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. Autonomous is the company and they sent me a desk to do a review on, and I wanted to just share it with you because, spoiler alert, I was very, very pleased with the desk.
Clay: 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. Whereas I open it up and you see me unbox the entire thing, so 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: So, 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. 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.
Clay: While I’m not going to say that it was strictly the standing desk that made all the difference, there is no doubt in my mind that standing did make a very big difference. 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.
Clay: 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. So, 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. 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. This is The Stock Trading Reality Podcast, Episode 312.
Announcer: This is The Stock Trading Reality Podcast, where you get to see the realistic side of a trader’s journey. Get inspired and stay motivated by everyday normal people who are currently on their journey to trading success. And this is your host. He wants to quickly discuss his two favorite brokers, ClayTrader.
Clay: Yes, very quickly, I want to go over this because it’s something that I’m always getting asked, and rightfully so. It’s a good question, it’s a wise question. By no means is it some question that is like, “Why would you be asking that?” No, it’s a very good question, and really, it breaks down to two main questions, two main dynamics that are going on.
Clay: For those of you that are loyal listeners, I’m sure you’ve heard I’m always talking about WeBull before the podcast ever starts. So, yes, WeBull is fantastic if you are a beginner, if you are on a budget, and I’m defining budget as if you have less than $25,000, then WeBull is where I would recommend. They have fantastic charts and as a [inaudible 00:03:11] trader, you really can’t go wrong with their charts.
Clay: They have a very respectable platform, again, for somebody that’s on a budget, wants to trade on the stock market. They are somebody that I would highly, highly recommend, and if you go to claytrader.com/webull and use the link there. They’re always running promotions, so they’re giving out money, or stocks, or I don’t know what the promotion will be, but again, claytrader.com/webull. You can learn more about that there.
Clay: But then the other question becomes, “Okay. Well, what happens if you have $25,000?” Meaning you can overcome that pattern day trading rule, then I would use Lightspeed, that’s who I’ve used for years, that’s who I’m used to, and yes, it’s not free like [inaudible 00:03:51]. There are commissions that come with it, but you’ve got to always remember that free is not free, and in many situations, the non-free part comes in the form of opportunity cost where you are missing out on opportunities or you’re not being able to maximize those opportunities because the broker that you’re using is just not quite fast enough.
Clay: Now, that doesn’t mean that it’s for every situation, but if you’re looking to do some very small time frame day trading, then speed matters, and in many situations, it’s worth paying for that speed. But again, if you’re just getting started, you should not be doing any sort of day trading where you’re on the one-minute time frame anyways. So, that’s where WeBull would totally come into play.
Clay: But for me, if you have under $25,000, WeBull, good place to start. If you’re up over 25,000, then I would say, “Hey, you know what? Give Lightspeed a look.” And I’ve never met anybody that said, “Oh wow, Lightspeed’s not worth the minimal commissions and fees that I’m paying for,” so definitely give them a look.
Clay: As for our guest, well, I’ll put it this way, he showed up with notes. And when you show up with notes and you’re ready to go, I know I’m in store for good things because I know there’s going to be structure, I know there’s going to be not us just jumping all over the place. Not that I don’t mind that, but people that show up with notes, it just makes for a smoother process, and this was a process that went fantastic.
Clay: So, Joseph, a relatively long-time member. As he mentioned, he kind of lurks in the background, so for those of you members that are maybe more active in the chatroom and stuff, you maybe have never come across Joseph or anything, but he is there. He’s a member and he’s got a great journey including really just starting off with a big misconception about the markets, but he’s not alone at all. A lot of people started off thinking that way.
Clay: So, I mean, where did his journey go from pretty much a launchpad of being pretty shaky, of being pretty just not factual? Well, that’s what we’re going to talk about and there are all sorts of great bits along the way. So, let’s get to Joseph and hear about his journey.
Clay: Recording. All right, here we go. Joseph, welcome to the show.
Joseph: Thank you.
Clay: Now, I appreciate you volunteering to be here. Those people that always volunteer, you make my life easy, and my life is easy, I enjoy that. So, thank you very much for doing that, and from my understanding, I hope I’m not wrong here, but I don’t think we… Have we ever talked in email or anything like that? I feel like you’re kind of unknown to me. Is that pretty accurate?
Joseph: That is partially a true statement. I did, I think, the webinar back in 2019, and I’ve been a member since then, but I just stay in the shadows doing my own thing. I’m not necessarily active in the chat or send emails and whatnot, so that is correct.
Clay: Okay, good. All right, perfect, and I bring that up just for listener’s sake. If you’re not very familiar with the format of the show, I want this to be as real as possible, so none of this is prescripted, nothing like that. It’s going to be a genuine conversation between Joseph and I, and you just get to be a fly on the wall and just hear a couple of traders talk.
Clay: I don’t know what’s going to be talked about. There’s not really an entire agenda at all. I mean, I’ll ask the first question that I always ask, and then from there, we’ll just see where everything takes us. So, with that being said, Joseph, where did all this get started for you? Where did you hear about the markets? What sort of things happened and played out that brought you to the point where you made the decision that you wanted to get more active with it?
Joseph: Sure, I took some notes so hopefully, my message is slightly structured, so that will help.
Clay: All right. Hey, I like people that show up prepared with notes, but you know what? Even if it’s not structured, that’s okay. We’re just going to, like you said before we got recording, we’re just going to go with the flow. But I like people that show up prepared. So, yeah, if there’s structure, fantastic, if there’s not, hey, that’s okay too. But yeah, go for it.
Joseph: Okay, good. So, in reality, back in high school I’d just heard news that stock market was a risky thing, only smart people were doing it, only rich people were working with it. So, I didn’t pay much attention to it. I knew it existed, but I didn’t think much of it. So, when I went to college, I took a bachelor’s in administration, got an accounting degree, and whatnot, and that’s where I started to get more information about it, right?
Joseph: So, nothing beyond what a college course could teach you. Not technical analysis, but just more the fundamentals and I didn’t think much of it. I kind of kept my same thought that it was a risky business to be with, only rich people could do it. I know it existed, but it wasn’t going to be for me.
