104: Alex, @AT09_Trader – An Appetite For Risk, and Hitting Hard When Opportunity Arises

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Chat for more information. Tasty Trade Inc. is a registered broker dealer and member of FINRA, NFA, and SIPC. Big thanks for being here. On the podcast this week, I got the chance to catch up with Alex. We will keep his surname private, but he goes by AT zero nine underscore trader on Twitter. Alex is a 22-year-old discretionary day trader who has seen really great results in the few years he's been grinding away at this.

He trades small caps and he trades aggressively. As you'll soon hear, Alex is far from conservative. This conversation was recorded on the 16th of November after the close, right around the time when the madness in the shipping sector was unfolding. So we got talking about the ticker D R Y S. How Alex racked up a forty thousand dollar loss a day or two before our interview, although I should also mention he had his first one hundred thousand dollar day shortly after two.

We also spoke about how Alex got started, the types of trade scenarios that he looks for, areas that he's working on to improve, and also his venture into real estate, where he flipped a foreclosure property for a tidy profit. plus much more. Now I'd like to remind you that nothing you hear on this episode, or for that matter, any episode, is to be treated as financial advice. Please remember you are entirely responsible for your own trading decisions.

And as this is the last episode before the 25th, I'd like to say, please have an awesome Christmas. Enjoy time with your family and friends, and prepare yourself for a big year in 2017. Merry Christmas. Now let's go. Here's the conversation I had with Alex.

Usually on this podcast we don't talk specific about particular trades or certain events because it sort of tends to date things a little bit, but D R Y S The ticket for dry ships. This one we can't ignore.

Yeah, it's all over everywhere. Everyone's talking about it. CNBC is even talking about it. Yeah. This is one for the history books. So I mean I'm really keen to get your take on it. How have you been trading it? When did this first come onto your radar? I mean, okay, so Basically I first saw it, I think it was Ah that day it was like very low volume. I think it went from eight to maybe sixteen or something like that. Slowly start to fade off.

And then I really started to pay attention, I think it was the day after. when it had a little bit of a week open and then pushed towards eighteen. And then from there, I think just it trapped everyone. Everyone got stuck. It was just weird, weird thing. Like I I thought it was just gonna be like a normal You know, a short squeeze after a couple of days, you know, come back down. You know, nothing crazy. We've seen a million times.

You know, all like these big traders that I speak to or I know of, they're all shorting, you know, they're very comfortable. It's like nothing crazy. And then out of the blue, it just It rips faces off. It just blew my mind. I luckily did not have the borrow for it. So I'm sure I would have been one of those guys that got their ball squeezed too.

So why did that happen? Like what was the driving force behind this? I mean, even the to start off with, eight to sixteen dollars, that's that's a pretty b big move in itself, like how did it what was the driving force that led it to continue? Because, you know, just to put things in perspective for people who might be unfamiliar with this or who haven't seen the chart, uh, I think it was early November or even October, it was just trading at like it was less than a dollar.

It's a reverse split. It just keeps selling off and then reverse splitting. Right. And, you know, it went from under a dollar to over a hundred dollars uh within like a matter of what, like a couple of weeks. Yeah. Not even a couple of weeks. I think it was Friday to what's uh today? Today's Wednesday. It hit one hundred fifteen today, pre market. Yeah.

What was the driving force? So what I think the driving force was was uh the short sell restriction I think was a big part of it. So the float is already low. I think it's less than a few million shares or whatever it is. And the problem with SSR is that

It goes high enough, the stock goes high enough. There really is no more sellers to push it down because they're not gonna be selling on the bid. They're all comfortable, everyone's fine. It's just gonna be shorts putting it on the offer. As soon as the shorts are done. It's just gonna keep ripping and ripping higher and it just everyone uh it's been a long time since we had one of those black squeezes. So a lot of shorts just felt really, really comfortable and

It just got destroyed and I mean like I would have been one of them too, you know. If I had to borrow I would have been smoked as well'cause We're all used to seeing these charts. We're all used to seeing these parabolic charts. And I guess just sometimes if you don't stick to your rules, it all it takes is one day to blow you up forever. It's a scary thought, honestly.

So were you involved in trading this at all? I mean you said right there you couldn't get the borrows for it, but were you trading the long side? Yeah, I couldn't get the borrow, but I was trading their uh the sympathy players, like uh I think it was E. G. L. E. It was one of them, uh S I N O was another one. T-O-P-S was another one. So basically the way these sympathy plays work is that they fuel off the main runner. So call D RYS the head of the snake.

and everything else just falls in its path. So as soon as the head of the snake gets cut off these stocks collapse with it. So my thesis was I couldn't get the borrows on DRYS. Why not short the sympathy plays? You know, D RYS is not gonna last forever. It's gonna fall down. So these stupid stocks should fall too. Okay, so these other stocks were up significantly as well.

Yeah, I think they were up like thirty, forty percent. This is this was on Friday, so even before the crazy squeeze started. As soon as the massive, massive squeeze from like Was it thirty dollars to sixty dollars to ninety dollars to a hundred dollars? Started these things started to go ridiculous. For example, I was short uh S I N O

I think I had like a a dollar ninety average or something like that. I managed to cover a few a dollar sixty and then I started adding near two and your two thirty and then I had I was forced to cover. I was losing too much money. Turns out the next day it's trading at three P market, then goes to four, then goes to five, six, seven, and like it almost hit eight the same day.

And then sold back down to five. And now today, uh, and after I was trading, it's above eight. It's at eight sixty. So that could even go even higher. It just blows my mind that. you know, a couple of hours ago or a couple of days ago, I was covering my short at a dollar sixty and I couldn't fill all the way and now it's at eight dollars. If I didn't stop out, you know That'd be the end of my trading account. You know? It's just so scary to think that.

