128: Andy Kershner – Risk Tolerance, Daily Habits and Trade Critiques

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How you doing everybody? Thank you so much for tuning in to episode 128. This week, joining me is Andy Kirschner. Andy has been a trader since the early 90s and somewhere around 2001 he founded Kirschner Trading Group, which is a proprietary trading and technology firm in Austin, Texas. And also through a partnership with SB Capital, Kirschhner Trading have a second office in Midtown Manhattan.

So, what did we talk about? Well, we spoke about Andy's ability to take pain on adverse positions as though that's a strength of his. Whether or not this has been a key ingredient to his trading success, and do traders with higher risk tolerances make more money? And he also shares his daily habits and critiques a trade which didn't go so well from the session prior to recording this episode. And naturally we cover a few other things too.

Please enjoy it and take some notes if you need to. Here is my interview with Andy Kirshner.

Okay, cool. Well I mean let's start right at the beginning. I think this is probably the early nineties. I mean, where did you start out? I don't know a great deal about your background and how you actually did get your start in this, but Um, if I'm not mistaken, you actually started out as a software developer. Am I right? I mean, feel free to correct me. No. I was a geologist by training, but um

was ski bumming around a little bit and a friend of mine figured out how to tell which uh stocks were gonna go up the next day. And so we started put all of our money together, five thousand bucks and started trading options out of the library. Can you tell us a little bit more about that? I mean, what sort of experience did your buddy have in trading, or were you both very green to this?

Well, my friend was uh extremely dyslexic and a great friend. Um and so you know, he was finishing up undergraduate at Texas Tech and so I went drove down from Colorado and and m moved in with him and we started um trading the markets. So he essentially being dyslexic, he's a guy that was excellent at Pattern recognition and he paid his way through school by figuring out how to tell which baseball cards were in a pack, you know, before he bought them. Um

You know, you'd walk down a beach and he'd find seventy two sharks' teeth and I'd find two. So he was that kind of pattern recognition, savantish kind of guy. And um so you know, we would make a list of a hundred

the top hundred IBD names, inter investors business daily names, and look for patterns within those and we trade options on them. And this was before the internet and before you had the ability to actually trade and get prices on a screen and so we turned our five thousand dollars into fifteen hundred dollars by the end of the summer, but we were really encouraged

Because we go, gosh, if we could only get the prices that we see on the screen, we'd make a lot. Um because we were right eighty percent of the time. So we ended up finding out this was just as the SOS system was developing um where retail people could actually get prices from the market makers um on the screens and uh so we called a guy on Sunday, drove down Monday and moved the next week. It was that compelling. Okay. And when you say called a guy, who who was this guy?

Oh, uh his name was David Jemail and David Birch. Uh they were uh became my partners in um or I became their partner, um, in Cornerstone, which became Pro Trader, you know, back in like nineteen ninety six. And what was ProTrader? ProTrader was a broker dealer that essentially service day traders. And so it started out with twelve seats in Austin and then we grew it to maybe twenty offices around the country, did maybe one percent of the Nasdaq at our peak.

uh and serviced probably four hundred and fifty, five hundred traders. We ended up selling that business, the retail and the technology to Instant in two thousand and one and kept the proprietary trading business, which is what we do today.

Okay. And so just going back to uh ProTrader there, is that where you were a software developer? I mean, were you a software developer at any point or were I just totally misread something? No. But They will laugh at you, uh, if you were to tell them that I was a software programmer. Sure. Okay. So at Pro Trader you were a trader or were you more involved in the business side of it?

No, I I mean uh I live and breathe and trading and that's what I like to do. I'm a not a great manager or any of those types of things, but um I love talking to traders and helping traders get where they wanna go and Um, you know, having a little input on technology and kind of what it takes to put it all together so you have a real healthy environment. So yeah, I mean I I spend all my time trading and then two or three hours after the market doing stuff like this.

