STR 129: Paying Himself Nicely and Rebooting. Welcome Back Dim! (audio only)
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STR 129: Paying Himself Nicely and Rebooting. Welcome Back Dim! (audio only)

August 14, 2019


This is the Stock Trading Reality podcast episode 129. You know, the frustration creeps in, and you break rules. Yeah, well, what happens
when you break rules? You gotta suffer the consequences, so. (fun music) 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. He wants to visit Germany
some day, Clay Trader. (speaking foreign language). That’s all the German I know, but I would like to get
over to Germany some day. And this is like the fourth take that I’ve had to do of this so I don’t know. I’m like flustering myself at the thought of visiting Germany, so I don’t know what it is other than both sets
of my grandparents are from, see what I mean about flustered? Are from Germany. Now I don’t know the exact bloodlines, and when people came over
to America or whatever, but yeah I do have history
there, in terms of Germany, so I would like to visit some day. Apparently more than I’m aware of because, subconsciously, like I said, this is the fourth take, and then I’m already
stumbling out of my words. So maybe I should get over
there sooner than later ’cause maybe it’s not good for my health, but yeah, I’d like to get over
to Deutschland at some point. Chez do you have any, by the way, Chez is our esteemed co-host, but Chez, do you have any sort
of dream vacations anywhere? Which is a question we ask our
guests every once in awhile is a place they’d like to visit. So I guess, I’m now asking you that. Any sort of dream holiday
or dream vacations? I’m not sure about vacations, but yeah, my dad is actually from Germany. They left there and he came
here when he was a small child, but yeah, both my
grandparents are from there. My grandma’s from Lithuania, and I actually took two years of German, but I’m not even going to embarrass myself by butchering it with a bunch of sentences like hey can I borrow your bicycle? Or something like that, ’cause, you know, that’s a pretty odd thing to ask people nowadays. Most people won’t just lend you a bicycle if you say it in German. Might probably run away
from you or call the police, but, yeah, I would actually love to go pretty much anywhere in Europe. My parents have kinda done
trips now that they’re retired into France and Italy and Germany, Switzerland, stuff like that. And they just say they always tell me how beautiful it is and
show me all these photos, and yeah I’ve never been to Europe. The farthest I’ve ever
gone is Vancouver, Canada just in terms of kind of distance. I don’t really count Hawaii ’cause that’s still the United States, but yeah, I’d love to go
pretty much anywhere in Europe, and I also would like to do a big motorcycle trip in
Australia at some point. So those are the two main things. The Europe one is very broad. The Australia one is much more specific. I did not know that. So your dad came over to the
country as a kid, your dad. Literally on a boat, yep.
Wow. Alright, so that’s interesting. So your generations
aren’t too far out then as far as–
Yup. So what is that? That makes you like a, what generation immigrant
are you then, second? Or third? I think that makes me the second. My dad is the first. So that would make me a second. Or would your dad’s parents be the first? Actually, that’s a good point. I have no idea how this stuff works. Any immigration specialists out there please, in the comments section, help Chez and I figure out this conundrum. ‘Cause we can’t figure it out. Yeah, ’cause we’re not smart enough to figure this out so, but anyways, that’s cool. See, that’s why I like these fun facts ’cause I did not aware that Chez was such a recent immigrant
to the United States. So, today we have a great podcast. We are bringing back Dimliwitti. I think I got his name right. That’s what he goes by in the room. To be honest what is his first name? Do you know his first name? Sean, Sean is his first name. Sean his first name, but we all just call him Dim. Dim, yeah, so his screen name is Dimliwitti in the community, but I can barely ever pronounce the thing so we just all call him
Dim to the point where I had to take a second. I had to really think. Wait, what’s this guy’s even first name? But Dim is what he goes by, and that’s what we refer to him as, but his name is Sean and he’s
been a member for a long time. He’s already been on a podcast before so this is his one where he comes back, and yeah it turned out to be awesome as we figured it would, and at the, towards the end, said they Dim do you have anything
else you want to talk about? And then he was just kind of laid off laid on some great talking points that extended the interview that much more, but really good stuff. And at one point is, and he didn’t quite say it like this, but he’s like I disagree
with you about something, and then he just shoved it in my face, in a nice way of course, but then we had a great
discussion about it, and it was very refreshing. So make sure you definitely
stick around to the end. So without further ado
let’s hear from Dim. Dim, welcome back to the podcast. Thank you, good to be back. Now I actually did my homework beforehand, and you last time you
were on was episode 59 so it’s been well over a year since you’ve been back on the show, and you were still in the markets. You were still surviving. So right off the get go
congratulations for that because as both Chez and I know, and as you know, that a year may not seem like a super, super long amount of time, but when you’re trying to
keep your head above water not only prosper in the markets that’s actually a good accomplishment. Would you agree with that Chez? I mean a lot of people struggle to make it six months let alone a year. Yeah, once you kind of get over the six month mark or the year
mark for the most part you either got really deep pockets, and are just continually losing, or, more often than not, you’ve kind of figured
out risk management, and how to get your piece of the market. That’s true Chez. I didn’t think about that. You could be a super, super deep pockets, and you could really be
losing for the next 20 years, and still be in the game. So I guess a good point on your part, but Dim I guess like what we start to do, or like to do with these, you know, kind of welcome back type interviews is why don’t you give the listeners a nutshell version of episode 59. So kind of what we talked about there in terms of your story. What got you interested? What got you trading? But you know just summarized
in a several sentences. Geez would it be a sign of my age if I told you I can’t remember? (laughing) Do you remember how you got started? (laughing) No I remember
how I got started. You know, going back to that episode I had explained that a lot of my funding, or my capital, we had had an unfortunate situation in the family where an