One or two days of just stupid trading or irresponsible trading, not sticking to your rules, could destroy you. It's it's t it's scary. It blows my mind. Yeah. I think there's a number of traders who have probably been hurt by this quite badly, so So these are the stocks when you're talking about these sympathy plays.

Uh, these other stocks really have no reason to be up by the crazy amounts that they do other than the fact that they're in the similar sort of industry and sector as, um, in this case, D RYS. Is that what you're saying? Exactly. So most of these stocks are even they're like garbage. So they have to raise money. They have ATM warrants, everything. They're looking to raise as soon as possible. So

My thesis on these sympathy plays is they're usually not going to run as hard or as fast or as high as the main one. So they seem a little safer to short. But when craziness like this happens where DRYS hits one hundred fifteen, these things just lose their minds. They have low floats, some of them under three million shares. And it's crazy. For example, SINO has a float of what is it, 2.8 million. And today it traded almost uh 42 million shares.

The float rate rotated almost 12 times, 13 times, and it just keeps going up and up. Shorts get trapped and they have to keep covering to get out. It just it's crazy. It really is. So I mean a lot of these stocks are still up quite a bit at the time that we're recording this podcast. I mean, how do you anticipate this is gonna play out from from here on? So I guess I want to backtrack a little bit. So if these stocks are I guess are going up like

Why would I short them? You know, why would I not buy them is what I guess a lot of people are talking about. Like why not buy it? You have two hundred percent upside rather than, you know, blowing your account or something. And the reason for that is like I am I'm like uh terrified. I'm terrified of buying'cause today D R Y S was halted. You know, what if the next shipper gets halted?

And it just I feel like I'll have that bad luck where the day I buy that stock, it's gonna halt, you know? So I avoid it. Now, I saw you post it on Twitter. Uh, it was either yesterday or the day before, um, again, before when we're recording this. And we're recording this. Uh we're recording this after the close, which on the sixteenth of November.

Two thousand sixteen. You you mentioned that you lost forty thousand dollars the other day. Yeah. I gotta ask you about that. What happened? Yeah, so I was short when the symphony plays, E. G. L. E. and uh I had some S I No as well. So EGLE I had around uh thirty five thousand shares at something in the sevens average. And when D RYS was starting to pull back near like forty five.

I was confident that the stock was just going to fail back to five or whatever. You know, like I said, we've seen it a million times. You know, why is this time going to be different? And Uh, it just blew my mind when DRYS went from 45 to 65, broke new hive today, and I just had to get out of this EGLE stock. I took my loss on that. I took my loss on SINO and before I knew it I was down four grand.

It was it sucked. It was a terrible feeling. But looking back now, I would have been down a hundred grand or a hundred twenty grand if I held like an idiot, you know? Yeah, so obviously I presume that, you know, you didn't anticipate to lose that much money going into this trade. Like you weren't prepared to risk that much money uh in these trades all that day. You know, what went wrong?

What we're wrong, I underestimated the staying power of D RYS. The stock is truly a black swan stock. It's it's like the KDIO, AQXP, all combined, you know. It just For a stock to go from five to 115 in less than a week is just something that you don't see every day. So these stocks are acting the way they don't.

So in my mind I say, you know, I'm gonna short it. I could be a little bit patient. Maybe I'll be down ten grand, you know, it's not gonna be really much of a big deal. But if you don't stick to your rules, if you don't respect the chart, Then you know, you could blow up in a day. It's really as easy as one bad day could screw you forever. It's very true. That's very true.

Anyway, man, let's get into some more uh let's rewind a little bit and let's talk a bit about how you got into trading. I know you've got a unique story um around this. So I mean tell us what led you into trading, how'd you get into it? Yeah, so basically it starts with my dad. So he came from Turkey to the States in the nineteen eighties with his brother. So he didn't really speak any of the language, he didn't really have much money, but he was an entrepreneur at heart. So

He started his own electronics business, my uncle, and it took off. In the 80s, electronics was hot. Everyone was buying left and right. He really made a name for himself and the money started pouring in. He started making a lot of money. And I guess for as long as I can remember Uh money was never an issue in our family. My dad had a lot. He worked really hard and everything came really easy to him.

So I think it was in the two thousands or whatever, he had a little extra money on the side and he said, you know, what do people with extra money do? Put it in the stock market. So he put his money in the stock market, and I guess I was younger at the time, I didn't really understand it, but all I can remember is he just kept making money, making money. Uh he would put in like some blue chip stocks, like nothing crazy, just like uh

I guess watch it over a couple days, you know, not really day trading, it just I guess investing. But long story short, 2008, 2000 uh nine, whatever it was, when uh the whole economy went to shit. Uh people weren't buying things anymore from the electronic stores and quickly our lives changed. E everything changed immediately. From having a lot of money we went to having almost no money instantly. It was just big, big change. I think I was uh

I think fifteen or sixteen at the time. And I didn't really understand it because I was so used to like everything coming easy to my dad. And it's uh this is a crazy story. So when I turned I think it was uh sixteen or seventeen, I had like a pretty decent car. I bought like some rims for the car. Nothing crazy. Uh, so I thought in my mind, you know, if my dad

uh was making money in the stock market, you know, why can't I do the same? You know, we don't really have that much money anymore. I don't want to ask him for money. So I sold my uh wheels for I think it was like two thousand dollars. And I put it into like a T D account or an E Trade account.

And I just started like playing some stocks I heard. I I I didn't find like much traction. I was mostly buying stocks and just losing. I was the guy buying at the top and uh it was just it was a terrible time. So I guess I was looking on like the online forums and whatnot and I found like a penny stocking guru or whatever. So I supped to him for like a hundred bucks or whatever it was and I said, you know, if this guy could do it, why can't I? You know, what's stopping me?

