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!)

Wednesday - August 4th - @ 7:00 pm est

Listen To The




Online Course

I love the people I talk to on this show. I truly do. People are not trying to portray themselves as something they’re not. In fact, the exact opposite happens. People are being brutally upfront about their journeys so that we can all benefit from it. In this episode, I talk with fellow member Kelly about this journey and how he has ended up in a place he doesn’t want to be, but needs to be. What is this place? TIMEOUT. Just as you would discipline a child with putting them in timeout, we as traders sometimes need to do the exact same thing. It does not make you a bad trader at all! I would argue it makes you a self-aware trader who is treating trading as a business and taking it all as serious as it should be. How did Kelly end up in timeout? What is he working on correcting? We go into that and a whole lot more!


Clay: Hey, it's Clay. Real quick before we get to the episode, I want to just bring to your attention one of the most common questions I get, and it's a wise question. It's something that makes sense to be asking, "Hey, Clay. What is a good broker for a beginner? I want to trade stocks. What would you recommend, ideally if it's got zero commissions?" And that would be Webull. They're a fantastic platform. What I like to apply is known as that platform HAT method, H-A-T.
Clay: First off, the H. Does the platform give you the ability to hunt for stocks, to find good stocks? Webull absolutely does. The A, the analysis. Does a platform give you the ability to analyze whatever stocks you have hunted and found? With Webull, it absolutely does. And then the T, take action. You can hunt out stocks. You can grow analysis on them. But if you can't actually take action and put everything into motion, well, then a platform is not going to do you very much good. But once again, Webull is very, very beneficial for allowing you to take action with whatever sort of stocks and then strategies you are looking to take advantage of.
Clay: Are they the be all, end all. They're not. There's lots of good platforms out there. But when it comes to the quality of charts they give, when it comes to the zero-dollar commissions, and the ease at which you can sign up, they have a great app for your phone, I would say at least give them a try. Go to and you can learn more all about them. But let's now get to the episode. This is The Stock Trading Reality Podcast, episode 294.
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. The toxic nature of social media has really surprised him as of late. Clay Trader.
Clay: This shouldn't be anything new to me, but I guess I never really realized how bad it was. I mean, I get it. I've been around social media. I've had people. Trust me, I know everything wrong about me, both physically, the way I talk, the way I look. I get it. I've read comments, and I get that I'm apparently not the most normal-looking human being. But just the overall toxicity of the way people go back and forth and the logic being used, and really the lack of critical thinking on both sides of the argument. And then the way people just default to such weak, weak arguments.
Clay: A lot of times, the weak, weak argument is just simply name-calling and making just straw man arguments. It is just a toxic, toxic place. Really lately, I don't know if it's gotten worse. It could just be my imagination. I'm self-aware enough to realize that sometimes maybe I'm just imagining things. Maybe I have some sort of confirmation bias going on in my mind, that I want to think things are worse, and therefore they seem to be worse. Maybe that's just what's going on. But I have just learned that I just can't even read it.
Clay: Twitter might be the worst. I mean, goodness. Twitter, you go down. You see one of those hashtags trending and you click on one, and then you start to go through the comments. Then all of a sudden, you look up and you're like, "Wait, where did that 15 minutes go? Where did that 10 minutes go?" It's crazy. But like I said, maybe you can deal with it, but maybe I'm just weak minded. I suppose that's a possibility. But for me, it is just so toxic. I don't know how really anything is productive on there.
Clay: I suppose that there are some productive conversations that occur. I don't think I've seen any. But I also think that just the general format of how Twitter's set up, and even Facebook comments, you go through those comment sections and you see something, and all you can shake your head with, or all you can do is really shake your head. Then you look at all the likes that the post gets, and it's, "How did that thing get that many likes or that many..." I don't know. So it's too toxic for me. I've been waving the white flag on it, but it really just has surprised me of late really how toxic it seems to be things have gotten.
Clay: That's my little... I don't think that was really a rant, just my recent observations on social media. But luckily, this episode, this podcast has nothing to do with social media from this point forward. We have an awesome, awesome interview, though. We are in a really good streak. We've had some fantastic guests. We've had what I think to be some very valuable episodes, and we're not slowing down. Today I bring on Kelly, who you're going to learn is a chemist, which just blows my mind. Still blows my mind, but a super nice guy. Very well-spoken, very transparent, very candid.
Clay: He's not sitting here acting like he's got it all figured out. He's not sitting here behaving like he's never made any mistake. No, he just lays it on the line. As a little spoiler, he's currently in timeout. He has put himself in timeout because... Well, I won't go that far. All I'll say is that's how candid it is. That's how open he is about his journey, is he is to the point now where he has hit the pause button on his trading. He's put himself in timeout.
Clay: What got him there? Why does he believe put them there? What's he doing now to work on things? We're going to get into all that and much more. So without further ado, let's hear about Kelly and his journey. Kelly, welcome to the show.
Kelly: Thanks, Clay. It's an honor to be here today.
Clay: Well, I appreciate your patience. We had a couple of technical difficulties. Kelly, we both know that Nate said it'd go right, okay? That's just what he said.
Kelly: Right, left. It's a matter of perspective.
Clay: It is. It is. It's totally subjective. You're absolutely right. Perspective, which is totally subjective. That's our story and we're going to stick to it. But, Kelly, you're already on my good side with your patience. You gave good feedback. I'm glad we could get the little microphone issue figured out. I am curious. How long have been a member? I feel like for a while now, right?
Kelly: I think I joined back in, I think it was the Inner Circle maybe, in April of 2019. Then I went full CTU, which is TFP, maybe like two weeks later. So it was pretty quick.
Clay: Okay. I don't know, I feel like you've been around for even longer than that. But I think maybe it's because you've had the same avatar from the start, right?
Kelly: I have, yeah. I really don't want to change that.
Clay: Yeah, please don't, because that's what I always remember. Kelly is like the mad scientist guy.
Kelly: That's right.
Clay: And it just feels like I've seen that avatar for apparently longer than what I have. Are you a mad scientist, by the way? Like what do you do?
Kelly: I have a degree in chemistry, and so, yeah, I'm a mad scientist.
Clay: You know what? I respect you that much more now. I took two chemistry classes in college as part of the engineering program and they were like... I don't know if intro is the right word, but they weren't anything complicated. It definitely wasn't like organic chemistry or anything like that.
Kelly: Well-
Clay: And those things just beat me down, beat me down. Chemistry is so hard. Why is chemistry so hard?
Kelly: I'll let you in on a little secret. It wasn't easy for me either. It was hard the entire way. The 100 level, which is your general chem, and then you go to organic. Then the real ringer was analytical, which was chemistry plus statistics. That was a real joy. So I struggled through all those classes, and the only class that finally made sense to me, it was one called instrumental analysis. That's where you get to use all the toys of chemistry to determine how much of what is in something. That was cool. I liked that a lot.
Clay: Are you able to disclose what you do for a living? Are you a chemist? Am I talking to the chemist right now?
Kelly: Well, I guess when you graduate, you're technically a chemist. But I work for an electric utility, and I analyze water a lot. There's ultra pure water for the steam turbine. And then there's the cooling tower water, which is dirty water, so to speak. That's what I do.
Clay: You're a chemist-
Kelly: I've been doing that for a while.
Clay: You're a chemist.
Kelly: I'm a practicing chemist.
Clay: I've never talked to a chemist in my life. I am a little intimidated right now. But I feel like you grow up, you're like, "What do you want to be when you grow up?" I feel like chemist is something that somebody could say. Police officer, an architect, a professional football player, a chemist. But I am now talking to a... See, this is the joys of the podcast. That's the first thing I'm going to tell my wife when she says, "How was the podcast? I'm going to say, "I talked to a chemist today." She's going to be just as impressed as I am. So this is good stuff.
Kelly: That's awesome. I will say that I have twin sons, and one of the sons is pursuing mechanical engineering. He shows me his math homework and I'm like, "Are you kidding me?" He asks for my help and I'm like, "I can't do that anymore." He's like, "Well, you've done this." I'm like, "Yeah, that was like 25 years ago."
