Transcript

Clay: Hey, it’s Clay. Real quick before we get to the episode, I want to bring your attention to a desk that I recently got for the cottage that I have, and Autonomous is the company, and they sent me a desk to do a review on. I wanted to just share it with you because, spoiler alert, I was very very pleased with the desk. However, I will say that the review that I did, I don’t know if I was the only one to do it, but I put a little spin on it, where it’s I open it up and you see me unbox the entire thing.
Clay: This was not some sort of review where I had it all scripted out and I knew what I was going to say, or that the company sent me anything. I mean, it could have been a review that did not turn out very well for the company. They were aware of it and they said, “That’s fine, I just want you to give your honest thoughts,” and that’s what I did. Like I said, I enjoy it very very much so, it’s awesome, and you can see how it all played out.
Clay: If you’re interested, if you’re in the market for maybe a new desk, and the nice thing about this desk is, it’s one of those that becomes a standing desk or a sitting desk, and I love standing desks. They’ve really helped out my back, and I don’t know about you, but if you’re in a situation where you sit around quite a bit, which yes, us traders, we do sit. But for me, my back was aching and I was sore, and I couldn’t quite figure it out. But then years ago I changed to a standing desk, and while I’m not going to say that it was strictly the standing desk that made all the difference, there’s no doubt in my mind that the standing did make a very big difference.
Clay: In fact, there’s all sorts of scientific research out there that shows that yeah, standing up can be very beneficial for you, because the whole sitting down position, especially for extended periods of time, really isn’t that healthy for you. But it is a standing desk, but it’s all automated so you can press buttons and it rises and falls back to whatever height you want it. Definitely check it out. If you go to claytrader.com/desk, again, claytrader.com/desk, that’s where you can find the review video. There’s also a link there where if you click on it, you’ll get a special deal.
Clay: So thanks to Autonomous for doing that, and like I said, it was totally a non scripted review, so if you want just straight up real thoughts as you see me unbox the entire thing, claytrader.com/desk. All right, let’s get to the episode.
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. His daughter is all in on hunting. Come on, Clay. Clay Trader.
Clay: I mean, she truly is all in. It warmed my heart, it made me so proud, and it’s really going to hold me accountable now. Little background, I got a bow, I don’t know, several months ago now. I just like it. I’m thinking about maybe trying to get into some bow hunting. I like the challenge aspect of it. I’m all for some protein, I’m all for some organic meat. But anyways, so I got the bow, and my daughter Dot, I mean she just thought it was the greatest thing ever.
Clay: People always told us, “Oh, your kids are going to be different. I mean, they’re your kids but they’re all different, it’s not like they’re all little cookie cutters.” It’s so true, because Joy, the oldest, “Yeah, it’s great, let me go read a book.” Dot is all about hunting. So much so that she … They’re at a thrift store, and she came home and she said, “Look at this shirt I got.” She bought this camouflage shirt. She bought with her own money, and we pay really bad wages around here, just because as a parent I’m trying to teach the value of a dollar.
Clay: So for her to get the buck fifty, or whatever that shirt was, for her to make the decision that I’m going to spend a dollar fifty of this money that actually took a lot of hard work to get on a camouflage hunting shirt, oh man, it warmed my heart. She is all in, so I have no excuses now. I’ve got to go all in. I’ve got to keep up with that, there’s no backing out now. But I am looking forward to doing some hunting with my daughter in the future. But I thought that was, you know what, sometimes all you need is who you’re surrounding yourself with. You’ve got to have a good accountability partner, and Dot is apparently going to be my accountability partner when it comes to this bow hunting and all that.
Clay: In fact, now she’s saving up her money for a bow, and she’s also getting a good lesson in taxes, because at the store it was $20 for this bow, but well, you’re going to probably want to save about $25, because there’s a little thing called taxes, Dot. In specific, sales tax. We’ll just leave it at that, but so yeah. She’s all in, she’s going to hold me accountable. But yeah, I thought, there’s nothing more all in than spending your own hard earned money on something.
Clay: But for our guest today, have an awesome discussion. We are bringing back Ken. In the chatroom he goes by gaingreens. I think he’s still got the fishing boat, or him holding up a fish. Anyways, I remember from our first discussion he’s down in Florida. He enjoys fishing, so that’s who it is. For those of you fellow community members that listen to these, then that’s who I’ll be talking to here.
Clay: He’s gone on, tried a bit of a transformation, as many of us have. We kind of discovered that in the interview. It’s kind of weird, but when you bring people back it’s really a question of, well yeah, the last time we spoke it was before the whole COVID situation, so to just see how things have changed for people is quite dramatic. And with change comes change within your trading too, so that’s a lot about what we talked about. But we go down some great mental rabbit holes in terms of trading psychology, things that were tripping him up, things that got him in trouble, so there’s definitely a lot of good learning nuggets for everybody.
Clay: Without further ado let’s hear about Ken, and get an update on his journey. Ken, welcome back to the show.
Ken: Hey Clay, how are you doing? Glad to be back.
Clay: I’m doing fantastic. Everything okay with the hurricane and everything, that all miss you?
Ken: Yeah. Not if you’re in Louisiana, unfortunately. They got banged up pretty bad. My buddy sent back some photos, and it’s pretty bad over there.
Clay: Yeah. I know you’re in Tampa, right?
Ken: Just south of there, actually, in a town called Port Charlotte.
Clay: Okay.
Ken: But yeah, it’s considered southwest Florida, yeah.
Clay: But you were in its pathway, because I remember when we got this set up, you kind of threw out the contingency, “Well yeah, we’ll do it assuming …”
Ken: Oh yeah, yeah.
Clay: So I’m glad to hear. Unfortunate for your buddy, but I’m glad at least you guys didn’t get hit by anything.
Ken: Yeah. Yeah, we’ve been fortunate last couple of years.
Clay: Have you ever been in a hurricane before?
Ken: Yes. Yeah, it’s not fun.