Joseph: So, that’s what I went through while I was in college. The only participation that I had was when I was working for Walmart as a part-time employee and they gave the opportunity to buy and sell stocks through the payroll process. So, that was the first time that I actually purchased it, but it wasn’t necessarily the way that a day trader would do it.
Clay: Oh, right, right. No, absolutely, when you’re going through… Well, Walmart, fantastic. Their stock has been doing very, very well. I just had a question. You had this impression that the stock market was for really smart people. You needed to have a lot of money. Is that what your classes in high school were teaching you or is that just what you remember hearing in general in high school?
Joseph: No, not necessarily the courses per se, but it was more, I guess the media, talking to people in my circle and everywhere you go. The stock market at least within my peeps, it was a dangerous place, stay away, just be safe. So, I just play along, right?
Clay: Okay, okay. Good. I’m glad that there’s not high school classes out there that are saying, “Hey, the stock market is super risky, you need to be super smart and you need to be super rich, because I would want to talk to those high school teachers and be like, “Hey, what’s the deal? Why are you misleading the youth here?” I mean, you don’t want to be stupid about it, but it’s not like you need a PhD in aerospace physics to be able to understand it either.
Clay: So, okay, thank you for clarifying that because that would have been a sad situation if that’s how it actually played out. But okay, so you were just surrounded by people, like you said, media, and just in general, that’s the impression that you had. Okay. Well, I’ll let you pick up from your notes wherever you think is structured, but yeah, like you said, that was your first impressions.
Clay: So, like I said, I don’t want to pull you away from your notes, but my question would be, “Okay. Well, what finally happened that got you a little bit more interested to take a hands-on approach?” I know you were at Walmart and you were getting stocks through, like you said, basically the payroll… Basically, the company benefits package I’m sure included all that.
Joseph: Right.
Clay: So, I mean, how long did that last before you started to take a little bit more interest in it and wanted to get a little bit more maybe hands-on?
Joseph: Well, actually, it didn’t do anything to me apart from being a memory, honestly. When I quit, because it was a part-time job while I was in college, I just sold the stock and I didn’t necessarily gain. It was sort of break-even, but that was a memory that I had, right? And that was back in 2008. So, fast forward-
Clay: I’m sorry, not to cut you off, but this was… I’m sorry if you mentioned this, but you were working for Walmart in college?
Joseph: Yes, sir.
Clay: That’s awesome. A college kid getting stock in Walmart. I mean, even if you did break even or whatever, that’s good stuff that you were doing that and also… And I’m asking from this position because I can see and it kind of drives me nuts, “Oh, well, I’m a college student. I don’t have time for anything else.” But here you are. You are working a part… How many hours a week did you work at Walmart while you were in school?
Joseph: I would say about 20.
Clay: 20, okay. So, I mean, 20 hours, what were you doing at Walmart?
Joseph: I was working basically on the electronics department, just helping stock the aisles and helping customers. It wasn’t necessarily a specific position, but I was working in that department.
Clay: Okay, awesome. How did you get to the job? Did you have a car? Did you have to take a bus? Did you walk? How did you get to Walmart while you were in school?
Joseph: I had a vehicle.
Clay: Okay. Okay. So, I mean, you were just getting it done, and you said you got a accounting degree? Is that what you said?
Joseph: Yes, sir.
Clay: Okay. So, like I said, I’m just throwing this out to you younger people out there, “I can’t get any money to trade, or, “I don’t have any money to invest. I’m a full-time student.” But do you really need to be a full-time student? Are you sure? Are you sure you need to be a full… Are you sure you can’t squeak in 20 hours a week? Think about it, Joseph, 20-hours-a-week college student getting Walmart stock. In hindsight, you probably wish you would have held that stock, but that’s always-
Joseph: True.
Clay: That’s always hindsight, but that’s good stuff, Joseph. I like your work ethic already. But anyways, so like you said, that’s just a distant memory for you, but pick things back up wherever you think will make the most sense.
Joseph: Sure, so fast forward until 2019, actually. From 2008 through 2019, I didn’t do anything on the stock market. I just got a new job position, marriage, have kids, life happened and I’m all the way back to 2019, okay? So, that huge gap, I didn’t do anything.
Joseph: So, I happened to be with some money that I’m managing for my kids’ education, and I really wanted initially to buy a property for them. And I’m still hopeful, that I will eventually buy a property for them so they can have it for their education or whatever they want to do. During that process, I just happened, just by coincidence, to be talking to a buddy of mine about purchasing Disney+ the application, right? That was before it was sent to the market.
Joseph: We were talking about having that, adding it to our Netflix account, and whatnot, and he just happened to tell, “Hey, that’s good, but I will also be curious to buy Disney stocks.” And I was like, “Huh, Disney stocks.” So, that actually started the whole thing of my urge to go back and get more information about the stock market. So, I talked to him and said, “Well, what do you use to buy Disney stocks?” “Oh, well, I use Robinhood.” “Oh, okay.”
Clay: I had a sneaky suspicion that was going to come up. All right.
Joseph: So, I immediately downloaded Robinhood, and I verified and just bought five business stocks right on the spot without no knowledge or anything. I said, “Well, this is going to be something that I will be… My kids’ education while I find the property that I want to find. I will hold this, and this will go up. When I find a property, I will just sell, sell and get the profit and just get the property,” right?
Joseph: So, I noticed that the app itself recommends some stocks by just looking at it. So, I look at the stock and I said, “Well, we should buy this stock.” I just wanted to test it. I don’t recall the stock that it was, but I bought it and I gained 20 to 30 bucks in five minutes. I was like, “This is easy. How the heck I didn’t do it before?”
Joseph: So, the next day, I happened to do the same. I said, “Well, I’m going to gain 30 more bucks,” and I lost the same amount. 30 bucks in five to less than five minutes. I was like, “Well, maybe there’s more to it.”