Clay: Yeah, and you don't see any chemical compound equations that need to be balanced? I mean, that's just-
Kelly: That's exactly right.
Clay: Yeah. I mean, chemistry, that's protons and... No, that's physics, isn't it?
Kelly: That's chemistry too.
Clay: Okay. All right. Listener, if this is your first time listening, I promise we'll get to it. But I should also note that this is very unscripted. This is as real as it gets, and I'm just fascinated by... Clearly, I'm fascinated. I'm like a little kid in a candy store right now. But we'll get to it. One more final personal question and then I promise, listeners, we'll get to it. Where is your one son studying mechanical engineering at?
Kelly: New Mexico State University.
Clay: Is that where you live, is New Mexico?
Kelly: I do, yes.
Clay: Awesome. Awesome.
Kelly: Matter of fact, it's snowing here right now.
Clay: It snows in New Mexico? Really?
Kelly: Not very often, but it sure snow today. They say that today is the earliest that it's ever been recorded in history.
Clay: Of snowing.
Kelly: Of snowing in New Mexico. Yeah.
Clay: That's flat out global warming right there. I'll tell you that right now. Anyway. All right. Here we go. Where did all this start for you? Where did you hear about the markets? What sort of things played out that got you to the point where you were like, "You know what? This stuff is interesting. It's fascinating, and I want to get a little bit more hands on with it.
Kelly: My story starts probably back in 2017. I started to think about multiple streams of income or something that I could do alongside my current job, that could maybe help me retire a little bit early, or it's something that I could do in retirement. I don't remember how, but I remembered that I had this tiny retirement account from over 20 years ago, that I hadn't touched. And so, I thought there was money sitting in the account. And so, I logged into that website, and sure enough, that cash was sitting there.
Kelly: And so, I started to poke around on that website to see if there's anything that I could do to invest that money, like in a stock. I picked two stocks using a screener, and I bought them. Then it was like two weeks later, the first one that I bought, it sold for a $46 profit. I thought that was pretty interesting. That was back in, I think, October. It was late October when that happens. Then I didn't touch it. I completely forgot about it, got busy with life.
Kelly: It was now May of 2018, and I was sitting at the lunch table with my coworkers, and I got this email alert from Schwab that my stock had sold. And I'm like, "What just happened?" And so, I looked at my phone and I'm like, "Holy crap. I just doubled my money." I'm like, "That was simple." That's really where the juices got flowing, so to speak.
Clay: Awesome. Awesome. I don't know if I'm breaking any social protocols here, but what age... You mentioned that you got interested in multiple streams of income. What age was that? You can give me a range if you want to. I don't know where your comfort level stands in this regard.
Kelly: No, that's fine. I see, that was 2017, so I would have been 46.
Clay: Okay. That's awesome.
Kelly: I'm the big 49 right now.
Clay: I thought you were in your thirties when we first started talking. So-
Kelly: Thank you. I'll take that.
Clay: Props to you on the... I don't know. You sound like you have a lot of wisdom, but you don't sound like an old guy type of wisdom, if that makes sense. I think that's awesome because I see it too often in the world of the customer service, behind the scenes. Sometimes publicly, but, "Ah, it's too late for me. Ah, it's just too late to get started. Yeah, my time has passed." Here you are, Kelly, at age 46 being like, "Hey, let's get to it." I mean, did you have that hesitation at all?
Clay: Because I guess what I'm getting at is I can visualize somebody in the late thirties, forties saying, "You know, there's trading, there's stock market," even not even that stuff, "Just multiple streams of income, all that sort of stuff, it's too far gone." Did you have any of those hesitations or were you pretty much gung ho about it from the get go?
Kelly: I wasn't really hesitant about it. I was more curious about it because being... I'm not saying I'm older, but yeah, I'm kind of older. It's not that I don't want to retire or continue working, because I do. But if I don't have to keep working for another 10 or 15 years and I can retire early, well, that's the motivation. That's really where this was going, because I've got a really good job and I'm happy to have my job. But if I can retire in five years or maybe start trading like Austin [inaudible 00:13:39], well, hey, that'd be great.
Clay: Yeah. I mean, who doesn't want to trade like that? I'm in full agreement there, which, for you listeners that'll be a couple episodes ago, Austin, the guy that made $130,000 in profit. So if you want that reference point, if you haven't listened to that episode, you can go back and listen to that. I would assume you have listened to that, because as-
Kelly: That came out yesterday.
Clay: Yeah. I was going to say, for the listeners' sake, as of the recording of this, of the episode that he's referring to, it literally just came out the day previously. You've listened to that one then?
Kelly: I have. Yeah, it was great.
Clay: Yeah, that was a good one for sure.
Kelly: Except his loss. I'd have a heart attack.
Clay: Would you have told your... Or do you have a wife?
Kelly: I do have a wife, yes. We actually have our 25th anniversary is next year.
Clay: Hey, congratulations.
Kelly: Yeah. But yeah, I would have told her.
Clay: Okay. Yeah. Somebody in the chatroom was like, "I would've never told my wife." I'm like, "Oh man, I don't think that's the pathway to longevity if you want to stay in this game because you need a support system for sure. And keeping your support system in the dark, probably not the best way to keep the support system in the first place." But-
Kelly: That'd be unwise.
Clay: Yeah, that would be quite unwise, and we're in agreement there. But anyways, so all right. Well, that's great that you didn't play the, "This is not something for younger people, whatever, to get over the hurdle." Now what do you... Oh, you said Charles Schwab. Do you remember what these stocks actually were?
Kelly: I do.
Clay: Those first two?
Kelly: Yeah, I do. The first one was Caterpillar.
Clay: Oh nice.
Kelly: Yep. The second one was Intelsat, which was I, the ticker I.
Clay: Oh yeah. That thing's gotten destroyed since then.
Kelly: Well, I don't know-
Clay: Recently, I remember, I don't even know. I think they were like... I'm just going to pull up a chart right now, because I feel like... Have you been tracking it lately over the past year?
Kelly: No, not at all.
Clay: It says invalid symbol. Yeah. That makes sense. I think they might have went caput.
Kelly: Well, good. I played that one well.
Clay: Is that the one that doubled your money?
Kelly: It did. Yeah. Yeah.
Clay: Okay. Okay. Well, and that's where you left off at, is at lunch with your friends. You got an email. "What? I just doubled my money. This is fantastic." So pick back up your journey from that point.
Kelly: Okay. That was like May of 2018. That was a very busy year for my family because both of my sons graduated high school and then they were starting college in the fall. So trading stocks and whatnot, that just got put on the back burner. But then we had some family visit in the fall, and my wife's uncle, we'll call him Woody, was talking about some money that he had made on pot stocks. And I was like, "Huh, you know what? I forgot about the stock market. I need to check back into that."
Kelly: In November, I bought $2,000 worth of ACB, $7.52 a share. The whole plan at that point was to double my money again, just like-
Clay: Let me ask you this. Why ACB over TLRY or CGC or some of the other pot stocks that were... What led you to towards that one?
Kelly: You know what-
Clay: Because of what he told you, or did you do your own independent research?
Kelly: I did my own research. I didn't know anything about anything. And that one just kept popping up in my Google searches for hot pot stocks and whatnot. And so, that's the one that I chose.
Clay: Okay. Well, at the time, you probably thought you were doing good solid research, so, right?
Kelly: It's like the Dunning-Kruger effect. You don't know what you don't know. I didn't know what a candlestick was at this point. I mean, I'm looking at line charts, if even that.
Clay: But I'm saying, at that point in time, you probably felt like you were actually doing legitimate research.
Kelly: Oh, probably so. Yeah.
Clay: I mean, and that's the tricky part, is it's easy to sit here in hindsight and say, "Oh, and I had no idea what I was doing," because the logic that'll comeback would be, "Well, then why were you doing it?" But at the time you don't know that you don't know what you're doing. You think you're actually doing legitimate research until you actually learn, oh man, yeah, that definitely was not legitimate research. So you were just running Google searches. Were you on YouTube at all? And then...
