211: Stan Gluzman – One Bias, One Objective: Make Money

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Hey crew, welcome to another episode of Chat with Traders number 211. Accompanying me from Fort Lauderdale, Florida, is Seven Points Equities Trader Stan Gloosman, who you may recall from episode 171, which we recorded almost exactly two years ago. If you haven't heard that episode or you happen to miss it for some reason, uh it's definitely worth listen when you get a chance.

So given this is Stan's second appearance on the show, we start with the main areas that he's improved upon in recent years. We then proceed to chat about the opportunity set of twenty twenty, you know, looking back on it. Stan's systematic model for position sizing and scaling risk, his foray into swing trading,

And we then have some great discussion about intraday trading too. So things like recycling shares and timing entries, exits, etc. flipping long to short, intuition, and Stan gives his views on the relevance of tape reading today. Just before we get started, I will quickly mention two things. So this was recorded before the whole GME saga. Just thought I should point that out, although I'm not sure if it makes any difference.

Uh, and you'll hear we reference how Stan traded Tesla one day in January. To see his executions and exactly what we're talking about here, peep the show notes at chatwithraders.com slash two one one. And now folks, I present to you episode 211 with the talented Stan Gloosman. I mean, it's been a couple of years since we last spoke, and if you think back to how you've performed over that time, you know, those past couple of years, where have you seen your greatest improvements?

You know, it's just minor improvements pretty much every day. Uh, it's just kind of staying open-minded and looking for new setups. So I would probably say definitely two biggest areas of setups and also like the mental game where the setups I learned, you know, kind of increasing uh holding period where, you know, I would short a stock and instead of covering in the next, you know, ten minutes I can cover in the next

three hours or so. So it's kind of um uh a setup is on a on a different time frame. So I don't really look at the one minute chart anymore. I do to like time the entry, but um I focus on Like five minute chart is pretty much the the shortest time frame and then I look at uh a one hour uh chart uh for like the big picture idea. So

Probably the biggest improvement is just patience for the trade to actually play out. So that allows me to to kind of scale into the trade um with a bigger picture in mind and capture a bigger move on bigger size. You know, so and that also falls into like the me the mental aspect of it where I know that I have um an edge that's a strong edge and I have a lot more conviction and you know, if there's like a bounce in the in in the in the stock that I'm in.

I'm not too worried, you know. I'm I'm still, you know, it's still part of the plan, whereas a few years ago I maybe would have been shaken out pretty easily. Um You know, a few improvements there. I think, you know, just minor, minor tweaks here and there, and just talking to A lot of well, I don't know a lot of great traders. I know a handful of really great traders and

just kind of balancing ideas with them and then seeing what their process is like and implementing some of their ideas into my process. I think that's been uh the biggest improvement.

And uh it it you know, it shows in the in the results for sure. Okay. We're gonna make a note here'cause I'd like to ask you a bit more about some of those setups and I think we'll also get more into the mental game aspect of it too. Yeah. But if we just look back at twenty twenty, I think you clearly had a a good year. Where were or rather, you know, what presented the best opportunities for you then?

So twenty twenty started um pretty good, you know, just kind of taking my regular momentum setups and then obviously the market started to crash in February, March, everything was just dropping. And we were trading uh I think I was trading oil quite a bit'cause it was very liquid and it w the quotes were very thick in the old in in the oil names and I'm pretty familiar with with the oil stocks. Um but I think for the most part two

Uh two different areas. The first one, when the market was moving, it was kind of a sector play, it was a market play. So when I'm watching high beta names and I put say fifteen of them on my screen and I'm trading let's say five of them, the most liquid ones. Um when I'm trading a basket, you know, it's much easier

to get a feel for the market because you know, I know which ones are the stronger ones, which ones are the weaker ones. And so when everything is kind of moving in the same direction because the market is dropping, I can kind of Get a feel for you know, the f the first three stocks dropped, you know, and the other nine are gonna probably drop as well. So when the market was moving. like that, it was pretty easy to to to tr to trade um you know a basket.

And uh I think in April and so on later that year, you know, people started to get stimulus checks in the United States. And I mean I f it just felt like all the stimulus checks went straight to the trading accounts because people were buying penny stocks. You know, everybody got twelve hundred dollars. Up I think up to twelve hundred dollars. But people were buying the trashiest stocks and there was record number of trading accounts opened up.

Just all records were broken, you know, in that regard. And things were just going vertical. You know, the all the penny stocks were going vertical. Like everything people were just buying everything. And the craziest thing, man, I'll tell you this. I've never seen anything like this. People on Twitter, so I'm part of this, I would say I'm part of this like fin twit, it's called like a

Yeah, trading Twitter community where everybody kind of knows everybody. It's a pretty small community, uh, but a lot new, a lot of New people started to appear and they were following guys that are just pumping. And the these guys, I mean, they have. Those guys would have like a hundred thousand followers. And they don't like, if you read their tweets, they don't really know what they're talking about.