So earlier you said that you started out with about five thousand dollars, you and your buddy. Uh that account sort of dwindled down to fifteen hundred dollars. Um What sort of things helped you to get better? How were you helping yourself to improve? Well, um so as you can imagine we we drove down and they took a look at me and they took a look at my friend and they said, You know, we'll hire your friend, but you, you know, you can't really trade here. Uh you're you're um

too self confident and you look like a train wreck waiting to happen. Um and so I ended up, you know, kind of working part time jobs and I'd do one trade a day at a bucket shop kind of across the street. And my friend Scott was hired on with the Scott Dyer's his name, um, was hired on uh to trade and they loaned him a hundred thousand. And so all the best traders in Austin

were kind of at this one uh firm, uh pro trader. And I was friends with Scott and became friends with all the traders and so they kind of told me kind of what worked for them and y you know, what habits to do and how to stop losing. You do trades two times and if you don't make money on'em. It's rare that you do it a third time. And people gave me some mechanical processes. So for me it was more about talking to the best traders I could find, figuring out what worked for them and

You know, there's lots of details kind of through that, but you know, the markets change all the time. There are a lot of timeless principles, but um you know, my strategies have changed many times over the years, but a lot of the habits haven't. Okay, so how long would you say it was before you actually started to see some progress in your own trading?

You know, so I guess I probably traded on my own in a s in a small shop um for may about a year and you know, I'd maybe make a thousand or two thousand a month. doing it, doing one trade a day, um, on average. And these were longer holding times. But then of another company opened um and they needed a trader and And so they gave me some money to trade and, you know, I made a I don't know, eighty thousand the first month and then a hundred thousand plus every month thereafter.

for ages. And so it didn't take very long kind of once I was kind of on my own and had enough capital. Yeah, I was able to follow rules and remember numbers and do things like that. And it was helpful that I was not around a bunch of other people. Because I just did things that made sense to me at the time. Um, and had I been trained in a different environment I may have, you know, been a become a scalper and not holding things longer.

It took me a year and a half before I got an opportunity and then I had no idea that it it would suit me as well as it did.

That's a really significant increase to go from making one to two thousand dollars a month to then making eighty to a hundred thousand dollars a month. I mean, how was that possible? Was it just because of the amount of extra capital you were given? I mean, I'm sure there were some other factors to it. No, it's mainly the uh the amount of capital. You know, I could be in lots of positions at at once. And back then it was largely a market maker driven market.

and, you know, things would move three points and they would kind of go up in a jiggly line. But if you could hold these pullbacks, which were measured, you would end up with eighty percent of your trades were flats to plus or minus, and then you'd end up with ten or twenty percent of your trades that were plus two dollars, plus three, plus seven eights. Um and I was able to kind of Anyway, it didn't bother me taking those kinds of risks and holding things longer.

Okay, so when you describe the market environment as a market maker driven sort of market, can you just break that down a little bit and maybe expand on that, please? Once upon a time, you know, probably before you were born, you know, there were the the markets were, you know, largely I'm a product of of really having access to the markets. Prior to this, you know, if to be a trader you had to be In Boston.

New York, Chicago, some in Minneapolis, here in the US anyway, to really trade and you had to you were generally a market maker and those guys traded and they would accept or fill your orders, you know, o over the phone. Computers did not run the trades. It was a human was on the other side of you. when that happened uh and things were traded in eighths and quarters and then eventually sixteenths, but uh and eventually pennies and now subpennies, but

things moved a little smoother back then. Um this is in the mid nineties and it was easier to trade against other humans than it is to trade against computer models that always seem to be searching for your stop today.

We're gonna talk a little bit more about that uh in a moment. I think uh that'd be interesting to go into a little further, um sort of about how your trading has changed due to, you know, um markets changing of course. But Before we do, I I'd like to ask you about some of the mistakes that you made early on, because I think it might be helpful for others to hear about some of those mistakes and maybe

mm caution them about a few things. So I mean, is there any mistakes that you made earlier on which you know, you'll always remember. I've made so many mistakes. In fact I was just adding up my mistakes today. And you know, I made I don't know, a hundred thousand plus of mistakes. And that kind of gets you sharp if you kind of continually look over your mistakes. Big mistakes that I've made The biggest ones that I typically make ca one of my strengths is that I can hold lots of pain.