Kelly: YouTube did come up pretty soon, but I don't think it was right now.
Clay: Okay. So that didn't lead you to ACB or anything like that. All right. Well-
Kelly: No.
Clay: ... you bought ACB. You mentioned $7 something. So-
Kelly: Yeah. Yeah, 7.50.
Clay: ... pick it up from there, or pick up from wherever you think makes most sense.
Kelly: Okay. I would watch the price performance. I'm not sure if it was daily, but maybe like once a week. I saw it kept climbing, and it was getting higher and higher. It was well over $10 a share. But I want to double that money, so I'm going to hold until it hits 14 or $15 a share. It actually got really close to I'm not sure if it was 12 or 14 or where it was, and I'm like, "Why isn't my shares... Why aren't they selling?" It turned out that my order expired because it was over 90 days. I'm like, "Oh, well, that kind of sucked."
Kelly: And so, then I was like, "Well, I need to watch it. And when it goes back up to a good value, I'll sell it again." Well, it kept dropping, and dropping, and dropping, and dropping. At that point, I think I had started the CTU program with you. I'm like, "You know what? This thing is just causing me heartache. I just need to get out." And so, I finally sold it I think in August of 19 for $4.98. I think it was a $381 loss.
Clay: I feel like that's still better than where it is right now, isn't it? I guess it did... Oh no, reverse split it though. That's right.
Kelly: Yeah. Yeah.
Clay: I mean, it's almost basically at the level... Well, you said you sold it at what price? $4?
Kelly: 4.98.
Clay: Okay. I mean, it's even post reverse split. It's even lower than what you had sold it at previously. What I'm getting at here, listeners, is had he continued to hold and hold and hold, it would have just gotten more and more and more painful. That was, in hindsight, a good decision on your... I mean, it would have been a better decision to sell, obviously, when it was greener. But, I mean, if you were still holding right now, that would be a very brutal situation for you.
Clay: Okay. I mean, so connect the dots between there. You had ACB and then somewhere along the line, you said you ended up selling it after you had gotten enrolled in the program. I mean-
Kelly: Yep.
Clay: Unless you were planning on coming back to that, but I'm curious where it-
Kelly: No.
Clay: Okay. Where-
Kelly: Then what happened was, so again, when I sold that, I had already been in the program probably for three months. But what got me to the program was Power Plants, which is where I work, Power Plants, we go through what are called [inaudible 00:20:24], usually in the spring and the fall. That's where we work like 12 hours a day, no break, no days off, and take the unit apart, and then put it back together. And we start back up and run all summer long.
Kelly: And so, I was working those crazy hours and I was like, "You know, I'm getting tired of working these crazy hours." I'm like, "Maybe I should look at actually doing the stock market for real." And so, that's when I started to search online. Of course, I went to YouTube because that's what people do. I'm sure I was searching for like how to get in the stock market, how to trade stocks. I saw quite a few of the flashy salesman out there and they were interesting.
Kelly: Then there was this guy wearing a t-shirt, and I was like, "Man, you know, I like how this guy talks. He's straightforward." There just was something different with you. And so, after watching a lot of your videos, I signed up for the Thursday night webinar, the free one. I enjoyed what I heard so much so that I did the Inner Circle. The Inner Circle was a real eye-opener to where my knowledge level was, because I was searching on iHub for terms like, what's a moving average? What's RSI? What's MACD.
Kelly: Yeah, that information is out there, but if you don't put it together in a logical sequence, it's almost overwhelming. And so, on the Inner Circle, somebody had posted their personal link for the Tuesday webinar, the live webinar, And I was able to gain... I shouldn't tell you this, but I was able to gain access to that and I was completely blown away with the content. And so, a week passed. It was Tuesday like at, I don't know, noon-ish, and I didn't have that access code.
Kelly: I messaged you directly in the Inner Circle. I'm like, "Hey, where's that code?" And you're like, "Are you CTU?" And I'm like, "No." You were like, "Well, that's only available for CTU members." I told you that soon as I got home, that was going to sign up for it. And so I did. I actually have a screenshot. I have it somewhere, but it's like, "You know, that's a breath of fresh air, because you said that you're going to do it. That's a real doer," or something along those lines.
Clay: Oh yeah. No. Yep. There's a lot of people that talk, talk, talk, say, say, say the right things, but then when it's actually come to do what they say they were going to do, woo hoo, welcome the floodgates of excuses open up like the Hoover Dam. And it's just like, "Oh, here we go." But no, yeah. You were like, "Okay, I'm going to do this." And then you did this right when you said you would. I mean, that is always a breath of fresh air because... Maybe that's really sad. I don't know. But it just seems...
Clay: Maybe this is only in the training world, I don't know, but there's just too much talk out there and not enough action behind things. So it is always a good relief to know, yay, some people say certain things, but they actually do what they say they're going to do. Do you remember, though, who posted the link in the channel?
Kelly: You know what? I have no idea. I have no idea.
Clay: That little scumbag, you know?
Kelly: Yeah, I know.
Clay: I'm just kidding. I'm sure it was an innocent... Well, I know it was definitely innocent because they probably had no idea. In fact, we had somebody do that not that long ago and went and actually posted something and I was just like-
Kelly: You know what? I was on when he did that. Yeah. That was funny. That was [crosstalk 00:23:46].
Clay: Yeah. I was like, "Man, you know what? I get it." I come across as all grumpy, but on the back end, the logistics of things. But anyways, I'm glad that you followed through with that. In a unique type of way, you got a sneak peek into the content there. So that's-
Kelly: I did. Yeah.
Clay: That's funny in sick and twisted kind of way. But all right. Well, you said you're going to sign up, you signed up. At that point, what were you actually thinking that you wanted to do? I mean, at that point, was it still literally, "I'm only happy if I double my money," or did you think that you wanted to become... In your mind, and I realize at that point, in hindsight, maybe were like, "I had no idea." But at that point, were you thinking like, "Hey, I want to be a day trader. Hey, I want to be a swing trader"? What was your actual plan of action?
Kelly: I don't think I even knew the difference between swing trading and day trading. I mean, you're literally talking to somebody who had a complete blank canvas. I knew nothing about anything.
Clay: But, I mean, you had to have signed up under the premise of you wanting to... Or was literally your premise, just, "Hey, I want to make money"? Is that basically as simple as it got?
Kelly: I think the premise was that I wanted time freedom, and I thought the money would come with that, of course.
Clay: Okay. Okay.
Kelly: I mean, there's so many things that are great about the stock market. This was one of the things that I had mulled over, is that if I was to start a traditional business, what businesses out there would be able to have or provide that level of comfort, if you will. Real estate is a great option. But for me, personally, I'm not a huge person people. It's not that I don't like people, but if I don't have to deal with people, I prefer not to.
Clay: Hey, welcome to the club. I can't stand people. Anyways, keep on going.
Kelly: Okay. I'm like, "So real estate, you know, that's not for me." Even though my wife and I do actually have a real estate, a rental property now, but-
Clay: Oh, nice.
Kelly: ... that's [crosstalk 00:25:44] story.
Clay: Nice.
Kelly: Yeah. And so, I started thinking. I'm like, "What can I actually do that could generate that lifestyle?" And so it was the stock market. I'm like, "It just totally makes sense. I can do it from home. It doesn't matter what I'm wearing. Doesn't matter where I'm at, as long as there's an active internet connection. And so, it just had a lot of things that appeal to me.
Clay: So it was more of a broad sense, "I want to make extra money. I like the stock market. I know that in order to learn, I need to have structured education, so I'm going to just sign up." But it wasn't like you were going in, "Hey, I want to be a day trader." You just had a very broad sense. Okay. That makes sense, how you would still end up. But still not really quite know what exactly your strategy was. Your strategy at that point was just very broad. [crosstalk 00:26:29]-
Kelly: The only strategy that I knew was to buy low and sell high.
Clay: Yeah. That's an interesting talking point. But that's really just... I mean, the human mind is so crazy. I mean, in hindsight, you now know that you were being irrational, like who is only going to be happy unless they make 100% return on their money? That's literally crazy. Like, "Nope, my game plan here is I want to make 100% return. I want to double my money." That's so crazy. But from your perspective, all you knew was that situation where you doubled your money. So, I mean, it's such a false expectation.
