051: Bryce Edwards – Tracking ‘Stocks in Play’ and Acting on Order Book Activity, Intraday Momentum

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Chat for more information. Tasty Trade Inc. is a registered broker dealer and member of Finra, NFA and SIPC. The biggest secret of the best traders in the world is that they're just like everyone else. However, they've worked hard to learn the markets and discover what works and what doesn't. But how can you hear about these? Here's your host.

Thanks for listening in to episode 51. I have a brilliant guest on the show this week who I can almost guarantee you've never heard of. He generally likes to fly under the radar, but thankfully for us, he did agree to an interview. His name is Bryce Edwards. Bryce is an Australian equities trader. He takes a discretionary approach and makes his money from intraday price movements and goes home flat at the end of each day.

During the interview we walk through the ten plus years in the build up to Bryce becoming a profitable trader. He's got a really interesting story and you may even discover it's quite relatable to your own scenario. We also talk about how the order book plays a key role in his trading decisions and how he creates a stocks and play watch list using catalysts such as company news, underlying commodity prices, and broker upgrades and downgrades. Now if you have any comments or questions for Bryce

Just go to chatwithraders.com forward slash fifty one, scroll to the bottom of the page and drop a line in the comments area. He mentions at the end of the interview, he's more than happy to answer any questions you may have. So I really encourage you to take full advantage of this. All right, well let's jump to the interview. You're listening to the Chat with Traders podcast. I'm your host, Aaron Fifield, and please welcome my guest for episode 51, Bryce Edwards.

Bryce, what's up? How's it going, man? Good, Aaron. How you been? I've been all right. Now the market's just closed. How'd you go today? Yeah, not too bad. Not too bad. There's been um you know a lot happening on the corporate front in Australia. Um You know, big earnings downgrades and uh and big moves in a couple of stocks. So it's been um it's been quite a lot of action this week. It's been good. That's excellent. Nice. Well Bryce.

Thanks for agreeing to an interview. I know it's not something that you normally do, but you've got an interesting story and I think that many listeners will be able to connect with what you have to say. And one of the things I really like about your story is the fact that you didn't nail trading on your very first attempt, so

I mean you got into trading, you lost some money, you went into property, then you became a stockbroker, and now you're back into trading and you're doing very well for yourself. So we're gonna walk through all of this, but let's start right from the beginning. So tell us How you very first got started in trading, I think it was roughly ten years ago.

Yeah, probably a little bit more actually. So um you know, my interest was originally sparked by my grandfather. Um so he, you know, is probably more of a long term investor. Uh I wouldn't say he was overly overly wealthy. Um so he's actually a sail maker, used to make sales for yachts. And uh, you know, I'm pretty sure he had a a number of wealthy clients who, um, you know, he'd make sales for and, you know, I'm sure they gave him tips and advice and

You know, over that period I think he did okay. This is sort of, you know, late nineties, early two thousands when, you know, it's pretty easy to do well as a long term investor. Um So yeah, I mean he gave me a a pretty small portfolio and, you know, he'd follow stocks in the paper and, you know, tell me what he'd liked and Yeah, I mean I'd end up end up buying them in an online broking account. So um I guess that was my first introduction.

Um that kind of went on for probably two years and uh and then I actually went with a mate. My mate's mum somehow got uh in touch with a guy that ran a seminar and uh it was an options trading seminar. So this is a couple of years later and uh so we plotted along with this this seminar and it lasted for four or five days and uh you know that was my first introduction to charting and and technical analysis.

Um so it was, I guess, a typical black box system. So the guy had obviously back tested it. Um, you know, all we had to do was follow his system into when, you know, one indicator crossed another and sell when such and such happens and uh you know, repeat and and we'd get rich basically. Um so that was the pitch anyway, but um

Yeah, we left the seminar on Cloud Nine as you do, talking about which beach we'd be sitting on, um, you know, while we're trading and and making millions, but it didn't exactly pan out like that. So, um You know, to be perfectly honest, I don't think I stuck to the system. Um, you know, originally I sort of just went about trading options willy nilly, um, which was, you know, kind of a recipe for disaster.

But um yeah, I mean I was buying options, so buying puts and calls. Uh I don't think I knew back then that that you could be a seller of premium. Um, but I I think I started with about thirty five thousand dollars in my account and um yeah, within six months I sort of whittled that down to around twenty thousand dollars um before I gave up. So

Yeah, it was pretty ugly. Um but you know, considering how green I was, I think uh you know, and the fact that I was trading options, I think losing less than fifty percent of my capital was Yeah. Probably a a pretty good result. Yeah, no doubt. So what what would you say probably led to you losing, you know, not quite half of your account? Like what kind of mistake

were you doing? Well I just had no system. And I I mean at the end of the day, you know, I was so new to it that he didn't really understand methodology. Um I thought it was a prediction game. And uh you know, obviously you soon find out that it's not about prediction, it's more about managing risk.