Um, but they're just pumping, and everybody is following them, everybody is just buying what the you know, what these guys are recommending. those guys are like sort of talking about risk management, but they don't really know what they're talking about. They like they've been trading for like three, four months themselves and and everybody's following them. So that was the craziest thing. So

All these stocks that are going from a dollar to six, seven, eight dollars, they would crash in the next couple of days back to like two, three, four dollars and then bounce and crash again and everybody would buy and everybody is underwater. Um I think most of those people

Don't trade anymore. I think they all pretty much lost money. Um But I think there well right now there's a second round of stimulus checks, so things are uh ripping up again. Uh the biggest area where I made the money was trading small caps. Both long and short, but mostly on the short side where things get really overextended. And that that's been my bread and butter for a while, but this time around.

uh there was just a lot more volatility and a lot more liquidity and the the biggest difference was the reward for the risk was so much greater. So I didn't really do um I didn't really take uh different trades as before. I just had a longer time frame. Um and also

uh the reward was just much greater where before it wa it was like two, three, four to one was a good trade. Now it was like eight, nine, ten, you know, something like that to one. So that's why a lot of people had uh you know, a really good year in twenty twenty in my opinion.

If you think back to March when the market was uh going over the edge of a cliff, I don't recall what year it was when you started trading, but I'm pretty sure you wouldn't have seen anything like that um in the time you've been trading. Um, you know, what was that like for you? And and do you feel it as though you kind of maximized the the opportunities at hand having not gone through something like that before?

Yeah, I think I did pretty well. I mean every week pretty much every week was was a record week for me and we traded a lot of shares. Yeah, like you said, uh I've never seen anything like this. A lot of things happened in twenty twenty that uh you know I've never seen before. You know, in in trading and outside of trading. It was just a bizarre year. I think I capitalized pretty pretty well given um You know, my experience I think what twenty

fourteen I started or twenty fifteen I started trading full time. So given my experience, I think I capitalized pretty well. Um, but I think now I'm uh prepared to absolutely destroy it if if anything like that ever happens again. Um, but it was it just felt like the end of the world, you know, when the market would halt.

like twice or three times a week or something like that. You know, a few weeks back to back. You know, it's down seven percent on the day, everything halts for fifteen minutes at like nine forty five or something like that. You know, it was just cool to trade through a period like that. It sucked that, you know, a lot of people were losing a lot of money. Um but obviously if people held um it all came back within a few months. It certainly did.

Yeah. If you were to go through something like this again, let's say, you know, touch wood, it doesn't happen for the the greater sake, but um, you know, how would you approach it differently, if at all?

So I... Well, right now I'm... like I said, I have a much longer time frame in my trades. So I would be holding a lot more overnight. Uh so I you know, I I d I was short quite a bit. Obviously everything was dropping so I wasn't trying to buy anything. So I was short quite a bit, but I never really held overnight. And a lot of moves happened over overnight. And also in terms of sizing.

I've been able to size up, you know, in the pat you know, in twenty twenty I've been able to size up uh and then I think if anything like this happens again, I would be trading pretty crazy size and holding it overnight. So um it would be a different uh He would be the PL the PL would look a little different.

Um but also when everything bottomed out, I didn't really know how to buy it properly. But in the last, you know, a couple of months I've been working on the long setups like swing long and um I've been doing okay. And uh I think I would be absolutely buying uh as it's reversing, I would be buying and holding. Yeah, with the overnight plays, I mean what would

What what's your thinking there? Obviously to capitalise on uh big gaps that happen between the close and the next open, but what what would give you the confidence to hold something overnight? If uh an entire sector, for example, if I was trading oil sector and if the entire sector is weak all day, you know, it's

it's not really making higher lows. It's just downtrending on every single time frame. You know, if I'm looking at a one hour chart and it's below all the moving averages and There's really no higher low, it's just lower highs and lower highs and it's closing weak, you know. I uh I like to trim and then hold a piece overnight and see what happens, you know, maybe a quarter of the position or or whatnot. Um and uh when everything is gapping down, you know. Uh and the money is in the gap down.

Now you can probably size up and actually hold, you know, more than a quarter of the position for the gap down. So it's just kind of recognizing the pattern and just, you know, putting the money where the the pattern's i is at.

Yeah. Well I guess it's nice for you and all of us who are trading through that period to have sort of gone through something like that that now can maybe be a little bit more prepared for, you know, if we see something similar again in the future. Let's talk about the sizing because I actually sort of skimmed back through our last podcast uh yesterday before doing this, just doing a little bit of prep.

