233: Kenny Sharkness – Blowout Loss Creates a Cold-Blooded Killer

Chat with Traders is brought to you by Trade the Pool. Did you know that every decade the market reinvents itself? Online brokers opened the doors, mobile apps made trading seamless, and commission free trading erased barriers. Now a new era has begun. Meet, trade the pool, limited risk trading. And now you also have unlimited time to reach the profit target. From now on, your trading risk is capped and your trading opportunities are limitless.

Trade the pool funds home-based stock traders with up to$200,000 in buying power. That means you can trade larger positions and scale your strategies without risking your own savings. It's time to trade with more capital, making it truly worth your time and effort. Ready to trade the pool? Click the link in the description and join the stock trading revolution today.

What's up friends? Welcome to the show. This year, so far, I have brought you some truly phenomenal traders, and that continues right here on episode 233. My guest is equities trader Kenny Sharkness, although some will know him better simply as Shark. While Kenny himself keeps a low profile online, Anyone that follows SB Capital has likely heard Mike Balafiore make references to Shark as he's consistently one of the top performing traders at the firm which he joined in 2010.

Now the areas we covered during this interview I think will be of most interest to developing traders, those who are early on in their trading journey, but of course there is something for everyone. We cover things like a slow start, gaining consistency, growing PL, the positives that can follow from a blowout loss, complacency, expanding into additional strategies, and mindset. So there's quite a bit packed in here.

As there are references to specific stocks and prices, as well as some talk of preparing for the year ahead, I will point out that this was actually recorded a couple days before Christmas. Now I know that probably sounds quite odd to hear I've been sitting on this interview for four months, but it's just the way things have worked out with scheduling and ordering, et cetera. Anyway, I am now pleased to present from New York Kenny Sharkness on Chat with Traders.

If we could start by just going back in time a little bit, back to 2010, I think it was, why did you want to become a trader? Um, I guess I wanted to become a trader because it seemed like something I'd like to do, really. As straightforward as that. Yeah, as a finance major I was looking for kind of the next step and

I always was into strategic games. I played poker. I played a bunch of video games in college and I I got a hold of Market Wizards and some other books and I was like, Wow, this is really something that could be up my alley and I interviewed at a few brokerage houses and I realized it was just cold calling and and selling and and that sort of thing that just wasn't me and uh And so then I I dug into it a little bit more. I said, Okay, you know, I'm gonna try this out. Um

Luckily had supportive parents uh that kind of supported me for the first year. I told them, you know, give me a year to figure this out and you know, luckily it it worked out. And at that point had you gone down the route of trying to get yourself on a prop trading desk?

Yeah, I knew nothing at the start and so I knew I needed to get some training and so I looked around to places that had programs that taught you how to trade and and S M B was the one that I gravitated to and went through a few interviews and got the job and you know, at the time

It's different now, but we actually had to pay for the training, but then they would onboard you and give you an account to trade. Um very small at the time, you know, and they give you more risk if you do well, but uh so I actually paid to start, you know, my first job out of college, which is I would say a little bit unusual, but uh it was also very beneficial because I knew nothing and I just got taught good habits from from the get go and I didn't have to break any bad habits and And uh

And I think I started from a you know, a good a good footprint basically. So you hadn't placed any trades prior to joining S and B? None whatsoever. I didn't even know what a bid ask level one, level two, any anything really, uh, when I first started.

Let's go through your early experience. So talk to me about that first year. Um, you know, did you have a natural talent for this? Did you just hit the ground running or what did it look like? I mean it's so long ago now, but uh

I don't think I was some sort of savant or uh prodigy or any of that. I think What benefited me was having the right attitude from the get go, knowing that I was I was gonna suck and it was gonna take a while and my focus really was getting better and setting goals and making incremental prog progress and all the cliche things that really worked.