inheritance was involved, but also I had been a long term investor prior to that since, geez,
some of my first careers where they first introduced
you to the 401ks, and mutual funds and all that. And that tweaked an interest in just knowing about the underlying stocks, and the stock market itself, but I was given an unfair advantage with capital to break into trading, and I say unfair because a lot of people just start from basically nothing, or, you know, 250 bucks and work up. And I had inherited a very
large portfolio to begin with. So, you know, having learned from my wife’s grandfather on investing side of it, and fundamentals really strong
background in that area. We cleaned up the portfolio, and spun it out to a separate
brokerage account to trade from so it wasn’t affecting our savings if you will, and just started rocketing from there. Had some huge losses, and as most people do before they enter some formal education process, but after I came to you guys things really turned around, and I had some major wins that have far outweighed the losses previously, and I’ve been doing well since. Clay I know I disclosed
to you my account size, and everything at one point with the just the pure trading account, and since then I hit a high mark, and we’ve peeled off basically
a zero out of that (laughing) so I’m down to a small
size brokerage account, but the reason for doing that was so that I secured that money, but it’s also part of my vacation home endeavors. Nice, I like how you
said you peel it off to. How did you say that? You you took it off to what? To secure my profits. There you go to secure your profits, and that’s actually a super good point, and I have a video out on this because, and I got to remind myself this. Just because you buy and
then you realize the gain, so you sell, that really
doesn’t technically mean that you’ve made that money because sure it’s sitting your account, and yeah, you’ve locked in the profits. I mean it’s no longer an unrealized gain. It’s a realized gain, but there’s kind of an asterisk by it because unless you do what Dim does, and you literally pull
it out of your account there’s still potential for you to lose that money in another trade, or if you just all of a
sudden have a brain fart, and you just do something really stupid that money could still be lost. But if it’s not in your account anymore then you literally can’t use it. So, you know, when
you’re out there trading, or investing just remember that there’s unrealized gains, there’s realized gains, and then there’s I don’t know. We need to come up with the term for the gains that are– Book gains.
Yeah book gains. Is that the proper terminology
or do you just make that up? Um I think I’m just pulling it out of my rear end, but at the same time– No, I like it, I like it. It makes sense and then
you have book gains which means you can’t
lose that money at all because it’s not even in your account so just one of those little
kind of small things out there. And then I’m still guilty of
I gotta need to remind myself of every now and then is
ooh Clay I’m up this amount. Like well not really really ’cause I could still do something stupid, and lose it all. But I want to circle back real quick, and first off I applaud
you for your humble nature that yeah maybe you
did inherit some money, and you started off with bigger accounts, but and I know it with Chez I’m gonna toss the ball over to his court here, but just because he got
a bunch of, you know, he started with more money. I mean, yeah, that’s an advantage, but I know you’ve talked
to plenty of people. I’ve talked to plenty of people where they get a bunch of money, and they are just being
total morons with it, and you can tell they’re gonna
go right down with the ship. I mean so Dim’s gotta give
himself some credit right? Yeah, absolutely, you know. If you come into $100,000
or whatever it might be most people will
foolishly think okay cool. Put that whole thing
in the trading account. I’m trading $10,000 positions while the smart person would literally take $1,000, trade extremely small, and
see are they making money? Whether its large or small,
or are they losing money? Because if you lose
the $1,000, guess what, you’d still have the 99 to go hmm. Maybe I need to do something different, but yeah, most people, when they come into kind of a sum of money they think this is the road to riches. It takes money to make money, but if you’re a consistent loser you can go through that
pretty quickly as we’ve seen. Yeah so I mean good on you for being humble, like I said, but also good on you
for actually being smart with the large amount of
money that you inherited. So the one thing I remember about Dim is we kind of coin it the fourth dimension. The fourth indicator
that it uses which was fundamental analysis is kind
of an overarching blanket, if you will, on top of the charts, and the technical analysis that I did. So I guess the first kind
of just let’s catch up on things are you still
using that fourth dimension indicate in your trading Dim? Or is it still functioning the same? Has it changed at all? So let’s talk about you
know where fundamentals still fit into your overall trade plans. They absolutely do factor in, but they’re more technical in that I’m using fundamental numbers, and ratings and different
things that actually equate to a chart over time you can do it. If you’re talking long term you can do it monthly, yearly, every
five years, every 10. You can build up in increments of time so you can build a graph long enough to feel eddies, or you can do short. And what I have with
my particular platform is they give you a number, whether it’s in the negative
or the positive trend, and in that context I’m able to look at that metrics little screen, and say oh well okay. If I’m going against
this trend it’s kind of I better be tight with my stop losses, but I use it very much as a chart indicator for my decisions. And I think it’s it’s really cool because, honestly Clay, I’m not sure. Dim was pretty much the pioneer for us, or at least our introduction, to kind of that fourth
dimension of trading. Am I wrong in thinking that? I really don’t feel like
there’s other people who have a firm investment background, but in terms of kind of trading, day trading, swing trading,
Dim kinda is the guy who was the first person to even bring that to our attention. Yeah, from what I remember because I don’t want to say
anti fundamental analysis, but it’s like well you almost
gotta be one or another, but I will say that Dim had Chez, and I both going okay
yeah, I’ll buy that premise. I’ll go long Dim strategy ’cause it makes sense
the way he fits it in. So now this thing you’re
using for the trends. Is that something that did you say your broker’s giving you this number? Where are these tactical
data points coming from Dim? No, they come from my brokerage. Okay and your brokerage is? Schwab. Schwab. You’re still using Schwab? Yeah.