Clay: Don't you think that's so crazy how when you didn't have any sort of experience, your mind literally somehow fooled itself thinking, "Hey, double my money." That should be a strategy. Isn't that bizarre?
Kelly: It is bizarre. And the mind games really haven't even started yet, but they're going to kick up here pretty soon as our talk continues.
Clay: Hey, I know quite a bit about mind games, but yeah. I guess, moral of the story there is, listeners, if you somehow made a huge, massive winner on any sort of trade, not necessarily doubled your money, but if you were like, "Whoa, that was fantastic." Just realize that's not the baseline. That's not what you should be thinking should normally happen on every trade. No, sure. Does it happen every now and then? Absolutely. But it's a very counterproductive, almost...
Clay: I would say, a worst case scenario where you have something super good happening to you on one of your first couple of trades and then you think, and that's the baseline by which you're working off of, that's a very dangerous situation. So yeah, if you take one nugget of wisdom, really from this entire discussion, just realize that please don't base your expectations on some sort of hugely successful trade that you had, thinking that that's how it's got to be every time. If only it were that easy, but that's just not really the reality of the matter.
Clay: All right. Well, I'll let you pick back up wherever you want, Kelly, but you're NACB. You got the program. So yeah. Somewhere right about there, wherever you think it makes the most sense to pick back up your journey.
Kelly: Okay. Once I signed up for a CTU/TFP, I just started watching the material, taking notes, watching the videos, and really attending all the webinars, being pretty quiet on those Tuesday night webinars, because sometimes you get a little animated, shall we say?
Clay: That's not true. I'm totally calm.
Kelly: No, you're passionate. You're passionate.
Clay: I'm totally calm.
Kelly: Yeah. So I would do those, watch the IC chatroom during the day. Speaking of the chat room, let's just take a minute here because that thing is fantastic. There are so many great traders in there, and we've already mentioned Austin. But Dan posts a lot in there. Lance's still in there, already traders in there. Tady P is in there.
Clay: Tady, Tady. How do you-
Kelly: Tady P. Make sure you take... That's how I pronounce it, is Tady P.
Clay: I don't think that's right though.
Kelly: Well, that's how I'm going to say it.
Clay: Okay.
Kelly: Sorry, Tady or-
Clay: I'm sure she'll address both of us in the chatroom once again. But yeah, I hear you there. Her name I don't think will ever be known.
Kelly: Yeah. Kendall is another great one. And then, one more that I want to point out is probably the unsung hero, and that's a Joel, because that guy does a fantastic job for keeping those rooms clean, if you know what I mean.
Clay: He does. And it's all out of the kindness of his heart. I don't know if it's because he's an architect, so those guys are super structured, and, "Hey, this is how it needs to be by the book." But yeah, that the guy just does it just, I mean, like I said, literally out of the kindness of his heart. So yeah, I appreciate that shout out you gave him because it's definitely well-deserved. But depends. I mean, there's a lot of other moderators that it's a community effort.
Clay: But I'm glad you're finding value in it. Even Hooch isn't around as much, but I would assume that he's one of the guys that you would say, "Hey, big help too whenever he's around." Or do you have something against Canadians?
Kelly: No, Canadians are just fine.
Clay: "I don't like Canadians." I mean, you could have fessed up. I mean, all they talk about is maple syrup. But anyways, I'm just kidding, the Canadians. You talk about maple syrup and bacon, okay? There we go. Anyways. All right. Well, I feel like you're probably just on observation mode, the majority of the time. I mean, you chime in every now and then, but I really don't see your little mad scientist icon show up that much. Is that a fair summary of your activity level, more so just observing?
Kelly: Yes, that's very true. Throughout the week, I really don't post that much in there. However, Tuesday nights, while we're live, oh, that place is... It's a riot. There's a lot of memes that somebody with a little mad scientist icon-
Clay: You're a mean guy, huh?
Kelly: I am. I love doing the memes.
Clay: Memes, I don't know whoever invented those things, but they really do go a long way. But okay. We keep going down sideways rabbit holes there, but I think members of the community will appreciate all these little tidbits that you're throwing out there. But, well, you're part of the chatroom. I guess, just pick back up with wherever you think suits best.
Kelly: Okay. I studied the materials. That took me through most of 2019. And then I started 2020. I figured out that I could actually trade with my Schwab account from work, which is tricky because, with our new internet rules and protocols, you can't install anything on your machine anymore. But I found a loop around that allows me to actually load my trading program as if it was running on my machine, even though it's not technically installed. So I started trading.
Kelly: One of the things about my account, it's an IRA account, I can't short, in the traditional sense, but I can do options. But I can only do on-calls and long puts. So it's very tricky on what I can and cannot do, but I really like shorting. I don't know what it is. I'm short biased. So started just trading options, little by little. That's really where I've been, well, for all of 2020.
Clay: Okay. For a lot of people, they get into options because, A, I have a smaller account. And the way options work, if you're new, but I'm not going on the options rabbit hole too in-depth, but just realize that from a broad sense, options, if you do have small amounts, can let you get involved with bigger names. You can be trading Tesla, you can be trading Apple and Amazon and any "expensive stock" for relatively small amounts of money compared to how much it would cost to buy even one share or let alone a hundred shares of whatever those sticker symbols are. But for you, it sounds like it was just strictly because you wanted to be able to capitalize when prices go down?
Kelly: That's exactly right. Yeah.
Clay: Yeah. Interesting.
Kelly: I like the breakdowns.
Clay: Yeah. I'm trying to rack my brain, but I feel... I mean, I suppose maybe somebody else... I mean, we've done well over 300 episodes, so maybe there's somebody else that got into it for that reason. Well, I commend you. That's good stuff right there. A nice little example of instead of sitting there complaining about the problem, complaining about, "Woe is me, the system's rigged against me. I'm not allowed to short stock in my IRA." No, you were like, "All right. Yeah, that's annoying. Yeah, that's a problem. What's the solution to this?" That's what brought you to options.
Clay: And like you said, you've been doing that ever since then. I mean, I guess walk us through the options journey, because I can see a lot of listeners out here saying, "Hey, I have a small account," or who knows? Maybe somebody is thinking that they have their hands cuffed behind their back because they are trying to trade out of some sort of retirement account, so thinking, "Hey, I can't do anything when prices go down." What was your options trading journey like? I would assume it started off going through the classes, but I guess I don't know that for sure.
Kelly: Of course. The options simplified class was fantastic. Again, that's my very first introduction to options. I didn't know what an option was when I first started. Remember, you're talking to someone with a blank slate. I didn't know you could short. I didn't know what that even meant. It's like, "What do you mean you can make money when the price goes down?" And then we talked about options, and I'm like, "Well, that is very interesting."
Kelly: And so, I went through the options, the simplified options course, and that made really good sense. Then I started going through the advanced option courses. Gosh, there's so much content on there that I probably would have made it like 80% of the way through and I was like, "You know what? I feel like I'm just blowing through this material just to get through it." And so I stopped. I'm like, "You know what? I'm not going to worry about advanced options right now. I'll just focus on simple calls and puts, and mostly puts. And that's where we're at right now.
Clay: Okay. Now, are you trading with real money right now?
Kelly: Right now I'm in timeout. But yes, all of 2020 has been with real money.
Clay: Okay.
Kelly: Let me back up. I did do paper trading with the thinkorswim platform, but I got frustrated because I was getting really crazy fills. And I'm like, "You know what? This isn't helping me any at all because I don't think it's realistic. And so, that's when I went to live money.
Clay: Okay. I know what you mean by crazy fills. But for listeners out there that maybe they're thinking they're a great trader, maybe they're thinking that they've got it all figured out, what do you mean by... You led to a little bit, but give listeners an example of a crazy fill that the thinkorswim platform was giving you.