Uh so you know, the first year I I I think I just got my account green after ten months, but but the biggest benefit, um, and I guess the biggest service I did for myself was never dig myself a hole trading super small hundred share lots until I really proved to myself that I had some consistency, I had some edge and and then from there on out it was about just developing that a little bit further and scaling up and that sort of thing.

I think that's probably quite an important point you bring up there. Never or you didn't dig yourself into a hole. So I'd I'd like to just not gloss over that. I mean, how did you go about that. I know you said you just traded very small, but was there, you know, for someone else who's listening to this, who's just coming into trading, they might hear that, okay, don't dig yourself into a hole. I mean, w what more to it is there?

Yeah, I mean keeping your risk limits super small at the beginning is is simple as that. Um Obviously I'm at a firm and we have our risk limits there and there's a risk manager and so It's a little bit different if you're trading on your own, but you can still set yourself risk limits and stick to it and never lose more than just a couple hundred bucks in a day at the beginning and

Usually at the beginning, especially when you're not trading well and you're you're down money, it's not something that you're just gonna dig yourself out of. Uh you just kinda take a step back, treat it as a little bit of tuition and go about the next day trying to get a little bit better. Um So that was that was the biggest thing was just keeping things super small until I had, you know, some some sort of uh little uh albeit track record at And then go from there.

Okay. When we spoke uh beforehand uh the other week You said that your progress was very slow, um, and maybe a little bit too slow. Uh, can you speak to that a little more? Yeah, it's so funny looking back because it's not it's definitely not a problem I have these days, but at the beginning my biggest problem was scaling up, uh and and and so I say that because I think I could have been trading bigger, you know, year two, year three, year four and and making a lot more, but

At the same time, it was probably uh beneficial to go incremental so my psychology was always there. But uh but that was a big thing and and what I did was I set goals. to try to trade a little bit bigger, feel a little bit more uncomfortable in my trades, journaled about it, reviewed it each month and and then kind of just chipped away at it.

And it seemed slow at the time, but I guess looking back, uh Yeah, I'm I'm I'm happy with the with the progress I I know it was ten or more years ago, but can you recall what some of those goals were? Sure. I mean like I just said, uh Maybe I I wanted to make sure I felt uncomfortable in my best trades, meaning, you know, I put a little bit size more size than I was used to and, you know, across the line a little bit where I'd start to feel it.

Um, but I always was was very good about about setting goals. I would have a whole process of You know, each month I would I would have a goal and and then I would drill that down to each day and it would always be something process oriented, not not P and L. So like I said, maybe I feeling uncomfortable in a trade or maybe holding my winners a little bit longer with a system and following the system and then

I would grade myself on that stuff each day. At the end of the month I would kind of see how how I did progress wise and decide whether I wanted to kind of shift my next month's goal and my daily goal and and just chip away at things uh like that and and You know, there's uh all these books about goals. I forget the whole acronym, you know, you have to be measurable, attainable, blah, blah, blah, blah, blah. But yeah, you you gotta

hit the you gotta set the goal and then set the steps that you're gonna do to to get towards it. And and it's always slow progress, but you know, progress is made over time. So it almost sounds like you kind of picked one thing each month and then almost like prioritised that. Yeah, I w I I would say it would maybe be three or four things for the month, but then it would just be one thing each day.

I thought that doing that I'd I'd get good or I'd make I'd make improvements, I should say, on on the one thing I was really focusing on and it'd be in my uh forefront of my brain each day. So I'd I'd really be thinking about it rather than having, you know, ten goals.

Where I see some people do that and they're trying to work on ten things at once, but they don't really do it in a in a you know, uh a disciplined way or a way that's gonna actually uh improve. They're just spreading their self too thin. Um so I I I think Yeah, that was that was definitely instrumental, doing it the right way and and just making progress one or two things at a time and and not trying to be a be a hero.