Clay: Okay, I have a key question here for you. Why was it only $30? And I ask it from the reference point of… I mean, I’ve lost count of the number of times where people they’re like, “Well, I don’t want to lose money,” so they hold and they hold and, “Oh, it’ll go back up.” And they hold and hold. And then those losses get so much bigger.
Clay: So, I mean, how did you… At that point, you cut the loss. So, yeah, that’s bad that you lost money, but it was still only $30. It’s not like you blew up your account or suffered some sort of massive loss. What was going on that made you aware that I better take this loss?
Joseph: I will say that it was the same amount of profit that I made the other day, so I wasn’t in a position to risk anything. So, I said, “Well, wait, I don’t know anything. I don’t know what I’m doing. So, that means I want help.”
Clay: And this was only your second trade?
Joseph: That was my second day trade, I guess. In theory, yeah.
Clay: Yeah, you are… I mean this as a compliment, but you are unique. Most people don’t realize that quickly. They don’t admit it that quickly, “You know what? I don’t know what I’m doing. What is going on? I don’t know what I’m doing.” I mean, but you admitted that on your second trade within you said about five minutes. And you just cut the loss, got out, and were basically back to break even.
Clay: I’ve lost count of how many people what they need to finally serve as their wake-up call that they don’t know what they’re doing is a massive loss or just something crazy. I mean, with all due respect, that’s kind of a boring story. That’s not really that exciting when, “Oh yeah, I noticed in five minutes, okay, I don’t know what I’m doing.” But that’s good. I mean, boring is good, so I don’t mean that as an insult, but that’s-
Joseph: No, and I appreciate your kind words, but this is not the end. Our excitement [crosstalk 00:18:49].
Clay: All right. Okay, this is not the end. Okay, well, I’m still impressed though that you did… All right, I’ll just sit back, but all right, this is not the end. So, continue on, Joseph.
Joseph: So, I just happened to say, “Well, I need to be educated.” So, I did some limited research on Google to try to go back to college to try to see if there’s some sort of minor that I can complement with my education. For finance, and I wanted specifically to be on the stock market on buying and selling stocks, right?
Joseph: So, I guess I couldn’t find anything, and the closest thing that I was able to find was to listen to podcasts on my way to work while I was commuting. And it wasn’t yours, but I just searched stock market, stocks, and whatnot, and I just happened to come across two different podcasts, and I just started to listen to them, getting definitions and just listening on my way to work. And then I return and I do the same, and I just happened to finish one, and the next one was this podcast actually.
Joseph: I just happened to listen the first one and I was like, “Well, but this is cool. This is like me hanging out with my buddies talking about random stuff, but instead of random stuff, it’s stocks.” So, between that, I started listening to more podcasts, and I said, “Well, let me take a look at this guy in YouTube.” And then I started watching a few videos on YouTube, and then fast forward a little bit more, I happened to attend a webinar, and in the webinar, I purchased the CTU package back in August 2019.
Joseph: So, right there, what I did, I started full-blown taking the courses, robotic trading, blah, blah, blah move to the next, move to the next, move to the next.
Clay: Okay, blah, blah, blah, let me interrupt you at the blah, blah, blah. Now, during all this YouTubing, and then like you said, you signed up for the webinar and you ended up joining, were you doing any real money trading at that point? Or were you just in full-blown, “I need to figure this stuff out,” kind of mode? Or were you still actively trading?
Joseph: No, at that point, I stopped trading, and what I did was just to get the money out and put it where I had it before. And just wanted to educate myself because I knew that I didn’t know anything.
Clay: Okay, and this is still after that second trade?
Joseph: That was still after that, correct.
Clay: Okay, Joseph, I’m still very impressed with your journey so far. Maybe it’s going to get worse here, but that’s some good discipline there for you to be like, “I don’t know what I’m doing and I’m just going to start learning and learning and learning,” and you just didn’t do anything with it. All I’m saying is I’m still impressed with the journey so far, Joseph. You seem to have quite a bit of self-awareness and discipline. Okay. Well, you get the program, blah, blah, blah, you said you start studying. So, I’ll let you pick it up from the blah, blah, blah.
Joseph: Right, and I said blah, blah, blah because I guess I didn’t… Not with the sense of boring, but with the sense of multiple… You have so many information there that is valuable that I’m not going to list them, but to finish your course, it took me close to a year to actually finish it because personal stuff and whatnot. Within a span of one year, I would say in actuality, it was closer to 10 months that I was able to complete the whole course, which I really enjoyed.
Joseph: But anyways, I started then paper trading. Started little by little trying to see how I was doing comparing with the course. I’m trying to apply the lessons learned from the course, apply the lessons learned from the podcast. What I did, I created a spreadsheet and I did true, true paper trading, but it was honestly very, very boring. So, I then opened an account with my bank, my broker, and I started buying only one stock.
Joseph: A column, I’d buy the actual amount that I bought, but on the next column, I will buy the quantity that I would have buy it for. And then I will calculate what I won or lost, and when I started to see the greens then I watched increasing the amount of stocks that I was actually buying. Does that make sense?
Clay: It does make sense, but I wanted to ask you because you made an interesting comment and you said paper trading was boring. What do you mean by boring?
Joseph: I guess I’m not sure how to explain it actually. In hindsight, I didn’t feel the emotions that I feel or the… I’m not sure how to explain that.
Clay: I know what you mean. You didn’t feel emotionally invested. You didn’t feel that it was real.
Joseph: It wasn’t there, correct.
Clay: Okay, and-
Joseph: It wasn’t there. Maybe it’s a combination of that or me being impatient, but I guess this is the time that you need to put your popcorn, okay?
Clay: Okay, but I will say that, again, so far, so good. I’m kind of hammering this home because, at this point, the train must go off the rails, but up until this point, I really have not heard anything from Joseph that makes me say, “Oh, that was stupid.” Including a “paper trading is boring” because I understand, and it’s a gray area, and I don’t think there’s any right or wrong way to it.