Clay: I mean, this is obviously coming from somebody that has only been in Florida for vacations, but if you live in Florida is it basically guaranteed at some point you’re going to have some hurricane experience?
Ken: Yeah, it’s just a matter of when, not if, unfortunately. Yeah, as long as you … Most homes are pretty good the way they build them these days, but the scary things about hurricanes really people don’t talk about, is they drop a lot of tornadoes. When they do that, those really seem to wreak havoc. Of course there’s tree damage and everything else that comes along with it.
Clay: I did not realize that tornadoes were often … I just thought it was high winds and rain, but-
Ken: Yeah. Oh, yeah.
Clay: Interesting, okay. Well, I’m glad everything is okay. I’m glad nothing crazy happened. Yeah, that’s always a step in the right direction, is just not having anything happen in the first place.
Ken: Oh, absolutely. Right.
Clay: All right. I’m trying to wrack my brain, and I feel like it’s probably been right around a year since we last spoke, or has it not even been that long?
Ken: I think the first one was in December, so yeah, we’re pretty close.
Clay: Okay, all right, all right. Right around nine months in then, and I know that … Well, I don’t know. I guess, why don’t you just recap to the best of your knowledge, because I get this was nine months ago. But where were things in your journey back nine months ago, and maybe just kind of recap not necessarily every talking point that we talked about, but just kind of where were you at that point in your journey?
Ken: Well, mostly being introduced to the markets, and then wanting to take things more seriously and of course get educated. After the podcast, just kind of slowly dipping my toe into, getting my feet wet trading and figuring out a style. Of course, using the methods taught in the courses and things like that. But wow, the whole world’s changed since then, you know?
Ken: Of course, we’ve had the coronavirus, but then there was a big market crash.
Clay: Yeah. I mean, when you say the world has changed … I feel like 99% of situations, that would just be a figure of speech, that wouldn’t-
Ken: Right.
Clay: But no, you’re absolutely right. The world has changed, so definitely … Which is a good point. I should remember that really basically before, let’s just call it March, February-ish, anybody I’ve talked to, things are so much different now than what they were at that point. I guess, I know … For full disclosure’s sake, for you as listeners, I know kind of what … Sorry. Gaingreen is his name in the alley, so if I call him Gains, that’s just kind of how I envision him in my head. But Ken.
Ken: Right.
Clay: I know what Ken’s kind of been up to. But so I guess after we left off, you’re right, a lot of the world did change. I mean, how did that affect your trading? Kind of just walk us through, just I guess your experience of the coronavirus in terms of how that influenced or affected, maybe impacted what your trading strategy was and all that good stuff.
Ken: Well, I’ve got to say that the market crash, or downturn, was like … I was trading micro futures at the time, so essentially they trade 24 hours a day. But it really was like somewhat of a blessing in disguise. I can’t say I made a whole bunch of money or anything like that, but it kind of gives you confidence, because there was 10 point, 5 minute candles. You could literally buy the bottom of one, and by the time the candle closes you were up 10 points later. The volatility was just at a level I’ve never seen before.
Ken: But it kind of give you the confidence after a while to go ahead, put your order in right on this area or whatever. It was just an amazing thing to be a part of. Of course that didn’t last, and now we’re presumably back to all time highs. I kind of came out of that questioning myself. Well, the market’s going to settle down. Was all that kind of fool’s gold? I was using, I still had a margin account at the time, which you need to trade futures. But after the market settled down and things in my personal life changed, where I couldn’t really trade in the evening as much anymore.
Ken: I slowly, slowly migrated over to a cash account.
Clay: Okay, so really the main driver here was just stuff in your quote-unquote real life changed around, and that’s what forced you to have to change some of your trading?
Ken: Yeah. There’s a couple things. My margin account went back and forth. I just wasn’t seeing the consistency. I slowly started cutting things I was doing that was not working. Holding overnight, just whatever. I started tallying things up, and okay, that’s not working, this doesn’t work. Actually, I’ve seen RDTrader, this was months ago, posted his results. I think it might have been a video you did too. He had a really great win rate, and I thought to myself, although I keep a journal, I never tracked the win rate before.
Ken: I said, okay, well where’s mine at? Surprisingly, I was in the high 60s. This was not the month I sent you. But I did a terrible job at controlling my losses. When you see that information, I kind of went and showed my wife. I said, “Hey, look at this. This is actually …” She’s trying to understand it. But I said, “Hey, this is really good. If I cut this loss, this loss, and this loss, well this is a really good month.”
Ken: I did adjust some rules, and then just keep chipping away at that process.
Clay: Okay, let me ask this. What rules did you adjust?
Ken: It was … A lot of it was focusing on good setups. Staying out of speculative consolidation setups and things like that. Just stick to really, really simple things. Another thing, I do trade, place trades on my tablet. I’ve cut that way way down, because some of the worst losses I had were actually on that tablet.
Clay: Do you think those losses came from, from a logistics standpoint it was just much more difficult to put it orders, exit orders, stuff like that?
Ken: Yeah. You know, when you’re sitting in front of your computer, I think you just have all the tools available to you. It’s not just like, we can watch one ticker and see what the SPY is doing. You can kind of put together what I would say, a full stack of what direction this is fixing to go. The tablet, it’s … I don’t want to … Can it be done? Maybe. But should it be done? And I did question this a little bit in the last podcast. Is it sustainable over time? It’s nowhere near being in front of your screen.
Clay: No, that’s a great point. It’s definitely gray territory, because there is a lot of it depends. For example, if you’re a swing trader, then yeah. A tablet, a phone, in actuality would be probably just fine. But if you are trying to do what Ken’s doing with the day trading, and needing to analyze multiple things, I’m not saying that it’s going to be impossible. But I mean, if you can operate with … Let me say this, I’m not saying in the sense of you need to have 10 different monitors or anything like that. You don’t need to take it to that extreme.
Clay: But there is efficiency in having a few different monitors. I mean me, I’m at right around two or three monitors that I actually use for actual trading. I mean, my home setup is four monitors, but one of those monitors, basically one and a half is for more so work stuff and other things. But I will say, and I experience the same thing. When I travel and I’m on my Surface Pro, I can trade, but I almost feel underprepared.