I'm sure I'm smarter than like most people. So long story short, I followed his trades and I lost a bunch of money. So I said, Screw it, trading's not for me. Whatever, I'm done with it. So I got a job at Starbucks. I started working a little bit more and I said, you know Uh I'm a smart kid. Maybe the first time it didn't work. Let me research a little bit more.

And let's see what happens, you know. So I took the money I made from Starbucks, I put it into uh, well, I took the money from Starbucks, I bought a subscription for another chat room, and I learned about what shorting was. And this concept blew my mind. I said, you know, if I'm buying at the top and the stock is going down, what if I just short where I was gonna buy and, you know, make some money?

So it just it like uh there was a light bulb that went on in my head. So I found a broker that allows shorting, the uh an offshore broker. And I I put what money I had in there and I think the first short trade I ever had was a I shorted 2,000 shares of VGGL at like four dollars. And within like ten or fifteen minutes the stock went from four dollars to three fifty and I was up a thousand dollars instantly.

And just I I can't explain to you the euphoria I felt. It was just I was on top of the world. I felt like a king. I made a thousand dollars like from one trade and I was hooked forever. I I couldn't stop. Shorting became everything to me. What a story, man. So just backtracking a little bit, when you first opened up that trading account, um, did you blow up that first trading account or did you just decide that you were losing too much and that it wasn't for you?

Uh the two thousand count, I blew it up. I blew it up after a couple of trades. It was

It was gone before I knew it. And was that the only account you've blown up uh to date? I've blown up a lot. I I can't even count. So after that VGGL trade I started to pick up traction and then before you know it I was doing stupid stuff again, you know, I was shorting anything that was up. You know, I had no rules. I said, This stock is up twenty percent, let me short it. What's gonna happen, you know?

And after I started losing that money, I just kept you know, I kept working at Starbucks, you know, I kept my job a little bit. I wasn't really making that much but After blowing up like five or six accounts, these are small accounts, like say a thousand dollars or whatever.

After blowing that up enough times, I said, what would work on the short side? What are all these big traders in this chat room doing that I'm not doing? Like what am I missing? What is like the what is the golden road? What is the Like whatever it is, like what is the secret sauce of trading that I'm missing? And The thing is I found I guess the strategy that most people were using was their shorting stocks that are trash that don't really uh have any reason to be up.

And long story short, that strategy worked a lot for me. And then I evolved that strategy into shorting the sympathy plays of running stocks. So Mostly when these stocks run like the sectors run, whether it's forklifts, uh Ebola, whatever it is. They usually have sympathy plays that other people are chasing or wanting to be.

that next big runner. Most of the time, I guess with smaller accounts, you don't really have the borrow for that big one. So I found that having the borrow for uh these sympathy plays was not only cheaper, it was also a little bit easier, you know?

So you said that you were you know, you were trading accounts that were only a couple of grand and I think you even said maybe one was like a thousand dollars. Like that's uh that's pretty tough going. Like how are you How are you managing to trade with such a small account and how did you get around the the Pattern Day trader rule? Okay, so I use one of those offshore brokers that uh allows you to have like a five hundred dollar account minimum and they give you six times leverage.

So let's say you have a thousand dollar account, they let you have six thousand dollars in buying power entry day. So that led to my blowing up happening even faster, you know, because I was playing on margin And just losers just start to add up and add up and add up until I said, Screw it, I can't lose anymore. I'm sick of this. Screw Starbucks. I want a better life for myself.

And now these these offshore brokers, that in itself, it sounds very dodgy. Is it dodgy? Are there any risks of using a broker like this? I think so. I mean the whole concept is sketchy anyway, but without these offshore brokers, I wouldn't be where I am today. I didn't have enough money to Passed the pattern day trader rule. I didn't have enough money to open up like three accounts. I just had to pray that.

This thing wasn't really a scam. You know, whenever I complained and yelled at them 10 times, I eventually got my money, and the routing was terrible, everything was terrible. Uh it just this pattern D trader was such a stupid thing to me. Twenty-five thousand dollars to trade as much as you want, like it just I don't understand it.

I think it's so stupid. So now that you're well above that, you're obviously not with an offshore broker any longer. Exactly. Okay, sure. Now I just want to put things into perspective here because when we the start of this call, you know, I asked you about losing forty thousand dollars uh just the other day. And here you are, you started out working at Starbucks. Like, just put that into perspective for us. How much were you earning at Starbucks? Oh my god.

I don't even want to say it'cause it sounds so stupid, but I was making I think it was like a hundred dollars a week after taxes. I put sixty dollars in my gas sink for my car and then whatever I had left over I would spend on my ex girlfriend. So I basically had nothing at the end of the week.

And how many hours were you working awake? I think I'cause I was still in school at the time. I was still in like high school and college or whatever. So I had to balance both. So I think I was working like twenty five hours a week or thirty hours a week at Starbucks and the rest at school. Sorry, you're working twenty five hours a week and making a hundred bucks.

Yeah, it was nothing. I was getting paid minimum wage, like as little as it was terrible. Just thinking now that money meant so much to me and losing forty doll forty thousand dollars doesn't even phase me anymore. It just blows my mind. Man, that's so savage.

Yeah. Okay, so at what point did you feel comfortable I mean, obviously there wasn't much risk in losing uh in in leaving Starbucks because you weren't making a whole lot of money. At what point did you make the decision to Just go full into trading. So basically again it's gonna sound funny, but my girlfriend broke up with me, so I was a little bit upset. So I said, you know, screw it, how am I gonna spend money on this stupid girl when I could be

you know, saving up some money and starting to trade. So after that moment I guess I was a little bit upset. So I dove full into trading to get my mind off everything. I started researching, I started watching some D V D I started to do everything that I could just so like I could stop thinking about this person. And it's worked out amazingly. Couldn't be happier. How long have you been trading for all up and how old are you right now? Okay, it's been

I think two and a half years. It's gonna be three years in February. And I'm twenty two now. I just turned twenty two. That's incredible, man. Yeah, thanks. Good going.