Okay, so why Schwab? what are your commissions first off? Well, as of late, it being in 2017, we’re in almost August now. Recently, or the earlier
part of this year, a bunch of different brokerages
really put the competitive– The Broker wars, yeah.
Yeah. The brokers have broken out in war which is what Dim’s
referring to absolutely. Right, so luckily, that benefited anybody in Schwab, especially
the larger account holders, and they’ve basically
done away with all my fees except for per trade which
is down to $4.95 per trade, and that’s in and out not transaction. So that was wonderful change compared to the $8.95 per transaction (laughing) where I started with them a long time ago, but before now, and back then, I’ve tried a couple brokerages. I was with Interactive
Brokers which Hooch is big on. I still have let’s say about 25k in that account, in some long term positions
just to keep it there. I like some of their little
tools that they have over there especially some of the newscast stuff, but Schwab has huge, deep pockets and resources, and any data, that’s the other thing, all data is free with them beyond the certain, I guess, account sizes, but that I haven’t found a single broker out there that offers something that Schwab’s trading platform does not. So it’s just what I’m
most comfortable with, and with that fundamental
piece they’re huge on that. They offer all kinds of ways to relay the information to you on the fundamental, and it’s integral now in my strategy so you know I’m back with them. Where I was doing my day
trades at one point with IB. Gotcha, and honestly, you bring up a good point in terms of kind of comfort, and we we talk about this a lot. Don’t get me wrong. We don’t think you should be paying three or four times the
market rate for, say, a specific platform or
something like that, but, honestly, when you’re
comfortable with a platform, it has the tools that you enjoy using, and say, the rate is in line with market, and considering you have a larger account they’re definitely willing to play ball, and make the rates probably
extremely competitive. That’s what it really comes down to because it costs you a
drastic amount of money, and I wish there was a
figure to kind of calculate how much money is actually
lost due to errors in your order entry exits, misplaced stop losses, things like that. It can add up very quickly so when you have this comfort level with whatever platform it may be those errors are drastically reduced
which is really just makes for a more efficient business, but to kind of go past your
your previous podcast, I guess, how has your trading
been since I mean Clay. What’s it been almost
100 weeks since then? Yeah.
80 weeks since then? So it’s definitely been over a year so how has your trading
been since we last spoke? But, before you answer that. I want to be rude. So did you say that your fees right now were $4.95 both ways? What do you mean by both ways? I mean like when you buy and sell that the total cost is $4.95?
Right. And they do something so the terminology is a little
different with their setup, but I do brackets in
there, and multi bracket. So if I buy 1,000 shares, and I can do several stop losses in that. So I could do 500 at one, 250 on another, and 250 on another, and if each of those stop losses are hit it divides the exit $4.95 across them as proportionate to the number of the percentage of the 1,000 shares. So it’s literally $4.95 for in and out. That’s, so I’m not a math genius, but that’s about $2.50 to buy, and then $2.50 to sell overall, which I will that is
very respectable, I mean. Yeah, definitely.
I’m assuming that doesn’t matter if you’re adding, or removing liquidity I would assume. Right.
Okay, so that’s whereas for me at Lightspeed I’m
technically cheaper than that, and I haven’t run the numbers, but if I start just removing liquidity, and stuff like that, then my fees can switch to the opposite pretty
quickly so, but yeah Dim can, and if you’re not sure
what I mean by adding, or removing liquidity we’ll
put a link in the show notes about I’ve done an article on that so we’ll put that down below. In some cases you may not
even have to pay commissions, but point here being I
will stand corrected. I would say Dim that is a very, very attractive fee structure especially
the way they, like you said, they divide it up, and
just kind of spread it across your various
orders, and bracket orders, and point being, like you
said, they have deep pockets. They give you a bunch of tools, and when you’re doing bracket orders within bracket orders that’s
good stuff, and not all broker. Robinhood is not going to allow you to be doing bracket orders
within bracket orders. I’ll just leave it at that. So sure, Robinhood is free, but going back to Chez’s point too, they’re not exactly designed for the type of training that Dim’s doing, and I can see all sorts of order misses, and mishaps that cost you a lot more than what the actual cost of Robinhood is. So that’s good stuff. Now you don’t have to tell
us the exact account size, but do you have like a massive account because it sounds like a lot of this is because you do have a bigger account size. So what I’m trying to get at here is for the listener out there
that’s maybe got $1,500, $2,500 do they have a chance
at this fee structure? No.
What are the minimums that would be required? Hmm, they wouldn’t, (laughing) it would not qualify for some of the fee waived stuff. A lot of the data. Some of it, yes. I think it sounds like
just call Schwab right? It sounds like these people
should just call Schwab. Yeah.
Talk with a representative what their numbers are,
because to be fair to Schwab, by the time this airs maybe another broker war has broken out, and all of a sudden Dim’s paying 50 cents. You never know in the world of brokers, and that’s the great thing
about the free market is literally by the time this airs things could be totally different. So it sounds like Schwab
should not just be passed over. That’s the point I’m trying to get across is get on the phone with
them, talk with somebody, explain your situation, and who knows? Maybe they can give you
some some worthwhile fees especially depending on your strategy. So this is all a good stuff ’cause it goes to show that this is why people out there follow my
strategy, and use my broker. No there’s there’s no one
size fits all broker either, and it really just depends so. Now we can swing back to Chez’s question. How has trading been going? I mean, in the email earlier you mentioned you’ve kind of switched some things up so I guess what sort
of things have you been ’cause we know you’ve been doing well. One thing about Dim is he’s always very transparent in the chatroom, and that includes when he has rough days. Hey I’m shutting it down. I’ve given back gains, or I’ve
lost some money on the day. So it’s not like he’s one of these people that only post winning
trades or anything like that. So we know that you’re doing well, but what sort of things have
you kind of switched around that you were alluding to
in that email you sent me? Well one thing was when you have a very large account, and you subtract a zero from it suddenly it’s not a very large account. Zeros matter (laughing), and it’s had to change my risk tolerance. Let’s just throw huge numbers out there. So when you chop a zero
from a million dollars. Think about it now
you’re dealing with what? $100,000 right?