And um there was one thing you said in it which was quite interesting. You said you should always be working on some sort of project. Uh, for you in twenty eighteen that project was sizing up. And you said it hurt your consistency a little bit because you were often trying to, you know, bag home runs each time. Uh so twenty nineteen the goal was to find a balance between sizing and consistency. Um so I'd like to ask you like how was your journey of increasing size?

How did that develop in twenty twenty? Yeah. So I'll tell you I can't say I found a balance, but I'm definitely on the right track to find uh a good balance and uh I've developed a system. Um, like you said, you know, a trader should be working on the project. And uh, you know, I've I had a few project m the main project, the main idea that I you know, developed uh and deployed in twenty twenty was um actually two models

working together is max you know, how do you know how much money you should be risking on the day? So like max Uh like lockout. uh on the day as well as uh the risk per trade. Uh so I believe that a trader uh should earn the right to size up. And how do you earn the right to size up? You know usually it's a It's a pretty subjective kind of a number, you know, what's your RP trade or what's your max loss on the day?

It's a pretty subjective number. It's kinda like what you know, in the prop world at least, it's kinda what your risk manager feels like you can handle or what you feel like you can handle. And you kinda you discuss it with the risk manager and you come up with a number. Uh but then you you you kinda ask for, you know, can I go bigger? You know, and then you uh you go back and forth constantly. So I I've developed a system where

It's based off of my performance. So I'll take a twenty two day, which is a twenty or twenty two days is a h how many trading uh days are in a month. So I'll take an average green day, multiply by two, and that's how much I'm gonna risk on any given day. So uh the idea here is that I'm never gonna lose too much, you know, I'm never gonna blow up because if I basically get locked out, if I basically blow up, get locked out, it's just two green days, you know, and my risk per trade.

Is a fraction of that number. So let's say my risk per trade is like one eighth or one sixth of my daily lockout. Um so that gives me like six, seven, eight trades per day uh to maximize my average green day or my green day. So if I'm taking good trades, my average green day should increase, and therefore my max lockout should also increase. And therefore my risk per trade also increases. You know what I'm saying? It's like a domino effect, and now it's like a game, you know, how

You know, how big can I get? You know, it's like, but I can't just pile in just because I woke up and felt like I want to pile in. You know, I'm doing it very slowly so that twenty two average green days slowly rises up. And I was surprised by uh you know, how fast it can it it can actually move. You know, if I'm trading with a five, six, seven to one risk reward, my average green day goes up real fast, you know, and my lockout

Goes up really fast, man. And when I do get locked out, I look at the number and it's it's mind-blowing because it's such a huge number. You know, I I couldn't even make that in a couple of months, you know, a few years ago and now I'm like blowing through that in a few hours in the morning. And um, you know, but I can sleep at night because I know that I can make it back in in in two days, you know.

So or one day. So actually I don't use a twenty two average green day. I use median green day for those who wanna try and implement. It takes out all the outlier green days. Um but the idea is is uh I don't want to lose too much, you know, and uh I can sleep at night when I do get locked out. uh because I have confidence in my trading. You know, if I do get locked out it's just two days and my risk per trade is directly proportional to how I'm trading. Uh so So that you know kind of

took my sizing to the next level and it's responsible. You know, it's it's all about sizing up responsibly. Yeah, it's kind of a nice way to do it, I think, because it's like you probably because you've got like a rolling average of your last twenty two days, I mean it's not like it's a big jump.

like you're not clipping up massively um from day to day or, you know, each time. It's like it it's gradual increases, but as you said, it sort of ramps up pretty quickly and when you look back, you know, maybe over the past few months, you've actually come a long way in that time, but you sort of don't really notice it from day to day too much.

Yeah, exactly. And it it it worked out perfectly. Uh in twenty twenty it just worked out perfectly because I was trading a little bit bigger, a little bit bigger, you know, every other day. It was trading just a little bit bigger, you know. If you're trading, you know, a thousand shares

today and then twenty thousand tomorrow, you're gonna freak out and lose money on on the twenty thousand share position. And then you're gonna go back to a thousand shares and now you have no confidence. So it's like, you know, digging a hole, but you gotta size up responsibly. And I found this way

Uh this this worked out real nice for me and um you know if anybody wants to implement that it it's a good way to size up responsibly. Yeah, it's a pretty simple formula. How often are you hitting your your lockout limit for the day?

Not too often, maybe like twice a month or so, you know, but I don't trade until I get locked out, you know. Ideally if I'm down on a day, if it's just like one average green day or half average green days, as long as there's As long as I've exhausted all the opportunity, you know, I'll I won't be trading, uh, but uh maybe twice a month. Okay. You said your max like per trade risk is a fraction of your max lockout uh risk.