Clay: But Joseph was like, “I don’t feel very emotionally invested, it just doesn’t feel real. It just doesn’t feel right. So, you know what? I’m going to use some real money.” But even that, I still don’t see anything wrong that Joseph did because you said you’re just buying one share. So, it’s not like he was going out there, and let me put it this way, here would have been the wrong story so far if Joseph was like, “Oh, this is boring. This doesn’t feel very real. Let’s just load up my account with my savings and let’s just go start trading Amazon or some sort of crazy volatile stock and put my whole account into it.”
Clay: That would be very bad, but that’s not what Joseph said. I mean, he started off very, very small with one share. So, as a listener, if you’re sitting there, like yeah, I agree, paper trading, it just doesn’t feel very realistic. It feels like there’s just not much there because there’s no emotional attachment to anything because I know that the money’s not real. That’s okay. If you want to put some skin in the game, that’s fine, but be smart about it and go super, super small like Joseph did.
Clay: So, as of now, I’m still not hearing anything that I would say, “What are you thinking?” But Joseph made the popcorn comment, so maybe things are about to get rough here. But so far, I’m not seeing anything crazy. But Joseph, I got my popcorn, I got my Sour Patch Kids, so what happened next then?
Joseph: Okay, so I told you that I got the course in 2019 in August. So, jumping to 2020, that was the time frame that I started increasing the amounts of stocks that I was actually getting. In August, I made 400 bucks green in total and I was happy with it. So, my confidence was increasing. In September, I don’t know if you recall when Tesla split, at that time frame I went all-in with what I had so far, and at that moment I had a cash account. I bought the stocks actually, and then I’m looking at my broker’s account, and I see the price going up and up and up.
Joseph: In five minutes, I made $2,000 and I was like, “Wow. This is amazing. I’m so happy about myself.” I was like, “It took me a while to be here, but I’m here.” So, that’s amazing. Just happy to be-
Clay: Okay, I have a question for you though, and that $2,000 was a result from you going all-in you said?
Joseph: Yes.
Clay: Okay. So, my question is what made you go all in? I realize that you were seeing green, you were seeing a grow… Was it just you got too confident? Is that where the-
Joseph: I think that-
Clay: Because it seems like-
Joseph: I think that’s correct. I think it was a combination of me being overconfident and also being desperate to get into the game that I just wanted to do it, and I did it the day after Tesla split because I also noticed that Tesla was a hot stock and I just wanted to be in and trust my knowledge, what’s there. I was able to do a profitable transaction based on my paper trade. All the signals were there, so I went in, the transaction went in, and I made 2,000 bucks, but I didn’t put a stop-loss.
Joseph: As simple as that, I didn’t do it and magically it happened the transaction went against me, okay? So, the transaction went against me. I transitioned to being a confident and structured, I guess trader, to the hope and hold individual. I hold the stock for two days hoping, and I lost over $3,500. I sold it because I was revisiting some of the information that you have on the podcast and whatnot, and I just said, “You know what? I need to cut this out of my life. It is a lesson learned.” Very upset with myself, I’m frustrated, I couldn’t sleep. Actually, I went to the couch and slept by myself because I couldn’t sleep.
Joseph: I was angry with my kids, with my family, with my coworkers, with my wife, with the dog, with everybody, because I made a mistake and I lost $3,500. [crosstalk 00:29:57].
Clay: So, are you saying you were up 2,000?
Joseph: I was up 2,000 and I didn’t take them because-
Clay: Okay, and then you ended up… So, that was a $5,500 swing then.
Joseph: Oh, yes, sir.
Clay: Wow, okay. Yeah, that’s pretty crazy.
Joseph: So, after that, I said live and learn because after that now I have a tattoo in my brain that says, “Don’t be greedy and honor your stop-loss.” I see it clear now. So, that was a big lesson, and I guess a little bit of hindsight, I know that if I were to hold more, I would have gained $80,000 with Tesla as the price is right now, but I think I needed to have that lesson learned, and I learned more by losing that amount, than by gaining $80,000.
Clay: Well, said. Well, said.
Joseph: Of course, everybody wants money, but I think the struggle that I went through is going to develop more… I’m going to be a more [inaudible 00:31:08] trader in the long term.
Clay: I mean, it’s easy in hindsight. It’s easy to be like, “Well, it’s Tesla. Why would you ever sell Tesla?” You know what? If Tesla had crashed and crashed and crashed, everybody would be saying, “Well, the writing was on the wall, Tesla, that was crazy. That was so overvalued anyways. Why would you have held? Why didn’t you just get out at $3,500 loss?”
Clay: I mean, it’s always easy to sit there in hindsight and be the critic and make it like, “I can’t believe you would sell Tesla.” Yeah, but you could have easily just said, “Well, I can’t believe you still held Tesla. It was way overvalued at that point anyway.” So, before you as a listener or anybody is just like, “Oh, well…” That’s all hindsight, and it’s super easy to be a trader or investor in hindsight when you know what’s already happened and when you know history, right?
Clay: It’s easy to say, well, it’s easy, when the coronavirus first showed up and the markets crashed, why would you ever sell? Why would you not be buying and buying and buying? It’s like well, yeah. I get it, now when you know the market just turned around and went basically straight up. But at that point, it’s just not quite that easy, and I love how you said, “You know what? The lessons learned from it were well worth the $80,000 I could have made.” That’s definitely a good attitude to have about it.
Clay: Yeah. Hey, you know what? Trading and investing in hindsight, I mean, I’m worth billions upon billions of dollars in my hindsight trading account, so welcome to the club on that one. But, well, like you said, you took that loss, you just put it behind you, so where did you go from that point?
Joseph: So, October and November, I paper traded again because my confidence was crushed. I started again going slowly. Going back to buying the one stock or five stocks and then trying to match what I could have done. Until that became profitable, I waited for December and I was just paying attention to all these stocks related to COVID. I was trying to do some sort of fundamental analysis combined with a technical analysis.
Joseph: I was looking at Moderna, MRNA, and I decided to try to do a swing trade because I was looking at the day store and all the technical analyses were there. I decided to do a swing trade and it just happened to… I got a profitable transaction on it. And I did it for two days, and it was before it crashed from the 180 amount, so I was able to get those two swing trades.
