. Don’t get me wrong. I mean $400 to 4,000, but the market is very efficient. The market knows how to counterbalance everything, because I’m looking at the chart and I’m thinking, what are you talking about? I mean from my alert it actually had a very, very solid bounce to the upside. But that’s my perspective looking strictly at how you just played the stock straight up.
Orval: Correct.
Clay: But to Sandman’s point, well yeah, when you factor in these different Greeks and the way options contracts work, you can still have action like it’s had, but still come out where it’s just, “You know what? I’m going to move out for a loss.” So that’s a grade A example of … Or at least I’m assuming where I alerted it it’s bounced up from there. Is that-
Orval: Yes. And so my biggest loss to date in my live account is PINS, Pinterest, and this is one I did not play well. I did not honor my stop loss and I had 100% loss of the money that I put into it, so that’s my fault. Lesson learned. Move on. Don’t make that mistake again, like I said. I lost $468 on that one.
Clay: What was the-
Orval: 11/4 it looks like I got in.
Clay: Okay, on the gap down there?
Orval: Yeah, and 11/15 I got out.
Clay: Okay, so you were thinking it might get bounced to the upside?
Orval: Yeah. A lot stronger than what I … Yeah, yeah, there was really nothing there.
Clay: Yeah, and assuming you had been disciplined, what would your loss have been?
Orval: Well, probably half. I probably would have gone half of my entry capital or my risk capital on a stop loss and said, “Okay, well if I lose half then I’m out.” And that’s not a very big … $234 would have been the max, except for I didn’t put a stop loss in and when it didn’t go my direction, I didn’t honor it, and then it just went all the way to expiry. Well, no, I got out on the 15th. I’m sorry. Yeah, on the 15th.
Clay: So the moral of the story there is, follow your stop loss. Follow your risk manage, because your account theoretically would be even $200 more than where it sits right now, and that’s just, welcome to the club there. So that’s been the only one where you broke your rules? Everything else has been …
Orval: Yeah, I think so for the most part. I had some SPY calls here where I lost $97 which was 51% of what I put in. I had one where I lost $145 which was 20% of what I put in. The brilliance, I’m looking at my whole profit and loss. That’s it pretty much.
Clay: Okay, so let’s go back to the wins though, because the AMTD one, that was, I don’t want to say it’s an older trade, but I mean it’s nothing really recent. Do you have any recent trades that you’ve taken some wins on?
Orval: UNG. This is a gas stock or something.
Clay: I love it. Or something. I don’t know, I just liked the chart. I don’t know what they do. You are a true technical trade, my friend. I don’t know. I don’t know what they are. I love it. I love it.
Orval: Yeah. Let me get the details of this up here. I got to scroll. Open date.
Clay: I’m guessing you opened it on what, the 9th?
Orval: 29th. 11/29.
Clay: Oh, 11/29, okay. Okay, yep.
Orval: This one likes to gap a lot, and what I didn’t realize was this one like SPY trades 24 hours a day, five days a week. And so the reason why you see the gaps is because there’s a lot of intraday stuff going on there, and I saw the gaps down and I saw how it was gapping and it was coming down to a support area. I think it was near the all-time low.
Clay: Yeah, back in August there. I see what you’re looking at. Yep.
Orval: Yep, and then I ended up selling on the 3rd, and that was a 48.53% gain for $232.
Clay: So that was a recent one for $200. What about any other recent winners? I should note that you’re not-
Orval: I’ve got a pretty small account too. You have to understand. I’m not-
Clay: Right, but also you’re not really day trading. You’re swing trading.
Orval: For the most part. Yeah, I’ll keep it for more than … And to be honest some of my day trades have turned into swing trades. I’m sorry. Some of my swing trades have turned into day trades where it’s just-
Clay: I was going to say, wait a second. I’m pretty sure that’s not what you, wait, but alright, there we go.
Orval: It’s just gone up-
Clay: So fast.
Orval: So fast, and then I’ll end up setting a stop and that is one thing I need to work on too is not setting such tight stops, especially when I’m well in profit. But it’s gone up so fast and I set a tight stop and then I ended up getting stopped out of it, when if I would have been a little bit more loose with it, then I would’ve made more money in the long run.
Orval: ETRN. ETRN. I just sold some of those. Let me see here. The 25th of-
Clay: Oh, nice.