Kelly: If I wanted to get filled at, say, I don't know, $4.81, it would fill me at like... Not six, it'll be like $5, 5.27. I mean, just something that's not even close to where my entry target was. Then I would get stopped out, and I'm like, "You know, that doesn't make sense as to what's going on." I mean, that wasn't something that was obvious right away. It took a while for me to figure out, "What going on here?" I think that's part of being a good trader, is being able to look at your, not losses, but your account, the trade, and to discern what's going on there.
Clay: Yeah, absolutely. I'm glad you brought that up. Just be very aware. Now, neither of us are saying that paper trading is worthless or simulated trading is worthless, or demo trading. Whatever you want to call it. They're all one and the same thing, practice trading. Nobody's saying that it's worthless, but you just need to be very careful that your platform... It's never going to be perfect. I'm not saying there's any perfect platform out there, but you've just got to be aware that sometimes that simulator trading can produce results that are deceiving.
Clay: How deceiving? Welcome to the world of when you're new and you don't know what you don't know. It's hard to know that for sure. But at least if you have a broad... Let's just say it this way. Let's say that you are doing awesome. You are killing it. You are growing a simulator trading account. What we're saying is, you know what? We're not doubting that you may have some skills, but those are not as good as what you think they are based on you just, "Oh, man, I'm doing so good." Yeah, maybe you're doing good. But in other words, don't go out there and think that you're ready to load up your trading account with everything you own, and then just start trading the way you were on your simulator account
Clay: Still ease in small because with the platforms, it's just not going to be perfect. And in some situations it can really lead you astray. Would you agree that's halfway decent advice there?
Kelly: I would totally agree with that. Yes, sir.
Clay: Yeah. So just, you've got to be careful with that, but okay. Well, you did thinkorswim. You were not happy with the crazy fills. Let me ask this. How long did you paper trade or demo trade, whatever you call it, with thinkorswim before you arrived at that conclusion that, yeah, this is too crazy.
Kelly: I think I was paper trading while I was doing the coursework, which, looking back, I don't know if that was good thing or not. The part that was good was that it was the introduction to the platform and how you set up advanced orders. And that was very helpful. How you set up your chart. That's also good information, but I just don't know if I should have waited until I got through more of the coursework, you know what I mean?
Clay: I do know what you mean. That's a very valid... It's a very wise question. I feel like it's just such a... There's no right or wrong answers. Everybody is different. Everybody's experience is always a little different. I wish there was like a broad scope of, "Hey, do this, or don't do that." But everybody does learn in slightly different ways, which does make a difference. I can totally see where you're coming from there. But okay. Were you going to say something or did I just cut you off?
Kelly: Nope. Nope.
Clay: Okay. All right. You started then trading with real money. So, I mean, I would hope, I guess, I'm guessing, I'm hoping that when you did start with the real money options, were you doing some very small, conservative amounts.
Kelly: Of course not.
Clay: Fantastic. Okay, here we go.
Kelly: Go big or go home, right?
Clay: Yeah. Yeah. You know what? If you're not living under a bridge after a trade, you're not doing it right. So-
Kelly: Yeah. No. I will say, that all this money that's in this IRA, it doesn't matter if it all gets lost. It's not going to make me live under a bridge in a van down by the river. It's good practice money, but that being said, I don't want to lose it all. That's really why, as of today, the recording, I put myself on a timeout.
Clay: Okay. A timeout. Yeah. Walk us through the journey, the psychology, all the nuts and bolts of how you ended up in timeout.
Kelly: I've been graphing my performance on a monthly basis, and January was down. I don't have the exact dollar amounts, just approximation.
Clay: Just real quick, what are you using a graph with? Like a spreadsheet or what?
Kelly: Yeah, Excel.
Clay: Okay.
Kelly: Excel. January was a very tiny loss, maybe $10, which that's nothing. And then February was like plus $20, and I'm like, "Hey, that's great." Then March was a loss for maybe, I don't know, a hundred. Then April was a loss for 300. Then it was like May was about 225 loss. But then June things started to work better. That was a gain of of 500. And I'm like, "Great." Then I got cocky, and July showed the result of negative $750. I'm like, "Man, I was doing so good. What happened?" We'll talk about that in just a minute.
Kelly: Then August was a tiny loss of maybe like $10, and then September was another $400 loss. I'm like, "You know what? I have got to stop. I've got to reassess what I'm doing." I figured out what I'm doing wrong. And so that's where we're at.
Clay: Well, I mean, what are you doing wrong?
Kelly: Pretty much everything that you taught in your classes, I wasn't doing. The first thing is set up a trade plan. Options, they move differently than the underlying assets, and everyone knows that. They're not a linear relationship. First of all, let me also say this, that I was trading at work, which, you know what? I really can't day trade options at work. It doesn't work for me right now. But I had no trade plan. I would see the pattern that I liked, and then I would pick a premium that I also liked. And as soon as I thought that it was going to collapse, which was, in this case, I'd be doing a put, I'd get in.
Kelly: I'd have no set stop loss, even like a line to say, "If the price jumps up this high, I need to get out no matter where it's at," I didn't have that. That was such an absolute disaster for how to trade. I would highly recommend don't do that if you're looking to trade. You have to have a plan.
Clay: I guess what I'm thinking is, how could you do this if it was so bad? But I can actually see how your brain, and the voice, it would trick you in to think that you're doing something well, because you had identified a setup, a pattern. That can seem like it's a plan, that, well, based on this pattern that I'm seeing, I think that price is going to go down. So at least you get the sense of you're analyzing something and you have a plan, and this plan is based off of the pattern.
Clay: Then all of a sudden, the price behaves in a way, and you see it behave, and you think that your thought process is going to go on a certain direction, but you take action, which, I mean, there's a plan. It's not a complete plan, what you're getting at because... I'm glad you're saying all this because I see this all the time. Sometimes it's [inaudible 00:43:34] fall into where you think you're planning, and you think you have a strategy, and you think you're following a set of rules, but you're just doing it at a very broad sense. You're not really actually doing every little part of it, which seems to be exactly what you just described.
Kelly: Yeah, that's exactly right. I would see the price would actually drop. And so, my premium value was going up, which was good. I should have taken profit. That's the other thing, is I was doing one contract. As soon as I saw a profit, I should have taken it. But I was like, "Nope, I want more." Then the price would roll around, and then I'd start to see that negative count balance. I'm like, "Oh man." And I would get out. There's another losing trade, and then another losing trade, and then I'd get one that would win. And I'm like, "Oh great. I'm good."
Kelly: Then it's like, "Hey, you know what? Go a little bit higher on your premium. That way you can get more faster." It just was like this, I don't know, sickness, if you will. You know what? I think you call it being a degenerate gambler, right?
Clay: Well, I wouldn't quite go that far because you were still using charts. You were still using that pattern identification. So I don't know about degenerate gambler. But your plans weren't working. But now, you mentioned stop loss, you weren't really identifying that. But it sounds like you also weren't identifying any areas where it would make sense to take profit. You were just-
Kelly: No, that's exactly right.
Clay: Okay. So you were-
Kelly: That's exactly right.
Clay: So you were just basically saying, "I'm watching my P and L, it's green, but it's not as green as I want it to be." Who cares what the chart's really saying. I'm just looking at the P and L and it's just not as green as what I wanted it to be." So you would just hold for that reason, even if the chart was maybe even giving you some sort of signal that, "Hey, Kelly, this is probably a good time now to remove yourself from the trade." That's [inaudible 00:45:21] more of a P and L trader than actually a chart trader after you enter into the position.
Kelly: Yep. That's exactly right. Then I got trapped into the old hold and hope and that did not work out too well either.
Clay: You mentioned it, but what would spark the hold and hope?
Kelly: I guess, the idea or the thought that, "Hey, you know what? This is going to totally turn it around. It's going to gap down tomorrow. It'll be great." And that doesn't work out.
Clay: At the core, though, you had mentioned earlier that you would see the P and L go negative, and it sounded like that's what triggered you mentally. It'd be like, "Well, it's negative. I wasn't green. There was no way I'm going to take a loss on this thing." Is that a fair probably-
Kelly: Yeah. I think that's very accurate.