One of the things which is so crazy about your story is how quickly you've been able to pick this up and and get a grasp of, you know, how to trade your way in the markets. I mean, how have you been able to pick up these concepts so quickly? I guess the best way to say it is I'm addicted to trading. Like This trading is on my mind 24-7. The first thing I do when I wake up is I check the quotes on some tickers that I'm watching.

midday, I'm just thinking, no matter what, it's always on my mind. Before I sleep, it's on my mind. What am I gonna do the next day? How am I gonna plan my trades? I'm out with my friends, I'm drinking, I'm thinking, okay, what's the next stop that's gonna be in play? How do I

How do I nail this stock? What do I have to do to become the best of the best in trading? It just it's become an obsession in my head. It's become like the only thing I think about. It might not be healthy, but it's I love it so much that I can't stop. It's literally is. It means everything to me.

So obviously you've got a clear obsession for trading. Do you have an obsessive uh personality like by nature? Like does this you know, can you track this back to uh things in your teenage years that you were like that just really obsessed about? So basically I guess like when I wanna do something, I try to be the best at it, whether it's trading, whether it's uh in school, whether anything. No matter what, I try to be the best in anything.

comes in my way. So with trading it was a challenge'cause you could never be Like you can never master the market. The market is always gonna be smarter than you. So it just blew my mind that like no matter how hard I study, no matter what, the market is ever changing. So even we saw with all these shippers. They're blowing everyone's minds because these moves are crazy. They're absolutely nuts.

And it's something that we're not used to. It's something that the market is doing. We have to get used to it eventually. This might be the new norm. What if these new shipping stocks are it's gonna happen more often. What if the next sector is who knows, like coal stocks or whatever, you know? We just always have to be adaptive. We always have to be learning. And the moment we stop adapting is the moment we're done.

So maybe walk us through your typical day. You know, you said that pretty much from the minute you're up till when you go to bed, you're you're just thinking and obsessing about trading. Walk us through a typical day. Yeah, so Basically I don't really get much sleep at night. I guess I have like a sleeping problem or whatever it is. So I'm usually up pretty early. So uh let's say normally I'm up at like five in the morning. You know I wake up, check the quotes.

You know, go shower, think about trading, what am I gonna do? And then I start checking the uh the pre market gappers to see what's up on the day. I do a little bit of research before the market's open. I usually just hang out like really early. Uh between like five to seven AM and then from seven AM to eight AM I'm always like on the screens watching how the stocks are acting, how they're trading pre market, like

Is there like a a trend that's forming? Is there some sort of news that came out? Like what is moving these stuff? And by the time the open comes up, I usually have a plan set up. Sometimes I write it down on a piece of paper, other times I just wing it. But mostly I find more success when I just write my d write down my plan and stick to it. So For example, let's say uh tomorrow there's these shipper stocks are flying again.

So I'll probably wake up in the morning, see how they're acting. Did they gap up? Did they gap down? Which stock am I most interested in? Why is that? And then form a plan. For example, I'm gonna try to find the weakest shipper amongst all these stocks, the weakest, uh, the relative weakness.

And then from there, I'm gonna plan my trades according to the support and resistance of that stock and then get my orders ready and then by the time the market opens, hopefully if they spike up hard enough, they'll hit my orders and we'll get the day going.

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In the years that you've been trading so far, what would you say have been the biggest challenges that you had to overcome? I think it's my nature to be very stubborn. I am incredibly stubborn no matter what situation I'm in. And that really shows my trading. You know, if I'm trading a stock with size, Uh and it's going against me, I say, you know, screw it. I have the money to sustain. What if it goes

You know, let it keep going up higher. You know, I could eat I could take some blood, you know. Let them let the stock kick me in the balls, you know. I'm stronger than that. And it just shows on situations like this, like D R Y S. If you're short at let's say thirty dollars.

You have a thousand shares at thirty dollars short and it goes to forty, you say, I'm down ten grand, no big deal, you know, I can sustain that. What happens when it goes to a hundred and you're down seventy grand? It's just it's crazy. So that's something I struggle with now. I have to learn to cut my losers faster. I usually cut them too late. I usually cut them when the pain is too big and I'm just like I can't deal with this anymore.

If I cut my losers earlier, I would probably be a millionaire by now. It's just it's just crazy, but it's in my brain to be so stubborn. And if I could just fix that problem I have, I would be such a better traitor on so many different levels. Have you made any effort, like any real conscious effort to try and change that? Like is there anything you've tried?

Yeah, so I've tried using stop losses and they've been helping, but I always feel like when I get stopped out, it's always at the top, you know. So what I've been practicing is setting the stop loss on half my position and then seeing what happens next. If the stock goes even higher, then I'll stop out the rest of my position by myself.

If the stock goes lower after my stop, I'll just re-add it back half my position. So that way it's a little bit of a balance. You know, sometimes the the stop will take over, sometimes I'll take over, depending on the situation. Right. So when you get into a trade, do you have in your mind like a predetermined amount that you're willing to risk on that trade? Not really. No. I never set a predetermined amount that I'm willing to lose. I usually just

Play it based on the chart, you know. So for example, EGLE when I lost what is it, forty thousand dollars. I said, you know, worst case scenario, the stock is gonna go against me and I'm gonna probably lose like ten or twenty grand. Like it's not a big deal. Like I thought to myself, you know, whatever. This is a winner, this is a sure thing. I know it's gonna drop.