Joseph: After that, I didn’t swing trade anymore because it just partially crashed, right? So, in December, I continued to do day trades, and with the amount that I got for those two swing trades, I was able to bump to a margin account, and I was able to get the money back from the course, from getting a new laptop, from getting a new monitor, from getting a new equipment. So, ending 2020, I gained some experience, and I reached a break-even point. I was a happy trader.
Clay: And that was all from, you said that MRNA swing trade?
Joseph: Yes, sir.
Clay: Okay. But it only was a two-day swing trade?
Joseph: Well, it was a one-day swing trade. When the market opened, I put a stop-loss and it sold, but I gained profit. And on the closing of that day, I was looking at the short and I decided to do the same. It happened to get a big bump the next day when the market opened. I put a stop-loss and it sold for me.
Clay: Okay, and this was all… It sounds like this was based on the chart, based on what you had learned, based off of your knowledge.
Joseph: Yes. Yes.
Clay: This was not some sort of random gamble just dart throw. It sounds to me like there was structure behind everything, right?
Joseph: Yes. Honestly, that’s what I was telling myself because I was looking at the chart, I was confident. I was reading the FDA approval status for Pfizer, for Europe, for… I was trying to educate myself on the fundamental spectrum, and I noticed that Moderna vaccine didn’t need to be frozen like the Pfizer one. So, I said, “You know what? Maybe the Moderna vaccine might be more profitable because it doesn’t have to require freezers and it doesn’t have to require special transportation.” So, I took a leap of faith on that assessment, and I just happened to do it, if that makes sense.
Clay: It does make sense. I just wanted to make sure that this wasn’t some random, “A bunch of people are talking about on social media, and I’m just going to… Let’s see what happens.” But no, it sounds like there was a combination of both, like you were saying, fundamental analysis and technical analysis, which is no right or wrong way to do things. Do what works for you, but you were combining a couple of things.
Clay: I just find it really amazing how all it takes is a couple. All it takes is a couple of good trades and it can wipe away a lot of stupidity. Here Joseph was where it wasn’t random. He was using his chart knowledge that he gained from the classes. He was using some fundamental analysis to put himself in a good position.
Clay: Now, you probably didn’t think you were going to make the amount of money that you made, especially when it happened so quickly, but point here being is you never know when you might be in the right place at the right time. He put himself in that place because he had good knowledge behind him. To me, it’s just crazy how you can have… And this is why risk management is so important because, you know what? One or two trades can sure wipe away a lot of control losses. Isn’t that pretty great? Would you agree, Joseph, it’s amazing how it only takes a couple?
Joseph: Yes, sir.
Clay: And yeah, it’s-
Joseph: Yes, sir. But at the same time, the story doesn’t end, so you still have popcorn?
Clay: I got some left and I got a box of Sour Patch Kids too. So, all right, here we go.
Joseph: January, I began the year very positive thinking to myself, “Joseph, baby steps. You’re not going to get rich tomorrow, you’re not going to retire, but you’re going to get money.” So, I was very positive talking to myself, talking to some friends that they try to do the same. Just saying positive things, just doing… I was now doing day trades, and this just happened to be that January was a profitable month for me. It happened to be that some trades I were getting 2,000 even 3,000 in one trade by itself.
Joseph: I was just scalping. I was going all in, in and out five minutes, and I was getting money. And my confidence-
Clay: Okay, so why are you going all-in again? Because your confidence? Because you had made so much on Moderna? Is that where-
Joseph: That is correct.
Clay: Okay.
Joseph: I was looking at the numbers, I was looking at the paper trade results, the scenarios of the what-if. I saw a lot of green in the what-if scenario, and my confidence was built. But this is a dangerous place. So, again-
Clay: Can you just let listeners that in the classes, nowhere does it say to go all in, right? You weren’t doing what you learned from the classes, right?
Joseph: No, no, no, no, this is only me. The class said the opposite. Baby steps, control the quantity of the stocks that you’re buying, but I’m thinking that I guess, for lack of a better word, I’m special and I have it under control and everything is on my favor and I’m green, so why not?
Clay: I had to go on a little speech here just because you made the comment and I’ve done a couple of videos on this. I should probably do another one, but Joseph says, “I thought I was special.” I see this all the time, and it was me too when I first got started is you think… I call it the diamond in the rough syndrome where you’re like, “You know what? I’m just like a prodigy. I am a diamond in the rough. I realize that this is not how it’s supposed to be but look at these results. I’m just not like everybody else. I am a diamond in the rough.” As Joseph said, “I am special. That’s just me.”
Clay: So many people think that way, and not to be negative, not to rain on anybody’s parade. If you can relate to this, maybe you’re in this right now thinking, “Whatever, these guys don’t know what I’m talking about. I know maybe I’m doing things a little unorthodox, but I’m just special. I’m just good.” No, you’re not. You’re not. I don’t mean to burst your bubble, but you are not special, you’re not a prodigy, you’re not a diamond in the rough. It just hasn’t come back to bit you yet, or to bite you because I’m telling you how it works time and time again, and Joseph is…
Clay: And here’s why trading is difficult because trading will take logic and turn it against you. Let’s put ourselves in Joseph’s shoes. He’s behaving in a certain way, and the way he is behaving is giving him money and more money. In fact, $2,000, $3,000. His behavior is giving him good money, so what’s the logical thing to do? Well, to keep on doing what’s making him all the money. Ah, but the logical thing to do is not always the right thing to do because the markets reward bad behavior.
Joseph: True.
Clay: Here Joseph was getting all this positive reinforcement for actually doing the wrong things, but that’s how the market will set you up to just absolutely crush you. So, I’m assuming all this going all in and seeing all this money. I’m assuming that all this overconfidence, which again, is logical to be confident when you’re making all that money, right? It would be irrational to say, “Wow, I’m making all this money. I probably shouldn’t be confident. That doesn’t make any sense.”