Can you speak more to the consistency part of this? Like how did you gain consistency. I know that's probably quite a a simple question or a very broad question, but um, you know, obviously as uh for for new traders and developing traders, that is kind of like the ultimate thing, right? In the in the very beginning is to get consistent. How are you able to develop consistency? I mean it it really goes back to the same the same sort of thing, just review having a process to get better each day.

It's good to be on a desk where you're seeing people that make money and you can emulate them a little bit. So y you learn the setups a little bit better rather than just going out of thin air. So, you know, you learn the setup. You think about what worked, what didn't each day, why? Was it the way you traded it? Was it the market or your stop suit tight? Did you not hold your winners?

You know, then through that process you see the mistakes you're repeating, you kind of attack those a little bit, you see what you do well, you try to scale that up a little bit. and you see what you do good in certain markets and what you do bad in other markets and all those things you just make little tweaks and little tweaks until uh until your edge kinda comes into its own and uh everyone's gonna be different. Some people are gonna trade

you know, ten minute time frame. So people are gonna trade two week time frame and and I knew that I had to find what kind of worked for me and uh And that was a little bit more of an active style and Through that style I uh consistency was was really important because if you're day trading, you really want to try to the best you can to pull some money out of the market each day.

And obviously when you're swing trading or or you're doing longer term investing, it can be a lot more uh up and down. So Making those little changes each day and again gets back to all this cliche stuff, but that's really what worked at the beginning for me. What were some of those setups which you first started to trade and you found, you know, that started to work for you?

Oh man, uh I remember it's kind of funny looking back. We used to sometimes find charts that were in a five cent range for like thirty minutes, and then you know that five cent range would break and play the play the break and that that actually would work a little bit back in the day, but algorithms have totally eliminated that stuff. But uh

It's just funny, uh, thinking back. But uh I I would have a bucket of things and I would try to just pick up as much as I could from people that are doing well. So whether that be kind of a daily chart breakout or, you know, a stock that was in play and and was breaking the opening range or or uh you know opening drive setup where you'd have a stock That is doing a lot of pre market volume and you would just get in and the first moment.

and try to kind of follow the uh follow the tape a little bit. When I first started I did a lot more on tape reading and really short term stuff. And then over the years I think that one has become more more difficult um with with algorithms and other things uh being more competitive. And two, I'm just, you know, too old for that. And three, it's just not as scalable. Um so my style has definitely adapted. uh a ton over the years. Um, but at the beginning it was a lot more short term.

Quick stuff.

Okay. We're absolutely gonna get into more of what you're doing nowadays, but just sticking with this point of consistency, you know, the position you're in at the moment. I presume you interact with a lot of the junior traders at the firm and I'm sure, you know, some of those uh traders are still trying to find their feet, still trying to find consistency. Is there any kind of theme or common, you know, stumbling blocks you've observed? which um sort of hinders their consistency.

Hm. You know, really everyone has their own thing, you know. Some people go at it too fast, some people go at it too slow. Uh some people don't hold winners, some people you know, all uh everyone has their own thing and and their own obstacles and they kind of have to attack it their own ways. I've seen I've seen it not work out from many a trader for a variety of different reasons. Uh as far as commonalities

having a plan, being able to stick to it, all the you know, I really the psychology aspect of course, uh, is is the most important. And so the ones that can kind of get their psychology under their feet and

being able to deal with the ups and downs and still make the next trade the same way, even if the previous trade was a loser, and just really drill down on what triggers them and their psychology are the ones that are gonna work out. I don't really have the one thing that I see across everyone that hasn't made it, uh, if that makes sense. it does yeah

That's what I would say there. I think everyone has their own their own issues, their own demons, and it's about finding them out and and attacking them.