Clay: Yeah. It's accurate because I think any honest trader has been there where you're looking at green, looking at green... Seriously, as a listener, even if you've never traded, ask yourself, how would this make you feel looking at a situation, and you know that you're making money? In whatever situation. It doesn't even necessarily have to be stocks, but you're making money, you're making money, making money. All of a sudden, you decide, you know what? I want more money.
Clay: But all of a sudden, now you're looking at the situation, you're saying, "Oh, crap, I'm losing money." I mean, how would you feel? I would feel like, "Well, geez, I was just making money. That was a good feeling. Let me just wait a little while until I can get back to that feeling of making money."
Kelly: Yeah. It's going to turn around.
Clay: Yeah. It's going to turn around. I really like that feeling of making money. Yeah. Next time I won't be so greedy, I'll take advantage of it. But I really don't like that negative P and L. It'll go back up. Then just like that [inaudible 00:46:54] the hold and hope. To be fair, sometimes it'll go back up and make money. But as far as a habit-building perspective, that's just not where you want to be at all. It sounds like you had a lot of that where you would be rewarded every now and then with making money. I would assume that would have went bad. It went really bad and things just never went back up and it kept dropping and dropping.
Kelly: It did. There's a saying, "Death by a thousand cuts," and that's exactly what's been going on.
Clay: Well, death by a thousand cuts but in the sense of, what makes you take the loss? You almost make it sound like you were not using stop losses at all. What would cause you to sell in the first place? And finally, what is the way forward for a losing trade, that is?
Kelly: What I have figured out through this adventure is that if the option premium gets to half of what the entry value was, it's probably going the wrong way. You know what I mean? That's the tricky part of options, at least for me, is that if you don't have a defined limit or a line on your chart as to, hey, this is where you need to get out, because this is where some resistance is, you know what I mean?
Kelly: For me, it was like, "You know what? If it gets to half of the premium value, just get out." That was wrong a lot of times, because it actually would roll back over and then go in my favor, but I'm like, "Oh, I'm out now." And so, it was just a bad way to trade.
Clay: Yeah. I do understand. I can see where you're coming from. It doesn't make it right. But that is also why I would disagree with the degenerate gambler situation. It's not quite that bad. You had all [inaudible 00:48:44] old paint brushing. You were just taking some big strokes, but you weren't necessarily using that finer tune little paint. You know who Bob Ross is, right?
Kelly: Of course.
Clay: Yeah.
Kelly: Happy little tree.
Clay: Yeah. The happy little tree. You had very deceiving trees, but you were using too broad a brush all the time. Would you agree with that assessment? Am I being fair on that?
Kelly: No, that's very fair. I was just being a very undisciplined and acting like an uneducated trader. But it's discipline really.
Clay: It is discipline, but it's also always deceiving. This will sound contradictory, but getting educated often makes things difficult because you can get educated. And because, from Kelly's point of view, I'm sure he can say, "I've been going through the classes. I know how to identify a pattern. I learned about these things called trade plans." And then, somehow the mind, again, which is a tricky place, can take the fact that, yeah, you have invested in... Especially if you've invested in education, right?
Clay: You've made an investment to yourself. You've been going to classes. You've been attending webinars. I know how to read a chart pattern. I know what a candlestick is. I knew what supports resistance levels are. So I'm going to [inaudible 00:49:58]. Sure that doesn't put you at degenerate gambler status, but [inaudible 00:50:02], it can still put you at gambler status because if you're not fine tuning it in all these other areas, which Kelly has very candidly, which I appreciate, talked about, I mean, yeah, you've got to know where some stop losses are.
Clay: I say kind of, because, again, like Kelly said, with options, it's not linear. It's not going to be perfectly matching up. So you've got to have a broad idea of stop, because you have to have a broad idea of where it would make sense to start to take those profits. Because if you don't, then you're basically going to get what Kelly described. And so, through all the [inaudible 00:50:33], where were you actually at? I mean, I know you had some [inaudible 00:50:36] me, so net, what are you net right now?
Kelly: You're talking about my overall account balance?
Clay: Yeah. Yeah.
Kelly: For the year?
Clay: Or just, how much have you made since at the beginning of the year, or lost?
Kelly: Made is zero, and lost is I'm 1,500 down.
Clay: Okay. Think about that. It's not like the way that Kelly is behaving has cost him massive amounts of money. Now, don't get me wrong. Every dollar counts, $1,500, it's not like it's small amount. But it's not $15,000. It's not $150,000.
Kelly: 120.
Clay: Or $120,000. It's $1,500. But the point here, which, hopefully, you're getting to learn a lesson from is that what trading looks like is a chop fest up and down? Even if Kelly was like, "Yeah, you know, I'm up like 1,500 bucks," but I mean... No offense, in that situation, being up $1,500 when you're 10 months into a year, I mean, that would be good, kind of, but it would just be choppier results. That's what kind of following traded plans, kind of identifying things, will get you.
Clay: As a listener, if you can relate to this and like, "Yeah, I'm being so choppy, I'm up, and then I'm down, and then I'm up," and pretty much inconsistent is the word I'm looking for here. It's probably because you have partial plans. And because you have partial trade plans, it's not like you're sitting out there blowing and money's just being lit on fire every other day. So it's not that extreme. But it's also not really making any progress either, if at all. So that's just where you've got a really button down.
Clay: That's what it sounds like, Kelly, you are currently working on, is really buttoning down all those different areas to tighten up the trade plans. Is that accurate?
Kelly: That's very accurate. I have a list of things that I'm working on.
Clay: Oh, [inaudible 00:52:29].
Kelly: Yeah. Then, basically, the title of my little list is What Do I Need To Do To Reverse My Trends? The first one is smaller position size. That's key. Number one. Number two is actually set up-
Clay: Let me tell you this though.
Kelly: Okay.
Clay: Okay. Smaller position size. That's just a word, but, I mean, you're a chemist. You understand quantity. Let's quantify smaller. What is smaller? Quantify that for me.
Kelly: I will. Instead of getting a premium at $550 or $5.50, let's go ahead and just take two contracts at 40 cents.
Clay: Okay. In other words, what you're capping is... Let me put it this way. What number does small become big? Like if you go over $500 in the position? What is the number? There you go, quantify it. What point does small become big? I get it, you want to have small position size, which is true. I fully agree. But small is just a word. It's not a number. So just something to think about. You want to make sure that you actually put some quantity behind those words. But that's good. That's number one, small position size. What else is on your list?
Kelly: Definitely set up your entry, exit, and stop-loss targets. The big thing is to honor the stop loss, because I'm so guilty of not honoring the stop loss.
Clay: I guess we talked about this, but from a human psyche perspective, why do you think that you're not honoring it? We know that it's not, "Well, I can't afford to lose this money. I can't afford to lose this money." That's not why you're not honoring it. So it's not a matter of the money per se, and you actually needing the money. I mean, why do you think that you would struggle to honor the stop losses?
Kelly: Greed, thinking that somehow I'm going to will the chart to go in my favor when I know very good will-
Clay: Is it greed or ego, of not wanting to admit that you're wrong?
Kelly: It's probably a little bit of both, actually.
Clay: Okay. I'm just talking. I don't know. For me, I think that's what would, for me... Maybe not necessarily now, but just being a super competitive person. That's why trading is hard. Even if you can look at the situation and be like, "Yeah, if I take a loss, I'm not going to be living under a bridge. I can totally [inaudible 00:54:46]," but there is that desire to be right. And as humans we do want to be right, and it's very hard to admit that we are wrong and-
Kelly: Yeah. Nobody wants to be wrong.
Clay: Yeah. Then, of course, the markets rubs a little bit more salt on the wound because being wrong means you've actually lost money too. So it's kind of a double whammy of, hey, in this situation being wrong means you've lost some money. But again, even if you remove the money part, I mean, just from a very human perspective, nobody likes to admit that they're wrong. I mean, it's very clear you're an educated person. You're a very outspoken person. You work hard. Like you said, chemistry wasn't necessarily easy for you.