Um I think you said something like one eighth or m maybe one sixth. Does that just sort of vary from trade to trade a little bit or is that a hard and fast rule also? It's uh a little more discretionary, but uh you know, I don't I don't keep it at like either half or, you know, I won't risk the entire thing on one trade or anything like that. It's anywhere between six and eight, depending on

how juicy I feel the the setup is, you know. At the end of the day I I'm a fully discretionary trader. You know, I try to be more systematic but we're, you know, I'm a a very emotional person and then if I see a really good setup and I try to size up a little bit I'll I'll use a little bit more size, you know, but I'll never I'll never go, you know, bigger than like, you know, one quarter or something like that.

Yeah, just trying to keep it consistent and not go outside of those boundaries too much, you know. Yeah. And even though like we just spoke about it's kind of been a gradual increase of risk. You know, you were like when I look at my lockout limit today and I, you know, see that figure, you know, two years ago, I couldn't even make that in a month sort of thing. Even though it is sort of a gradual increase over the years

Has that also come with some psychological difficulties still? Like you said, you're an emotional person and all that, um, as we all are to a certain extent. Um have there been any, you know, psychological barriers you've had to overcome to uh, you know, size up appropriately? You know, before I implemented that, you know Two median green days rule. I had more psychological issues after I would get locked out because I would get really depressed.

Um and it was tough to deal with, you know, I would like wanna c just crawl up in a ball and not do anything. You know, I didn't want to work out that day or anything like that. Um but now, you know, I I mean, I've hit a new record red day so many times now that As long as it's not more than a couple of green days, I don't really care anymore. Do you know what I mean? Yeah. Like I have a lot more conviction, I have a lot more confidence in my trading nowadays, so so that

I I don't get depressed anymore. And that happened to me. I think I noticed it like a few months ago. I hit like a crazy number, uh crazy red day. And Somebody messaged me, one of the mics, either Manjiria Cats messaged me and like, You good? I'm like I don't give a shit. Like I feel nothing, you know? I of course it sucks to take a big red day, but Um, I think because I know that it's just like I can make it back in in just a couple of days. Um, like I feel very comfortable. So

Used to be much worse. Now it it it's gotten better. Maybe it's just because, you know, just with experience, you know, I've gone through it so many times. through that um sort of a thing where I just lose so much money um that uh you know I've always made the money back in a you know couple of days. So doesn't feel what doesn't feel too bad anymore.

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If you think back to your best trades, or your best trade, if you want to talk about a single trade, uh, of the past year, what lessons can be learned from this? Of the best trades in I don't know if there's one that stands out to you. You know, I can't really think of anything, any like single trade uh really good trade. I think I've made some mistakes.

I've had one trade where I bought Tesla, uh I bought the Tesla breakout and I sold it too early because I took a big loss on a different stock because I oversized. You know, I I think um just following the plan. Uh following the plan is just the most important thing. And once you start to what once I start to

you know, get too overly confident and start doing things, you know, I feel like I know what I'm doing and I start doing random shit. Uh things start to fall out of place. Uh so I think the biggest thing for me is to just follow the plan, not risk too much. There was one trade where I lost um basically in an like three or four average green days in just one trade. And I was like, oh my God, that's a crazy

That's a crazy red day. And I just bought Tesla. I just bought Tesla in my swing account like a few days ago and it's it's going vertical. And I'm like, I have to basically close this trade just so that I don't I don't feel like crap about this massive loss that I just took. So I just closed Tesla and now I'm basically flat on the day. Um but then Tesla just kept going vertical. So that was pretty much the biggest um

error that I made in twenty twenty. I I know you asked about the best trade, but I can't really think about the best uh trade. I can only think about the worst trade. So what went wrong on this other trade that you ended up losing was it three the equivalent of three green does? Yeah, it was just oversizing. Yeah, just... getting greedy and thinking I got this where I don't and just going way too big and then in like a couple of candles uh I'm marketing out and I'm top ticking the entire stock.

you know, taking it even higher. Um, and it's just a fat loss. And then the stock reversed and went in the direction that I was positioned in without me. And now I'm depressed and now I'm staring at this huge loss. And now I'm thinking I gotta close my swing positions. and just missed out on just an absolute massive opportunity there. All because I didn't follow the sizing plan and I, you know, oversized. Yeah. Oh there's a lesson to be had there.

We were talking a little bit before hitting the record button and you spoke about how you've been You know, you used to do a lot of uh short trades. You'd mostly play on the short side. Um, but as of late, uh, you know, more recently, you've been more and more trading the long side. So I'd like to ask you like what are some of the most effective plays or set ups uh you've been trading currently?