Um and I can hold winners for a long time. It's also my biggest weakness and which is, you know, uh a lot of times I'll be up I might get up twenty percent on a swing trade or something like that and not It hasn't quite hit my targets. I don't have a Sometimes if I'm not a little bit more structured on hey how I need to capture profits or if it doesn't work out exactly as I intend, how do I work my way out of this trade? And so sometimes I will hold on too long, give things back

let'em come back too far. And so, you know, a couple of years ago I turned a couple of million dollar trade into a couple of million dollar loss, you know, across a

uh a number of different stocks. Uh and that hurts and it just gets your psychology all messed up and anyway, I still have troubles with that from time to time and I just have to journal about it and make sure that I'm a little bit more focused on making sure I have a a real structure and if things aren't going exactly as I need to, how am I gonna scale down?

Right. So that ability to take a lot of pain on positions can be a positive and a disadvantage. I mean is that something you have always been able to do or is that something that's you've been able to get better at or is become more acceptable to you over time? I think I'm all I've always been

overconfident and the numbers big numbers don't bother me. So you grow into it and just recently this this year, I I'm sitting next to a really good trader that's traded really big and so I'm trading a lot bigger because of it. Um and so that I'm having to change my psychology around and also tactics around how I'm trying to capture trades and you know, how do you handle stops when you're moving lots more shares and those types of things.

How important do you think it is to to have that skill of being able to take you know, a bit of heat on a position and withhold the pain when a when a position's moving against you. Like I feel like that this is probably a quite a key element to your success as a trader, am I right? You know, I don't I don't know if it is or isn't. Um I think it's one part of it. I mean I think

It's you know, you it's it's more helpful to kind of trade according to your psychology. If you if you have something that really works well for you and you can d repeat it lots of times, then you should focus on that and, you know, make sure that, you know, find an edge and really make sure that it works for you and then see how big you can do it without affecting the way

that you trade. You know, the best traders are the ones that can trade fifty thousand shares or a hundred thousand shares like they trade a thousand shares and not change their Not change the decision making process for the most part. If you're gonna sit in the seat all day, you might as well be doing some some size.

So even when you get into a position, how do you determine when you're gonna get out and when you're actually gonna cut your losses? Like do you have a predetermined point or do you kind of feel it out as you go?

Usually now I am laddering into positions and laddering out of positions and I get more of a feel for how things are going to happen. But I usually am trying to you know, get in and say, Okay, I'm gonna risk a point, point and a half on this trade, you know, kind of worst case, and I think I can make three and a half or four.

You know, and what are my odds? You know, I'll probably have a fifty fifty chant on something like that. Um sometimes you may add into something and then it feels like it's really got some support in here, so I may triple my size and go, Well, I'm only gonna risk another thirty cents on this particular name from this spot on triple the size, but the risk reward just went from

Yeah, since it's gone against me, but it seems to be having some support, my risk reward is now not one to three or three to one. It's more like ten to one. And so I don't mind getting in a lot bigger right here. Even though my odds are a little bit less because it hasn't worked for me thus far but I still have I mean, the chances of the trade working are less. You know, it may only be a thirty percent chance that it works. But if it does, it's gonna be a ten to one winner.

And so I I modify my behavior around that at times.

Now I just want to take a step back to a comment you made to a couple of questions ago. You know, when I said that your ability to be able to take a lot of pain on a position is probably been a key element to your success. um and you weren't so sure if it is. Do you think the traders who maybe have a lower risk tolerance make less money though? No, not necessarily, not at all. Um

There's lots of different styles um that work for people. Some people are scalpers, some people are swing traders, um some people only like to do things that are set up where they're gonna win, you know, seventy or eighty percent of the time. So you can be very successful and you can accomplish whatever your goals are um in lots of different ways. Um you can be a

you know, computer genius and write some models, uh, like we've got a bunch of guys here doing quantitatively. So there's you know, I I asked somebody once uh who ran a really big firm, hundreds of traders.