Ken: Oh yeah, yeah, absolutely.
Clay: Yeah. So-
Ken: It’s like not having your favorite blanket or pillow, something like that.
Clay: Yeah, exactly, exactly. Like I said, as listeners … Because I get a lot of times, people are … It’s a good question. “Hey Clay, I have this and that, is that going to be enough to trade?” And I mean, yeah, maybe, but that’s why you’ve always got to factor in, well you need more little details. But again, at a broad sense, swing trade and investing, yeah. A single computer is fine. A phone is fine. A tablet is fine. But if you’re looking to do more sort of day trading, where you’re looking to buy and sell in a single day-
Ken: Scalping, yeah.
Clay: Yeah, scalping. Definitely not your phone. I mean, that’s not an argument. No phone in those situations. But a tablet, maybe, but yeah. That’s a good talking point there. I’m glad you brought that up, because I would agree that I don’t think that was a coincidence. I can see some of your bigger losses having to do with the fact that, like you said, you didn’t have your blankie with you, and that can definitely make a big difference.
Clay: It also sounds like one of the rules was, you just started to avoid more so consolidations, and you wanted to see … I’m assuming the price maybe start to head in your favor before you took any action?
Ken: Yeah, yeah. The market was, there were months it was really choppy. But yeah, that and I would notice too, I mean when I started the size … My max was like 10 contracts. Those rarely ever worked in my favor. I went down, I just basically started over. One, and three, and then five. But any more, I just don’t see the point in scaling up. I’m not even in a rush to do that. That was one of the big things. Yeah, from there just slowly … I know I post some wins, but I know they’re not big. But you know, the little base hits do add up over time.
Clay: Oh, absolutely.
Ken: Yeah. Really excited, when I sent you the email. I wanted to wait to the third month, would have been this month of August. So I had three months of data, because the month I sent you was actually the second month. But yeah, it’s an amazing thing. I was sitting with my buddy, and he trades, but he doesn’t have any education in it, or anything like that. I had a really really big grin on my face, because I showed him, thinkorswim will show you kind of, it just tracks your P&L. It just gives you a little line graph. I’m just looking, and it’s a steady, just nice slope up. I’m like, “Yeah, check that out.”
Ken: But I think too, one other thing with the margin account I had, just going back to that real quick. It was frustrating because I said, “Okay, you only get three trades in a five days, right. What if that one trade was just a bad trade?” Okay, or whatever, it didn’t work out. Well, your next opportunity, you have to wait, depending on how you have your trade set up. Then since going to the cash account, you have three day trades in a day, essentially, and the next day you start all back over.
Ken: But yeah, there were days I had two losers, and then one winner, and it was a break even or a small win. That’s when the equity curve really started to smooth out. Like I said, I went back through the whole process, and is it my broker? Is it this margin account? What is holding me back here? What is … Going through the data. Kind of that’s where I am right now.
Clay: Still going through the data. All right, well like I said, I know you had those months, and it sounds like … How long have you been completely off of the tablet?
Ken: I am not off the tablet, truthfully. I still monitor the markets. Like I said, I reduced … Another thing is, for me to take a trade on the tablet, I really have to have time. You know what I mean? I just don’t want to … Okay, I’ve got a five minute break at work, or something stupid. I think it has to have more respect than that. I still monitor it, but it’s not something I do, like I was doing before. It’s almost about probably, I’d say a 75% … I’m not trading on a tablet. Something like that.
Clay: Okay. So for my clarification, you use a tablet to monitor the markets, but as far as executing trades, that has dropped down significantly, that you’re using the monitor … Okay.
Ken: Yeah, absolutely. Yeah, it’s few and far between, and it’d have to be just an amazing, good looking setup. Because you still in the back of your mind, hey, your worst losses were on this thing, so there’s an issue there. You’ve got to be able to recognize that.
Clay: All right, so given we’re talking about data, given you’re currently going through data. My question is, since you’ve implemented this policy of, I’m going to do it if only it’s a really really good looking setup. How do those trades look? Let’s call them tablet trades. Have you been tracking that data, in terms of the results from those tablet trades that you have taken?
Ken: Not exactly, not exactly. That’s a good point, though. It’s just more or less, I know this isn’t working or this won’t … I think over a long period of time, this is not going to work out. It’s just something I’ve kind of put off, and like I said I’ve had some changes in my personal life where I just don’t have the time. Right now, usually, like today, Fridays I’m off. I kind of look forward to getting some screen time. If I can’t trade every day, that’s okay.
Ken: That was one of the other things. It was like kind of swimming upriver against the tide, with everything going on in my personal life. Work and kids or whatever. Trying to put this into practice too, but if that’s just where I’m at right now, that’s just what it has to be.
Clay: That’s actually a really good point, and I want to come back to that. But I guess, to me it sounds like, and I’m just talking out loud. That’s the whole thing here, and for listeners if this is your first episode you’ve ever listened to, this is unscripted. Ken literally got on and we just hit the record button and went with it. This is me talking out loud.
Clay: But I feel like if one of your thoughts is, “You know what, I think the tablet may have been a source of problems.” I think almost having a section of data of tablet trades should probably be monitored. Because I mean, for-
Ken: Well, going forward, yeah, absolutely.
Clay: Because I mean, for all we know, maybe some of your hiccups are still because of the tablet, but you’re just not quite seeing it. Because I mean, information gets blurred together in your mind, which is why actual data is a good thing. Yeah, I think maybe separating that out might be worthwhile. Then on the other point, and you make a fantastic point, is correct me if I’m wrong but it appeared that for a while, you felt like in order to be a trader, that meant you needed to be basically putting on trades every day. Is that a relatively fair understanding of your previous kind of approach?