That’s a big difference. That’s a huge, huge difference. So even when you’re going from 10,000. You chop a zero off that
you’re going to 1,000. So $10,000 account, you can enter a lot of different long positions, but when you’re dealing with 1,000 now you have to pay attention to the price on your equities if
you’re playing equities. And even so with options. I mean you you’re limited by what money you have to buy with so I’ve had to adjust position sizes, and my risk tolerance numbers. So some of the strategy and
things that I’ll pass over are things that awhile ago, it’s actually I want to
say a long time ago now, I used to not even blink at, and jump in. Now I’d have a plan of course, but when you’re sitting there, and you’re looking at
1,000 shares of something that’s $100 per share your risk breaks. It’s still a percentage, and you’re looking for the four to one, or five to one ratio, and it’s all that, but if you lose it that
loss is much larger than one if you’re
dealing with a $10 stock. You know what I mean? Yeah, definitely, and
I mean it makes sense because you really bring up the fact that it really is percentages, but you know $1,000 or
1,000 shares of $100 stock versus a 1,000 shares of a $20 stock. Don’t get me wrong. The whole thing is you have to keep your stops realistic as well. Right.
$100 stock, if you have a five cent stop loss you are most likely getting stopped out because five cents on $100
is quite a small percent. But five cents on a $10 stock, a $5 stock, these might in terms of percentages are actually much wider, and that’s why we always
kind of harp on stuff in terms of position sizing is one of your best risk management tools, and you should be kind of using it dynamically based on what you trade, but you also brought up something
else I want to bring up. A $10,000 account versus a $1,000 account. When Sean started with their $250 account on a cash account for
options, essentially, you can go through your account value just about once a day, and then it’s back the next day assuming you’re just day trading. You can only take maybe one, or maybe two positions on a $250 account because you’ve literally used
all of your cash that day versus $1,000 maybe you can spread it over four, or five trades. $10,000 you can probably go
way more than you need to, but these are kind of good things you got to kind of remember too, but a lot of people just think
oh I have a $250 account. It’s gonna be awesome to day trade. I’m like ugh, well, you know. Maybe you get a trade or two of the day, and honestly, it’s not always a bad thing. Maybe you need to only find
one or two trades that day, and take a look at it after, and see what you missed, or should you have waited
for a more optimal setup. Sometimes that kind of
forcing you to be patient turns out to kind of be a real big asset. Right.
I guess my question here at this point is what
steps did you have to do in order to, I guess,
realign your risk tolerance? Were you going super small positions, and then working your way up? But how did you make the transition of this whole risk tolerance stuff because that’s more than valid. It makes perfect sense. So what was the process that you kind of had to take yourself through
in order to figure out how you define okay whoa
that’s too much risk, or all right yeah, I feel
comfortable with that? Well, currently I play
more of that zen feeling, but when I first went back with taking that zero and starting over again. It was right before I took
that unfortunate long break (laughing) due to medical reasons. Which, by the way, we’re very happy to have you back and–
Definitely. Yes.
Thank you, but it was a sitting there with the calculator, and trying to come up with the numbers back to the way basics. Saying okay, I won’t go beyond
one percent of my account, and what does that actually come up to? And hard lining what I was willing to risk, and it was hard at first. Very hard compared to when I was operating
out of the huge account. It was a very much zen, and feeling saying yeah that’s just another pebble in the bucket. I can afford that. Whereas when you’re missing a zero, or two zeroes, or whatever it is off of your normal account size it takes discipline, and you really need to
have those hard numbers in your head to know what your limit is, and what you’re willing to do. Now how did you determine
what your limit was? I understand you’re sitting
there with a calculator. Alright, what’s one percent of my account? And you look at that number. Now was that number that
was staring back at you. Did you know right off
the bat it wasn’t good because it just wasn’t realistic? It was too small or because just I guess what
I’m trying to get at is just because you type in
numbers in a calculator, and it spits you back out a number really you don’t know how
you feel about that number until that amount of that number is on the market in the line– Right.
And then when the voices are if there’s no voices, okay. Then obviously I feel
comfortable with that number. So I guess where did you
end up with that number? Is it one percent, two percent? And how did you actually, did you have to just throw
that number to the market and then saw how you feel? Or did you just know
you know mathematically where kind of the gray areas were, and where it was very black and white? Well I had come up to I had said one percent, and I think in the in the
beginning I had worked it out to maybe one point something
percent closer to two percent. But basically what had happened was I was trying to work with one percents on my normal watch list, and the watch list included a stock that I used to trade a lot, XLE. VRX.
Oh, no, VRX is cheap. Oh.
XLE was an ETF thing that I traded a lot–
XLE, that was another one of your lovers.