Orval: November I got into that, and I just sold on the 12th and that was a 38.31% gain for 68 bucks, $68.32. So a lot of these are very small amounts up and down, but again, you have to understand I’m trading with a much smaller account than maybe a lot of people are doing and so I’m trying to be careful with it. I’m trying to pull back my position sizing. I’ve gotten too big in some things. I understand that even if I’ve made a lot of money I understand, hey, you know what, that was probably kind of dumb because you could have lost a lot of money on it too.
Clay: Is that a lesson that you maybe learned from that Pinterest one?
Orval: Yeah, absolutely. Absolutely.
Clay: Okay. Because hearing the numbers of the size of your wins seems small compared to even if you had been disciplined in that, you said you would have still taken right around a $200 loss. So I’m sitting here thinking, okay, even at a discipline loss is $200, but then he just had a $68 one. He had a $90 win. But, that is because you learned from that one, you know what? I need to chill out on the position size, so had you taken Pinterest with your new rules, I’m assuming the disciplined loss would not have been $200.
Orval: No. I wouldn’t have gone in that large, and I would’ve honored a stop loss so it would’ve been a lot less.
Clay: Oka, so that makes sense. I was a little like, “Wait a second. Something’s not adding up,” but that’s why I was able to guess for the, let’s see the listeners, when you understand, okay, it had to have been that’s where we learned that lesson because none of these wins are really adding up compared to that disciplined loss of 200, but yes. Had you extrapolated what you’re doing now position size to Pinterest, that disciplined lost probably would have been what, like 50-ish bucks or so?
Orval: Oh, probably. Yeah, 50, maybe $100. I think as a trader you can be told don’t do this and don’t do that along the way, and you’re just going to have to make your own mistakes from time to time. Again, like I said, that’s the best way you learn is by making the mistakes and then you learn from it.
Clay: I guess, yes, you can still make this [inaudible] where you’re watching the P and L flashing like, “Holy smokes. Okay. Oh, alright. Yeah, I’m green, but I need to learn a lesson from that because that P and L, that was much bigger swings than I was normally used to seeing.”
Orval: I consider a measure of my success, a much more accurate measure of my success, looking at the percentages rather than looking at the actual dollar amounts. And I’m going through and I’m looking at my profit/loss statement here, and I’m seeing 20%, 45%, 42%, 15, 17, 14, 14, 20, 11, 16, 18. All of these to the positive. Well, where can you make that in a bank account over a month, a month and a half, two or three days even? If I’m doing that, then I’m doing something right.
Clay: No, you’re absolutely right and as long as, and I know what you mean, but on the flip side for listeners to also keep that in mind, this is also why position size is so important. Because all those percentages he just listed out, but let’s just say on one he decided to go really, really big from a position size perspective and then “only” lost let’s just call it 15%, which doesn’t sound like a lot because okay, he lost 15% but he just listed off all these percentages that were bigger than 15%. But, if that one time he decided to increase his position size and then lose 15%, well that could wipe away all those other wins even though those percentages may have been bigger. If they were bigger on smaller amounts, well then there’s always that give and take, which is why-
Orval: That’s why you stick to your plan. You stick to your plan and don’t get outside of it, because the moment you do Murphy’s riding with you. Murphy’s Law will come along and it will get you.
Clay: And a very, very easy way and a very common way to get outside your plan is to all of a sudden increase your position size. See it all the time. I know the temptation voice is, “Oh wow, Clay. Wow, that’s good. Hey, let’s start to ramp things up here.” And it’s like, “No, no, no, no, no. I know what you’re trying to do,” because something such as position size can really alter and just make a big old difference in a hurry if you’re not aware of it. So yes, don’t deviate from the plan even if it’s just increasing position size, unless you’re ready to slowly scale up, because the math can quickly, quickly shift against you if all of a sudden-
Orval: I would say that you ought to set a percentage of your account as a position size and no matter how big your account gets, stick with that. Because that’s going to scale you up automatically and that’s not going to be something you’re going to be doing emotionally.
Clay: I like that. A good cold, hard metric that really cuts through that, “Well, am I scaling too fast? Is this not enough?” You can just make it a percentage. That’s a good way to look at it.
Orval: Yeah, and if you’re successful, if you’re doing things right, you’re following your rules, and you’re making money and your account’s getting bigger, then your positions are going to be bigger. They’re still going to be the same percentage of your account, but they’re going to be bigger in raw dollars.