So I said, you know, it's not going to be really much of a big deal. But then when DRYS starts reverse, I said, oh shit, maybe I'm fucked. Maybe I have to cover, maybe I have to take my loss. So I didn't even look at the PL. I just had to get out of the chart as quick as possible. And then I saw the damage and I was like shit, this sucks. But luckily, the stock, this EGLE is up like three, four more dollars since I covered. So I guess I did the right thing for now. Right. So I just

I wanna stay on this for a little longer. I don't want to skip over this. Um, you know, I I think it's very interesting that you you approach things this way because it kind of goes against a lot of the um, you know, conventional wisdom, if you want to call it that, that that's floating around. is having either a stop loss or a predetermined price point or knowing what's going to cause you to get out of that trade. But you're not really like that.

Yeah, I think that's gonna cause too much emotional trading. If you say like my number is let's say for example my maximum loss is ten thousand dollars in a trade. I mean it is the smart thing to stop out at that certain point, but Sometimes I guess it's I guess it's my nature too that I like to risk a little bit more. So I'm a very risky person. I like taking risks like in any situation.

So when I see the stock going against me, sometimes, depending on the situation, instead of stopping, I'll just add a little bit more. And I'm not gonna add to the point where I'm add, add, add to oblivion. I'm gonna add where it makes sense. If I'm wrong with that add, I'll take it off ten cents higher, twenty cents higher. But at least I tried, you know. So when does it make sense for you to add to a losing position? It depends. Like so for example, let's say uh

This EGLE. It went from I think the day I was short, I think it hit$8 and then started to sell back off. And then ramp a little bit again, it's like 750. So what I do, let's say I had like a 720 average, 730 average, whatever it was, and it was at$8. So when I saw DRYS reversing at that point, EGLE started reversing. So I said, this might be it. It's time to add. So I added there.

The stock went down a little bit more. But then when the whole thesis of DRYS changed, when it reversed itself, that's when I knew, okay, this thesis isn't going to sustain. I have to get out no matter what. I don't know. I don't really know how to word this correctly, but a lot of what you're doing uh in in managing your trades once they're on is just trying to really gauge the emotion of the market and really trying to work out like

I guess where where price is going, like everyone is, but like your managing the trade extends a lot further than from the point where you get into the market and have a predetermined stop. Really tracking and trying to have a really good read on where the market's going. Yeah. I mean if you say like I'm gonna I'm gonna play EGLE. I'm gonna lose five grand. As soon as I lose five grand, I'm gonna be out.

The moment you lose five grand, you're gonna be fucked up in the head a little bit. You're gonna say, I lost, I suck, whatever. And that's gonna cloud your judgment for when the reversal really does happen.

So I'm okay with taking the loss if I have to at that certain point, but I'm not gonna say I lost 40,000. I'm done for the day. I'm gonna say, okay, I lost 40,000. You know, I suck. I was an idiot. This was avoidable. But when the stock reverses, I want to be right back in there hitting it with size. It's not gonna be just to make the money back. It's gonna be'cause I was wrong in the short term, but I have to re tack, I have to re hit the stock. I'm not gonna

I'm not gonna sit in a corner and cry if I lose, you know. That's what people are gonna do and they're never gonna succeed. You have to overcome that loser. Even if it's 5,000, 10,000, 20,000, whatever it is, you have to think past that and focus. on being the best trader, being in the best trade that you could be.

Okay. So this has probably become a little bit easier for you to do now that your account's a lot larger, but in those earlier days when you were trading accounts that were really just a few grand, were you much the same? Like how did you how has your trading changed? from when you were trading, let's say, let's just say a five thousand dollar account to what you're trading now, like a few hundred thousand dollars. Yeah. So when I was trading with a smaller account

My idea was do not short any bit of size until the reversal is confirmed. You know, I said I have too little money to risk that. If I'm shorting before the reversal, I'm asking to get wiped out. But now with bigger count, I guess I have the uh the leeway to short a little bit early, to throw out some feelers into parabolics, or to throw out some feelers into bigger

uh bigger size charts and slowly add on the way down rather than let the stock collapse and then add. It's a little it's a little different, but I mean it's been working for me. In that same sort of period. Was there any like defining moments or turning points?

Things that changed for when your you know, your average P and L for the day went from perhaps maybe a few hundred dollars to, you know, a few thousand dollars. Was there any like big changes that you made to your trading that uh started to ramp up the the pace that you were growing your account. I mean I I increase size, but

It was just consistent gains. Like what grew my$5,000 account and what grows my accounts now is very, very different. So what grew that$5,000 account was consistent gains every single day. No matter what, I would show up to the market. I could make five hundred dollars, I could make a thousand dollars, and then I'd cut my day off, I'd take a nap, I'd do whatever I had to do, and I was just growing my account every day, slowly but surely.

Now what I try to do is I try to find those perfect opportunities, those ninety percent opportunities and trade those. So that doesn't mean trading every single day. That means maybe trading once a week or twice a week or like Well maybe like once every other week. I try not to trade every day. I try to trade only when my specific setup shows up. So for example, this week I've been trading every single day. I haven't left the computer because my setups are there.

I keep telling everyone these shippers are crazy. They're gonna be a once in a lifetime opportunity, both on the long side and the short side. So I can't afford to leave my computer for a second. These opportunities are so big that when the time comes I have to hammer them lower. It's just it's it's crazy to me, honestly. Do you really think it is a once in a lifetime opportunity though? Or is that a little bit of FOMO? Sure, sure. I guess it's not a once in a lifetime opportunity, but it's been

It's been kind of slow in the small cap world and seeing the stock go from five to a hundred and fifteen in less than a week is gonna light up everything. Everything is gonna be lit up for a few weeks. So after these shippers run. Some uh let's say some chat rooms are gonna try to pump the next big thing. And when that happens, they're not gonna have as much fuel as this one did. So the fade is gonna be even bigger. So I'm trying to like Stick here, stick to the market, stay on my computers.