Yeah, and it was in the $70 range and there was no way I could really trade it effectively at least in my previous strategies effectively with the position size I like, and the price, so I started
saying okay position sizes. We’re gonna cut those down,
and I still wasn’t happy because if my trades for the day
I didn’t want to exceed X amount on a single
trade one percent great, but how much in a whole day am I going to invest or risk of the account? So I was like hmm I don’t want to lose in a single day more
than 5% of my account. So right there I got five trades on a, based on the smaller position
size, on the XLE alone. I’m just throwing those out there. I don’t know the exact numbers, but it was very limiting, so I quickly said okay. We’re gonna have to start
playing with some stocks that are under the $50 mark, and I can operate I could
do more trades that way, or I can invest, I could do two entries on a single stock, on VRX for instance, and
treat them as separate trades, and I’m not robbing from other
possible trades in the day. Do you follow? Yeah, and I mean, correct me if I’m wrong, but you’re pretty much looking at what is the best return on your capital? Is that a good way to kind of sum that up? Exactly. While it is totally math it also kind of comes down to you had these names that
like Clay said that you love, and that you’ve traded often, but if capital changes
and things like that you might be trading subpar because it has nothing to do with
how large your position is, but if you can’t kind of
scale in like you’re used to essentially you are getting
out of your comfort zone because you know how to trade it one way. you know that it works well, but if things change and you have to start kind of changing stuff up, and maybe it’s time to find
a way to kind of go back to what you’re used to, what
you’re comfortable with, but it might just have to
be a lower price stock. so I mean that’s it’s an
absolutely great point too, but I mean, Clay, correct me if I’m wrong. Doesn’t it really just
comes down to comfort? If you start having to force yourself force a square peg through a round hole most likely your trading
is gonna go poorly versus something that just
feels natural and works for you. Yeah, you took the slogan
right out of my mouth. I was thinking this is a exact perfect example of a square peg round hole. Let’s just say the square
peg is account size. The account size has
changed, so therefore, this square hole has now
gone to a circle hole, but if he’s still trying
to use his square peg strategy that he was using beforehand things are just not gonna work out. So basically, what Dim had to
do was get out his whittle. I think that’s what they’re
called, you whittle with. Is that right? So he had to get out his whittle, and figure out alright,
my strategy is no longer a square hole, it’s a round one, so I got to get my strategy now. It’s also be a round one so it can be round peg through round hole. So you got to keep that
in mind as traders is when things change whether
that’s account size, or heck, even position
size, if you all of a sudden scale up too fast we’ve heard
that tale over and over again. There’s many variables in
trading that can change that all of a sudden turn something from a square hole to a round hole, and then it can get nasty, but a lot of times you got
to get out the Dim whittle. That’s what we’re gonna call it. You just gotta Dim whittle something, and figure out–
We got the fourth dimension and the Dim whittle. Yeah there we go. So now my question to you is how long did this
whittling take away before you kind of started to find your groove? Was this something that you
got done relatively quickly, or did the whittling take, I guess. How long did the whittling
process ultimately take you before you found your comfort level? Well shortly after I returned. (laughing) So what was that? Close to four months?
I was gonna say, yeah, three months, but yes I think we’re in the same ballpark there. Right and that’s a long time, but to be honest while I was out on medical leave I hadn’t
been doing much other than listening to some of the trainings, and podcasts, and stuff, but as far as the platform I opened it up on a weekly basis. So I get to play a little. I didn’t do a lot, but when I returned in about three weeks I had gone back to the very
bare minimum small amount that I had figured out before the leave that I took, and then it just started feeling it out, seeing the success. The biggest frustration
for me was just the sizes, and the limitation of it. Kudos to a lot of folks that
start with next to nothing, and build up because
that is it’s infuriating how slow it is starting out to me because having a large
amount of money to play with you can yeah it’s all zeroes at the end, so you know your 10 gain
may be 100 gain for me, or 1,000 gain depending on the number of zeros we’re playing with. And 10 was just a reality check. Very frustrating for me having
to put on the patience hat, and keep the discipline, and some of the red days
that I was encountering was just going against that discipline, and taking off the patience hat. So you know it’s quick
to remind you saying no no (laughing) I stick to the plan, and (laughing) be patient. Do you ever get tempted to grab that vacation money house, and be like let’s put that
back in the trading account? Or is that just on lockdown in some offshore account that
only your wife knows about? (laughing) No it’s on lockdown, but you know I could go through
some steps to get it back, but that’s not a consideration. We’ve been taking frequent
trips down to the Gulf looking at properties, and whatnot so it’s a
constant reminder saying you know I couldn’t be doing this if that money wasn’t there. So there’s no way I would touch it. I was actually gonna ask is there any sort of like mind games you ’cause that would be
the way you describe it is that would be like
you said infuriating. That would be terrible to
be like I remember when, and then you know you had that zero, and life was so much easier. So I can totally see the
temptation being real on some days like I just need to grab that money, but, like you said, if you’re
headed down to the Gulf, and you’re kind of reminding
what the point of all this is I could see how that just makes things a little bit easier on you. So are you still trading mainly stocks? Are you doing options? I guess what are the vehicles that you’ve been mainly focused on? Well, in the beginning,
figuring out those numbers, and being limited, yeah, I did use both options, and equities. My preference has always
been equities, just always. Now I have, I’ve gone through
all the training for options, and I’ve used advanced, and I’ve use just plain,
straight trading options, buying a call, buying a put, and it does give you access to the things that were out of reach, but there’s so many stocks out there. So many equities, and so many different trades available to you
I don’t see having to, again, force something that’s out of my main strategy. My main what I like to do, and I’d like to trade–
Your comfort zone. Yeah, exactly. And I mean we’ve talked to a lot of other people before where it’s well they know how to trade
kind of both vehicles, I mean, some people can
trade multiple vehicles, forex futures, you name it. Ultimately, I know it sounds
like I keep repeating myself, but the comfort level,
and just your familiarity with one versus the other, and, don’t get me wrong,
I think options are great especially for folks even
with the large account, but mainly a small account because of the leverage it’s
kind of inherently built in, but there are factors