Um so yeah, I mean that was um you know, that was a pretty big um loss for me. I think I was twenty or twenty one at the time. And um Yeah, I thought, Oh, this is a mugs game, it's for the professionals, I'm not gonna I'm not gonna make any money from this so I threw the towel in on the stock market and ended up getting interested in property, so

Um you know, I focused on that for about five years, I think. Um so actually ended up buying a couple of

places in New Zealand. Have you I I sense a bit of a Kiwi accent there, is that right? Yeah, yeah, I'm from New Zealand. I moved over to Australia when I was twelve. Ah, there you go. Yeah. So yeah, I mean I bought a couple of places over there and And uh yeah, that was I held them for about five years and and then the financial crisis hit and that was sort of two thousand and eight and uh yeah, I mean at at that time, you know, I was really interested in in what was happening on a macro level.

Um, so at the time I was working as a mortgage broker. Um, you know, that kind of complemented the whole property investment thing. And um yeah, so I had a a pretty good understanding of the whole subprime crisis. Um, you know, the securitization of mortgages. I think I sort of you know, recognize that they were, you know, bundling up steaming piles of of you know what and and selling it on to unsuspecting investors.

And uh yeah, I mean at at that time I'd actually discovered the likes of Zero Hedge and Um, you know, people like Peter Schiff and Mark Faber and you know, I got really interested in the whole Austrian economics crowd. Um and you know, that sort of led me to uh be turned into a kind of chicken little type character. Um

Yeah, I I r I thought the sky was falling in basically. I thought the US dollar was going to collapse and um you know, I quit my mortgage broken job and sold my investment properties and uh you know, put all my money into an account to try, uh, for a second time to be a full time trader. Um and uh yeah, I mean it was a really, really fascinating time to be in the markets, but uh again, you know, I hadn't really done the research.

And uh, you know, there wasn't any method to my trading. I didn't have any discipline, um, you know, or risk management. So You know, all I had was a a a pretty strong view that uh that the world was going to hell and I thought that, you know, I could pretty much sort everything and and be long gold and and make money.

And uh, you know, it didn't quite pan out like that. So I think, you know, after the first QE programme was announced, um You know, I had some pretty big wins in gold stocks, but you know, because I was so bearish, I kept trying to short things like consumer discretionary stocks. And you know, this is through that two thousand and nine rally.

Um and I just basically tore up all the profits. So, you know, shorting really strong stocks in a bull market, um, which, you know, was a bit of a recipe for disaster. So, um, you know, shorting things like Flight Center. Um, what else? I think I had a go at uh JB Hi Fi and you know, even in the US I tried shorting um Oh a couple of names I remember but I had a took a well pretty big loss in Whirlpool, so that was uh WHR uh on the New York Stock Exchange. So

Yeah, I mean yeah, the end result was, you know, no method, poor risk management. I was I was gambling. Um so that went on for you know, I had quite a bit of money in the account, so I think it went on for almost one and a half years. And uh, you know, if it wasn't for a certain turn of events that stopped stopped me trading, uh and that is my broker uh actually collapsed and my trading account was frozen.

Um, if that hadn't happened, you know, I probably would have gone about blowing myself up over the course of the next couple of years anyway. Okay. Okay. So wow, that's I mean, there's a lot to take in there. So let me just ask before we move on.

How did you go in property? I mean, did you have, you know, quite decent success there and is that what um allowed you to fund your, you know, your larger size trading accounts? Yeah, well I mean at that time, um, you know, there was a whole lot of lot of l literature out there about uh positive cash flow properties. So that's what I was trying to do. Um buy properties that generated a rental yield um in excess of the cost to finance.

Um and so that you know, there was guys going out there and just, you know, b borrowing and buying and borrowing and buying and because of the cash flow that was genera that was being generated then you could just keep buying stuff.

So yeah, I mean that's what took me to New Zealand. I mean I don't know whether you know a a town by the name of Talmara Nui, but I mean I bought a couple of houses over there for less than forty grand, you know, on a sixteen percent yield and um you know, within a couple of years, you know, three years or whatever, they'd triple. Um so it was just right time, right place, I think, more than anything.

Yeah, no that's that's an awesome return. Um, okay, so I'm not sure where this fits in on your timeline, but you got a job as a stockbroker. So what was this experience like for you? I mean, did you learn any s anything significant? in this role. Um, tell us a little bit about, you know, being a stockbroker. Yeah, yeah, sure. Well, I mean, how I actually got into it, I mean obviously after this broker um went under and, you know, I won't mention the name of the firm but

They're actually based on the Gold Coast, which, you know, in hindsight was probably a bit of a red flag. Um but I mean the end result, I mean I ended up losing a couple of hundred thousand dollars. Um so I was devastated. And uh yeah, I mean that was a pretty heavy weight on my shoulders for a number of years there. Um, but I mean the end result was that, you know, I hadn't had a job for probably a year and a half. Um

I you know, I didn't really have any money aside from what I'd lost in the trading account and I didn't have an income. So, you know, I had to go back into the workforce and um You know, I had a passion for the market, so so I obviously uh thought that getting into stock breaking was a pretty good idea. So Um, you know, the first two years was, you know, really all sales, so cold calling, um, bringing on new clients, and then eventually