To try to anticipate those trades and short them on the way down. Now I just want to pick up on something you said there. You said another chat room might try to pump. a certain stock. Is that really the way that it works? You know what I mean? Like does a chatroom actually have the power to be able to really drive a stock price higher like that or lower even? It depends on the subscriber base. So let's say, let's say one chat room, whatever. Let's say they have a thousand members, right?

And the main guy is buying 10,000 shares of an incredibly illiquid stock. Like this stock trade, let's say 500,000 shares a day, like on a regular day. This guy's buying 10,000, 20,000 shares. If a quarter of his chatroom buy a thousand shares, that's already like two hundred and fifty thousand shares, right? So it's just gonna push the stock much higher.

And then what happens? When everyone starts to sell or when everyone uh when there's no when there's no real demand for the stock it's gonna go back down. So I live for these chatrooms. I am I pray that they buy everything'cause usually it goes right back down instantly. I mean we might have already covered this a little bit, but

Uh let's just let's just go through it again and maybe a bit more in general terms, I think. So what are the qualities of your ideal trade or your ideal setup scenario, whatever you want to call it? Okay. So My ideal setup is are these sympathy plays that are going on right now. So

Basically, what I'm sure most people thought is when DRYS was halted, we everyone said that these stocks are toast. They're collapsing. They're nothing. That's it. The head of the snake is gone. Short these to oblivion. And when the stock when DRYS halted, these stocks went down almost instantly. But to everyone's surprise, they held a bid. They started trapping shorts again.

They went even higher and higher and higher and they're still continuing to squeeze people. So now since D R Y S is halted, there are other shipper stocks that are still going up that are quote unquote, the new index for shipper stocks. For example, SINO is the most powerful. It's at nearly eight or nine dollars, whatever it is right now. So tomorrow morning, depending on how SINO moves, it's gonna fuel these other stocks higher.

So tomorrow what my plan is gonna be is when SINO starts to reverse, I hit a different sympathy hard. I short it as hard as I can and hope that It's time for these to reverse. And if I'm wrong, if SINO starts to reverse, I'm just gonna take my walls. I can't fight these shippers, they're too strong. But basically my strategy is Find the main stock that's running and short their sympathies when the main one starts to reverse.

That's what I try to do. That's usually my best, best, most profitable setup. Okay. And when you say you're gonna try and hit these hard, what does that mean? I'm going to short as much as I can. So Let's say it's gonna be 10,000, 20,000, 40,000, 50,000 shares. I'm gonna try to short it and hold it for a few days because we all know that after the hype is done, they're gonna go back to normal. They're gonna go back to where they came from.

Stocks that went from two to ten are gonna go back to five by the end of the week, and then they're gonna go back down to two by the end of the month. So, what I'm gonna try to do is when the main stock Starts to reverse. When the new head of the snake is cut off, I'm gonna short sympathy plays and hold for as long as possible for as much downside as possible.

Cause we all know these stocks really they have to raise money. They're toxic companies. They're they're uh there's no real reason to be up rather than a sympathy play. So as soon as all these longs get stuck, it's It's gonna reverse. So I might have misheard you there, but did you say you might hold these for a few days or you'll you'll hold them for definitely overnight? Yes, yes. So right now the shippers have not reversed. So I'm not holding anything overnight yet.

But when they do reverse, I plan on holding maybe two or three days because usually the bleeding doesn't stop in one day. It continues to bleed for a couple more days. So that's also something that I'm trying to work on. I'm usually quick to cover. I'm usually quick to take my money and run.

But I've realized that from more successful traders that if you wait a few days, if you stick around for that quote unquote hard money that you just have to wait and be patient for, the payoff really is worth it. The money is really there for your taking because after a day or two, traders are just looking to the next stock that's moving. They forget about this stock and it just starts to sell off when no one's looking.

Now, from the way you've been talking, it sounds as though you you hold pretty large positions. How do you adjust your position size when you're holding a trade overnight? Is that something you do? It really does depend on the situation. So When a stock is below the VWAP level, That is my tell that usually it's very weak on the day, selling off under VWAP, you know, closing near lows. I think to myself, you know, what reason do I have to cover? Like it's probably gonna go lower the next day, but

Maybe I'll take off like a third of my position or half of my position just so that in that case where it goes a little bit higher, I've locked in some money. And worst case scenario, I'll just reshort it tomorrow a little bit lower.

Now you know throughout this episode we've been talking a lot about the uh shipping container stocks. More broadly speaking, how do you identify these sectors and industries that are starting to uh gain momentum? Well, usually there's a lot of people on Twitter talking about it or I mean chat rooms are talking about it, but when they start to stick, when something like this sticks like uh before it was uh let's say Ebola or uh forklifts or whatever it was.

When they start to have these sympathy plays in the similar sectors that every single person is talking about, every single person on Twitter, every single person in a chat room, they're only trading these stocks, that's when you know that. There's something going on here, you know. This is when DRYS goes from five to a hundred and five or a hundred, whatever it was.

It's gonna get people talking. It's gonna get people everyone's gonna be curious. Everyone's gonna have it on their screen. Everyone's gonna be watching every tick of it. It's just The more eyes that are on it, the crazier everything could get.

And what would you say is your ratio of trades on the long side compared to the short side? It's pretty pathetic, but it's usually ninety nine percent short and one percent long. And the only time I long is Usually when I lose in a short, let's say, for example, it was a, I think it was C A N F, like a while back, a few months back, whatever it was.