Clay: So, that’s what I mean by the markets will take rationality and logic and totally twist it around. I got my popcorn ready, Joseph. Let’s hear it.
Joseph: So, basically, towards the last week of January, I actually made a profit of 23,000 for scalping, doing my trades going all in. And the very last two days of January, I lost them all. As simple as that. I made two transactions that the broker that I was using didn’t fulfill at the speed that I was requiring it to fulfill, so I was just looking at the stock going against me and couldn’t do anything at all. I just want to correct myself. I lost the profit that I accumulated, not the basis of my account, if that makes sense.
Clay: It does, and we’re talking about January 2021.
Joseph: Yeah.
Clay: So, this-
Joseph: January 2021, correct.
Clay: Yeah, and for listeners, this will air a little bit later, but we’re recording this on February 9th of 2021, so this literally just happened not that long ago.
Joseph: Yes, sir.
Clay: Okay. Well, first off, nothing but respect from me. Nothing but admiration for you to want to come and disclose all this when the wound is so fresh. So, we’ve all been there. I have, like I said, nothing but respect for you, but what stocks were you trading when this occurred?
Joseph: It was FUBU and AMC. The plan itself went well because I was able to see the [inaudible 00:44:13] pattern, but the speed of the execution from my broker didn’t meet my expectations and it just went against me because of this-
Clay: Okay, so what broker were you using?
Joseph: The broker that I was using was Merrill Lynch. Now, I’m shifting to Lightspeed because it seems that it will be a more beneficial broker for scalping, which is what I was doing. Merrill Lynch, I guess it didn’t execute at the speed that I needed. I guess it failed me.
Clay: Okay, so you wanted to get out at a certain point and you couldn’t. Did you just start to hold and hope at that point? Or, I mean-
Joseph: No, no. I placed the stop order, but it didn’t went through. I saw it that it was just pending and I had two… I have a big monitor, and on one side I have my brokerage account. The other one I have the trading view, which is the one that I use to look at the charts, and I just happened to see the order loading and loading and loading, and then I see the stock going down, down, down, and I couldn’t do anything.
Clay: Okay, so by the time the order actually was sent to the market, the price had gone so low that you were just-
Joseph: Correct.
Clay: Okay, so it’s not like you were like, “Well, cancel stop-loss. Okay, cancel stop-loss.” It was literally you just had some sort of… It almost sounds like a glitch on Merrill’s side where it just took a while for the order to get registered in, and by the time the order got registered in, the price had just dropped that far against you. That’s what occurred then.
Joseph: Correct, and it has happened to me before in terms of because I’m doing scalping, and I’m not here to talk good or bad about my broker. That’s not what I want to do, but it’s just what I experienced. Yeah, so that’s what happened. I just saw the order being loading and loading and loading, and I just see the stock going down, down, down. And I lost the money because the plan, the trading plan itself are supposed to take me three minutes. I ended the transaction five to seven minutes before.
Joseph: Five minutes is a world when you’re scalping, right? So, that’s my story. That’s what happened. Needless to say, right now I am on time out. I started the process of opening the Lightspeed account to try to continue developing a controlled way, a scalping technique, and take it back to baby steps. Take it back to doing the one stock and getting myself familiarized with Lightspeed and the way that it works because it’s a whole system.
Joseph: I was playing with the demo and it’s completely different than the other broker that I was using. So, I will take it from there, and I will say that on that weekend, that Friday, that weekend I was mainly depressed. I binge eat a lot, I spent the weekend in bed, and I was trying to just fool myself of thinking positively. Thinking of ways to come back from this. Again, live and learn, lessons learned, try to put it behind me, and move forward.
Clay: Okay, so let me ask you this because I’ll be your soundboard here. What were your lessons learned?
Joseph: Well, first of all, with the combination of everything that happened in January, I need to control the size of my trading plan. I can’t buy 1,000, 2,000, 6,000 stocks. That needs to stop. I need to control myself on that way. I need to paper trade a little bit more than I actually want to until I see more solid results. With the combination of what happened with me with Tesla. Don’t be greedy, honor your stop-loss, and keep learning as much as you can.
Clay: Okay, that was a little quiz and I would say you passed beautifully. Had you said anything other than what you said for your first bullet point. If you had said, “Well, I learned I needed a new broker,” or, “I learned that stocks can move fast.” But you nailed it. “I learned that my position size needs to be kept under control. I don’t need to be going all in. I don’t need to be buying 1,000, 2,000, anything like that.”
Clay: I mean, good job. That is the lesson that you needed to learn and you have learned it. But I would also say, and I want to ask you, and maybe you haven’t quite thought this through, but hey, that’s the point of this. We’ll talk it out. What is your scaling-up strategy going to be? Meaning, okay, you want… I would probably disagree. I don’t know if you necessarily need to go back to paper. It sounds like you do a good job with just if it’s one or two shares of stock, whatever, that’s fine.
Clay: But let’s say that you go back with very small size, one or two shares or whatever, and you start to see consistent gains. What is your next step at that point going to be?
Joseph: [crosstalk 00:50:45].
Clay: I know you’re going to trade more, but how much more? What does that look like?
Joseph: I guess I need to design some sort of way to do it by section. Let’s say I just told myself, “February you’re out. Even though once you get your new broker’s account, you’re out. You’re not going to do anything. So, in March, you’re going to start getting one to five stocks, that’s it. You’re not going to do anything else.”
Clay: Okay, so what’s going to dictate one to five?
Joseph: The price of the stock.
Clay: Okay, fair enough. Okay, so one to five based on the price of the stock, that makes sense. So, then when you get consistent and you show that you’re making consistent money, where does it go from that point?
Joseph: Based off our current… I haven’t think this through, but I think what you’re leading to is to just take another baby step. Then it will be like move to five to 10. Then eventually, if I’m consistent, 10 to 15 and eventually keep increasing the size of the stock in a slower process instead of going all in.