Clay: I don't think it has to do with greed because greed implies like, "I want more money." But would you agree that if you made money, it's not going to change your life. Sure, you're not going to be living under a bridge if it goes wrong. But if it goes right, you're not going to be like shopping for a Lamborghini, right?
Kelly: Yeah.
Clay: Is that fair?
Kelly: Yeah. That's very fair.
Clay: I mean, to say that it's greed, I mean, "I want more money. I want more money." No you don't because you know that the amount of money you would make is not going to make any really big difference in your life. So it's not greed in the sense of, I want more and more and more. I think it's just, you don't want to be wrong, not to tell yourself that you're wrong. Is that-
Kelly: So-
Clay: You think I'm barking up the right tree there?
Kelly: No, you're 100% right. Years ago, my wife and I took a personality test, and where it identifies certain key areas of your life. It's called your flag page. My main flag page, if you will, was competency. And so, that rolls right back into this. I don't like to be wrong. And in the stock market, I'm going to be wrong. We're all going to be wrong. And so-
Clay: And it's-
Kelly: ... that was hard for me to see that, like that P and L go negative. I'm like, "I'm wrong."
Clay: Exactly. This is good stuff, where we're down in the weeds right now [inaudible 00:56:43] psychology, but that is what it's [inaudible 00:56:45] because like I said, you could be looking at the amount and you can be like, "It's down $5." Let me put it this way. If losing $5 in the market is going to hurt you personally, from a financial perspective, I'm just going to encourage you, put trading aside, put your personal finances in order because $5 should not be ready to wreck your life.
Clay: I mean, being down $5, that means you're wrong. You're right, Kelly, that that is what that represents. And that's what makes trading so difficult. The red means you are wrong. Nobody wants to admit you're wrong, especially, to your point, like how your personality test really emphasizes it that much more. So I think that's the main crux, is it has nothing to do with you being greedy and wanting more money. You've just got to admit to the fact...
Clay: Let me put it this way. [inaudible 00:57:35] realize that being wrong is a good thing because you're never going to be a good trader unless you're okay with being wrong, because you're not going to take a loss. You're never going to manage risk unless you can be wrong and will cut the loss. But-
Kelly: Yep. That's one thing that I'm learning as I'm in this timeout phase, is that even when my stop loss gets hit, hey, you know what? That was a successful trade plan. It wasn't green, but it was a good trade plan, because it saved me some money, or not save me money, but it did what it was supposed to do.
Clay: Yeah. Absolutely. You survive and it's not going to wipe away a bunch of bigger wins or anything like that. Well, good. I'm glad that you've already realized that. To me, that sounds like the biggest hurdle is... Well, how do you feel in regards to your ability to recognize chart patterns and stuff like that? I would assume that you can identify all that sort of stuff. Is that fair?
Kelly: Yeah. That's a good question because one of the things that I do, I call it the newsletter game. That's every Saturday, when you send out that newsletter, I open it up to see what the tickers are. But then I don't look to see what you've done on them. I open up my... Like on thinkorswim or whatever platform I'm using, and I'm like, "Okay, what would Clay be looking at here? And so, it's a real good litmus test to see if my chart vision is aligning with yours. And I've been really good at that.
Kelly: Now, there's some that I miss, and I'm like, "That's okay. I just don't have the same chart vision that Clay does." And I shouldn't have the same chart vision that you do. You know what I mean?
Clay: I should also note that, those patterns that I draw, it's not the only way to look at the chart. That's just how I'm seeing it. So, I mean, that doesn't even necessarily mean that you're wrong per se.
Kelly: Right. Right.
Clay: I guess, it sounds like the big battle for you is just simply what you what's you're well on your way to work out right now, is, hey, it's okay to be wrong. In fact, be wrong. If you're never wrong as a trader, you're not doing it right. I'll tell you that right now, because you're either a brand new beginner and you haven't traded enough to have something blow up in your face. But there is no such thing as a trader out there that is going to be perfect. You need to be wrong and you need to be truly at peace with the fact that, hey, I was wrong. It's okay. You've just got to move on from it. And it sounds like you're making progress in that regard.
Kelly: Absolutely.
Clay: How long have you been in timeout for?
Kelly: For a couple weeks. I traded on paper AMD this morning, as a breakdown, and I think I bought, it was like... It was paper. It was five shares, and it was great, because I got in. I started a mitigate. Then I sold off two, and then sold off another two. And then I went into CEO mode and I was like, "You know what? That was a really fun trade." And it was stress-free, because I had the plan set up. I had the mitigation points set up. That was, I'm not going to say easy, but it was easy.
Clay: But it was easy and fun not because you made money, because, I mean, with five shares, you're not going to make [inaudible 01:00:36] money.
Kelly: Oh yeah. Wasn't.
Clay: It was fun because you had a plan.
Kelly: That's right. Exactly right.
Clay: It was easy because you had a plan. When you actually follow a plan, it doesn't become easy in the sense of it's easy to make money, but it's easy to just actually trade with a bit more confidence. Would you say you probably had a bit more confidence when you have a full mapped out plan?
Kelly: Very much so. Yes.
Clay: If you're not aware, confidence is a huge part of it, but that's a way to [inaudible 01:01:02] too, because at what point does confidence become overconfidence and cockiness? That's a whole nother rabbit hole, but it's like that. For you, Kelly, it's not just... Especially, good bit about your personality test, you've just got to be kidding, man. It's hey, I'm wrong. Just be wrong. Be wrong, cut it, and reassess.
Clay: The nice thing is you can be wrong very temporarily, and then, all of a sudden, do the same exact trade and just give it another... For me, I mean, that happens, that something gaps down, then a start to dip cut, and then I short. Then it keeps going, I'm like, "Well, crap, I've got to get out." I get out. And then I look for another [inaudible 01:01:37]. I'm like, "Okay, but now I think it'll work out." Right there, you can go from having a red day to a green day, and that's still part of being wrong. Whereas if you hold and hope the whole time, it can be a very different outcome. What else is on the list there? Small size.
Kelly: Okay. So yeah. [crosstalk 01:01:56].
Clay: Full trade plan.
Kelly: Yep. Let the price come to me. Don't just get in because you want to get in right now. Let it come to where it needs to come to. Dan, he made an interesting post in the IC about how he uses Fibonaccis a lot to help target values for him for swing trades. And I'm like, "You know what? I can start to use Fibonaccis as well." But I really like using the support resistance more so than fibs. But I'm willing to try with those just to help me get better target values. And then rule number five is stop trading with real money. Paper trade until I get consistent and my chart vision improves.
Clay: Okay. Again, just to quantify, how are you going to define consistent?
Kelly: I want to do between 100 and 200 trades, and then evaluate those results and see what's going on with them. One of the things that, I think it's Lynn, and I think Judd, they said they only go long, which is interesting. And so, I went back to the RVR course and I picked one of the strategies. And so, that's all that I'm going to paper trade for the next hundred or 200 trades. I want to evaluate that strategy to see how that works. I guess that will let me know if it's consistent or not.
Clay: I do like approach of really narrowing down strategies because if you're out there trading 10 different strategies, then yeah, you really overcomplicate the statistical analysis process of things of, okay, well, is it really that bad or is it just like one or two of these strategies out here that are pulling everything else down? But yeah, from your perspective, when you just narrow it down, that's going to eliminate any sort of hassles from that regard. So that makes good sense.
Clay: Well, this is a good ending point here just because you are in time out. You've gone through the list of the things you're working on. I like the way that you've defined consistency. You'll just have to go back and figure out how to define small, but you can work on it later on. At the end of the day, you're down $1,500. So well done in that regard, in the sense of not saying, "Yeah, I'm down 150,000," or, "I'm down 15,000," or something like that. $1,500, you get things figured out. I won't say it'll happen overnight, but $1,500 is definitely a hole that can be climbed out of. I mean, so you definitely kept things within range.
Kelly: Absolutely. Absolutely.
Clay: All right. Well, did you have anything else that you wanted to add? I feel like that's a good ending point right now, and we're definitely going to have you back at some point to hear how timeout, when you pull yourself out of it, goes on. But for now, unless you want to throw out any of your tidbits. I don't know if that's... Sometimes people come up here and they want to put down their showbox and talk about something. Do you have any other showbox talking points?