you have to keep in mind. So if you have the
equity to kind of trade. An actual equity to trade
shares of a company, I mean, more power to
you because, honestly, in reality we’re always
just trading the chart. How you accomplish that
is pretty much up to you, and most the time it’s
determined by your account value because, I promise you, if I
had an even larger account, and could trade thousands
of shares of Tesla, or Google, or something like that then I would probably
not trade options either. But yeah I think it I
feel like a broken record, but I really do feel like it just kind of comes down to what you’re
most comfortable with, and I do remember from your last podcast that’s that’s really your bread and butter is trading shares. Yeah. And on that point you think of TFletch who we interviewed several episodes ago, but he’s got a nice sized account. Yet here he is trading options,
using advanced options. So to just help beat that dead horse that Chez has been kicking
this whole entire episode personal comfort whatever you
feel most comfortable with because you may have a huge account, but you may still choose to
trade options in that account. So, and I realize that
seems like a dead horse, but maybe you’re not familiar with the world of trading educators, and this, that, and the other, but I assure you you start digging, and you’re gonna have people proclaiming they have the strategy do
this, and it’ll all be good. No because what happens
if quote unquote this doesn’t fit your personal comfort level then it’s not, sure, maybe
it does work for them, but that isn’t mean
it’s gonna work for you. That’s why you got to
learn the general tools which here we use charts, and Dim uses some fundamental analysis, and then you gotta figure out you gotta do some whittling. You got to figure out
what works best for you. Do you have any stocks right now that we’ve had XEL, VXR, I mean what sort
of stocks do you like to pay attention to nowadays? Or you just kind of trading whatever pops up on the scanners? Or do you have ones that do
you have a basket of stocks? well I have a small basket, and then I trade whatever
comes up on the scanners. What’s funny is I’ve been frustrated with you, Clay, from time to time because you’re coming
up with a watch list, and I’m like dammit those
are the same damn stocks. So I have a feeling we’re both checking a lot of the same scanners and– Oh, same stocks that you’ve also found is what you’re saying. Exactly.
I thought he was saying that you only say the same
positions day after day, but what he’s saying is that you two come up with essentially
the same watch list. Right, yeah, okay, there we go. Well, I don’t know Dim. I don’t know what you want me to do. I’m sorry that, I feel bad for you because that means you’re in
the same mindset as I am now, and I don’t know why that’s
a scary spot to be in, but yeah, I mean I clearly I guess this what are you looking for on your scans? In order to get on your watch list what would you like to see? Well, sometimes you’ll post something that’s just too low in price. What’s too low? Just that, and remember listeners, this is not a Holy Grail this is just what’s too low for Dim for
his personal comfort level. So what’s too low for you? I’ll shy away from anything
that’s coming out of, or going into the penny stock range. So if it’s at a dollar forget it. I’m not gonna, no. I’m not gonna mess with it. There’s one that you just, you had recently alerted, and I loved the setup
and look of it, whatever, but you know there are others. I’m gonna move on and it was what $1.40, or $1.20 or somewhere in there, and it was it was moving downward. I was like oof, (laughing) no thanks. There’s a lot out there
that are more stable, and I’m you no, no thanks,
I’ll walk from those, but I’m looking at price and volume. If there’s a volatility in there, especially in the
beginning of the morning, some of these crazy, or nuts, or not nuts but crazy alerts where it could probably whip saw you some of those still really attract me simply because of the action that’s in there, and liquidity is often huge in it. I like what you said there, and that’s a great point. It goes back to you being very self aware, and having a strategy is
you could look at something, and just not looking at the price, but ooh look at that pattern. Yeah, that pattern looks great. Oh yeah, okay, I’m like it, and that all of a sudden
he sees the price, and because of the price,
as much as I like the chart, as much as I like the pattern, I’m no longer interested, and he moves on. And that’s just that’s what a system is. That’s what’s having a rules
are as a part of a strategy is knowing what your limits are, and are we saying that
that’s the right way to go? No, maybe you can sit here like I don’t care if this thing is 10 cents, $10, $100, or $1,000 I will trade it if I
like the chart pattern. For Dim that’s not the case. If he likes the chart pattern, but then he sees that it’s
a dollar stock, for example, he’s just gonna move on
and find something else. So many ways up the profit hill, but that’s a great example of somebody that’s being self aware, and has rules within a strategy, and isn’t just making it up as they go. So do you have what other
sort of rules do you have? Is there any other kind
of I guess red flags? You’re just like I won’t touch it. We know that price. You can’t be coming out of a dollar land. Do you have any sort
of volume requirements? Or how do you gauge
what’s sufficient volume verse what’s not enough volume? Well it’s funny you say that. Volume, it depends on the stock. I know certain stocks
they don’t trade at all during pre market so it’s sort of hard to dictate based on pre
market activity whether the volume’s there or not so I’ll rely on the previous days, what it’s
average volume trading is, and I like to see in a day well over a million shares, but it’s not hard fast because I have gone in light with a small position on something that’s had great news, and they’re just now they’re doing nuts, and volume builds up so
their past behavior on a stock could be they
only traded 2,000 shares in a day on average for
the past three months. But suddenly their patent was approved, and today they’re doing
over 2 million shares. So you know I don’t bar those out, but the current volume trade level also needs to be it’s play it as it comes
to you sort of strategy. But what’s going to make my watch list before the market opens is the average volume, or what pre-markets already trading in, and their current volume level. I don’t like to see something that is likely to leave me with an open order, and it won’t fill for 300 shares. Something like that that’s just not something I’m willing to to play with. And I mean it really is just comes down to obviously the liquidity is kind of the technical what you need to kind of work in and
out of these trades, but, more than that, what you’re really looking for is sustained interest. Something happened either
it had a huge move, and you want to see people
kind of flooding into it whether they’re buyers or
sellers doesn’t matter to you, but it translates to
you can kind of work in and out of your positions. If you get into something, and then the liquidity
dries up that stop loss might be much wider than you
had originally anticipated, and it just leads to a
whole mess of problems/ But obviously you’re looking for stuff that has the interest. Now you’re going where the
money is flowing in now, and it just makes your
life easier as a trader. You can keep your losses small, and pretty much ride the the winners for as much as they’re willing to give you. Right.