Well, it's definitely mid caps and large caps, uh just buying breakouts. So what I do is I'll scan for stocks that have been strong, strong for the past couple of months, up to like six months, and I'll find you know tight consolidations where a stock you know went up, consolidated for a couple of weeks.

or a couple of days, couple of weeks, and then starting to break out of a tight pattern, whether it's like sort of a descending or ascending triangle or just uh a a a level that it's breaking out of and I'll just buy the breakout and and that's the strategy. That's you know, Jess Livermore used, you know, so if it's good enough for him, it's good enough for me, you know. And uh I I gotta give the credit where it's due. I learned it from a guy, his name is Christian Kulamagi. I think uh that's

how you say his name. He he just puts out content for free. Uh and uh I learned that setup from him and uh huge thanks to that guy. I've been implementing it. And it's been working pretty well in this market where everything is just going up. Like I'm yeah, I'm constantly asking uh my managers to give me more buying power because I'm maxing out uh the buying power in my swing account. You're just buying things every day. That's a good problem to have.

Yeah. Uh so these uh patterns you're looking for, uh like I obviously you're an intraday trader, although you have been doing a little bit of swing trading also, and we we'll probably get to that. But for your intraday trades, are you looking at these patterns sort of on a daily time frame but then trading, you know, the specific kind of breakout points or thereabouts on the intraday?

Uh well yeah, so I'm buying basically like an opening range, like if if the stock starts to break out, I'll put it on like a five minute chart and I'll I'll I'll wait for a dip or or I'll just buy the breakout uh on the daily and I'll see where the low of the day is and I'll put the stop uh below the low of the day. So uh if it's a strong stock that has continuation, it shouldn't break the low of the day. Sometimes it breaks the low and then reclaims and goes higher and that really sucks. But uh

Yeah. I uh I don't really trade them on uh intraday. chart like I'll time the entry. Uh you know, as I have alerts basically and then if the alert goes off, I look at the chart. It's not too extended. Um I don't wanna, you know, cause I'm also trying to get a good risk reward, right? In swing trading, the risk reward goes up, like long swing trading.

You can make twenty to one risk reward. Um like it's not too crazy. You know, intraday on the short side especially, you can't really do that. Uh the I think the win rate is a little bit higher. on the intraday, uh on the short side especially, the win rate is a little bit higher, the risk reward is a little bit lower. Uh but swing long, the win rate is way lower. It's like

Uh if you can get like forty five, fifty percent that's really good. Um I think lately it's it's been higher than fif fifty percent, but overall in my swing account I I think I'm uh at like thirty seven or maybe close to forty percent win rate, but the risk reward is pretty high. It's like five, six to one. And um I'm still a rookie at this, you know. Um

Lately it's been a little bit higher the the risk reward. But yeah, I just try to buy the breakout on the daily and then put it to stop below the low of the day and then see basically how far it can go and then um not take any uh and then just trail it with moving averages. And uh yeah, like I said, I mean Jesse Levermore uses basically the same strategy. And uh if you I'm sure a lot of people read uh the market wizards uh books and I think most people there um that's what they do. They buy

So just to clarify this pattern which you just spoke about, these are four swing trades. These aren't intraday trades, even though you might be entering during the day. Yeah, I'm not tra I'm not really trading on the long side intraday unless it's like a small, like tiny scalp where I see A lot of demand coming in and I'll buy it for like a few candles or something like that. Um I I I'm trying to kind of stay away from from those setups. It's

kind of a waste of time at this point where, you know, I can put my energy and time into something that is gonna pay me off a lot um more. So I don't really do that intraday as much. Maybe I just haven't figured it out on the intro uh intraday yet. I like to short intraday and I like to long swing.

Okay, cool. Now with these breakouts which you're talking about here, I mean it's a very simplistic sort of strategy, right? Yeah, it's very simple. What are the nuances to it? Because I presume a big part of it is probably picking the right stocks. Like it's it's you're gonna have a higher win rate or more success with stocks which are in a hot sector or, you know, are there any nuances like that which give these trades a better um chance of success?

Yeah, so for me, I try to buy stocks that aren't dilutive, uh, which are Uh basically small caps, they're always they're pretty much always diluting like there's somebody's always selling their at the market offering or whatever. Somebody's always dumping into these, you know, rallies. Uh so I my win rate on on small caps on you know the trashy names or the the stocks that like need money, you know, running out of cash. So on those

The win rate for me is it's much, much lower. It's probably like 10% or even less. So I just completely eliminated those. I'm trading like real companies, you know, uh, or at least I try to. Once in a while I'll I'll buy a small cap.

Um, so that's one. Like I try to stay away from s stocks that are potentially dilutive. Also, the hardest thing is to hold through a pullback. So me being a scalper, you know, coming from this background of scalping and you know, trading momentum on a, you know, intraday chart where I don't really like to sit through a bounce.

If I'm shorting a stock and it drops, I want to cover and reshort higher. So as a scalper, I don't I don't really like to hold through a pullback too much. You know, if I'll short a stock intraday and it it drops, I'll cover.

a piece, you know, a quarter or half, and then I'll wait for the bounce and I'll reshort the bounce. Uh but in a swing trade Um the hardest thing is just to not look at the PNL, not look at the intraday chart, maybe one hour chart, and just try to sit through a bounce and let the stock. Take you out basically and just trail it with a good stop, with a moving average. Um, and you know, sometimes.