Ken: Yeah. I’m not very good with swing trading. I like scalping. I like it. That’s kind of my little niche. After looking at all the stuff, holdovers or multi-day, multi-week stuff. Scalping suits me mentally. I’m down to chipping away at what’s working, and then what’s not working. That’s hard, kind of what we’re talking about, yeah. If you’re a scalper, then yeah, you want to trade every day. There’s opportunities every day.
Clay: I think that’s a good … Because it sounds like you’ve overcome that challenge, where you’re now perfectly fine with, hey, I don’t need to trade every day.
Ken: Right.
Clay: As listeners, that’s a big hurdle.
Ken: It is.
Clay: Because I get it. I understand where Ken’s coming from. I did it. I can understand if you’re doing it. Well yeah, I’m a trader. This is my side hustle. This is my whatever. It’s like, well, let’s take a step back and assess the situation. If you have other jobs, then it is okay. It’s not like you not trading all of a sudden means that your income just stops coming in. No, that’s the beautiful thing about having a job is, you don’t need to be trading every day. The problem with that is, and I mean, comment maybe if you have some good stories.
Clay: But I would assume, well you kind of already hinted at it, but one problem with thinking that you do need to trade every day, is like you were saying Ken, okay. I’ve only got five minutes, and go. It can almost be a self fulfilling prophecy, where it forces you to force bad trades. I mean, do you have some experience with that?
Ken: Yeah, absolutely. Yeah, you’re in the middle of your work life, and your personal life, and you’re trying to squeeze this in. This needs attention, this needs its own time. It needs to be respected. When you’re trying to … It’s essentially just forcing. I think human beings, we know when we’re forcing something. Whether you’re buying maybe a car that you really can’t afford or whatever, just for example.
Ken: But I could feel myself doing that, and some of my coworkers are like, “Hey, you’re kind of over there under the shade tree all the time, looking at that screen.” I don’t want to be Mr. Antisocial or nothing, you know. But yeah. For me, for me I would say that I look at the market with, it’s a huge opportunity if you learn the discipline and the skills to show up to it every day with the right mindset. I mean, you can be successful. It’s not so much … Not really FOMO, it’s just opportunity missed.
Clay: No, I-
Ken: Does that make sense?
Clay: It does, and as I listen, you make a good … That’s one of the big challenges, because it sounds totally counterproductive or counterintuitive. But you have to have the right mindset, like you’re saying, and you’ve got to do things the right way. Part of being a successful trader is not trading. Which sounds totally backwards, but to your point, especially when you’re just starting and you have a full time job, or a couple of part time jobs, is sometimes the best thing you can do to be a successful trader is not to trade.
Clay: But that’s so much easier said than done, because I mean, you’re right. There are opportunities out there. As somebody that is ambitious, and again this is one of the numerous ways where the market loves to turn ambitious people and use their ambition against them. But there are opportunities, and given you are an ambitious person by default, well then ambitious people want to take advantage of opportunities. Then you’re going to want to try to find those opportunities, and you think okay, well I’m ambitious, there’s opportunities, I want to find them, I only have 10 minutes. Then all of a sudden you go, and that’s just … Yeah, the epitome.
Clay: I like what you said. When you start to try to squeeze in trades, I mean, that’s got a bad situation written all over it. That’s a perfect way of putting it, and that’s funny, though. You made the comment about you’re sitting under the shade tree and people are thinking you’re antisocial. I remember at Honeywell. I guess people, they thought I was antisocial, but they were correct because I just eventually stopped going to lunch in the cafeteria, and I would just eat my lunch right at my desk so I could do this stuff, in terms of the markets and all that.
Ken: Right.
Clay: I don’t know. I’m kind of one of those people where it’s like, who cares if they think you’re anti … At the end, I mean, that’s where the name ClayTrader came from. Because they understood that I was doing all that stuff, so they just kind of … For all I know, maybe the entire site, the entire ClayTrader name is built upon mockery in terms of … I don’t know.
Ken: Well, I don’t know that. Yeah.
Clay: But it’s funny. I would say, who cares? If they think you’re antisocial, I guess it’s just a matter of what you think. I mean, if you can go and talk to them and you think that’s going to yield a better investment return than being focused on doing whatever you’re doing under the shade tree, I mean. But it’s a fine balancing act, because you don’t want to be a total antisocial … I mean, it’s not like people hated me. But I get what you’re saying, it just kind of brought back memories of me just eventually choosing to not go to the cafeteria anymore and eat with the coworkers, and just flat out stay at my desk.
Ken: Oh wow, yeah.
Clay: Well, all right. Before I forget, looking at the data, you had like you said, the one month you sent me was fantastic.
Ken: Yeah.
Clay: There were losses in there. My real question becomes, and this is something that I’m not quite sure ever goes away for everybody. But just dealing with losses from the mental point of view. I mean, for a lot of people they take a loss and then their mind can drag them down rabbit holes that can just be very dangerous. But I mean, how are you doing with the losses? It sounds like and it looks like from what I’ve been seeing you’re doing well, but I mean, how is that department going for you right now?
Ken: It’s fine. Like I said, the biggest thing was, it really used to come against me with the margin account, because you would have to wait so long for your next opportunity. Say if you were out of day trades. Then what I found was, essentially I put a little bit of money over into the cash account, and I said … At one point, honestly, I was like, hey is this even for me? I’m like, you kind of get to, well you know, I’m working my butt off. I’ve studied. When’s the light bulb going to go off, kind of speak.
Ken: That’s what kind of came about all the chipping down, or getting down to what’s really going on. When I had my margin account, yeah, it did bother me because you just had to wait so long for your next opportunity. Then when the opportunity came, because you did have a day trade, was it even a good opportunity?
Clay: That’s good stuff. I don’t mean to cut you off, but listeners, especially if you’re new, that’s a very real thing. Thank you government for the pattern day trading rule. In the spirit of trying to protect people, all you’re doing is making things 10 times worse.
Ken: Oh, yeah.