Let's get more into growing profitability. So I think you said, you know, that first year by the end of it you did manage to um be slightly green on the year. Mm-hmm. But I what was it like after that point? How quickly were you able to ramp up, you know, your daily PL numbers? Oh man, it took a while. Um but every year it was a little bit better and and then the numbers i i I would pretty much grow seemingly at the similar, you know.

kind of make double the previous year for many years. Um And uh that was just about making my goals about trading bigger and and like I said, it wasn't really as fast as I wanted things to happen, but I I did it in a way that never messed up my psychology. And then really I think the turning point to really turning turning it up a little bit was when

Th it was uh KBIO. I know a lot of people have talked about that one in the past probably uh Uh, I took a really big loss on that trade, like ten times bigger than any other loss I had taken and And then uh just seeing myself dig out of that within a couple of months, uh, you know, I think at that point I was like, man, it's just not that bad. Like uh, if I can deal with that. My I just my risk tolerance grew grew so much at that point, I think.

And then If you go even further, taking some more big losses and coming back, you just build that resiliency over the years and then uh and then you make a little bit of money and it just becomes a little bit easier uh to deal with some of the swings. Okay, so if that KBIO trade was a bit of a a pivotal moment, um what year was this? This must have been like two thousand, seventeen, like it was a while back, right? Yeah, something like that. I maybe I ha half erased it from my memory. I have

PTSD. What was uh how come you took such a big loss on that? You know, ten times bigger than what you normally would accept? Uh well i you know, I did all the Cardinal Sin things there. Uh I had a sh I I remember it was a bankruptcy stock that was trading like two fifty and I was short it because the parts were with worth fifty cents or something.

But it was a low float and then Martin Screli came in, did a reverse merger and then it started squeezing after hours and instead of just eating my loss, even though it kinda skipped up two bucks before I could get out, I Um, tried to do the add ad game and then, you know, it went from two to ten to fifteen to twenty and I had never seen a squeeze like that. Now there's seemingly one like that every month, but

You know, I you I didn't get out and I tried to fight my way out of it and uh and that was the uh the costly error. So, you know, when in doubt, get out and that's that's the big lesson. Right. So once this trade was you'd covered, you're out, it was kind of booked. I mean, how did you feel at the time? Yeah, I was a little traumatic at the time. I remember um walking back. Just thinking replaying it and I definitely felt a little bit down but

Uh I kind of worked it out with the firm over the next few days where they would just cut my split and as I uh as I chipped it away. So that really helped my psychology as well.

and uh, you know, instead of getting my normal split they'd just pay me out ten percent and the rest would go to the hole. And that was that was instrumental I think and You know, I just got back up, tried to just make a couple of green days, get get a little confidence, knowing that was kind of a fluke thing and learn from it and And uh, you know, like I said, we we really got into a really volatile time, I think, uh a couple of months later and I was able to just get out of it real quickly. So

At that point, I think I kind of hit a light bulb where, you know, things are not that bad. You lose a little bit of money, it's it's okay, and there'll be another day. This might sound like a bit of a odd question, but You know, do you think if it wasn't for those kind of uh you know, taking those big hits that you might not be the the trader you are today? Yeah, I I think that's a hundred percent true and I think every big trader is

can probably point to some of those moments. I think uh I think I heard once Paul Tudor Jones won't hire people that haven't dealt with a situation like that before, uh because you just have to you have some uh bumps and bruises to build that resiliency and build that tolerance and and that sort of thing. So I a hundred percent uh believe that if it wasn't for those things that feel like the worst thing ever at the time. Bye. in the end can be uh very instrumental in in long term success.

Yeah, as devastating it is at the time. I'm not saying go out and just you know blow up an account so you can feel it, but but it's kind of inevitable if you're trading long.

Of course. What about in terms of any systems or processes you put in place to help build your risk tolerance? Yeah, I mean being at a firm it's a lot more organized. So um the way it works is we have a you know a stop loss. For the day and if you hit that number you at least have to have a conversation. If it's a really special circumstance you can maybe keep trading depending on if your mind's in the right spot. But Over the years the you know, as you do better and better

you say, Oh, I c you know, I've proven I can make this mount, then they'll increase your stop loss and that just you know can go uh on and on and on. So it's a little bit more organized I think when you're at a prop firm than it is uh You know, if you're uh trading on your own, but that's not to say you can't organize it yourself and you know have your stop loss. and increase it as your account grows so that you're not risking too much of your account on any day or any trade.