Clay: You’re absolutely right, and I want you to prove me wrong. I believe that you will prove me wrong, but to me, and listening, and just hearing how you are, your problem is not going to be getting consistent because you’ve been consistent through many times. But it sounds to me… And again, this is just how, and I’ve talked about this many times before, but here again. It’s popped its ugly head, but the market loves to take ambition and twist it around and use it against people.
Clay: Joseph, you’re clearly an ambitious person. You go back, thinking about you’re working a job in college. I mean, you’re just an ambitious person, that’s very clear to see. But I see your ambition coming up in the sense of, “All right, I got it. Let’s go. I got it. All right, let’s go.” And I can see you increasing too quickly.
Clay: I get it, and you’re absolutely right. You got exactly where I was leading you. Hey, you know what? Five to 10, 10 to 15, and you slowly, slowly build, but I can see you getting to that 10 to 15 and getting consistent and then just being like, “All right, I got it. You know what? Forget it. I know I had all this small scaling up, these baby steps, but no, no, no. Let’s get to it.” I can see you going too fast back to too big a position size.
Clay: Now, I don’t think you’ll ever go all in again, but there’s still that point out there where you could go too big too soon again, and I think that’s going to be your main hurdle is you’ve already proved you can be consistent. But the position size, I mean, just be aware of that because from somebody that’s just being listening to you, being you’re ambitious, I think that’s going to be what you’re really going to need to be on guard against is that desire to want to go too big too soon again because you’re going to get consistent. Does that make sense about the pitfall that I could see you potentially wanting to fall into again?
Joseph: No. Yes, sir. It’s going to be hard if I were to be consistent again, which thinking positive, I will. I should limit myself to certain amount. And I could also compare it to the profitable amount on the what-if scenarios, right? I have a chart that I calculate the trading days of the year, 252 I believe, versus the one that I actually trade. And then last how much is the profit per day that I need in order to get X amount of income for the year.
Joseph: In reality, what I’m trying to shift right now is to have an early retirement. Replace my current income with day trade, but this is going to be a 10 to 15-year process. I’m right now shifting my mind from, “I’m going to be a millionaire in a year,” to, “Let me take the time to trade and replace my current salary in 10 to 15 years.” And that’s what I’m going to do. That’s what I want to do because once you get this, I don’t see myself retiring per se.
Joseph: I mean, from working. I would want to retire from my current work, but not retiring in the sense of just going to watch TV and just go to the beach and what. I don’t think I’m that kind of person, but I’m trying to put myself in a position that I can become more self-aware and teach my kids what I know. I’m still trying to get an investment property, which I was going to wait for when the market crashes to buy at that time. Yeah, I think I took a side… I’m sorry, what we were talking?
Clay: No, that was… You’re right. You’ve had the right reflection. You’ve had the fact… Basically, what you’re saying is you’ve realized that things are going to take time. That’s what you’re at, that’s what you’ve realized, and that’s important. But to hear the way you thought through it and to hear the realizations, you’re absolutely right.
Clay: As nice as it would be. As easy of a sales pitch for me would be, “Hey, listen, this will only take 90 days and you’ll be good.” That’s just not the reality of the matter. There’s a lot of fine-tuning that needs to go into it. But the first step to actually accomplishing it is just to acknowledge the fact of, “Hey, it’s going to take time.” You’re absolutely right, and like I said, there’s no doubt in my mind you will be consistent again because it’s never been consistency that’s been your problem. It’s position size, which all of a sudden, blows up the consistency because you get way too big.
Clay: You’ve proven you can be consistent, but again, when it goes back to the whole position size, that will eventually bite you, and it bit you. But yeah, as long as you now know that just because you’re consistent doesn’t give you the green light to start going all-in again or going way too big too fast, then you’re in the right spot and it sounds like you totally realize that. You have a new mindset that… As you know, it’s still not going to mean that it’s just going to be easy, but it’s going to be much more realistic now to get you to where you want to go.
Clay: So, looking at the time here, we’re almost at an hour, but I wanted… Did you have anything else in your notes that you wanted to address or anything? I don’t want to cut you off before you had any other bullet points that you wanted to go over.
Joseph: No, no, I’m pretty sure up to date this just happened January, and February I’m out, but I’m still listening to the podcast. I’m still listening to the training videos that you have on Tuesdays. I still-
Clay: Yeah, you’re going to be on the webinar here in like 30 minutes.
Joseph: No, actually, I don’t listen to them live. I listen to them during the week because I guess that’s the way my schedule works, but I don’t listen to them all, and it’s as valuable as the training. It keeps you updated. It keeps you with current information. It gives you practical examples. I like it, yeah.
Clay: Good, good.
Joseph: It’s very good product that you offer.
Clay: Well, thank you, and I’ll make sure to pay you afterwards for saying that because that’s just like we had scripted up there, Joseph. Well, well, done.
Joseph: Sure, sure, sure.
Clay: Okay. Well, given we got through your notes, which again, thank you for doing that. That was well-structured and definitely a fantastic conversation, but the question that I need to ask is the time machine, and if I were to give you the time machine and you could go back to the start of all this and give yourself one bit of advice, what would that bit of advice be?
Joseph: So, I thought about these questions that you’re going to ask now. I think overall, I would tell myself, “Invest time and money on non-traditional education. Try to do it while you are in summer. Try to squeeze some sort of knowledge. Specifically, on the stock market, try to learn technical skills search as technical analysis so you can be a day trader or swing trader or whatever you want to be. You’ll have the knowledge, and knowledge is power.”
Joseph: But at the same time, other stuff like mechanical stuff or simple car maintenance, electricity, plumbing. I don’t have those skills. My best friend is super skilled with that and I’m jealous sometimes because every time that I have a problem, I call him and he helps me through the phone. I guess, I would have hoped to have more of that technical skill, so day trading being one of them.
Clay: Good stuff, I like it. I’m the same way. I’m not the most mechanically inclined person, and Nate, he’s the one that’s always helped me put stuff together and that guy’s like… Which doesn’t make any sense because he’s like a geek. He’s like the IT guy, but he’s super practical with tools and stuff like that too. But I’m with you. I want to learn how to get more hands-on like that also with stuff, but awesome.