It'll rip up and it'll come right back down and it just sucks. But most of the time, you know, it'll it'll rip up, it'll come back down a little bit. And then it will go way higher, you know. And so many times I'll take myself out. I'm like, oh I I just want to lock in the gains. I'll lock in with my like two R or whatever. And I'll lock it in and then the stock you know, doubles. Um there was um

It was last week, uh two weeks ago. Uh I bought a few stocks. It was the entire like E V sector. Uh I bought uh F Cell, B L N K, um Plug, uh some other stock and I sold it basically the same day. I mean they all went up like quite a bit and then in the next couple of days they all went parabolic. Uh I think plug went up a hundred percent in like four days.

You know, and like I was long this I was long the breakout, but I sold because of that little pullback. You know, I kinda kinda came down a little bit. I got freaked out and I I got out and then the next four days it doubled. So I learned my lesson. It was very expensive lesson. I I'm holding everything now as much as I as much as I can at least. You know, trimming just a little bit, trimming a little pieces into strength, and then just trailing the core position with a moving average.

Okay. So that's the hardest the hardest uh nuance to kind of uh uh to grasp and I almost can't believe I'm gonna ask you this question, but um what moving average are you using to trail as a stop? I think actually I don't remember. I think it's a 10 uh EMA. Okay. But I actually don't I don't remember. I have to double check. It's either a ten or a twenty EMA on a daily chart. Yeah.

Just that you spoke about when you are trading intraday, if you're short something, you're gonna and it drops, you're gonna cover into that wash. This is something I think you do really well from seeing, you know, your executions which you occasionally share. You know, a good example of this was how you traded Tesla, I think predominantly on the short side intraday, and then like you flipped along when there was a, you know, big wash into what happened to be the low of the day.

I'm quite interested to know more about how you do this, how you think about, you know, timing these trades intraday, what determines a good price to add, et cetera. Um, so I know there was just a whole bunch of questions in there, but How do you think about recycling shares on an intraday trade? It's all about the trend, uh, and it's all about the volume for me. So if the trend is still holding, uh, if the stock drops, bounces, and puts on a lower high.

Um, I don't know if it's gonna be a higher low or a lower high, you know, but I'll you know, as it's curling down, I'll re-add back. So one important thing that I started doing I think was it twenty nineteen or twenty twenty. I don't remember. I started doing it a while ago. Is for example, if I'm shorting a stock, if I'm adding um

or re-adding shares to to a short position, I don't shorten a green candle. I try not to shorten a green candle as much as I can. So I'll only shorten a red candle so that I know if uh the stock bounces uh you know I'm gonna short as it's as it already put on a lower high. So whether it's a one minute chart or a five minute chart, it's better if it's a five minute chart. So a red candle as preferably even as is breaking the low of the previous candle. Yeah, so I'll add back on the lower high.

As long as the trend holds, pretty much. So so I'm staying with the trend, lower high, I'm adding lower high or or re-adding and I'm covering into the washout, lower high. uh re-adding covering into the washout. And for me the main indication of a reversal where I should be going long is a volume exhaustion. So if the stock really extends and also extension from the mean.

So if I'm watching let's say VWAP or some sort of a moving average um and the stock really extends from from from its mean, um I know that I should probably be closing or scaling out of my short position uh completely. Uh so usually I would cover half, but if it's really getting extended on big volume, I'm gonna be covering the entire position and

Once a massive volume bar comes in, uh I'll be I'll be looking for some upticks. So um it's still gonna be a red candle that I'll be I'll be buying on. But I wanna see upticks. I wanna I want the stock uh to start going up and then I'll start longing it. So only when I see massive volume and extension from from the mean is is uh when I'll be looking to buy it. And it's a dangerous setup and It's not uh, you know, it's for someone who's a little bit more experienced because if it doesn't stop.

you know, going down, you can find yourself uh holding you know a long position and just it's kind of off the cliff against you. So uh the stop has to be pretty tight, you know, hard stop. once you know, you're in f uh once I'm in full size. But yeah, like I said, extension from the mean and huge volume is my main indication for reversal.

Okay, so a few things. When you're re-adding, so say you're short, you've covered some into a wash, pops up a little bit, you're looking for another lower high as you describe it. to re add short, but you're kind of waiting for it to like curl over a little bit before you do short it so you're not kinda shorting that front side pop, if you want to call it that. Okay.