Clay: Also that’s a great risk management technique just because, sure the amounts may be bigger, but relatively speaking to the bigger overall account, it’s still for example 5%, and I’m just making that number up but yeah, that’s a great way to go about it because everything will scale up proportionately and it’ll force you to keep growing, and if you don’t, well your account will shrink so that just means, well, back down to that position size because that’s what X percent of my account actually is. Now, how many positions do you usually have on at a time?
Orval: Too many.
Clay: Too many. How many do you have on right now?
Orval: Let me look in my IRA. I’ve probably got about 30.
Clay: Thirty positions open right now?
Orval: Yeah.
Clay: Options?
Orval: Yes.
Clay: Okay. I’m not saying that’s bad or good. I don’t know enough. I’m assuming you must throw some … I guess I’ll just ask you. How do you manage that many? What is your method to being able to manage that many positions?
Orval: I was pretty close, 31. I work on different expiries. I try to get a little bit further out, and that’s one of the things that I learned paper trading too was how the expiry is going to affect how the option moves and how fast you can make profit or take a loss, and you know, that’s always looming against you. Once that gets there, it’s either do or die time. So I’ve moved further out in expiration, usually two months, and I’m starting to move out a little bit further in expiration maybe than that right now, rather than week of or within one or two weeks. And I try to stagger this stuff out a little bit so it’s not all going to come expire at the same time so I don’t have to look at it all at once and have to worry about, hey, all this is going to happen.
Orval: But then of course I’ve got stop losses on this stuff, and when things go into profit I’ve experimented with doing trailing stops or with just setting a regular stop. What I really like now that they went to commission free trading, of course you got to a small transaction commission that goes either way for, it’s 65 cents each way right now for me for TD Ameritrade, but there’s no base fee so no matter how many ways I can stagger in my way into a position or out of a position, it’s going to cost me the same. Where before you’d get hit with that base fee every single time a trade went through, and so if you wanted to stagger out a whole bunch of different stops, it would cost you a lot more than it does today. So I’ve learned how to do that a little bit and I’ve learned how to stagger out my expiries a little bit depending on what the chart looks like and where I like things. Then just putting things on automatic pilot with stop losses and trailing stops, and manage it that way.
Clay: I realize that sometimes your swing trades turn into day trades because they happen so fast, but are you ever actively looking to make a day trade?
Orval: Something like on SPY. Yeah, I’ll do that on day trades. I’m really hesitant to do the same day of expiration because if it goes against you, it’s going to go fast and you’re really going to have a hard time.
Clay: Yes. That works both ways, for sure.
Orval: Right. But you know, of course it works the other way. If it goes for you, that’s where you’re going to make most your money, too. So if I do a day trade, I try to get the next expiry out that’s not the same day. Like on a Friday, I’ll probably do the next Wednesday or something maybe. I like that a little bit better because I’ve only got that one day over there and I got the long weekend in between.
Orval: But yeah, from time to time, and it’s a process. It’s something that I have to learn. It’s something I want to learn to do is day trade options too, but to me that comes with more risk. Especially if you’re working very near expiries it comes with more risk, and so I’ve got to get comfortable with that before I start doing that on a regular basis.
Clay: That pretty much answered my next question was just going forward, looking at the time. Coming up on an hour here. It sounds like, and feel free to plug in any other goals, but one goal, you want to get a little bit more better with day trading options. Do you have any other broader goals? Are you looking to take your account to a certain amount? What are your bigger picture goals or I guess really any goals going forward? Do you have anything that you’re looking to accomplish?
Orval: The overall goals, I’ve got a military pension retirement. I’ll have a police pension retirement. Wife will have her pension from the university, so that’s kind of one leg of our retirement. I’ve got my other accounts where, like I told you, I’ve got over 226,000 in different retirement, 457, 403(b), whatever accounts stashed away, so that’s another leg of my retirement. I would like to make trading here the third leg of that retirement, and depending on how good I get at it and in the success or failure of it is just going to speak for itself.
Orval: I’m not going to get dependent on this before I get to a point where I think I’m successful, but I could actually see myself retiring early if, if. That’s a big if. If I keep doing what I’m doing, I keep building the account, I fully fund it, which allows me to take bigger positions, and if I can keep working in that direction then that is a possibility. I would have to have a very large account. I would have to be very, very successful at it because if I retire early, I’m giving up pension benefits and then giving up contributing to the other accounts over a number of years, so we’ll just see where it goes and what the future brings.