Clay: But I mean … Think about, listeners. I’m talking to listeners, but think about what Ken’s saying. It’s not the loss of money that was irritating him, that was upsetting him. It had nothing to do with that. It had to do with the fact of, well great, now I’ve got to wait because I’m out of day trades or I only have … Just because of that day trading limitation. That in and of itself can just create anger, and create forcing trades. Because like you said, I mean, okay I’ve got to make something good. Then you can think that almost … Is that actually an opportunity? It can really create mind games.
Clay: But I’m sorry if I missed this, but I know you were doing micro futures.
Ken: Yes.
Clay: I know with that, there is no day trading rule. I know you’d mentioned, well, I don’t know if this was fool’s gold or else if I was really having success. But why did you get away from micro futures? Did the number of opportunities just dry up too much for you, or is that the personal life thing? Or kind of your life going on?
Ken: Yeah.
Clay: Okay.
Ken: Yeah, mostly the personal life thing. And yeah, you can really overtrade those things. This is where you’ve got to kind of come to table and be honest with yourself. Because at night, that’s when I had a couple of hours in the evening, and like I said, so after the market crash the market really leveled out. Kind of back to where it was. Looking at the commission structure on thinkorswim, it’s almost like five bucks. It was hard to sit there and pay that kind of commission on a scalp. Five dollars on a $20 scalp, what percent is that? I don’t know. 20%?
Clay: Say that again?
Ken: Something like that. What percent is $5 … I’m paying $5, say on a $20 scalp, something like that.
Clay: Oh yeah. Well, yeah, if $5 is coming out of a $20 trade, that’s a 25% commission, right there. Yeah.
Ken: 25%, yeah, that’s right. Yeah, so I started to look at that, and I said, well, maybe these things would make good swing trades, and I still think they would. But I’m just not, that’s not me. I’m not good at buying and selling the next couple of days over. I’m not good at it. At least right now.
Clay: Sorry, but I’m just thinking. What, when you’re doing … Well first off, thinkorswim, they have $5 fees associated with the micro futures?
Ken: Yeah. It’s like 2.65, I believe. Something like that, per side.
Clay: Okay, so $5 round trip, then.
Ken: Yeah, $5 round trip, yeah. Which that did get reduced, think I reduced it for like 15 cents, which I took it. But still, it’s …
Clay: My question is, was the struggles that you had with all that stuff? Are you … Was that because of the commissions that you were struggling? Or was there-
Ken: No.
Clay: Okay, so there’s a lot more to it than just the commissions, then.
Ken: Well, that and then … I have a relatively small account. I don’t have a big account. I call it a learner’s account, while I’m still learning. But I just started to have somewhat bigger goals. That part too. Then thinkorswim requires I believe for the micro ESs, about 1500 in margin requirements. That’s for one contract.
Clay: Right.
Ken: If you’re looking at 2 or 3 contracts, that’s a lot of opportunity tied up. Looking at a cash account where you can buy a few contracts of options … I just kind of gravitated that way. I took a little bit of money out. I still have my margin account. Took a little bit of money out and I said, okay, we’re going to put the whole thing to the test. Can you scalp consistently, and now you’re going to have basically all the freedom. Three day trades is plenty, in a day. From there, just it started to work. Just kind of trusted the process, and it started to work.
Clay: Did you ever look at any other brokers? I feel like TD Ameritrade has some pretty … Obviously the fees are not the greatest, but also the margin requirements. I mean, did you ever do any searching around for other micro future brokers?
Ken: A little bit, yeah. I looked at the Tradovate thing, but it just … Another thing, it just kind of, trading one thing all the time. I kind of wanted to break out of that too.
Clay: What did you have against that? I think I would make the argument, well then you can really get to know that one thing’s personality.
Ken: Yes, yes, and that’s why I trade a lot of SPY. The ES in SPY is almost interchangeable. But I think when you pull up the intra-day chart, and you say okay, well maybe the opportunity isn’t that good today in ES or SPY. What else is going on? I think that should be healthy. Because sometimes you almost … I don’t say hold a grudge about, okay, it didn’t go down that extra 10 cents or 15 cents. But it’s almost like a relationship …
Ken: How do I say this? You just know each other too much. It’s like that cousin that always comes over every day, something like that.
Clay: No, I understand what you’re saying is. Like everything in life, everything in life outside of trading even too, there’s always pros and cons. I do understand what you’re saying, and it is nice. I mean, coming from somebody that trades stocks, it is nice if I’m looking at a stock that I trade quite a bit, so I’ll just use Boeing as an example. If Boeing’s just not quite working, I know that all right, well, I have like 3,999 other ticker symbols out there that I could potentially go and take a look at.
Clay: Which is not going to be the case in micro futures, but again, pros and cons. You can also, in the world of stocks, just be overwhelmed because there is so much to choose from, so what is actually a good setup and whatnot? But I mean, that’s why it’s always a fine balancing act. That does make sense, and I was just curious … I’m not implying that you need to go back, because obviously you’re doing well with options and all that right now. But just, I had a feeling if I question a little bit more maybe stuff would come out, and yeah. You’re making very good points about, kind of just the little small mental things that make a big difference, where you just want to give yourself a little bit more freedom.
Ken: Yeah.
Clay: But you had mentioned trading SPY contracts quite a bit. Is that … What are you trading with options? Do you have a basket of certain ticker symbols? I’m assuming it’s not just SPY, but I mean, what sort of stocks do you look at?
Ken: I usually look at the, what’s alerted in the pits. Really, you have to kind of break out of that comfort zone, kind of. I feel like I’m really late to the party. I put on a few Tesla trades last few weeks, and they’ve been really good. Then because, the implied volatility on Tesla is nuts. I first ran into it with Apple, and I’ve never experienced anything like that. You’re buying these OTM contracts and it’s like, that’s crazy, that move that fast.
Ken: Just a little bit, just branching out and seeing what’s out there. Boeing, I’ve traded Boeing a few times. Roku, things like that. But yeah, the broker thing … I would, thinkorswim definitely has its problems.
Clay: So you’re still with thinkorswim.