You know, probably in the third year. I mean, I worked for a number of different brokers, but in the third year I eventually had my own book of clients. Um so some would obviously trade their own accounts and you know, to me they were the best kind of clients because

you know, you could kind of just sit back and and, you know, they would generate commission. Uh but then there was others that were really looking for um more general advice, stock advice and I'd, you know, present them with trade ideas and, you know, obviously execute on on their behalf. Okay, so how are you actually

How did you how were you generating those trade ideas for them? Like were you obviously heavily involved in, you know, research during that period? Yeah, that's right. I mean, you know, obviously after, you know, two years I went and got all the qualifications and

You know, by the time I had my own clients, um, you know, I'd finally got around to to doing the research on trading methodology and risk management. Right. So I'd say that is where the real journey in um in terms of the world of trading for me began. Um so By the time I'd got my own clients, I'd also, you know, I'd read a whole heap of books. Um, I joined a Traders Chatroom that I think I've mentioned to you, you know, when we spoke last time. That's called CFD Traders Edge.

Um so that was run by or still is run by a trader by the name of Alan McGrath, who's um you know, now a a pretty good friend of mine. Um and Alan became, I guess, somewhat of a mentor um to me. So, you know, I'm in the chat room, you know, I'm obviously doing my work all day, but

Um, you know, I was sponging off him and and really watching him get in and out of stocks intraday um while I was at work, you know, speaking to clients on the phone. I'm just watch watching the screens and watching what he was doing. Um, so yeah, I mean that's how I basically started to pick things up. And, you know, in the beginning I guess, you know, my results with clients were pretty mixed. Um You know, some did okay, others not so well.

And um, you know, eventually after watching the screens all day and particularly, you know, watching the order book, um, or you know, I call it the order book, they call it level two in America. um I really recognised that, you know, perhaps there was an edge um to be exploited in trading the order book on a short term basis. Um, you know, that's kinda when I had a bit of an aha moment and um

Yeah, I had a handful of clients that were, you know, open to more short term trading and uh and that's where I began to have a little bit more success. Um So, you know, I did that for a couple of months before I realised that, you know, the economics of of short term trading um with a full service broker. Uh it just doesn't work. You know, I mean to ensure that I wasn't churning um commission out of my clients, I had to drop them to a rate.

that was so low that uh, you know, I wasn't really making any money. And yeah, the boss wasn't happy, of course, but um you know, the upside was that I was I was learning a lot and and I was, you know, obviously getting paid to learn. So um yeah, it was pretty good to pick things up like that. So Cool, cool.

now drill down into more about the ins and outs of your trading. So how would you describe the approach you now trade? I mean, you mentioned the order book um and of course got a bunch of questions around that to come. Um but just if you could give us an overview of your approach and maybe also if you could share with us how this has changed over the past few years, because I believe

You were more of a scalper to start out with when you first um went from being a broker to trading full time. Yeah, yeah, correct. So Um, yeah, I guess a general classification, I'd probably say that I'm a a discretionary intraday stock trader. Um so I try and go home as close to flat as possible every day.

Um, you know, the obvious reason is is to minimise overnight risk, but I think Um for me, um, more importantly is that you know, I can be a hundred percent focused on um on news plays the next morning. And and that way I'm on the offensive and I found that, you know, initially when I was trying to find my own style, any time that I came in and I had a bunch of stocks to deal with

you know, I'd always have to worry about putting out fires in the morning, um, rather than being on the offensive. So yeah, I try to go home as as flat as possible. Um You know, company news I'd say is is my bread and butter. Um So that's something that I picked up again from from Alan McGrath in his chat room and uh you know, I think I mentioned to you last time that uh I'm also a big fan of S and B Capital, so um Mike Belafure's book uh called The Playbook that

you know, really helped me structure my approach um, you know, to trading. I mean the importance of process, uh of repetition, um and also that you know the big the big takeaway for me is this concept of of stocks in play. Um, so that was really powerful. I think that came out um maybe six months before I finished up Broking and it was kind of that book that I thought, Hey, you know,

um, the stories of all these young guys that um were having a good go at and I thought that, you know, that's something that I'd really like to do. So yeah, I mean the stocks in play, um Yeah, it's it's um probably the backbone of what I do every morning. So every morning uh I'm building a list um where I'm basically looking to trade stocks that have a catalyst. Um, you know, so my goal is to be in the right stocks every day. Um, that is the stocks that move the most.

And I find that um, you know, your risk reward is far better when there's a catalyst to drive um the move in the stock, if that makes sense. Absolutely. Yeah, and I mean I'm really actually I'm quite keen to read that book also, uh, by Mike Balafure. And Mike has been on the podcast uh in the past for uh those listening. Um if you want to check that out, that's episode twenty two.