I said, Who's your best trader? And and you know, he looked at me and said, I d I don't have a best trader. You know, the best trader in what? You know, the best trader that's you know, the best short seller in this in this particular market, the best uh semiconductor trader, the best swing trader, the best and so

matching up your psychology with the types of trading that you're willing to do and the types of risk that you're willing to take makes a big difference. And, you know, it really does help to Dis discover what that is. And then you have to really make sure you have all the right habits around it too. Are you journaling? Are you viewing? Are you preparing? You know, I could I could tell you my exact strategy today when you could tell me yours and unless I did all the work around it.

um I'd be only twenty percent of as good as you are at it. And probably the same thing would go for you. So it's much less about the strategy and much more about Are you doing all the right habits in preparation, journaling, review? using the technology preparedness.

Well I mean this is probably a good point for me to ask you. I mean, what are some of those habits? You briefly hit on them there, but can you go into that a little further and maybe walk us through I don't know if you want to walk us through maybe a typical day or however it might be best to get this across, but Um, it'd be interesting to hear about some of the habits which you feel contribute to your success as a trader beyond having just a good strategy.

Yeah, I think the strategies come and go. To me so things that work for me are and I don't do it as much as I I'm I'm a little bit lazier in my older age'cause I've been doing this for a long time. And I want to see my kids off to school and those kind of things. So I sacrificed some upside uh um for doing You know, having a little bit more balanced life today.

But, you know, coming in early, reviewing the news, reviewing the things that are gapped up, having I'm putting out offers and bids and alerts at different places that I'm looking for. I'm talking to the other traders. You know, we've got Ten guys that get on a Skype call and, you know, we're talking about our best ideas for the day.

Putting alerts on those. Calling out your trades throughout the day with other people. Um, you tend to do better trades if you are more overt and talk about'em. Um, it's hard to do today. Most people are You know, the traders we have in our office, you know, they'll call out some of their trades, but often they're texting the guy right next door to them.

uh in some way. Uh because most most of the traders around here are somewhat introverted. So but I find that you do the more you talk about a trade with someone else y the more you follow it and do a better job at it. And the more clear you are. as well. And then um, you know, making sure you have good exercise habits, those kinds of things so that you're rest and rested and refreshed. Journal at the end of the day, look over what worked, what didn't.

I always kind of add up and tally my mistakes and you know, gosh, I'm I was he caught me on a bad day, I'm kinda chapped about this one particular trade. or a couple of others too that didn't really that I didn't perform well on. And, you know, then you're kind of ready to do it all again the next day. I think another thing that really helps for me is talking to you know, lots of different traders and different time frames and ideas and setups and that kind of stuff. And um

You know, that kind of informs you on on what's working for others. Um and there's You know, there's so many different opportunities every single day to make money. You know, making sure you're in the right place at the right time uh really helps.

Yeah, those are all really great. Um, I appreciate you sharing that. Um, one of the things you mentioned is I've caught you on a bad day, and I mean, I don't mean to uh kick you while you're down. But um, you know, would you mind sharing why you didn't perform as you would have liked to? I mean, were there any factors that you can sort of pinpoint?

Yeah, so uh I have this today is, you know, May twenty third, twenty seventeen. I have the stock Momo that I've been in for a long time and it's a Momo stock actually. Um and just You know, i it's been getting pretty hot. To me it feels like it's just about ready to turn over. Uh I pretty much knew I wanted to get out today. Um, had really good earnings, blew'em out. Gapped it up a couple of bucks.