When you talk about these volume extensions, you know, points where you will look to cover your entire position and possibly flip to a long. Extension from the main, I mean how are you determining what is the main? The mean so I'll I'll use a few moving averages. Like I'll use for example, I think I'm using a twenty SMA on a five minute chart. So I'm looking at that one um and as well as uh as well as uh VWAP uh but for the most part

If the stock just extends and I've I've actually coded into uh my uh thinkorswim platform, but I actually don't use the thinkers thinkorswim charts anymore. I used to have this code that um shows you know the percentages in in percentages how far it is from the mean and when it like kind of breaches a certain number I'll start to think about going long. But now I just

like look at it and and see if it's like way too far and it's just straight down, like really far from the moving average. Then, you know, I don't automatically go long. I I wait for the volume. I wanna see massive volume. Um and and that basically means like people are getting stopped out. Like people it's like max pain level where everybody's just getting blown out and the stock is

you know, there's not gonna be much more selling after that, after everybody gets blown out. So and then a little bit of an uptick and I wanna start in and an add as it's working.

So uh I mean it's probably fair to say you have a pretty good feel for these sort of things nowadays. Um I mean, I I mean is why you're not so reliant on the things you've coded to look at the actual percentage. Yeah. From Yeah, because it varies from stock to stock, you know. Yeah. Uh like percentage wise. Um, but I I used to be a I I used to be more systematic and uh now I'm a lot more kind of reactive.

Uh I don't really think about like what exactly I'm gonna do. Uh, you know, I was actually telling my girlfriend, I was like, I don't even know what to talk about on this podcast. I just kind of I don't even know what I did today. You know, I just I just traded today. I don't I have no idea what I did today. Just on autopilot. Yeah, so I I feel like with you know, with experience the more trades you you know, you put on, you kind of uh

start to feel fill, you know, these things. So I don't even know what I don't I'm not sure what moving averages I'm even using. Um, but as it's extending from it like really far, you know, there's an opportunity and that, you know, it's just about timing when there is an opportunity. Yeah. When you are flipping to long at these points, and I'm sure you don't do this every time, but when it it seems obvious to you.

I mean, is it easy for you to just flip your bias like that? Like you've been I'm sure you've been holding a decent short position throughout a a decent chunk and then all of a sudden you're flipping to long. Is it easy for you to flip your bias like that or is that something which has also come with more experience?

Um, you know, it's just hard to h to sit through a pullback when it when it actually puts on you know, if you're holding and it the volume gets exhausted and it gets extended from the mean and it starts to come back. you know, it's really painful to sit through that low and not cover any. You know, so now I just know that m more likely than not it probably if it didn't bottom out on this scandal, maybe next scandal, you know.

Um pretty pretty rarely it'll you know keep dropping. But uh if I do go long and it bounces just a little bit and starts to curl down again, I'll probably uh trim or even get out and see if If this is kind of an outlier move. Uh but yeah, uh it's not that it's not I can't I wouldn't say it's difficult to flip to flip bias. Mm the only bias is to make money. So if I feel like the stock is gonna bounce then I I gotta go along. The only bias is to make money. I like that. Yeah.

I meant to ask you before actually when you were talking about uh, you know, recycling shares and covering into washes, adding on bounces, et cetera. From what you described it sounded a lot like you just look at You know, the price and the the bars, et cetera. Does tape reading also play into this?

not as much anymore for me because there's a lot of poker games being played on the tape and uh I don't really play poker anymore. Uh there's you know, there's a lot of spoofing and there's there's a there's just a lot of games and If I see a lot of selling, I'll see if if the chart kind of confirms, you know, uh the confirmation is on the chart for me.

So I don't really look at the tape as much anymore. And that's pretty crazy because I used to trade without charts. Back in like twenty sixteen we used to scalp without charts completely, just the tape. Um but I I don't really look at um it's very fake nowadays.

Uh you know, like sometimes there is an offer that comes in, like a massive offer and everybody starts to panic and sell and uh it just wouldn't go down. You know, the stock wouldn't go down and it and it starts to uptick and makes a new high. So which means that somebody was spoofing to buy the bid and other times they would they would uh show the offer and it would downtick. So like I don't know

You know, I don't know what their what their intentions are. Are they gonna soak on the bid, show the offer, soak the bid, or is it just somebody trying to sell their position on the offer and a stock downtick? So uh yeah, I don't really do that anymore. Not as much at least. So the same goes presumably for initiating positions like your entries. Yeah, it's for me the chart is everything. Okay, interesting. Because because the tape the tape translates into the chart.

You know? So if you're reading the tape, if you're really into the tape, you can put it on a one second chart. And that's basically the tape for you. Cause every every tick it's gonna is gonna show on a chart, on a one second chart, pretty much. That's kinda how I think about it. The tape translates into the chart and uh A lot less headache, you know, reading the chart.