Ken: Yeah, that’s an understatement. If I could commit to two or three hours a day in the morning, I would probably not be on thinkorswim at all. But right now, with just mostly one day a week, it’s kind of fitting that need. I’m comfortable with the platform. I did demo Lightspeed. That was great. That was actually amazing. I didn’t think the charts were that bad on Lightspeed.
Clay: No? I think they’re terrible, but hey, it’s all … Beauty is in the eye of the beholder, I suppose. I’m prejudiced, a high maintenance fill in the blank. I don’t know what I am. But no, I mean, more power to you. If you like those, then that’ll definitely save you some money. I guess, are you looking for … How do I want to ask this, so it actually makes sense for you? But I mean, what is the structure of what you’re looking at?
Clay: I would assume that if somebody alerts, and I’m just totally making … Some obscure stock in the inner circle. I’m assuming you have protocols and structures in place that will alert you to the fact … No no no, that’s not for me. I’m assuming that’s part of your strategy, right?
Ken: Yeah, yeah.
Clay: Then what are those things, would be the follow up?
Ken: I like flush points lately. It’s just been great. Yeah, so a lot of, even if you look at some of the packet or the stuff I sent you. You’ll see probably a lot of puts.
Clay: Yeah, yeah.
Ken: It’s just for whatever reason, I don’t know why, and it’s weird because when I started out, with Robinhood like I said before. You could only just be mostly a long-sighted trader. Yeah, I used to love it. Big green candles coming up. But now, it doesn’t do anything for me. Isn’t that weird? A bull flag, yeah, maybe. I don’t get that excited. But something, I don’t know what it is lately about when things just coming down and you’re making money. I think it just makes it a little more sweeter, I guess. Short sighted trades.
Clay: I think it makes it easier, because as of recording of this podcast, I mean think about it. Literally for listeners’ sake, we’re doing this in early September, when the previous day, September 3rd, was a big old red candle that wiped away a whole bunch of green days, just in one thing. Then today, the next day, Friday September 4th, the day of this recording, another massive bloodshed has been going on. It’s one of those things where fear from the emotional standpoint works even more powerful than greed, right?
Clay: People see prices going up. Okay, that’s great, that’s great. But when people start to see their money just disappearing, disappearing, I want to stop this money from disappearing. And the way you stop money from disappearing in the market is you have to sell. When you’re a short sighted trader, you’re actually benefiting from other people selling, because selling means the prices are going even down further, which helps you out.
Clay: That’s my personal theory, I think on why … I don’t want to say easier, because nothing is easy in the market. But from an emotion standpoint, I just think fear is way more powerful than greed. People are like, “Why do you only go short?” Well first off, I don’t only go short. But mainly because I think emotionally, it just makes more sense on why the market behaves … And like I said, right now we have the perfect example of that. Literally two days have wiped away … Actually I’m curious. What does that look like right now?
Clay: Oh my, yeah.
Ken: It’s still going down.
Clay: Two days have wiped away about, yeah, about two weeks’ worth of time in just two days. So yeah, about two weeks of gains, as of right now, have been wiped away in two days. Right there. There’s greed versus fear. Fear can be a nasty nasty thing. I noticed the puts, and I was like, well you know, no judgments from me. I pretty much do the same thing, and it makes sense. But let me disclose, both on Ken and I’s behalf, we’re not saying, hey, if you want success, just buy puts. Just go short.
Clay: Shorting can be, right Ken-
Ken: Very dangerous.
Clay: Shorting can be, yeah, took the words out of my mouth. Very dangerous if you don’t, to take some more words out of Ken’s mouth from earlier, if you don’t respect it. If you don’t respect the strategies, the skill, the art, whatever you want to associate with it. I mean, you don’t get punched in the face with a fist. You get punched in the face with brass knuckles that have been dipped in acid that have spikes on the end of them. That’s what you get punched in the face with from the short side.
Ken: Right, yeah.
Clay: It kinds of goes back to our little talk about always pros and cons, right? Shorting can be a great thing. That’s the pro. The con can be, it can definitely be a nasty situation if you don’t show it the respect that you have. But circling back to the losses things, how are you doing with losses? Mentally speaking, I realize that before it wasn’t the lost money, it was the opportunity. But now that that’s kind of been put aside. When you do take those losses, when you do actually lose money, I mean how do you deal with that mentally? Because I know lots of people maybe have some sort of Jedi mind trick, or maybe will just say something and you don’t even think it’ll be that good. But it might really help somebody out.
Clay: I mean, personally, how do you just get over the fact when you see that, oh, I’ve lost some money?
Ken: Yeah, yeah. I mean, it stinks, there’s no way around it. But one of the first things I’ve done is just staying small. Three, maybe five, and sometimes just one. One contract. Just stay small. Then yeah, when I do take a loss, now … I’ve got to say, when I went to the cash account, it really, really was like just a huge burden. I mean, my whole attitude changed. It really did, because-
Clay: Wait, wait, I want to finish the sentence. It was a huge burden, or it was a huge burden lifted off your shoulders?
Ken: Yeah, huge burden lifted, because-
Clay: Okay, all right. You just said it was a huge burden, and then you kept going on like-
Ken: Sorry, yeah.
Clay: I’m pretty sure that’s not what you meant. Okay, there we go.
Ken: Right, right. It really was, because whether I wanted to admit it or not, I finally … I don’t have that, in the back of my mind going, okay, well today’s Wednesday, you have a day trade. The first couple of days, it was just like, wow. A small loss is not as bad, because you know the market’s not going anywhere, and you still have other opportunities. I never trade to make back losses. I just try to put on the next good trade. Then let everything else just kind of work itself out.
Clay: How do you do that, though? I mean, I believe you, but that’s a great statement, is “I never trade to get back losses.” How do you rationalize that in your … Basically what you’re saying is, I don’t revenge trade.
Ken: Right.
Clay: What sort of things are you telling yourself, or how do you rationalize the very correct, the very wise decision on your part to not be revenge trading?