You know, I had offers out uh uh you know, laddering out fifty cents up for i and I'm out of half of my position. uh already, but um the other half I was hoping to take out at, you know, from forty six to forty eight. Opens up at forty five and You know, I had a feeling that this thing was gonna, you know, come unwound. But uh a lot of times they'll d you know, drop down about a dollar and then kind of come back up and and go roaring through. And so I was too afraid of missing

the upside to put in a really good stop. So I what I really needed to do was put in a stop at forty four and say I'm either gonna lose a dollar from this forty five level or I'm gonna make, you know three dollars, uh you know, or a dollar to three dollars on the r remainder of the shares. Um

and it just, you know, s washed right through forty four and then it was just a mess and it ended up going down to like thirty eight. I mean I had a pretty good idea that the numbers were gonna be good. I ended up getting out at forty one. after it kind of settled out. But it'll probably end up going to forty eight over the next month or two, but it may not. But I gave it way too much room and so I should have been more structured Ahead of time and not thinking

on my feet, if if you will. Um, and so I risk a hundred and fifty thousand more than I should have. And I ended up losing ninety thousand more than I should have on that particular trade. I've got to be much sharper to be able to stay in the game and do a little bit better on those. Now it easily could have gone to forty three and a half and then gone to forty eight.

But it didn't. And you know, I would have been mad or whatever, but I needed to be in in this context I needed to be a little bit more structured and have my game plan a little bit more in line and precise. Okay. Now this is probably Yeah, you can correct me if I'm wrong here, but is this kind of the scenario where trading becomes very difficult? Because

You've probably taken trades similar to this in the past where that sort of thing has worked out in your favour and you've made considerable amounts of money from that particular or a trade like that. This time it didn't work out. I mean Well, it's not so much that it didn't work out. It's more the mistake was not having a well defined plan. I had an intuition, man, this is pretty much it.

I need to be tightening it up. I told people on the call I need to get out today. If all of those things are kind of lining up for me, And I don't have a really great stop. you know, I've really uh I've misplayed the day for that particular trade. So I it's less about does the trade work or not work. It's more about doing what you think you should do. And today I didn't I didn't I was not disciplined enough or structured enough.

for how I was feeling about that particular trade. Other days I may have said, Okay, yeah, this is fine, they got great numbers, it feels good, I'm willing to let it kinda wash back around and no problem. But today I kinda went against anyway, uh I was unstructured, so

Anyway, it's embarrassing but you know, uh everyone else that listens still make the same mistake. Absolutely, absolutely. I mean I think it's it's really great that you can be honest about it and uh share it. I mean I'm sure it's gonna help many people who are listening to this, you know. we'll still make mistakes no matter what level we're at.

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Maybe I should've asked you this a little bit earlier, but what sort of trader are you? Like could you just give us a rundown on sort of the opportunities that you try to capture, the things you look at? Um just sort of bit of an overview of your strategy, if you will. Well I've got a a few a lot of different ones, but I'll say what kind of seems to be working more today for me than ever before is now I'm kind of the guy that, you know, I'll step in when things are really looking ugly.

um or looking great. So um I do a lot of fading of real extension moves um and try to kind of ladder into those and then if it really feels right hold on to them for some big retracements. So I do a good portion of that. Um I I would say I also end up doing some swing trading and and trying to buy some breakouts of some momentum names and some news trades too in terms of uh

you know, things that just seem to make sense. It's overdone or underdone or hey, this is really gonna go and I I try to pick bottoms if th it feels like boy all the bad news is in and it couldn't get any worse and You know, a great example was earlier this year, Trump is

beating up on Mexico. Everyone's afraid in Mexico and the you know, the EWW, the Mexican market and the peso are just getting crushed and they couldn't get crushed anymore and it just finally stopped and so then you just step in and catch a lot of it and catch a five or six point trade and um those are, you know, fantastic ones or eight points, I don't know.

Anyway, th that that's four or five different strategies that I've run across, but um how do you find the most beaten down kind of things uh and look for a turn? Um or how do you find the the real where where most people are getting stopped out and that's kind of a good place to step in. Okay, so you're mostly trading equities and a little bit of currencies?

I trade all US equities for the most part and I give options money away to some of the the other guys that you probably have on your show. Okay.

Okay, now you've mentioned laddering into positions a few times. Um laddering in is that's another term for scaling in or adding to a position, am I correct?

So can you explain to us a little bit about how you do that and when it's uh a good idea to do so? Um, you know, you're obviously trading a much larger account than probably most of the people who are listening to this podcast. Um laddering into a position, is that something that becomes uh necessary and useful when you get to larger account sizes, or is it something that uh can be beneficial for uh many traders?