Um really awesome to have him on. So Bryce What uh markets are you most focused on? Is it just Australian equities or do you um you know, go outside of those as well. Yeah, no, a hundred percent. Um, Australian equities, I mean Uh, I for a while there I considered um, you know, potentially moving across to the US purely for liquidity reasons. You know, I see these guys that are trading those Nasdaq stocks and

you know, making these huge um, you know, intraday profits. But I think, you know, I came to the realisation that it was you know, more my self limiting beliefs than it was, you know, that the the Australian market didn't offer the opportunity, you know. So, um yeah, and that that you know, really where I had to tweak um, you know, try and tweak my strategy and um, you know, and focus more on these these stocks in play. So you know, and and when I say stocks in play I mean

Yeah, I'm I'm obviously looking for a catalyst and in particular company news. So, you know, when a company wins a new contract or they announce an earnings upgrade, um, you know, that's the sort sort of thing that um you know I'm interested in. And also I think Yeah, with these types of trades, if you time your entry correctly, um, you know, oftentimes you'll be in profit, you know, right from the get go and and they kinda move quite quickly.

And so, you know, you can potentially run quite a bigger size position um and have a really tight stop loss. Um, so that your risk is small, but your upside's quite big if you time your entry right and the stock goes in your favour. Um so I think, you know, that's something that that works quite well and obviously when there's a catalyst, you know, around company company news and that sort of thing, you get bigger volume and and and more liquidity as well.

Um so yeah, trading company news is the main focus. But I mean there's there's heaps of different types of catalysts that you can look for. I mean I mentioned um to you that I also trade around broker upgrades and downgrades. That tends to be a good catalyst. Um, particularly now, I mean in Australia it's AGM season right now. Um so you get quite a number of companies that are not going to be a little bit more than

will bury a trading update um within the chairman's AGM address. So when the chairman's addressing the the meeting, um that uh address has to be released to the market prior to it actually happening in in real time. Um and so the stock might not move much in a day, but you might find that the broker um, you know, sees something in the trading update that they like and they might upgrade the stock overnight. So let's say they upgrade, you know, from neutral to overweight.

And uh and that tends to generate a lot of institutional flow um the following day. I mean it depends on the broker.

You know, if it's a retail broker like Bell Potter or um CBA, you know, they don't have institutional clients that are following the flow. But you know, these bulge bracket banks with Citibank, Credit Suisse, JP Morgan, Goldman Sachs, um they tend to have a lot of institutions that act on their research and so they're the ones that that can often generate um good flow and uh yeah so the broker calls can be can be great catalog.

Okay, cool, cool. Yeah, that's that's really interesting actually, and I'm keen to ask a few more questions around that um as well. Just right now, before we move on, I want to zoom in on the order book. Um, because I know this plays a really important role in your trading.

Um and you know, like you mentioned earlier, the order book is just the same as the tape or level two for, you know, those listening, you know, outside of Australia. Yep. Um why is the order book such an important part of your trading? Um, well, I mean, for me, you know, I started off scalping the order book and then sort of moved more towards uh also tra trading charts as I i increased the size and the hold time of my position.

But I mean, my original theory was that, hey, you know, if you're looking at a chart, um, you know, it's kind of like driving looking in the revision mirror. It's past tense, you know. What needs to happen for, you know, a trade to take place to then print on the tape is that two orders must mean. You know, so in terms of um predicting the short term move in a stock the order book is is you know at the very forefront of where the trade's happening.

Um and so that to me was a really big um you know kind of aha moment and uh and it's sort of gone forward from there. So I mean in terms of my decision-making process. um it is heavily weighted toward the order book and Yeah, also I think you know, that definitely comes down to market microstructure. So, you know, there's a really big difference between the Australian market and the US market in terms of microstructure.

Um the order book in Australia is, you know, I'd say it's probably a whole lot more reliable. So for example, you know, looking at the order book, I mean I'll use the order book to manage risk. So if I, you know, go to buy a stock. Oftentimes I'll I'll spot my exit in the book below. Right? So if I'm gonna buy a stock, I'll see a big line of bidders behind me that.

You know, if things don't work, um, you know, generally if I if I put a trade on it doesn't go in the in my favor straight away, then there's a good chance that it's it's probably not a winner. Right. And so having those big bidders behind me that I can turn around and hit out on and stop my trade out, you know, I found there was a cer certain element of um of risk management in it. So

um the volume or the size of b the bids below is going to help me determine um my position size in terms of risk management. So yeah, let's say I want to take a ten thousand dollar position in a stock if it's quite an illiquid stock and there's only say two thousand units within cross close proximity, bid bid below, then I'm not gonna take ten thousand units because I don't know that I can get out you know, within close proximity my whole ten thousand units.

Uh if that makes sense. So I think that's that's a really big difference. I mean I I think you'll find if you speak to a lot of US traders they'll say that, you know, because of market makers and whatever else, you know, all the spoofing and phantom liquidity that goes on in the States, I think you'll probably find that those bids that, you know, I'm relying on to hit out on, they're you know, there's a good chance they're not gonna be there.

um in the States when you want to exit. Um and that's because of the mic like the market microstructure. Does that make sense?

Yeah. Yeah, no, it does. So, I mean, this is something we've spoken a little bit about in the past and I dunno, you may have kind of touched on it there. You say that the Australian order book is lit, um, and there's a big difference between that and how that compares to the order book or the level two in the state. So could you just explain what you mean by the Australian order book is lit?