Well, let’s see yeah. I don’t think you answered this, but maybe you did which is why
I’m stumbling over my words. Now going back to the fourth dimension. You say you still use it, and you say you use that
number that Schwab gives you. Are you using any other
fundamental components that you factor into a trade? Or is it just that number via Schwab? If you are what other
things are you looking at from a fundamental point of view? Well it’s not just one number, they have– Good, now we have good. Now this should be a good talking point. I’m glad I asked.
(Dim laughing) So the cash flow. I’m looking at their corporate or company information. You’re buying shares of a company. So, to me, a fundamental says okay what kind of company is this? Is this a loser company? Or is it a winner company? Or are they just kind of treading water? And that tells me it’s
the same sort of trends, or pattern things that people were looking for in movement on a chart. It’s backup to what I’m seeing. Not basically I’m not gonna
look at just fundamentals, and trade solely on that. Like I said, cash value on a stock versus their earnings, their cash flow, PNE. There’s a number of
numbers involved in there that give me, okay, they
have five numbers here. Three of them all have
a negative behind them for year over year and months, and okay, so this is a losing company. Probably your best strategy
is either to buy puts, or short it depending on whether it has stocks available to short. So did that answer the question? It did, and my next
follow-up question would be so let’s just do a pretend situation, and I put out a watch list in the morning, and you’re looking at the tickers. Now in order for the tickers
to possibly translate from my watch list to yours do you put them through a
fundamental screener first? Or because sometimes I’ll
put out my watch list with like 10 minutes
until the market opens. So are you literally
going through each ticker before it gets on your watch
list with fundamental stuff, or how does that work
from a time perspective? ‘Cause it sounds like this
takes not like all day, but it sounds like it’s not something that happens within a few
seconds, or maybe it does. What is your process for
a stock to actually arrive on the official Dim
watch list for the day? Well, like I was saying earlier, your watch list has been in a lot of ways maybe one or two stocks are
on there that I don’t like, or didn’t pick up on, and I may have two additional ones that you didn’t pick up on, but coming up with that watch list it’s my morning activity with the biggest keying things are probably the same things
you’re looking for. And then on each one
when I type it into my platform I’ve got a screen right
over there called metrics, and those give me those
negative or positive numbers that are a trend back up on what direction is probably the safe bet in the very least long term for a week if I’m
thinking about swinging. On a day trading perspective I will bet against that depending on what today’s trading is doing. So if they’re suddenly
very bullish on this day, and you’ve got a nice bull
pole position started, or not position but formation. Right. Right, I will go long on that, but it tells me okay I better think about a little tighter stop
loss in here, or whatever, because we are playing
against the overall trend or playing against what
the overall company (laughing) has proven
what it’s going to do. And it’s funny how
often those fundamentals concur with the week, or the monthly, or whatever longer term charts say. No, absolutely. So it sounds like because
Schwab is a good solid platform, and you have everything figured out somebody could put an alert in the pit after the market is already opened, and you you can look at that ticker type it into Schwab, take a
glance at your metrics screen, and then you’ll you’ll
have an idea really quickly what’s going on from a
fundamental perspective. Is that a pretty fair assessment then? Yes, and yeah, it took a little tweaking to say okay include these
numbers, don’t include these, and now it’s just a quick glance. Are they negatives? Are they positives? Are they kind of close to zeroes? It gives me a story there, and then I can do a top down analysis real quick with just the plain charts, and it’s one of those. Doing a top-down step that’s all. And that’s great (laughing) I like this ’cause I’m honestly asking
from a point of ignorance because I don’t do much
fundamental analysis so my own ignorance is showing through, or I’m picturing Dim like okay, a ticker symbol pops up in the chat room, and he gets out like
The Wall Street Journal. He’s like okay what’s the EPS?
(Dim laughing) What’s the cash flow? Then he’s got to go to sec.org, and start pulling up filings, and he’s got it he’s going
through balance sheets. But I just learned something where, to your own self admission, it took a little finagling
to get what sort of numbers, and stuff you want to get on your metrics screen through Schwab, but you’ve you finagled
enough to get to a point where it’s almost like
looking at a chart for you. We have chart vision here, but your fundamental vision sounds like you can recognize
things very quickly, and do those top down analysis. So yeah that makes total sense on how this fundamental variable can exist within the world of high speed trading because it’s not like it’s
taking you forever to look at, and figure out the fundamental. Right.