Ken: Yeah. I mean if … Everyone is a little different, but with me doing just a few contracts at a time, even if you’re not going to sit in the trade the whole time to lose the entire amount. With everything kind of structured the way it is, does it matter? Yes, it matters, but it will work itself out as long as you’re still winning more than you’re losing. The only time I’ve really ever got into trouble was when I tried to size up. Go to 10 contracts, and then it’d go against me a little bit. I’m just not mentally and emotionally ready for that type of size yet.
Ken: But yeah, honestly, August has been a tough month, was a tough month for me. But I guess I just sit back and know that I do have the skillset to, if I just let the process work, that I put in place and I follow the rules, that the wins will be more than the losses over a given period of time.
Clay: No, you’re absolutely right. In fact, as of the recording of this, I put out a YouTube video, and the title of it was “My 33% win rate.” I had a morning where my first two trades were losses. But to Ken’s point is, you just have to have faith in the process. Now first off, you have to actually have a true process. Under that premise that you do have a true process, and part of a true process is you are supposed to be taking likely trades. Meaning, well, it’s likely for this to happen. You can never use the word guarantee, but you want to be saying, well yeah. Odds are it’s likely for fill in the blank to occur.
Clay: As long as you continue to take those things, where what is likely to occur, or what is most likely to occur, then things do work themselves out. In that video, had two losing trades. I was down, I don’t know, 500-something dollars. Then I found another setup that I liked. I was like, hey, you know what? What’s most likely to happen is this. I put on a trade based on that, and ended up making like $1000 on it. Not only did I wipe away my two losing trades, but then I close up the day right around $500.
Clay: Again, that was with being wrong 67% of the time. But that’s why you just need to keep on putting yourselves in situations where you know what, this is likely to happen. That can also be much easier said than done, because if you’re forcing trades, if you’re revenge trading, and if you’re not managing money size correctly, well then you can quickly blow that stuff up. But I mean, the main goal and like Ken was saying is, just let the process work itself out. The way the process does work itself out, to peel that back, is you better be putting yourselves in situations where you know what is likely to happen. Not guaranteed, I definitely want to repeat that, but likely.
Clay: Now you said August was rough. August was rough in the sense of you broke rules, or August was rough in the sense that things just didn’t quite work out as they normally do?
Ken: Well, I got out of my lane a little bit. I was looking for a short in the market. I’m looking at things. I’m maybe drinking my own Kool-Aid. Hey, here’s a gap. Go pull the rug out here, or hey, all time highs. These were not trades that I normally do. I talked about swing trading. I’m not ready to manage those trades yet. It’s not like a scout trade when you’re in it for three to five minutes, or even less than that. The market’s grinding against you, and you’re going, it’s going to come … You know, all the things we talk about all the time.
Ken: By the time you say, “Okay, it’s going to come down,” you pull your short or whatever. Then yeah, so basically that was it. I got out of my lane, and was trying to put on a short. By the third time I tried it, yeah, that’s when I realized it just wasn’t going to work.
Clay: August was-
Ken: That’s the short answer, yeah.
Clay: Yeah, all right. August was … It sounded like it was just basically one trade that got you?
Ken: It was a few of them, yeah. Like I said, I tried to put the short on a few times.
Clay: Okay, so this was over a spread of multiple different days, then?
Ken: Yeah.
Clay: Okay, okay.
Ken: I was looking … We talk about patterns and stuff, and if you kind of look at a 30 day chart, you can kind of see the slope. You almost see the market kind of … It’s not stair stepping up, it’s kind of sloping. Now you can see, well, it looks like we’re maybe a possible head and shoulders pattern developing. But I studied the bottoms. I study the bottoms and I study the tops, different time frames. That’s one of my edges too, is really nailing down, what does a bottom look like versus a bounce? Or a top look like?
Ken: I put a lot of work into that, and I don’t know when the top’s going to be, no one does. But I think you can see signs and maybe signals of it. Of somewhat of a trend change coming. I thought we were there close to August, but it looks like maybe now the market’s pulling back significantly. We’ll see.
Clay: This was … Pretty much you got a little too stuck in your ways, is what it comes down to.
Ken: Yeah. I was drinking my own Kool-Aid.
Clay: Yeah. That’s-
Ken: And …
Clay: Go ahead.
Ken: Well, it was bad because it’s like, you have a process that makes you money. Now you’re swinging for the fences so to speak. You want to hold some contracts for a few weeks or something like that, and just this … It didn’t work before, so why would it work now? I was like, well, my knowledge is more, you have more market awareness. But I’m just not ready for it yet, those type of trades.
Clay: What you describe is again, one of the many challenges. Is you need to 100% for sure, guaranteed, you need to have confidence as a trader. If you don’t have confidence, well then anything, really. Anything in life, if you don’t have confidence, then I mean I won’t say you can’t do it, but it’s going to be very miserable and it’s not really going to actually work out that well.
Clay: But as Ken just described, that’s the flip side to how confidence can kind of spin a little bit out of control, where all of a sudden he’s starting to just … Like I said. But I can’t say that he’s stupid, because I get it. You get confidence, that’s good. You need confidence. But you always have to be aware of … I don’t think this ever goes away. I was fighting with it this morning. I was up and then I’m thinking, that looks like a good setup. But I was like, I don’t know, am I just feeling too confident right now because I’m up and because it’s Friday, and nothing better than feels good than being up quickly on a Friday, and why don’t I put a little cherry on top for the weekend?
Clay: It’s like, wait a second, Clay. I know you’re feeling good, I know you’re feeling confident, I know you think that looks good. But you know what? Why don’t you just be happy with what you have, because maybe right now you’re almost being overconfident. Sometimes that’ll save you, sometimes it’ll cause you to miss trades. But my policy is, the way I look at it is, you know what? If I’m up, if I’m green, I’d rather miss a trade and still be green rather than risk taking and forcing a trade that ultimately not necessarily puts me in the red, but all of a sudden just knocks out a big chunk of my gains.
Clay: Confidence, I guess that was my long way of saying, I feel you on the confidence. It’s a slippery, slippery slope. Because you’ve got to have confidence, but you can’t be too confident. It’s like, okay, well where does that line exist? That’s very gray.