Um and how that differs? Sure. Well I mean obviously there's there's the lit market and, you know, dark pools, right? So, you know, the US market obviously they're they're lit markets as well, but you know, they're

there it's a little bit different. So let's say for example, in Australia you you can't really mask the size of your order like you can in the States. And, you know, I mean correct me if I'm I'm wrong. I mean I don't do a lot of US trading at all. So um, you know, perhaps I'm wrong, but it's my understanding that in the US you'll see

um, you know, a heap of of hundred lot bids in the book. Um and so that could be someone that's trying to buy a hundred lots, um, yeah, a hundred units genuinely, or it could also be someone that's trying to buy ten thousand units. and they're actually masking their order, right? So they're only revealing the first hundred units of their order.

And so that's what I mean by masking in a true lit book. Um, you know, in Australia you can't mask the size of your order. So what you're looking at, I mean what you see is what you get for the most part. You know, I mean we've got icebergs and

you know, different special order types, undisclosed bids, undisclosed offers. There are a number of different institutional orders that that, you know, kind of allow you to hide your liquidity, but for the most part you'll find that, you know, if you see a really big cell wall with with say 40,000 units offered and you lift the lock,

you you're gonna make the stock run. You know, so you can tell how much it's it it it takes to to break a stock uh in terms of like, you know, the order book and and you know when a stock crashes um, you know, you know exactly what's what it's gonna take to make the stock crack. Um so I think that's a really big um advantage. And I think, you know, without that, I think uh, you know, I'd probably be more reliant on

on the tape and also on charts. But, you know, because of the m the microstructure I think you can put a little bit more weight um to the order book um when you're trading and yeah, I mean, outside of the order book, I mean in terms of microstructure, um, you know, it's quite different. So it's probably a little bit interesting to go over this, right? So

Um in Australia there's only two exchanges. Um the ASX is the major exchange, so they basically used to have a monopoly. Um they still do I think it's probably Yeah, it's probably around ninety percent of the total turnover happens on the ASX, right? And you know, there's a second exchange called the Chy X. Um Yeah, that only launched probably three or you know, maybe four years ago now, and they do the remaining ten percent.

Right. So when I'm looking at the order book, I mean, I don't even really look at the triax because, you know, the triaks is where you get a lot more um algo activity, a lot more HFT. Um and so I'm only really looking at at the order book or the level two on one exchange, the ASX, uh, and they do ninety percent of the the turnover.

So it's very, very different and you know, you compare that to the States. I mean, how many exchanges has the States got? Are they you know, sixteen or seventeen different exchanges and God knows how many dark pools. So There's going to be a lot less HFT, uh a lot less less market making in Australia. because I guess, you know, there's a lot less opportunity for this kind of latency arbitrage that happens between um exchanges. Um so yeah, it's it's a big difference.

Sure, sure. No, well thank you very much for, you know, going into that Bryce. That's really fascinating. Are you ready to get serious about trading? Then join Tasty Trade, Investopedia's best platform for options trading in twenty twenty six. Stocks, options, futures, and more. Tasty Trade has everything you trade all in one platform. Get low commissions, including zero commission on stocks.

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One of the the types of trades that you focus on, you describe as trading a wall. And this might be a little bit difficult to describe without, you know, visualizations, but Could you give us just an overview of what this type of trade looks like and what causes these walls to occur? Yeah, sure. Um as I say, I mean without uh you know having a an order book in in front it makes it a little bit difficult, but you know, what you'll find in the order book is

Um, you know, there might be orders that gather around a particular price point. So if you have a large line of stock. um offered at a particular level and that stock might be, you know, uh that line um of of sellers might be say 10%. or sorry, ten times the amount of stock that's offered on any um line or price difference right next door. And so when a big line like this um wipes in the market, that's a sign to the market of conviction.

You know, so I often trade around walls and oftentimes you'll find walls um, you know, at particular points of of you know, resistance and support. And so say for example if a stock has, you know, a a a resistance of six dollars, you know, oftentimes you'll find a whole wall of sellers at six dollars. And so what, you know, oftentimes you can you can play a breakout and predict

that wall breaking. If you see a lot of activity coming up to the wall and you see bids start to build behind the wall and then someone starts to chip away at that wall. Um then you you know, you would buy that wall. And, you know, the huge volume that's just been done in lifting um that offer um creates momentum in the stock and and then, you know, and then things run hopefully in your favor.

Um so trading around walls in the order book, I mean it it's kind of something that it's hard to explain, but you know, if you're watching the order book enough, um eventually you kinda pick it up. Yeah, and I think you created a video uh which is available on YouTube which kind of um explains that a little bit more with obviously visualization. So what I'll do is I'll link to that in the show notes in case anyone wants to

Check that out and and find out a little bit more about it. Alright, so besides the order book. I know there are other factors you also can consider, um some you mentioned, such as news, commodity prices, broker gradients, etc., uh which I'd all like to ask you about in just a minute. Technical analysis, does this play a role in your trading and if yes, how so? Okay, well originally it didn't, you know, I was predominantly a really short term order book scalper.