Clay: I mean, even if let’s say that doesn’t happen, that’s really not a bad consolidation prize is, okay, well you’re still growing and you’re still chipping away with your accounts, and maybe it’s not as fast or as big as you want, but as long as the consistency is still there, it’s slowly, slowly scaling, you’re getting more and more slowly, slowly scaling. Oh yeah, and by the way, you still just were forced to work a little bit longer, but as a consolidation prize, you get even that much better benefits for the pension and all that sort of stuff. So the consolidation prize of maybe not scaling and all that as fast as you wish you would have, I mean, there are much worse situations out there.
Orval: Oh yeah, absolutely. I know we talked about this last time in the podcast I did. You think about the people who are out there who have nothing for their retirement, and you look at the ages where people have very little, and it’s crazy. It’s absolutely crazy that people don’t plan for their future.
Clay: Yeah, well that’s the fault of the 401(k)s. There’s an article out there talking about it’s the 401(k)’s fault. It has nothing to do with the people choosing to spend their money on iPhones rather than putting money in their 401(k)s, but 401(k)s are just-
Orval: I got plastic in my pocket so I can afford it.
Clay: It’s their fault, Sandman, okay. It’s the 401(k)’s fault as a tool. It’s nobody else’s fault that there’s no money being put into the 401(k). It’s just the 401(k)’s fault.
Orval: Well, I’ll tell you what. My 401(k) and my 457 are approaching a quarter million dollars.
Clay: I don’t know how that’s possible. You must just be an evil rich person that’s screwing over people. Certainly there’s no way that you just decided to make the conscious decision to save money and put money aside. We won’t go down that rabbit hole though. I just don’t have it in me to start ranting and raving about that, but good for you. What a good example of what happens if you actually just save some money and if you just put some money aside and let time do its thing. How long have you been … I mean you don’t have to tell me your age, but I mean how long have you been in the workforce?
Orval: Well, I’ve been in the department now for 14 years, and some of the accounts that I have now or were from before that time. So let’s say these accounts in total are maybe 20 years worth of saving.
Clay: Awesome.
Orval: Maybe. And we’ve ramped it up over time. I put practically $1,000 a month into these accounts right now.
Clay: That’s awesome. That’s awesome, and you can have a lot of fun with $1,000 per month, but you’re choosing to actually save some of that, and then all of a sudden you just keep getting richer because of this compounding interest phenomenon and all this other stuff. But yeah, that’s good stuff and it’s possible for you as listeners. I asked that just because, does it happen overnight? No, but it’s totally possible. But you got to just set money aside.
Clay: Well, I feel like we covered quite a bit and you have come a long way, which is why I wanted to get you back from not even knowing what you were necessarily going to trade to all of a sudden now you’re consistently growing your account, and you’re working hard. That’s one thing I want to comment on is Sandman is one of those guys where, I mean, when I swing by late at night to just do some emails or whatever and I peek in the chat room, usually he’s there networking with other people, helping other people, asking questions, answering questions. But he’s involved. He’s immersed in the community, and I just bring all that up because that’s just what it takes is, it’s hard work.
Orval: Well, it’s like any other business I think. Like I said, I want to treat this like a business and if anybody thinks starting your own business is going to be a cake walk, they’ve never done it. I’ve never started my own business where I had to deal with customers and make sales and make payroll or anything, but I think this is a business and it’s something I enjoy doing and I’m willing to put a lot of effort into it. So far it’s paying off, and I expect that it will continue to.
Clay: I mean as long as you honor stop losses and, because your chart vision is there and you got all that stuff down. It’s just a matter of no more Pinterests, and as long as that’s the case, then losses will come but your account will keep growing. Did you want to add anything more before we wrap this up? I don’t want to, I don’t know. Sometimes-
Orval: No, I just want to give you a compliment, Clay. The breadths and depths of the CTU courses are really fantastic, and it’s not just the CTU. You got the podcast there, you’ve got the webinars, the archives. Participating in the live webinars has been a great resource for me. When I first got into those, you have people submit their trade plans and they say, “Well here’s my entry point and here’s my exit point, but I really don’t know what my position sizing would be and what I would do.”