Ken: And the market just doesn’t give you what you want. It’s not going to happen.
Clay: That’s hilarious you mention it, because I have a video coming out tomorrow as of the recording of this video, and that’s one of my key points. Is there was a quote by Mark Twain that was something about, I don’t remember the quote. But it was basically saying that. It’s like, if you make something your priority … Oh yeah, that’s it. It’s something about, don’t make things your priority because the thing that you’re making your priority, if it looks at you as just an option, that’s basically setting up for bad circumstances.
Clay: That’s exactly what you just said is, the market don’t care about you. If you put too much priority, if you drink your own Kool-Aid like Ken said about something, and you’re like, “Oh, I’m in love with that, that’s my priority.” You’ve got to remember, the thing looking back at you is the market saying, “You’re not my priority. I don’t care what you think, I don’t care what your thesis is, and I’m going to do this instead.” That’s why you have to respect the fact that the market does not … well said, Ken. It don’t care. It don’t care about you at all.
Clay: I mean, it cares, in the sense of it’s trying to knock your teeth out.
Ken: Right.
Clay: But that’s really the only way that it cares about you.
Ken: Yeah. Yeah, ask my August P&L. I’m sitting here saying to myself, well, I’m looking at this. I know everyone else is. Can it be this easy? And that’s just not going to happen either, you know what I mean? Really, is this epic short going to be this easy, it’s going to come right up to this level and then just back off? Of course not.
Ken: But I’m glad I went through it, because you had a little bit of success, and then you just got knocked back. Now you’ve got to show back up with your thinking cap on and, okay, just get back in your lane and do what was working.
Clay: Exactly. Staying in your lane always easier said than done. I get it, you find your lane, you stay in it, but there are so many forces out there on both sides of that lane, and above you and below you, trying to just pull you out of that lane. It can be a crazy, crazy place. But it sounds like you’re self-aware. I didn’t hear you blame evil market makers, I didn’t hear you blame tweets, I didn’t hear you blame external forces, which is great. I heard you blaming the person in the mirror.
Ken: Yeah.
Clay: Blaming your own Kool-Aid that you decided to drink. Which is always a good step in the right direction, to be blaming the source of the problem. In that situation at least you can fix the problem, if you are the source of the problem.
Ken: Yeah, absolutely. Yeah, I had to … My wife was like, “What’s wrong with you?” I was like … It took me a couple days to wrestle with it, did I really just do that? You know what I mean? But the last couple weeks, hey, look at that. The sun’s back out again. You put on the same trade you’ve always done, and you’re back to making money. Look at there, it works.
Clay: Isn’t it weird how … You’re right, I love that comment about the sun’s back up. If you just step away, at least for me. For even just a day, and then the next morning? I mean, for you, do you notice that you just feel totally different? You’re like, hey, it’s a new day, let’s just …
Ken: Right. Yeah, absolutely.
Clay: As bad as you feel the previous day, and I mean, as annoyed and frustrated and angry and fill in the blank of whatever emotion, and you just want to, aah. Just realize, just steal from Ken. The sun will be up tomorrow morning, and you’re going to feel like a totally different person. And you’ll look back and say, “Yeah, that was a losing day. But you know what? At least it was only that amount, because wow, I feel great right now. I feel good, let’s just get back on the horse and keep on going.
Clay: Now all of a sudden, you don’t have nearly as big a whole as what you potentially … I really don’t know how to explain it, other than just realize the sun will be up tomorrow. If I can encourage you, if you ever feel terrible, if you ever just are so upset and you’re disgusted with yourself, and you’re just so frustrated that you took a loss. Just don’t do anything more, I promise you. Just check, and then wake up the next morning. You’re going to feel relieved. You’re going to feel like, okay. A fresh start, a brand new start, and things will … I guess you just can experience it, that’s really the only way to really describe things.
Clay: But well, I mean, I don’t want to cut you off if you had any more talking points that you wanted to get out there, but we’re coming right up on an hour. I feel like we went down some fantastic rabbit holes, talked about some good psychology, some good learning lessons. I mean, was there anything else that you wanted to add in before we wrap things up?
Ken: Yeah, I think that was it. If you’re new, and you know, we have a lot of really successful members. But just don’t take yourself … Don’t circumvent the learning process. Unfortunately in our business, learning means losing, and it does cost you money. But if you can hang in there, and then just learn from your mistakes, and keep to the discipline side of things, I think you’ll be just fine.
Clay: I fully agree, but I’ve said about a million times, easier said than done. But yes. If you locate setups and patterns and situations that certain outcomes are more likely to happen than not, if you can find those and stay consistent in those, then yeah. I mean, things will work themselves out, but that’s not always necessarily easy just because of the mental games that exist. But man, we had a lot of good talking points here, Ken. I know we had some technical difficulties before we got started, but thank you for hanging with us and getting that figured out.
Ken: No problem.
Clay: We’ll definitely have to have you back again, and maybe when we’re back again, coronavirus will be a little … Who knows, maybe the world will be back to normal. We’ll see what happens with it. But Ken, I appreciate you taking your time, and I appreciate you continuing to keep us updated on your journey.
Ken: Yeah, thank you, Clay. I appreciate all the hard work you do.
Clay: All right. Cheers, man. Now for those of you listeners out there, before you go, first off if you’re listening on iTunes or any of the other podcast players, please hit that subscribe button. That way you know when new content is released. On iTunes, if you can leave us a rating, that goes a long way and I’d really appreciate it, especially a written review, even better. Like I said, thank you in advance for little things like that. They go a long way and help out.
Clay: Then if you’re listening at claytrader.com, on the show notes page there’s a little live chat bot on that window. Feel free to click on that, and you can reach out to us. Comments, questions, suggestions, we’re all for it. Nothing better than somebody starting off a sentence saying, “Hey, I listen to the podcast and …” That’s fantastic, so please reach out to us any way you want.
Clay: But thank you again to Ken. Thank you to all of you as listeners. We will see you back next week.
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