Um, but I guess I ran into um some problems in terms of scaling up my um you know, my positions as my account grew. and I found that inevitably, you know, I couldn't just scalp any particular order book setup and, you know, particularly because I'm relying on the order book for liquidity um, you know, I'd get to a point where, you know, I'm gonna have to take a bigger position than, you know, the the the bids behind are gonna afford me in terms of risk management.

And so that's when trend trading, um, you know, uh I sort of m I changed my style, I guess, to um to trading with with momentum and you know, that's where you're able because the wind's at your back. I mean, let's say for example you're trading a a strong stock or buy a strong stock at highs when the market's trending higher. Um Yeah, you'll find that the wind's at your back and even if things do reverse

um there's a lot more liquidity than the order book will actually reveal. And so yeah, it's really just been a a case of scaling up my trading and and, you know, trying to hold positions a little bit longer rather than being a scalper.

Okay, sure. So let's speak about um the additional factors that we've kind of hit on already, but let's go into a little more depth. So Um, you know, things such as news, uh com underlying commodity prices, uh broker up and down grades. What do you like to see happening in these areas? Maybe if you could give us an example of a recent scenario where this has happened.

Yeah, sure. I mean when um you know w this is all in relation to, you know, building a stocks in playlist. So Yeah, in terms of catalysts, I mean I've explained company news, um, you know, broker upgrades and downgrades, that there's any type of catalyst and I'll I'll um, you know, look for in the morning. I mean I get up, you know, read two different papers, you know, I sort of got a set routine that I go to look for to build uh my list of stocks in play in the morning.

Um obviously in Australia we're heavily weighted toward resource stocks and oftentimes you can get some really nice lead-ins uh from overnight moves in in commodities. Um so you know moves in commodities can can make for some pretty good catalysts. Let's say for example, um, you know, I don't know, nickel might be down, you know, six percent on the LME overnight. And so, you know, I'll come in and look to short nickel stock. Um, you know, moves in copper or gold or the oil price.

um, you know, anything that that is gonna provide a catalyst. And there's also you know, there's a bunch of US listed ETFs that are also monitor for the same same reason. So Yeah, oftentimes you'll find, you know, just because gold's up, it doesn't necessarily mean that the gold stocks have been up. Um You know, so for that reason, you know, in gold in particular, I might take a look at the Huey index um or the GDX, the GDXJ, there's a bunch of different indexes.

Um, you know, if crude is down a lot then, you know, I wanna have a look at, you know, which um you know, US energy ETFs have have have moved. So I think the tickets for the energy ETFs are um XOP uh and the other one's XLE. I think X XOP is the one that that I look look at the most. Um you know, so there's plenty of places that you can look for a really good catalyst, but

you know, at the end of the day that's only really the first step in the process. Um so, you know, just because a a stock is, you know, has a catalyst and it's on my morning list, it doesn't necessarily mean

you know, that it's a trade. It's still got to qualify as as as a trade. So, you know, I'm still looking for a good setup in the order book. Um, you know, I'm trying to time my entry into the trade and, you know, that's all based on price action, watching the tape and and obviously the order book. Okay, sure. Well I'd like to ask you that, but um just quickly On average, how many stocks might be on your stocks and playlist each day? Just on average? Uh probably twenty. Okay.

How do you go about tracking this list of, you know, let's say twenty stocks throughout the day? Because I'm sure it's very tricky to track the order book of this many stocks. I mean, how do you approach that? Do you utilize any type of technology? Do you have your monitors set up in a certain way? Um, yeah, it would be great to hear more about this.

Sure. Um yeah, y you're right. But uh in in terms of um so I I basically, you know, start with stocks in play. I mean the open is a little bit different here in Australia. I'm not a hundred percent sure how it works in Australia but in in the US sorry, but Um you know we have an auction at the beginning of the day and then our market opens in five phases.

uh and so it goes group one which is you know all the tickers starting with A and B group two um the tickers from C D E and F uh group three you know so there's this five stage or five phase open And there's two and a half minutes in between each phase.

So, you know, I'll firstly look at all the A's and B's and then I'll, you know, trade phase one and then I'll trade phase two and trade phase three. Um, you know, sometimes if, you know, i let's say in phase one, you know, I make two trades or one trade, um, it's really good if that's a winning trade because then, you know, I don't really have to worry about, you know, um trying to put out a fire.

Uh I can move straight to phase two. You know, oftentimes if I have a couple of losing trades in the beginning of the five phase open, it means that. you know, I'm kinda tied up trying to stop out trades and I can't trade what's happening in the later phases. So yeah, it's kinda bit of a bit of a juggling act. Um For the first ten minutes.

Um, but it's generally the you know, the first sort of ten or fifteen minutes that I'm trading those stocks in play. Um, you know, I then move to a different kind of process um to trade uh momentum trades. um from, you know, sort of quarter past ten or fifteen minutes after the open. So, you know, in particular if the market's really bulled up, um, let's say we get a a really strong lead in uh from Wall Street, the Dow's up, you know, one and a half percent.