I I think it really depends on your style and what it is. If you have a style where you're looking for kind of retracements or perhaps you want to have it show you something and then add to add to a winner, you know, that's probably even better. I I think it worked for any size account. It really depends how you're the way I think about it is when you're when you're trying to

pick tops or bottoms or fade big moves. Um it's helpful to do'em in smaller chunks and so you get a feel for the market. And if unless you're in some, y it's hard to really feel what it looks like. what it is and you know, I'm willing to risk some money here and some more here, some more here, but at some point, you know, you you can't take any more on.

And you've gotta, you know, unload it. So And when you come to unload a position, are you also scaling out or are you taking everything off at the one time? You know, when you know that you're wrong, some y you know, it's helpful just to kind of Start taking it off, make a bad trade, get out. You can always get back in. Oftentimes I'll punch out of all of it and then a lot of times then I'm frustrated, but you know, it happens. You can't win all of'em. Of course.

And when you're adding to a position or ladder in N as you refer to it, how are you determining the size each time? It's usually somewhat equal sizes and Usually Yeah, it's uh I don't know. I and the size of the particular trade really depends on how comfortable and how liquid the trade is and how strongly you feel about it. So, you know, some trades I'll be in a few thousand shares and some trades I'll be in several hundred.

And just generally speaking about this concept of laddering in, is there any advice or suggestions that you'd give to newer traders about how to think about doing this or uh anything that may be helpful to them? Hm. I'm not sure. I think that it

you know, laddering in or laddering out is just that's just part of a particular strategy. Um, I think it's more important to find something that kind of works consistently where you're gonna win, you know, more than fifty percent of the time and you have a three or four to one kind of win ratio and have discipline. I think once you kinda get that, then you can be thinking about lettering in or where you'd add and so I wouldn't complicate it too much for newer traders, if you will.

I would try to focus on just get in, here's your risk, be disciplined. Here's where your reward is and then you know, if you really get that going then perhaps then, you know, start adding more shares. I think most of the time if people add to winners rather than you know, adding to losers, they're gonna do a lot better. Well let's talk about this a little more in addition to the firm, Kirschner Trading and some of the traders within the firm. I mean, when new traders come into your firm

Do you teach them specific strategies or how do you encourage them to find something that works for them? Like what's that process look like? Well, we try to get people going quickly. So yeah, there's maybe a six week kind of you know, here's a bid, here's an offer, here's some different strategies. But most of it's around the habits of, you know, here

Here's what you need to do to be successful. And then after about six w weeks we turn'em on live and start'em trading and at least this isn't a discretionary part of the business. And they usually will match up with a with an experienced trader and you know, get on someone's team and then they'll start, you know, calling out the trades they're looking for, help write models, help write alerts.

do other things and they learn from someone that's, you know, more experienced. Um and usually both parties learn and from that and and we find new opportunities and strategies. Okay, so in regard to them actually coming up with their own strategies, they're partially strategies which they pick up from uh the advanced member in the team and sort of things that they observe themselves as they are live trading.

Yeah, pretty much. Okay. Can I ask you what are some of the questions that you ask traders uh during the interview process before um you bring them into the firm? You know, I'm not doing a lot of the newbie interviewing today. Um I will say some of the things that we're looking for is, you know, prior records of success. um prior records of overcoming adversity, um the ability to the ability to act um without having all the information

Um engineers usually are not great intuitive traders, if you will. This is all for the discretionary side. You know, the quantitative side, you're asking much different questions. Those are the types of things that we'll kind of look for. It's a you're really looking for You know, sometimes you know, really competitive video gamers sometimes are really good. Guys that are

you know, don't mind sitting around playing video poker for sixteen hours a day, sometimes end up being pretty good. Um, you know, there's lots of Lots of different attributes, but you're you know, you're looking for uh a track record of success and the ability to adapt. Okay, and that track record of success might not necessarily be in trading, right? It might be some other sort of competitive field.