What was the process for increasing your risk each day? Or sorry, as your account grew, I should say? Uh the process was just chipping away at my my size, uh hitting those goals. having, you know, record month, going to the risk manager saying, you know, next month I want to increase my stop by ten percent or fifteen percent or whatever it is, and uh then trying to

structure each trade within that. So if your stop is say, you know, five hundred, maybe you're risking fifty dollars a trade. And then your stop goes to a thousand, you'll risk a hundred dollars a trade and try to

trade the same way. As it grows and grows and grows, then maybe your strategies have to adjust because scalability becomes an issue, but uh but very systemized and As you risk more, you really want to evaluate if you're trading the same way and if it makes sense and you're not uh you're not changing your strategy just because uh you have a little bit more size. How long was it until you hit your first million dollar year?

Oh, how long how long ago was that? Um I think it took me maybe five or six. I don't remember the exact year, but uh it definitely it definitely took a while. Okay. And how did that feel at the time? Like was that also another pivotal moment in your career?

I mean that was a big goal I had, sure, so it it felt good at the time, but you know, w as with everything, it's kinda you hit your goal, you celebrate, you maybe do something to reward yourself and then you set another one and it's kind of all about the chase. in the process and enjoying it. So So yeah, it felt it felt good, I do remember, but it wasn't like some euphoric moment by any means. Yeah.

Have you ever watched a stock explode and thought, if only I had the capital, or sat on the sidelines because your account balance felt too small to matter? Good news. With Trade the Pool's limited risk platform, you don't need millions or even thousands to start trading the U.S. stock market. Bypass the PDT and tap into over twelve thousand U.S. listed equities. From penny stocks to big caps, ETFs, even the newest IPOs, and short anything you like, with zero locate or hard to borrow fees.

Start your evaluation, get funded with up to$200,000 in buying power so you can go big without risking your own savings. And now you can also have unlimited time to reach the profit target. It's a game changer. Not ready to trade yet? Trade the pool offers a free demo and educational resources. practice on live data, master the platform, and build confidence risk-free before you even pay a cent. Click the link in the show notes to start trading with Trade the Pools Capital.

I'd be interested to uh learn a bit more about how you've kind of pushed the boundaries, how you've maximized your edge. You know, up to this point we've kind of spoken about, you know, your early developments, uh, gaining consistency, sort of growing your profitability, building your risk tolerance.

But, you know, how were you able to continue um pushing the boundaries? Like what's enabled you to go from having your first million dollar year to then, you know, doing five, ten million dollars a year and so forth? Like I I are you just doing the same things but bigger? I'm sure it's not as simple as that. Well, you know... The the thing I love about trading is you can you you always pursue the best version of yourself and you you have that pursuit of excellence all the time and

I was always really competitive. So I wanted to be kind of the biggest best trader at the firm. So that was that was something that motivated me. And then just trying to see how good I could be is another thing that motivated me. Yeah, so uh every year I just try to try to improve and and then as I've I've gotten

You know, over the years then your strategies adjust a little bit. So maybe on low floats you got to be careful about taking too much size, for example. And so now I've started to gravitate a little bit more to bigger cap stocks and doing a little bit more with options and hedging and being able to take overnight risk comfortably. Um so certainly uh Yeah, my time frame has also probably uh lengthened quite a bit. Um So yeah, all those things kinda go into it, I would say.

Okay. I think possibly what I'm trying to get at here is, you know, Mike speaks quite often about breadth. Like is that relevant to the this question here? I think that's one of my strengths is I'm able to do that. do a lot of things at once, but I don't think that matters that much in that Certain traders can do really well just trading a couple of symbols a day. For me, I would get impatient and it was just beneficial for me to to trade.