Kelly: My last soapbox, before we get to the time machine question, will be just because you have some education does not mean that you can trade.
Clay: I fully agree, and that's coming from somebody that sells education. So even if you invest in my education, that doesn't mean that you're all of a sudden going to have the holy grail. There's still more that goes into what... You've got to figure out your own personal risk tolerance. You've got to figure out... Kelly, to your point, you do need to actually follow what you've learned too.
Kelly: Yeah.
Clay: But still agree with that. There's nothing that my courses or anybody courses can [inaudible 01:05:31] Kelly's mental battle up. Just truly being at peace with the fact of, it's okay to be wrong. You're supposed to be wrong. Don't let the ego, or your competitive... So your desire to be right, get in the way. Just, you've got to be okay with being wrong. That's something that anybody, whatever your personality traits, present the hurdles... That's just something that, like I said, no course can help you get over. You've got to just lay down the law yourself and just come to those realizations. That's the word, right? Realizations. There we go.
Kelly: How about conclusions.
Clay: Conclusions. There we go. From a very not too bright person like myself, conclusions, that's a much more-
Kelly: That's not true.
Clay: That's an easier word to say, but-
Kelly: Anyone who does mechanical engineering is a sharp cookie.
Clay: Yeah. Well, see, this is what happens when you pay the people off, that you're like, "Hey, listen. Let me look at your paper and I'll give you a piece of..." No, I'm just kidding. We sounded very alike. It was not easy at all. It was blood, sweat, and tears to get to the degree. But we definitely sound alike in that regard. But for the time machine. If [inaudible 01:06:45] a time machine, and you could go back to the start and give yourself one bit of advice, what would that bit of advice be?
Kelly: I wouldn't change really too much on how I got started. I think I nailed that part by finding you and your community. I would definitely tell myself, when I start trading, to have that trade plan set up before entering into any trade and be sure to follow it.
Clay: Yeah. I was wondering how you're going to answer that because it doesn't sound like your journey was just wild and your [inaudible 01:07:15] just... The one thing I could [inaudible 01:07:19] say is don't think that the baseline is doubling your money. But-
Kelly: A little fool's gold.
Clay: Yeah, a little fool's gold there. Overall, yeah. I would say that you, for the most part, approached this very, very wisely. All right, Kelly. Well, it's time to move on to some fun questions here. I have no idea how a chemist would answer this question. I mean, I don't even know if chemists watch movies, but-
Kelly: Oh, we do.
Clay: Okay. You do. All right. So then what is your favorite movie?
Kelly: I can't really answer that without saying Empire Strikes Back, Ratha'kon, Matrix, Gladiator, Office Space. The Marvel movies are fantastic. The DC Comics movies are great. Forrest Gump. But if I had to pick one, and this one's way different and that's why I chose it. It's Rambo, First Blood. Love that movie.
Clay: I like Rambo. The second one is better, but-
Kelly: No, the first one, all the guy wanted was to get a sandwich or something to eat.
Clay: Isn't that-
Kelly: They kept messing with him.
Clay: What's the one with Keanu Reeves, then they killed his dog. What's that one called?
Kelly: That's John Wick.
Clay: John Wick.
Kelly: Those are great too. I love those.
Clay: Yeah, those are... Okay. All right. I can get behind a Rambo. Rambo, that's old school there. I always remember-
Kelly: Yeah, it is.
Clay: I always remember watching the second one.
Kelly: Yeah, just the first one, though. The other ones, then they get carried away with all those shenanigans. But the first one is actually pretty realistic.
Clay: Yeah. Where he sets up all the traps in the woods and all that sort of stuff.
Kelly: Yeah. That's right.
Clay: All right. Okay. I can get behind that. What about food-wise? What is that? Green chili? Isn't that what New Mexico is famous for?
Kelly: Hey, you're on the ball. It's actually, my favorite food is red chili enchiladas.
Clay: I've always wanted to... Well, Arch Steve, he's I think the only other person I've ever interviewed from New Mexico. He's an economist. New Mexico has delivered an economist that I've spoken to, and now a chemist. So what doesn't New Mexico have to offer is I guess really the question. But that sounds fantastic. I would love to try some authentic of the different types of chilies and all that sort of stuff. But that sounds super, super good.
Kelly: Well, Clay, if you and Abby and the kids are ever in Southern New Mexico, I've got room at the house. You're all welcome to stay.
Clay: Okay. Be careful. I've been known to sleep on people's couches, all of a sudden, but-
Kelly: Well, I didn't say you could stay for a week, but-
Clay: I don't read the fine print, so sorry. You should have qualified that beforehand, but-
Kelly: Okay.
Clay: It could be a good time. I know Judd's out there in, what, Arizona.
Kelly: Yeah, he's pretty close.
Clay: Yeah. We've got a bunch of people in... I think maybe the next meet and greet might just have to be the four corners. I don't know what actual city that would technically be and what state, but I think we could get a good... Well, I don't know how many people are from Utah. Utah is part of the four corners, isn't it?
Kelly: I think Denver would be good again. Denver's pretty close.
Clay: Okay. Yeah.
Kelly: Close enough. Yeah. I'd make the trip to Denver.
Clay: All right. All right. Well, as soon as the world gets back to normal, we'll have to maybe reconsider getting out West again, because that sounds like it would be a good time, but-
Kelly: It's be great.
Clay: All right. Well, oh, no, no, no. I've got one more question.
Kelly: Okay.
Clay: Three words, and these three words need to be what you would associate as what it takes to be a successful trader or what would just be associated with successful trading in general. What would those three words be?
Kelly: Education, discipline, discernment.
Clay: Oh, discernment. Good stuff. Yeah. Well done. Good words. Almost everybody says discipline, but as I always say, if everybody is saying something, maybe, just maybe, there's some factual proof behind it. But yeah, all good words for sure. Well, Kelly, I don't know where the time went, but we're actually even over an hour, which is what I usually strive for. But yeah. Great stuff. I appreciate you just shooting straight. Not trying to come here and make it sound like you got the world all figure it out.
Clay: But yeah, you're clearly on the right path. You just need to button down the hatches, and it sounds like you're well on your way to doing that. But will you come back and update us at some point?
Kelly: You know what, Clay? Anytime you need a podcast guest at the last minute notice, just let me know and I'll be-
Clay: All right.
Kelly: ... happy to-
Clay: I will hold you to that along with allowing me to sleep on your couch for as long as I want, because that's how I heard it, so-
Kelly: You know, I have an outdoor man cave, and there is a couch out there. So you can come out there.
Clay: Well, no. I'm bringing my entire family. You guys can have the outdoor man cave. My family would just move in, and if I heard you right, you said for as long as we want, which can be hopefully multiple weeks. But that sounds fantastic. Serious, though, I appreciate that invite, and hopefully, yeah, you never know. But I feel like right now the world is just waiting for things to get back to normal. But, well, Kelly, thank you very much for... You're going to be on the webinar and that happens in about 20 minutes, right?
Kelly: Absolutely.
Clay: All right. Excellent. So I guess I'll see you then, but thank you very much for hanging out.
Kelly: Sounds good. Thanks, Clay.
Clay: All right. For you listeners out there, before you go, a final few things. First off, if you're listening on iTunes or any of the other podcast players, please subscribe. That way you know whenever new content is released. Also, a rating goes a long way. Especially on iTunes, that helps us out very much so. All you've got to do is just click a button. Also, a written review goes that much further, and I really would appreciate that. So just please consider doing that.
Clay: If you're listening at on the show notes page, on the bottom right-hand corner, there's a little chat box there. So if you want to reach out and talk to us, that would be great. You'll have to at least first tell the bot that you want to talk to a human. But then, yeah, nothing better than hearing from somebody that says, "Hey, I listened to the podcast." And then feedback, suggestions, constructive criticisms are always all welcome. I would love to hear from you. But thank you again to all of you as listeners. Thank you to Kelly. We'll see you all 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 Clay Trader community, including the trading team, premium training, and more, visit

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