Okay. Um, what about options? Are you doing anything interesting with options nowadays? Yeah, I started trading options in my personal accounts. I mean I I I still do a little bit of like, you know, selling spreads and stuff in uh in the seven point with seven points, but for the most part Um like I don't know where to invest the money. So I'm thinking like the you know, best thing I can do is trade. So I just sell um put options.

Like naked, basically cash covered put options. The strategy is called the wheel, uh, where you know if there's a stock that I like, like um like Apple or Microsoft, you know, something that's like a good stock that shouldn't shouldn't go down too much. Um like I'll sell a put option out of the money and collect premium um but If the stock, if uh the option goes in the money and I actually buy the buy the stock, uh like I'll just own the stock and I'll

sell calls against it. So the strategy, like I said, is called the wheel. You can kind of read up on that. It's a pretty interesting strategy, more of a like a r really long term like investing um It's an investing strategy, I would say. Uh, but it's a cash flow strategy because uh I sell. out of money put options and most of them uh expire worthless. Um especially in this market where uh everything is really strong. But the ma the main thing is to understand implied volatility.

and sell when the implied volatility is high. And the implied volatility is high either like before earnings or after like something happens, like after like three, four red days, you know. Um Like I'll sell after like three or four red days, I'll sell out of money put option way like really far uh from the price, like really out of the money, and get decent premium and the

I'm probably never gonna get uh executed. Like it's never gonna go in the money. So I'm most likely gonna get uh paid on that. on that trade, but even if even if I don't, even if the stock um if the option goes into money, I'll buy the stock that I like, like Apple, at a really good price. And then sell a call against it. So it's it's kind of a no brainer for me. Uh I started trading it I think in uh

Uh September last year and I think I netted like twenty percent on my portfolio just in the you know, couple of months. So pretty good uh pretty decent uh I guess. strategy that I found that works for me. Right. So that's something you obviously need to manage kind of day to day. Not really. No. Just scanning. Yeah, no, just scanning for uh for like high implied volatility and and seeing what pops up and then just entering and that's it. I'm I don't look at the stocks, I don't look at the P NL.

Um I set my target. Uh like if I'm sure like I I aim for ninety percent. Uh I think it's either ninety or ninety five. Yeah, it's ninety percent of the premium, so uh I'm not gonna let it go uh to zero, I'm gonna cover it at ninety percent. So if I'm shorting at uh ten dollars, I'm gonna cover it at a dollar because sometimes I can cover it at a dollar um in like six days instead of waiting for like thirty-five days. Uh that's when it expires.

Okay. So if someone wants to read up on this, I mean, where did you what was a good resource for you? For options. Uh, for this particular strategy you're talking about here. I think you called it the wheel. Yeah, it's called a wheel, I found out later. I I mean I started trading it. Um I got I c sort of developed it and I I

And then I started trading it and I started kind of reading up more about it and uh it turns out that uh it people use it and it's it's got it's got a name. Um, but I think if you just Google it there's there's a lot of uh information on uh YouTube and on Google, it's pretty popular strategy. Gotcha. Okay.

Awesome. Last question and then we'll we'll probably wrap it up. But um I just wanted to ask you like how's everything going with the uh Florida office?'Cause you're sort of heading that up. Yeah, it's good. Uh we have a lot of applications. Most people are trading remotely and Man, some guys had some really crazy progress in twenty twenty.

you know, looking back at when they started and they couldn't even net t you know, twenty dollars on on the month, like now they're absolute monsters. And uh like really proud of of these guys, you know. Uh but we're still hiring, so if uh If anybody's interested, you know we're Fl Florida office and Fort Lauderdale. Um got a small team, really good team, and uh hopefully we'll be back at the office sooner than later because Because of COVID, you know, everybody's remote.

Yeah I bet you missed that. Yeah, definitely. How many is in the team now? Think right now there Six of us? Five or six of us? Yeah, it's small office, small team, bouncing ideas and helping each other out. You know, that's that's how I learned when I started in in New York. You know, there was uh it was like thirty or forty of us that uh back uh in twenty fifteen.

We have a smaller team. We don't really wanna expand too much. You know, it's better to have, you know, six really good traders than uh, you know, a hundred shitty traders. Right.

Ciao. Cool. All right, Stan. Yeah, if someone wants to find you on Twitter, what is your handle? It's uh Chokana Trader C I O C A N A Trader on Twitter. Okay. And I also throw it out there to people listening to this podcast right now. Um, definitely worth your time to go back and listen to episode one hundred and seventy one, which was the first uh interview which uh Stan and I did.

Well Stan, awesome catching up with you, man. Um I'm glad we can do this and I'm not sure what you were worried about, um, that we'd have nothing to talk about because an hour's gone by pretty quick. Yeah. So thanks a lot for doing this, man. Appreciate it. Thanks, Aaron, it's my pleasure. You've reached the end of this episode of Chat with Traders, but rest assured there are more I'd love it if you'd leave around