You know, not get too impulsive. And then additionally, if you know, if you do have the ability to kind of process a lot of trades at once, you're obviously making more bets. You know, trading is a game of probabilities. You want to be the casino, so the more good bets you can make. you know, the the better you should do, the more consistent you should be, the more money you should make. So

That w that's definitely a strength and goes into it. I don't think it's it's necessarily uh Pivotal um because I I see other traders do great just trading a few names. Okay. What about specific challenges you've encountered along the way, you know, while scaling? I think I may be wrong here, but I I think when I did a podcast with Mike a little while ago, he he made some comment about how

And correct me if I'm wrong here. You know, you were too early, uh often you'd have the issue where you would be, you know, too early shorting uh the f you'd like to short the front side of a move. Um, but you'd often run into the issues where you were too early. Um, so like what did you do to kind of counter those issues?

You know, and and that's just one example. But like are there other things? Like did you I don't know, I can't even think of something at the moment, but like not just like PL, maybe like there was something like psychological that you had to kind of push through. Yeah, so that's actually yeah, that that's a good one because one of the big uh stumbling blocks in my psychology was uh just being over eager. And I was always pretty competitive. So if I saw, you know, a big trade setting up

um then the FOMO would kick in and you'd be scared of missing it. I'd be scared of missing it and I might uh I might do do a little bit of size one or two days early. And then that would really eat into to the trade. And so So yeah, I've definitely made uh a lot of strides on that by really focusing on lowering my stress points in each trade. If I feel if I felt stressed or eager, I would really try to be on top of it.

You know, additionally I would now I use options often s if if the stock is optionable. Um where if I'm trading front side, I'll almost never do it without a hedge. And then uh additionally, if I'm doing like a low float, for example, um, I'm almost always waiting for the backside now. Uh, because it's just it's just not worth it. Um, especially with what we've seen the last couple of years and how far things can can go up. Um, it's been pretty amazing. So

That was a big thing thinking about where there was uh any stress points in my trading and really trying to eliminate that. And I think that's been super uh instrumental in kinda my success over the last couple of years. Are there other trades or other strategies which you play um where you've also lowered your stress points other than just um, you know, shorting parabolic stock?

I've tried to do that across the board. Um lower my variance overnight by using hedges or taking less pieces overnight. That was that was one thing. Um just trying to have winners overnight rather than anticipating or getting in early, only take winners overnight, uh, if if I'm not, you know, uh hedged out or something like that. I think the the

idea of being early is not just on a parabolic short, it's about uh, you know, any trade that you you anticipate. So I try to kind of implement the same thing across the board. rather than just on kind of parabolic shorts. Yeah.

Now you've been trading a little over ten years now. There's traders who have been doing this as long as you, if not longer, and most, you know, the majority here do not have comparable performance to you. How come? Like, how come you're an outlier? Uh I mean that's a tough question to answer, but I think I do see a lot of complacency I would say. You know, you get stuck in a a pay the bills.

mode and and then you just get used to it and you just go and punch the keys every day without really trying to improve. I think uh I think uh I I definitely have a a little bit more competitiveness than most and and so that's certainly helped motivate me. Um, I think a mix of being competitive but being humble enough to know when you're wrong and take a step back, uh, is a is a combination that I def I don't see that often. So that that's

But uh yeah, I see it. I see it across people I train and across the firm where, you know, you just get comfortable and and one day bleeds into the next and you're not really uh pushing the boundary. Hmm. It's interesting because how like is that ever so complacency and getting comfortable has never really been an issue with you because obviously you've made enough money where that could easily be the case.

I mean it hasn't yet. Um maybe it will one day. I I see some of my friends that were super successful losing a little motivation lately. Hasn't happened to me. I'm not saying it never will. I still love trading and I

you know, I want to push myself as much as I can and I enjoy it. I you know the money's never been a motivating factor. It's kind of just how you keep score and trading. It's it's been about trying to be the best version yourself, trying to Yeah, just trying to be the best out there if if if possible.