Clay: Well, good stuff. I like that final answer very much, so you’re absolutely right. I can certainly relate to it. Fun questions though. So, we’re going to have a little fun here, get to know Joseph a little bit better. So, when it comes to movies, what is your favorite movie?
Joseph: So, I have a tie, but I guess all my life it has been Forrest Gump. I love that movie-
Clay: That’s a classic.
Joseph: It’s a very, very good movie. However, as a Marvel fan, you can’t beat Avengers: Endgame either. At the same time, you can’t compare Forrest Gump with Endgame, but it’s just that those two movies are my favorite movies.
Clay: Yeah. No, I’m in agreement. It’s like a whole separate… I mean, there are so many… What’s it called? Comic book movies. There are so many comic book movies that you almost have to divide that out and say, “All right. Well, let’s just look at comic book movies, and let’s look at quote-unquote normal movies.” So, I’m with you there, Forrest Gump. I mean, not like my favorite, but a classic. An absolute classic. Top 20 for me for sure.
Clay: But yeah, and then Marvel movies. I don’t know, I liked Infinity War… I mean, Endgame was perfect, but Infinity War, that first one… This could turn into a Marvel podcast and this is not what listeners are tuning in for. So, I’m just going to cut us both off right now. I get the feeling that we could talk more and more about all these movies. But let’s just move on. Food, what is your favorite food?
Joseph: So, I do like in essence home-cooked meals. I do cook a lot, and I’ve been cooking a lot since the pandemic. But if I were to have one last meal, it would have to be my grandma’s white rice and chicken stew. Perfect. I’m from Puerto Rico. Rice and beans and meat, but that’s my favorite thing. Rice and some sort of meat.
Clay: To me, sometimes it’s the basics that go the longest way. I mean, simple, at least for me, I think is the best way to go when it comes to the food route. And then final question, three words, and these three words would be what you would describe to what it takes to be a successful trader. What are those three words?
Joseph: Okay, so on this one, I’m going to take a left route because the first time that I thought about this, it was going to be more of the same that everybody says, which what they say is true, right? But I wanted to do something different and my three words are family comes first. I say that because you can have all the skills, you can be disciplined, you can be responsible, accountable, whatever it is that you can define yourself. But if you’re not a family man or if you’re not true with your friends and the people that help you and the people that make your life better, you’re not going anywhere.
Joseph: I actually want to say to the listeners and you, right? If you close your eyes and let’s say you buy a hot stock. Let’s say you buy Tesla for 50 bucks and then you sell them now 900, you become a millionaire, right? But now think when in that scenario, your loved ones and the people that love you are sick or dead. You wouldn’t want to be in that position, right? At least I wouldn’t.
Joseph: By the same token, let’s say that your family is healthy, safe, and sound, and you’re just grinding and grinding and working towards the path of financial freedom. I think you want to be on that lane, and that’s the lane that I choose to be. Not necessarily a millionaire in money, but millionaire in life.
Clay: Amen. As a dad of four kids, one on the way, I can’t really offer up any sort of arguments against that. That’s family comes first or if people maybe our friends come first. Like you said, whoever that support system is because you’re absolutely right. If you burn down all of that in order to make a bunch of money, well, I mean, have fun with that money when you’ve burned down everything to get to that point.
Clay: So, I am in 110% agreement with that, and just when I thought that nobody can put a twist on that three-word answer, you did it, Joseph. I’m impressed and I am in full agreement of it. Very, very good answer and thank you again for being here. Especially having the courage, the guts to come here and be like, yeah. This all just happened literally a very small time ago, and for just not holding back.
Clay: There’s no doubt in my mind that there’s going to be a listener that’s going to relate to you. That has been there, that is going to be there, and now you’ve offered them insight to your plan of action to get things turned around. So, we’ll definitely have to have your back to see how this continues to go. Will you come back at some point to keep us all updated?
Joseph: Yes, sir.
Clay: Good.
Joseph: Most definitely.
Clay: Excellent. Excellent, excellent. So, again, thank you for coming here. Thank you for volunteering, and yeah, thank you for just keeping it real because that was some good stuff. So, thank you very much, Joseph.
Joseph: Excellent. Thank you. I know that, I guess, I struggled in January, but I just happened to read a quote yesterday and I happened to read it again today. So, I just want to read this to anybody that is listening. Giants often trip and fall, but worms don’t because all they do is dig and crawl. So, I don’t know, that blew me away.
Clay: That’s good stuff. You’re just full of surprises, Joseph. You’re full of surprises. So, that’s a great quote for sure, and definitely, a good thing to end the podcast right on. Yeah, thank you for slipping that… Is there anything else that you wanted to slip in before I call it good? Are you set?
Joseph: No, I’m set. I’m set.
Clay: Okay, perfect.
Joseph: Hopefully, it helps somebody, and if you’re on the CTU, be a volunteer. It’s not bad.
Clay: There we go. There we go, and Joseph, the man who is full of surprises. But thank you again, and I really do appreciate it. But for those of you listeners, before we go, final few things. First off, if you’re listening on iTunes or any of the other podcast players, please be sure to subscribe so that you know when new episodes and content come out. Especially if you’re listening on iTunes, if you could leave us a rating, hopefully, the five-star, and then even better yet, a written review. Little things like that go a long, long way in just helping out the podcast. So, I really do appreciate it, and thank you in advance for doing so.
Clay: If you’re listening at claytrader.com on the show notes page then there is a little chatbot in the bottom right-hand corner of your screen, so if you click on the little robot guy and just ask to speak to a human, it’ll go to myself or Nate. And I love to hear from people. In fact, today somebody reached out and gave me a suggestion for one of my solo podcasts, which we’ll try to do. So, I love to hear from people that are listeners.
Clay: Feedback, suggestions, constructive criticism, please. I don’t mind criticism, just make sure it’s constructive so we can all get better, but love to hear from you. Like I said, many different ways to reach out to us, but thank you again to all of you as listeners. Thank you, Joseph, and I appreciate it all. And we will see you all back next week.
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