So that makes good sense. So what are some things now that as we sit right now do you feel like you’re struggling
with anything right now? Do you kind of being very self-aware are you kind of aware of something, or it’s like I should probably
keep on working at that? Or are you feeling pretty
good about your trading? Where are you at kind
of mentally right now in terms of how your trading is going with the newer account size? I’d say I’m still a little frustrated, but there’s a light at
the end of the tunnel. I can see it for sure, but I had a couple red days last week, and that’s just because
the frustration creeps in, and you break rules. Yeah, well what happens
when you break rules? You gotta suffer the consequences. So, but I, just as you said very early in this podcast, I will shut down the platform
and and just walk away. Tomorrow’s another day, so. I think a lot of people
struggle with that too, and I mean, Clay, I think you
actually put a video out there about pretty much how just
the way that society is you feel like you have to be
at the desk making trades, blinking away all day, and in reality, in this kind of job, and in this industry, sitting on your hands and waiting, or if you’re just not
in tune with the market you are better off doing
exactly like Dim does, and shutting the platform down, and coming back tomorrow because I promise you, just for context, I had two losers on Friday. And it’s frustrating, and it’s the end of
the week, and whatever. It’s just that’s part of
the frustration of trading, and then today I had one trade that fully paid for both those
losers, and then some, and then I’m just like huh. So all that little upset
that I got on Friday it’s for absolutely no reason because on Monday there’s
gonna be more opportunities, and Tuesday’s there’ll be opportunities. Some days will be no opportunities, but I mean that’s really our job is to pretty much stay in tune, and spot where we see
kind of an advantage. Put the odds in our favor. So I think it’s very, very big of you to kind of say there are times when I just walk away from the computer. By no means you’re gonna sit there, and say I need to force a $250
day, $500 day, $1,000 day, whatever it is, because
sometimes it’s just not there. The action just isn’t there for you. Maybe you’re mentally just not there. It comes back down to the
square peg round hole. Sometimes it’s just not
gonna work out for you, but is it safe to say though
your account is trending up? I know you said you’re
frustrated sometimes, but overall is your account
heading in the upward direction? Or are you kind of break even or what? Because from what I see in the chat room it looks like you’re doing pretty well. Yeah it’s on an overall upward trend, and it’s funny. I recognize it from early on trading that it will. It’s funny, the graph
is gradual right now, and it will take a swing upward as I move more into my finding that past groove that I had before having
more engine work behind me. You know what I mean? More oomph to the account. I could add more zeros to it, and just the growth is exponential
as you grow your account. So anybody starting with a
small one don’t lose hope. It has a very slow gradual growth line, but the separation from the bottom to the top gets bigger, and bigger bigger, exponentially over time, and that’s my reminder to myself too. Just saying don’t lose hope, but yeah, it’s on an upward trend. Just not as sharp as (laughing)
I think anybody would like, but it’s on it’s on an upward trend. Higher highs and higher lows, trending up. That’s right. Yeah nobody ever said that higher highs, and higher lows would happen
at an extremely fast rate, and I think that happens
to a lot of people. They’re actually doing well, but then the voices show up, which again, to give Dim full credit. He’s very self aware. He understands that yeah
I’m frustrated yeah, but still it could be worse, but a lot of people they’re doing well, but the voices show up and
they don’t quite understand what the voices are trying to do, and because it’s not
happening fast enough, and all of a sudden they get off the path, and start breaking rules in the spirit of making it happen faster. And then all that happens
is it goes faster, but in the wrong direction, and your account shrinks, and shrinks. So I think that’s a
great point on your part where nothing here is fast, and when you don’t have
the quote unquote engine yeah things take a little bit while, but you’re constructing
the engine right now. Exactly.
I mean slowly but surely one bolt at a time, one nut at a time, and you know it’s just a
matter of letting time, letting your strategy do its thing. So looking up at the at the time here probably should be wrapping things up. I mean did you have anything
else you wanted to touch on? Or you know I don’t want to cut you off. I do yeah.
Oh great. I do. So you know reminder back to the the old 80, or so is that right? 80? 80 podcasts ago? You’re on 59 was your episode. Wow okay. So back then–
Time flies huh? Yeah, yeah, I had mentioned that this was my newest
career, and it still is. So I know there’s only a handful, if that, of folks in your chat room that make a living off of trading, and me being one of those that’s the other thing that’s slowed growth down is I’m actually pulling money out to my checking account every
so often based on my budget, and that slows down the
forward progress a little, but something you’d said, and you’ve said in the
chatroom quite often. It’s actually counter to what I do, and I guess it’s depending on individuals. What motivates them, and what actually is
behind in their psyche. And you warn a lot of people not to set a quota for themselves in a day, or not to keep a reminder of there’s a certain amount
of money you need to make, and I’m actually quite the opposite. I know there’s a figure in my head. What I need to make on average per day to know that I’m being successful, and that I can support myself. Otherwise I’m gonna have to dip into my long term retirement funds. So that’s an indicator
to me saying whether this trading business is worth it or not, and whether I’m being successful or not, and making a living off of it. Just something I wanted
to throw out there. So did you ever find
yourself forcing trades because of that though? I have–
‘Cause you need to get to some amount? I have found myself forcing trades, but it’s not because of that. It’s because I haven’t had a trade, or because I feel I’m sitting here. I should be doing something right? So when those voices start hitting me, and I force a trade or two
I recognize what I just did, and that’s the point where I’ll shut down.

4 Comments

  • Reply naveen mn September 4, 2017 at 4:40 pm

    Clay most of the time I am losing money I don't no where I am wrong. I want to stop trading but I really want to make some money for my monthly expenses like at least 15000 rupees almost (300$)

  • Reply bulltraderpt September 4, 2017 at 8:02 pm

    Hi Clay, it seems to cut off early?

  • Reply naveen mn September 5, 2017 at 3:31 am

    Clay you have sent me the link to your course but I am from India will your course help he to trade Indian market. And I don't want to buy all course DVD at once I don't have so much money right now. So you suggest me any one course DVD for me to try once. And if I buy one DVD that you suggest will it be shipped to my address in India plz let know

  • Reply Toxic Tank September 6, 2017 at 7:22 am

    So is there a genius behind the decision to abruptly kill the video after he says "I shut down"? My mind popped for a second thinking you guys took the words as an opportunity to make an artistic ending. Or did you just run out of VHS tape? Well done. I enjoyed this.

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