Sure. Okay. In regard to new traders coming into the firm, what are some of the mistakes you see them most commonly making? Is there anything that stands out? The one the the biggest one that people will make is that they they think it's going to be a lot easier than it really is. And so the biggest mistake people have is they they don't you know, they're not prepared externally

for how hard it is to kind of be able to make it. We take in great people and still only, you know, two out of ten make it. And we'll be successful traders over time. And it takes a you know, it's a couple year process. And so, you know, it at least at our firm, you know, we don't really pay salaries. It's kind of a eat what you kill and so A lot of people are not really ready for that.

And that's on the discretionary side, quantitative side's different. And so people get part way into it without realizing what it's going to take and don't have their financial stuff worked out on the back end. meaning I'm not, you know, I'm working a second job or I'm doing something else or you know, maybe my wife's working to keep me afloat or whatever it is. Um, while you kinda figure that out.

Okay, so let's uh two things on on based on your comments there. Um, you know, a lot of people who come into it are not ready, um, particularly because you don't pay a salary and I mean that's you're not unique in that way. I think that's the case at many uh proprietary trading firms. Um, like you said, you you eat what you kill. So how could people be more ready coming into this?

To get into trading? Yes, and probably more specifically getting into proprietary trading, I guess. But yeah, I mean, you answer that how you how you please. To me, I'd say you want to read some of the you know, read some of the good trading books and reminiscence of a stock operator. You know, market wizards books, all of those things. And they all describe

you know, how people find an edge and you know, how they treat their psychology and things like that. And I'm sure there's plenty of you know, trading to win psychology books and, you know, those types of things. That would be one. The second would be find Wherever it is that you wanna go. You know, find the best and this applies to any field, but

You know, find the best person in whatever field it is that you wanna do. If you really wanna be a short term trader, find the best short term trader you can find and try to go work for that person. If you wanna be, you know, a big fund manager somewhere You know, go find the find the best fund manager that you can find in your area and go work for them. Um and shortcut your process. Don't try to figure it out yourself.

You know, instead of taking twenty years to get there, boy, what if you can talk to people like I talked to all the best traders in Austin What if they shortcut my learning process to, you know, one month instead of five years. Um so really find the best person out there and best group where people are making the most money, having the most success, and go study under them. Be part of the team.

Yeah, that's really great advice. And just to pick up on a a second thing, you know, you said trading is so difficult. I mean, in your opinion, why is trading so difficult? What about this this whole game causes people so much grief? Well, it goes against most of our instincts, you know. If you ask a hundred people on the street, if you bought a stock at ten and one goes you bought two stocks at ten, one goes up five dollars and one goes down five dollars.

Which one do you sell? What do you think most people say? Uh you'd still the one that's in profit. Yeah. Almost everybody says that. And You know, it's I've I've asked I don't ask it every all around, but you know, it's probably nine nine out of ten people say that. Probably even higher. And that's the exact wrong thing. So it goes against all your basic instincts. of, you know, flight and f flight or fight and you have to kind of you know, do the opposite.

Um and you have to be disciplined about it. And so anyway, that's one of the reasons I think trading's hard. Is there any advice you'd like to give to traders who have been at this for a few years and are struggling to break through? Well, I think if you've been at it for a few years and you're struggling to break through, are you prepared? Are you focusing on it full time?

Do you have a strategy written down? Do you have targets and stops written down? Do you have your setup written down? Are you journaling to find out what went wrong? Each day are you adding up your mistakes? Are you also noting what worked well? And, you know, patting yourself on the back for that. Are you if it's not working, who is around you, who who is making money and why? How do you learn from that person? Um you know, don't keep doing the same thing if it's not working.

Um and for some people and maybe a lot of people it is, you know, how do you How do you pro you know, maybe it's better for you to run automated models. Um it takes a lot to kind of run automated models and things like that, but oftentimes a structured way of doing a trade People can actually say what makes sense and do it well. Um but when it the emotions get involved, it's easy to mess that up.