Let's get more into how you are trading today. Um, you spoke right at the beginning, you know, you trade these little five cent range breakouts uh back in the day, but what are the sort of things that you're doing now? I I try to have a a lot of different strategies and and then pull out which ones are working in you know in the current market. So

I definitely do gravitate towards the short side and those parabolic shorts we mentioned is is something that I I like. And you know, the GMEs at, you know, four or five hundred. That sort of stuff is my bread and butter, I would say, but I'm doing a lot of different things, you know.

For example, now I'm put on some stocks for the January effect where uh maybe there's some tax loss selling at the end of the year and stocks might go up at the beginning of the year and doing the some of those trades and I do some breakouts from daily charts and pullback trades and if the market's really volatile then I'll try to shorten my stroke a little bit and do more scalping around the indexes uh based on key levels and

and uh nicey tick and that sort of thing. So I I try to basically see wherever anyone's making money and if it makes sense to me, I try to implement it into my game with small size and As I get more comfortable with the setups, uh I'll try to just ramp those up. And that's how I've been able to kind of add different strategies and pull them out when uh when they're relevant for the current environment. Did I hear you say nicey tick? What's that?

Uh that's a common indicator people use of uh where this the amount of stocks up ticking at once at the Nicy, I think is And then uh usually people view plus or minus a thousand as uh significantly or uh statistically significant rather. That's not something I'm necessarily gonna trade on, but it's just one indicator I might use while trading the indexes.

I don't love trading the indexes but when the market gets really volatile, even like it has been the last couple of weeks, um, you know, that's that's where you gotta kinda gravitate to towards and I do see uh another commonality going back to your previous question of people kind of get stu stuck in one strategy and then maybe they learn something that works for a little bit.

and they're not working on their game outside of that and that that's something can that can kinda get people stuck in the mud. Yeah, well let's let's speak about that'cause that's a good point actually. So say you have developed consistency and you're doing quite well with uh a particular strategy or a couple strategies and you know a niche or an area of the market, how do you start to build your confidence and your ability to trade other strategies.

Yeah, it kinda li like what I just mentioned is just doing it small. Um, reaching out to people that are doing other things and and learning from them and and talking to them and doing it with small size. You know, making a plan, sticking to it, uh, seeing if uh you can get a little bit of track record under your belt and then once you see some success it's a lot easier to s scale things up comfortably. Uh so

And the other key is looking for other things, not getting too comfortable if something's working. Um and so again that that's an advantage about being at a firm where you're seeing A lot of guys do a lot of different things and so you can you can pick up on a lot more rather than um just going about it on your own.

And all these things you've mentioned, uh, these various types of strategies and plays, are these all discretionary? Or is there some systematic aspect to it? For the most part. I mean I I run one model. It's not a very large percentage of my P and L. I do have a lot of different filters and things like that that are are giving me ideas, but for the most part I would say Eighty five percent of maybe ninety percent of my trading is is discretionary, yeah.

Okay. Could we take a few moments to go through, you know, one or two recent trade examples? Okay, sure. Without giving away too much. Um So a trade that I'm in now is uh I'm short some AMC. Um You know, I I oftentimes what I'll do is as the stock's going up, I'll I'll buy some calls.

and anticipate it going a little bit higher so I can kind of work into a short with a built in stop. So that's kind of what I did with AMC. I bought thirty two calls and I was shorting it over the last couple of days. And then I'm hoping that it will It will stop somewhere around here and and turn its way down and go towards, you know, eventually its fundamental value of

lower than here. Um so if that I I d you know, without giving away too much, uh that's one trade I'm in. Uh another trade I I mentioned is um for the January effect, yeah, long long a little bit of Baba because I think uh everyone has sold it out a little bit much. And oftentimes uh there's tax loss selling at the end of the year and people buy back those stocks at the beginning of the year. So that's another trade I'm in.