Orval: Over time going through those webinars and then doing the paper trading and going through CTU and then participating in the inner circle, all of that comes together, has been a really fantastic resource. I wouldn’t be anywhere near where I am. I probably wouldn’t be doing this at all today if it hadn’t been for finding CTU and being part of it. So I’m not trying to be the little brown noser here or anything, but I really did want to thank you. It’s been a great resource and I really enjoy being part of the community there.
Clay: Well, you’re welcome, but I like to envision it as a two-pronged attack. Yeah, you can have the education. You can have the structure. You can have the information, but there’s that other prong where, you have to do it. You have to want to do it. You have to actually have a passion to do it.
Orval: You got to put the effort in.
Clay: You have to listen to it. You can’t just put a video on and be like, “Hey, yeah. I listened to this video kind of as I watched some Netflix series in the background. So because I listened, I know what I’m doing.” No, you got to actually absorb information. So it’s definitely a two-pronged attack. So you’re welcome, but I thank you for actually listening and doing and putting in the time and effort to make it possible. Because like I said, you’re just another one of these guys that other people don’t like because you’re just another data point about excuse. I don’t want to hear your excuses. Sandman’s got how many jobs is it, two or three?
Orval: Well when I was in the guard, if you consider that, I had three jobs, which I had for most of my life, but I retired. So I work full time. I’ve added probably about 20% of my base pay to my income because I work so much overtime and I take it as pay, so I work a lot of overtime hours and then my second part time job is teaching at the university for the police training institute.
Clay: Yeah. I’m sorry, I just … For you people out there that want to offer up, “Well I can’t do it because,” I don’t want to hear it. Where there’s a will, there’s a way, and there’s 24 hours in a day. That’s a lot of time. A lot of time in the day. But we’ve started with this and we’ll end with it. That’s why you got to have a passion for this sort of stuff because with a passion you’re going to find a way. You will find a way if you have a passion and actually enjoy this whole business, which it should be traded but this whole challenge known as the market.
Clay: So, great stuff here, and I would ask you if you’d come back again but considering this as your second time here, I’m assuming you will come back at some point in the future. But yeah, keep on working hard man, and you’re definitely a good asset to the community. It’s always a fun to see you, and you’re definitely one of those … You know, a community is only as good as … Or what is it? What’s the saying? A village is only as good as the villagers. I might’ve just made that up, but you’re a good villager. I guess that’s what I’m getting at. So I thank you for that and keep on being a good villager. So Sandman, thank you for hanging out.
Orval: Well thank you very much. I enjoyed it.
Clay: Now for you listeners out there, before you go, a final few things. First off, if you’re listening at ClayTrader.com on the show notes page down in the bottom right hand corner, there’s a little live chat box so if you click on that it’ll directly, not necessarily to me but somebody, and if you want to talk with me just request it, but I love to hear from people that listen to these episodes. So if you have questions, comments, feedback, anything, reach out to us and we will love hearing from people. Then if you’re listening on iTunes or Spotify or any of the other podcast players, make sure to subscribe so you know when new episodes are released and especially on iTunes if you could leave us a rating or better yet, a written review. Little things like that really help us out in big ways, so I’m really appreciative of that. If you’re able and willing to offer us a nice review or even a written review. So thank you again Sandman. Thank you again to you as listeners. We will see you back next week.
Announcer: This has been The Stock Trading Reality Podcast. Thanks for taking the time to hang out. To learn more about Clay and the ClayTrader community including the trading team, premium training, and more, visit ClayTrader.com.

Share This Post:

1 Hour Trader Transformation

"Let Me Show You How I Had ONLY 1 Losing Day Out of 73"

This Live and Free Event Reveals: How I transformed myself from an employee to being my own boss (and how you can too, even with no experience!)

Are you able to have only 1 losing day out of 73 days trading?

NO? Attend my free "1 Hour Trading Transformation" training event to learn how you can!

tunein-logo-svg-vector google-podcasts-logo stitcher itunes rss facebook twitter instagram youtube play-circle graph strongbox clipboard time-passing guarantee-icon thumbs-up books lamp stats-dots people people download-cloud trending-up video library id-card timer menu close notifications_active number 1 number 2 number 3 number 2 number 5 number 6 devices relate-arrow edit-script on-air chat playlist stop ticket calculator accountability friendship sketch arrow-right check_box_outline_blank lock unlock satisfaction-guarantee security smartphone phone_iphone bullhorn align-horizontal-middle sunglasses denied newsletter setting live credit-card