Uh the spy futures here are indicating, you know, we might be up one and a half percent. And so in the morning after I've traded um that stocks in playlist, um I'll then go and look to get you know market exposure. And so this is what I referred to before. Um, you know, I'm gonna be trading um well buying strong stocks, trading at their highs. Um, you know, for the most part lately, that's been, you know, that's been tech stocks.

Um but yeah, I mean I'll I'll, you know, go and do a bunch of scans for you know, stocks trading within two percent or three percent of the fifty two week highs. Um, that might produce a list of, you know, a hundred stocks and then I'll use a scanner intraday. To filter those stocks and only show me the stocks that are trading at their highs. And then I'm just going to go and buy the new highs.

Um so that's something that that works pretty well, um, in terms of momentum when you've got the market at your back. Uh and that doesn't necessarily have to be news. So that's just um you know, trading with the market. And so if the market's going up, I'm looking to buy stocks. If the market rolls over, I'm you know, I'm cutting my my uh long positions and I might start to look for shorts.

Uh and the shorts is just the same in reverse. I'm looking to short weak stocks trading at their lows. Um yeah, it's more of a a momentum game. Okay. And you mentioned in there that you were using um some scanning software uh during the middle of the day to find stocks trading at their highs. Um do you mind sharing what that is?

Yeah, it's a platform called Spark. Um it's not available in the US. Um but yeah, I mean it's it's it's a huge advantage. Um you know, I've got Spark running on four different screens. Um, you know, in terms of using technology. I mean, at the end of the day, as a retail trader,

you know, you don't really have an information edge over institutions. Your biggest edge is, you know, your regular you your pretty small size and your speed of execution and your ability to get in and out of the market quite quickly. And I think You know, if you can use technology um to keep more eyes on the market, then you know you could potentially trade more of your best setup.

And so spark Yeah, there's a whole you know different um you know, there's a whole bunch of really cool smart lists and watch lists and ways that you can filter the market to basically push to you, um, you know, your best setups. And so that's kind of what You know, I've used Spark for it's um

you know, you've only got two eyes and four screens, you know, there's a limited amount of things that you can see um, you know, in terms of what's going on in the market every day. So if you can use technology to bring more trades uh or more of your best setups um to your fingertips, then, you know, hopefully y you'll be more profitable.

Absolutely. Now as a day trader it's quite can or can be quite easy to get chopped up. with just your commissions alone, you know, jumping in and out of the market a lot. So how do you make a conscious attempt to be mindful of commissions as a day trader? I mean, does that mean that you're

only trading your A plus your your best setups or yeah, tell us how do you how do you work around that? Yeah, sure. I mean that's a really good question. It's something that I struggled with um quite a lot in the beginning. Um Yeah, the first thing or the first answer is obviously just to trade stocks in play. I mean, when you get much bigger moves in stock

um in comparison to your commission charge, then naturally, um, you know, your commissions are gonna eat uh into your profits a little bit less. Um so for that reason, um You know, I focus in the stocks in play. Uh I generally steer clear of the large cap stocks. Um, you know, things like banks, uh, Telstra, um, your Woolies and your West Farmers, I don't tend to trade those large stocks because they don't really move much during the day.

Um so you just end up, you know, chewing up commission and I kinda don't really have an edge there anyway. Um so you know, I'm unless unless of course it's on news then you know it's certainly uh in play and I'll have a look at it. But Um, for the most part, yeah, trading mid cap stocks and and trading where there's a catalyst. Uh, but I think something that took me, uh, maybe a year

um to to really work out is that, you know, you don't need to be trading in the middle of the day. You know, I tend to be way more active in the first hour and then, you know, also in the last hour of trade. That's when things happen. You're trading in the middle of the day. I mean oftentimes, particularly if the market isn't trending, you just tend to get chopped up.

um, you know, and you just end up churning commission. So, you know, in the middle of the day there's gotta be a really good reason for for taking a trade. Um, you know, most of the money for me is made in the opening hour.

Um so yeah, just be more selective in the middle of the day, I guess. Um so that's that's the major um you know, major uh thing that I've sort of come across in the last last year, but I think, you know, the easiest way to save on commissions is obviously pay less to your your broker and I think um you know, commissions here in Australia uh are really high. I mean we don't have

the turnover. Um, we don't have the economy of of scale um or the same sort of, you know, competition that that you get in the US. So it is actually quite expensive to trade uh in Australia. Um the ASX, as I said before, has a virtual monopoly. Um the exchange fees, the settlement fees, These are basically input costs to your commission rate as a trader. And so, you know, by global standards our commissions are are really, really high.

Um we in Australia we get charged on a percentage of of trade value. Um so in the US, you know, people are probably familiar with a a cents per share structure um where it's very, very cheap to trade you know, stocks that are trading at a dollar and it doesn't work like that in Australia. So, you know, if you're gonna trade um, you know, a hundred thousand dollars worth of a small specy, um, it's gonna cost you the same as a hundred thousand dollars worth of, you know, a large cap stock.