So some people might be better at automating, hey, I'm gonna buy this here, here's my stop, here are my targets, and then let it go. So anyway, there are lots of different ways to kind of attack that. But if you're not making it, you definitely need to be changing something and investigating what works. Is it your habits? Is it the people? Um and and find something that is working. And it it really comes down to do you care about being right in your strategy or do you care about making money?

And once you start caring about just the outcome rather than being right, there's really no stopping you.

Yeah, we hinted at automation there. So I'd like to ask you a little bit about this and more broadly about technology and how traders can utilize it because from what I understand, you guys there at Kirschhner Trading kinda pride yourselves upon um how you use technology. Um well that's the the sense I got anyway.

What do you think the future of trading kind of looks like? I know that's a very broad question, but you know, what are your views on automation, how traders can utilize that? Um, not just traders who are one hundred percent automated, but like uh even discretionary traders

using technology, um, because you know, you Mike Balafure speaks about this quite often, um, about encouraging traders to become more bionic in how they operate and that type of thing. So yeah, I mean what are your views on automation and and how it can be utilized.

Well if you look across everything in our lives, they say software eats the world and and everything's becoming more automated, you know, across every aspect of your life. So if you expect Tesla cars to be driving you, why wouldn't you expect that you should be using some AI and technology to be helping you with your investing process or trading process in our case. Um so the way of the world is

you know, everything gets smarter and faster and more efficient, you know, over time. Um And I think it's helpful to consider You know, creating models, creating quantitative alerts. Uh there's so much noise in the market. You know, you see every penny movement. What you're really trying to do is find, hey, where are these great setups? So, you know, we're tracking the eight thousand stocks that are out there, but how do I see only the best of the best um that kind of fit my strategy?

You know, if you're served up those on a silver platter and either automatically execute on them or are alerted to them, then you have narrowed down

your chances of success uh well, y you've narrowed down what it is you're really looking for and your chances of success are much, much higher. You know, our guys will start from you know, creating alerts to running models uh in the discretionary trading business and on the quantitative side, you know, they're just doing, you know, all all model um work and using lots of AI to kind of start figuring out other patterns and different

what's what are the most important things there? You know, what are the what are the factors that make the most difference in these particular situations. Now all of that being said, AI and automation, all of those do or are help someone smart with a strategy operate a little bit better. It's not y it's a tool. So AI plus humans

is not one plus one equals two, it's one plus one equals three. So you're looking for a real, hey, how do you really boost your efficiency and power, um, become smarter, uh, make better decisions. With better data. Right. And your traders in-house, the the guys who are more on the discretionary side. What tools are they using to develop alerts and different things? Is that all proprietary software or do you use uh some other methods?

So we have uh i internally it's all proprietary software. We call it Great Pi. Uh it's written largely on a Python. uh languages uh or Python language. And you know, you've got everything from, you know, script automation

that helps people write code too. You can you know, you can go directly to our website and look on CloudQuant and you can write anything that you want and create a model. You know if it's good, we'll kind of help fund it for you. But So generally we're using Python and you can think of anything that you could possibly do and uh you can get those alerts and turn'em into models and it's it's largely internal, but you can check it out on our website if you want.

Okay, cool. Yeah, well I mean I'll make sure to include a link to that in the show notes. Uh what's that? That's cloudquant.com, isn't it? It is, yeah. Yeah, cool. Andy, are there any further comments you'd like to add around automation or the future of trading or um should we uh close this out? Well, thank you for having me on. I've talked around a lot of different things. I wish you the best of luck with your

with your show and really I don't have any other further comments. Okay, cool. Well let's uh leave it at that. Andy, I I just wanna say a massive thank you for coming on the podcast. Um it's been really great and I I really do appreciate you taking the time. Thanks a lot. Happy to be here. So if someone wants to find out more about you, where's the best place to go?

Oh, our websites, uh Kirschhner Trading or CloudQuant, either one. Okay. And Kirschhner Trading is spelled K E R S H N E R Trading dot com or CloudQuant dot com. That's correct. Cool man. Thank you very much once again. Thanks so much.

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