I ended up losing twenty thousand dollars on the short and I said, okay, the short isn't working. The stock looks like it's gonna go higher. So let me buy it. You know, let me reverse my bias. Let me reverse my position and just buy the stock. I ended up buying the stock with a bunch of size. I ended up selling for I think it was a$50,000 win. So it ended up being a$30,000 win on the day after the$20,000 loss.

So usually when I long, it's because my short position didn't work out. I see the chart is going to reverse, so I reverse my bias. Okay. Now these are not small numbers that we're talking about. Like, you know, you're twenty two years old. You make me feel old. No. What do your friends and family think of your trading efforts and the amount of success that you've seen so far?

Basically, my friends really have no idea how much money I'm making. They just know that I trade stocks and that I'm doing well for myself. They have no clue about the numbers. If I tell'em, they'll uh they just won't understand. It'll blow their minds. Like they'll say I'm crazy, I'm an idiot. Like, what am I doing? You're risking too much.

And I say, you know, I'm twenty two. This this is is a time, it's a risk, you know. I really have nothing to lose, you know, I have no bills, I have no I have no mortgage, you know, I live with my dad. Uh it's I think it's that's one of my benefits too. I don't really have to think about bills. I don't have to think about where I'm gonna put my money, like what am I gonna do?

If I have a good month or a good week, I'll wire out some money and keep it in my bank account, save for like a rainy day, and that's about it. I don't really spend that much money out. I don't have I really don't have much of a reason to spend except going out on the weekends with my friends. So why do you why do you not share this sort of thing with your friends? I don't think they'll understand it. They'll I I don't know. I feel like maybe it might be a little bit of showing off and

I just don't think they'll they'll really get it. They know that I trade stocks, they know that I short stocks, but uh I don't really get into the numbers too much. I'm talking to someone from the training community. Then I'm like an open book. I tell them everything. no matter what, send me a question about my numbers, I'll tell you'cause they'll understand. They'll know what I'm going through. My friends really uh they don't know the stock market, so they wouldn't understand much of anything.

Sure. And what do most of your friends do? Uh one of my friends does real estate and jewelry. The other friend owns a hardware store. Another one is uh doing pre-med. He's gonna be like a surgeon. Another one's gonna be a physical therapist. So uh it's I guess they're eventually all gonna be doing well for themselves, so

No, that's really cool, man. Outside of trading, I want to talk to you about this. You know, I think it was earlier this year in twenty sixteen, uh or maybe it was twenty fifteen. Um anyway, doesn't really matter too much. Uh you Renovated a house and flipped it. So tell us a little bit about that. Like why did you decide to do this? Yeah, so I think it was uh I think two thousand fifteen the uh Las Vegas Conference Traders for a cause.

Uh I met a guy, uh, Louie, uh Monaco Trader on Twitter, and he made most of his fortune from not trading, but from real estate. So he trades just'cause he loves it, but most of his money is from real estate or venture capital or whatever else he does. So we met up at Vegas. We talked a little bit by the pool and he said, you know, what are you doing? Like what is your What is your long term plan, you know?

And I said, you know, I have some money in the bank. It's just really chilling there. It's not really doing much. And he's like, Have you ever thought of real estate? And I'm like, you know, like in the back of my head I thought about it, but sounds like a lot of work. Maybe it's not for me. And he's he just gave me some pointers, some tips. He mentioned his story about how he started in real estate.

I guess uh there was like a little he planted a seed in my head. He said, you know, you could do it, you know, you're not a dumb kid, you're pretty smart, you know. A lot of people could do it. It's not a problem. So I think the conference was in uh let's say October or November. Uh the market started slowing down, November to December in uh 2015. So I said, screw it.

Why not get into real estate? What do I have to lose? You know, I'm gonna learn a lot. It's gonna be a cool experience. The market's slow. Uh so I guess I started doing research about what what is like a a potential good property to buy and flip and whatever. So I ended up coming up upon like foreclosure properties and I started looking at a bunch of'em and I eventually found one that I enjoyed like that. I said

This one has potential, you know. I see the vision in this house. So long story short, I ended up buying the house and I guess that was the easiest part of it, buying the house. And then I had to think like how the hell am I gonna do this? I have to hire a guy to do it, I have to hire a contractor, a plumber, an electrician, uh some guy to do the masonry at the front of the house, a roofing guy. And it j it was it was really overwhelming because

It's like it's like trading for the first time, you know. You really have no clue what you're doing. You could press a couple buttons, maybe you'll be lucky, but really like you have no clue. So I said, you know, what what the hell am I gonna do? Like uh So I started interviewing what I it's funny because I'm not sure. I started parking my car outside a home depot at like seven in the morning.

And calling contractors from their vans, like from the numbers I saw on their vans, and just saying, hey, I have a house in this area. Do you mind if you could come in and maybe give me an estimate on what the work would cost? So I called, I think it was like thirty people and they all came in. They gave me like varying uh quotes from like twenty thousand dollars to like seventy thousand dollars to like fix the house.

And you can't over choose like the cheapest guy because you don't know what kind of work he'll do. You can't choose the most expensive guy because it's not going to fit your budget. So Uh I was a little bit frustrated, so I went out to drink with my friends and

I guess I got a little drunk and started telling him my problems. And one of my friends uh he actually owns a hardware store. So he deals with contractors every single day. They come in to buy paint, they come in to buy like anything. So I said You know, if you find me a good contractor, I'll buy all my all my materials from your hardware store. And he's like, done, deal.

So literally he found me a guy. He was one of the cheaper guys. Uh my friend vouched for him and I said, all right, let's do this guy. Let's use this guy. And Long story short, he had a a couple of friends that were electricians and plumbers and whatnot, so I guess it all worked out but Yeah, so the work started and he would just call me and he'd say, I need this, this and this and I'm like, All right.