Um so it's a little bit different and your commission, you know, is quoted in basis points. Um so you know, it's if if you're if you've got a really small um account and you're doing small turnover, you you know, you probably shouldn't be paying any more Um then say eight basis points. Um so that's eight dollars for every ten thousand dollars that you're trading. Um

You know it's also pretty important to uh ensure that your broker doesn't charge you a a a a minimum ticket charge. Um so you know oftentimes you'll see brokers quote um, you know, eight basis points with a ten dollar minimum ticket charge. Um, which is no good if if you've got a really small account and you're only trading five thousand dollar lot.

and you hit with a minimum ticket charge instead of the the basis point rate, then that's gonna eat into your profits. Um so yeah, I mean y you want no minimums. Um And, you know, once you start doing a lot more volume, um, you can sort of negotiate a a a pretty good rate. I mean, I'm currently on a rate of uh two and a half basis points, so that's two dollars fifty for every ten thousand dollars.

uh that I'm turning over, which is really, really competitive. I I think um, you know, uh traders in Australia would be surprised that you can actually get a rate that low, um, two and a half basis points. So You know, I won't uh I won't shamelessly plug my broker, but I mean if anyone wants um you know, to ask questions about brokers, um I'd be happy to uh happy to help. I mean I can answer questions on your site or um they can contact me via email.

Um but uh yeah, I think getting the right broker is is pretty important.

Sure. Okay. And just one thing before we um before we wrap this up. Uh you mentioned in your answer there that, you know, during the middle of the day you're not overly active. Are you still at your computer, you know, watching the market intensively throughout the day? Um or do you find that you

you know, leave your computer and and go and do go and do something else. No way. I'm always at my screens. I mean I I'll go down to get lunch for all of about five minutes and then um and then I'm back up uh eating lunch at my desk. So Yeah, it's um yeah, I mean it it's if if you have a really bad day and you make some mistakes and break some rules and and you've put a dint in your account, yeah, sure. I mean cool off, go take a walk. But for the most part, you know, if

If you're keen, you've got to be at the screens if if you uh if otherwise you're just gonna miss opportunity. Um but you know, each each to their own. I guess if the market's not doing that much, then um then sure, you know, take a take a bit of a long lunch. Absolutely. Okay.

All right, Bryce, well this has been awesome. I mean I'm really glad that you said yes to an interview because um I mean you've shared a lot of insight. I've found it really interesting myself and I've no doubt that people listening will also. So yeah, thank you very much for doing this. Mate, thanks for having me on and uh I have to say thank you for uh for keeping us punters. Um

up to date with it with an awesome resource. I mean, I'm still making my way through the past episodes and uh, you know, it really is a goldmine of of content that you're creating here for us. So, um Yeah, keep it up and uh and I look forward to to chatting again with you soon. Awesome, no doubt. Um and just one last thing. Where can listeners get in touch with you? I mean, you mentioned your email before. Um, what is your

Well I mean do you want people to email you or that's fine. I mean I don't have a blog or anything like that, so email's uh probably the only contact, so it's uh my name Bryce Edwards, uh the number's eight zero at gmail dot com. Okay, sure. And you're not on Twitter? Uh I am, but no, I don't really twit uh you know not very active? No. Fair enough, fair enough. Okay. And alternatively guys, um maybe also yeah, as an alternative, just leave a comment on the website.

Um in case, you know, some people have similar questions. Um, you know, Bryce can answer everything in one place and I think that could be a cool resource just to uh get a little bit more info as well for everyone. So yeah, if you have a question for Bryce, either email or in the comments on the website at chatwithraders.com. All right, Bryce, take care and let's talk again very soon. Thanks, mate. We'll do

Hey, thanks so much for listening team. I hope you really enjoyed this interview with Bryce. Um, I'm sure we'll be hearing from him again at some point, so that's something to look forward to. If there are any questions you'd like to ask him, anything around day trading, the order book, catalysts for intraday moves, momentum,

Pretty much anything trading related, go to chatwithraders.com forward slash fifty-one and drop a line in the comments area. Bryce is keen to answer your questions and help out, so please take advantage of this. And I also realized it's been a while since I mentioned the premium ebook that we have available here at Chatwith Traders titled Why Most Traders Never Succeed. So if you haven't had a chance to read this yet or you haven't even heard of it, I strongly encourage you to check it out.

Inside you'll find the responses from 18 traders who have previously featured on the podcast explaining the key reasons why most traders lose money and eventually crash and burn. To find out more about this ebook, which I've received really great feedback on from those who have read it, go to chatwithraders.com forward slash read R E A D and you can purchase a copy for just fifteen bucks.

And you'll pretty much get an email right away with an instant link to download. So again, that's chatwithraders.com forward slash read R-E-A-D and you can purchase it right there on the site. Alright guys, I think we've covered plenty of ground again this week. Until next time, take care and we'll speak soon. You've come to the end of this episode of Chat with Traders, but don't worry, more great episodes are on the way. We love it if you leave us a rating and review.