And I would go to the Home Depot or whatever it was and just find the materials. Like I had to choose the hardwood floors, the paint, the uh kitchen materials, everything and This is all like my first time doing anything, so I had to like I basically winged everything. I didn't know what the hell I was doing. I went to Home Depot, I uh went to all these like tile specialty stores, like a kitchen store, whatever it was, and I started picking things out that, you know, I would like in a house.

So I picked darkwood floors, I picked the paint color, I picked the kitchen with grand uh countertops, and I guess before I knew it, uh everything started to come together. I mean there were a bunch of problems like in between like contractor nickel and diming for like stupid things or like stupid problems coming up. But as annoying as they were, they weren't that hard to overcome. It just took some common sense and like

Some uh negotiation to fix all these problems. And the whole process uh from buying the house to uh selling the house. was about I think four months and then like there was like another two or three months of like the turn your review uh Making sure the other uh the buyers could get a mortgage and all this stuff. And it was really uh uh an interesting experience. I learned a lot. I learned

about how uh crooked these contractors could be. I learned how important like my friendships could be with my friends. You know, we help each other and Overall, like the whole experience was cool, but in the back of my head, I was still always thinking like I miss trading, you know, like when I was doing this house project, I wasn't trading that much. I was trading once a month and like just so I could get like my addiction settled.

Like there really wasn't much plays or whatever it was. And I was just thinking like, uh, you know, this real estate thing is cool, but trading really is where my heart is. Like it's still what I'm thinking about. So when the house got sold, I started trading again. I had more time to trade again. And I guess the timing was right. Everything was right. And all these stupid stocks like these sympathy stocks with these low flow plays were back again and

No hesitation. I was back in my element. I there was no uh it was like riding a bike. I knew exactly what I was doing and it turned out to be one of my most profitable months of the entire year. I did really well the first month I came back and Since then it's just trading's been on my mind twenty four seven.

Right. So do you have any plans of doing, you know, another venture into real estate? So like I said, my contractor was nickel and diming me for everything and it was just so frustrating and annoying. Like I by the end of it I was just so sick of him, so I mean I think a lot of this whole real estate thing depends on your team. It depends on who you're working with. Could are they people you could trust? Are they honest people? Are they people that you know aren't there to screw you? And my guy

as much as my friend vouched for him, he was there to screw me a little bit, you know. He's there to make his money, whatever it was. And From that that guy, just that one guy, discouraged me from doing this whole thing again. But if I found the right team, Honestly, I'd be I'd be happy to do it over again. It was a really cool experience. I loved the feeling of turning a garbage house. There were holes in there that were smelled like shit. It was terrible in there. And I'm glad like

I turned it into something that someone could live in, you know? They're gonna like start a family in there and it's just all from like a stupid garbage property that if they saw before they would never think about buying it. Yeah. So if you did do it again or or when you do it again, you know, obviously the team is a big one, like you you'd make sure you had a better team or a a team that you click with.

Is there anything else you would have done differently? Like how did you go budget wise? I know it's very easy to go over budget when you're renovating a house or, you know, and picking the wrong house. Like it's very easy to lose money in real estate.

you know, just as easy as it is in trading or I think to to many to a certain level. W is there anything else you would have done differently? So the area that I bought the house in obviously wasn't like the best area possible because it was very, very cheap. So the way I did the house is basically everything I loved, everything I thought would look cool, but all those things like

take a lot of money. Like they cost a lot of money. So what I should have done differently is not think about what I want. I had to think about what buyers in the area want. And that would save me a lot more money. You know, instead of using granite countertops or decent like appliances. I can go with the cheapest appliances and the cheapest countertops and the house would still sell. You know? So I guess it's I was doing it for the first time. I didn't really know what I was doing, but

now that I know a little bit better, I know what it takes to like uh flip a house profitably. It depends on the area. It depends on uh like the kitchens, the bathrooms or whatever. And I just learned that I was cheaping out on the bathrooms a little bit and I know now that if I wasn't cheaping out on the bathrooms, the house would sell a little bit better. I was like garbage. The bathrooms I thought were garbage, but

The whole I made some money on the house, you know, for the my first project I made some money, you know. I'm happy about that. I was ready to uh break even or even lose a little bit of money just so I could get that knowledge, but I'm glad everything really worked out. Yeah. Oh, that's good, man. That's good. And I think you went into it with the right attitude as well. I mean, you know, learn before you earn in some ways. So no, good on you, man. That's awesome.

Anyway, Alex, let's uh let's leave it at that. Is there anything else you want to add, anything you want to share with listeners uh before we call this a wrap? Uh I guess the most important thing is that When you're trying to grow small account, always focus on consistency.

Find a setup that you're really, really good at, a setup that you know you'll win at and trade that. You have no reason to trade like uh something like Facebook if it's moving on earnings just so you can get a rush or whatever. Find something that you're good at. Find consistent profits and your account will grow really fast. I couldn't believe how fast my account grew when I was being consistent, trading every day, trading setups that were there for me.

It's just the little things add up. It might take time, but trust me, it adds up faster than you'll imagine. So where's the best place that listeners can go to find out more about you? I guess my Twitter or my blog. They're both on my Twitter. I guess my Twitter is uh A T O nine underscore trader and my blog is ATO nine trader dot blogspot dot com. So I mean I have like some story about my real estate thing there and I post on Twitter pretty regularly about some trades I'm in or some thoughts so

That's about it. Excellent man. And can you just repeat your Twitter handle one more time in case someone missed that? It's AT zero nine underscore trader. Okay. Good stuff. Alex, thank you very much for coming on the podcast, man. It's been a blast to speak with you. Thanks very much, man. Definitely, man. Thanks for the opportunity. You've reached the end of this episode of Chat with Traders, but rest assured there are more