This AMC trade, this is you're obviously talking about a multi day kind of swing short here. Would you be able to go into how you use options a little more? This is something we you know, not many traders speak about this um too much, especially we haven't really covered it uh on the podcast too much.

Um, you you know, you're an equities trader but you do use options for the purpose of hedging. Um, can you speak to that a little more? Like I know this kind of probably plays into one of those issues you highlighted earlier where, you know, you can get crushed by being too early, but options can help to counter that. Yeah. What I found was that you know, I would do okay with options just directionally, but You know, options are like insurance where

you uh you don't ever really want you know, insurance, you pay for it each year, but you don't want something to happen. And overtime option dealers are the ones that that really make money, um, as you know, as long as you avoid those crazy outlier events. So yeah, that

That was the crux of it from the beginning and then secondly, as you mentioned about being early, that was a big problem of mine. So I use the options to avoid that a little bit. Um and then I've kind of developed over time a little bit more and more on that strategy where I might, you know, try to be short volatility on some options in certain situations if the implied vol volatility is really high, or maybe I'll try to

be long volatility if I anticipate uh a a range breakout, that sort of thing. Um but the crux of it is just risk management where I'm pretty good I found at finding turning points within a day or two and rather than having to be so perfect uh and picking the exact day. Uh and then additionally you know, additionally waiting for something to break so that you have a a clear s stop point with options, I'm able to kind of have built in stop.

And that helps me trade around positions and uh and time things not so perfectly. So you usually I can be within a few days. That's where the options really help. Okay. This might sound like a bit of a a silly question, but what's the added benefit of uh using options as a hedge. Like so if I understand correctly, um, you know, in this AMC example, you're shorting the AMC stock, but then you're buying uh option calls. So you're effectively long the options and short the stock to your hedge.

Mm-hmm. Like how come you don't just Forget about the options and just wait to short the um stock at a later point if you think that you're early at the time of putting on a hedge. Uh there's a couple things. The first thing is if I'm waiting for the stock to break. Uh, you know, I'm usually gonna be shorting at a lower point anyway. So if I'm trading on the options and I'm doing a little bit on the front side, maybe I'm a little bit early.

But I can usually scale into the position and make up the difference in the the premium by just having a better price when it turns. And then additionally, I can usually trade around the position and you know use the wiggles to kind of pay for the hedge and then leave a core on for a kind of a bigger trade. And then finally, the big thing is. you're n you can sleep at night, uh especially as positions get larger. Um so You know, you always have your worst case scenario covered and and in the end

Trading really is just about living to fight another day. Um so that that's been instrumental in lowering my stress and uh helping me uh sleep better at night. Um and scaling up in a more controlled wa way, basically. Right. Lowering your stress points. So with your hedge, do you do you typically make money or lose money on that?

Well, the idea is to lose money on the hedge. You know, there are times where Yeah, each scenario is a little bit different, you know, and you evaluate the risk reward on a trade. as the trade develops. So um sometimes I'll sell my hedge and go naked short completely. Sometimes I'll sell my hedges and buy another strike up, maybe even double size. Uh sometimes I'll sell premium against them. So it really is very situation specific and in the end that's where my discretion

what I think the next most likely scenario is and uh putting myself in the best the best situation. Um so i i that's a hard question to answer specifically. I think uh Yes, uh I'm anticipating. Most likely. Okay.

Now Mike often speaks about the idea or this concept of being a bionic trader. So using technology to assist your trading. Is this something you do quite a bit of? Like are there custom tools that you've built out to to help you? Yeah. Uh I have a million different things that are spinning me information, so that's certainly the case.

I just try to get as many inputs as possible and then then I kind of use my discretion to sift through them. So there are some filters that look for patterns. For example, maybe something uh moves a lot really fast. Then I'll you know immediately Spit that symbol out to me and then I'll look if there's news, what's the news, and I'll try to process that.

you know, and and then make a decision. Um that's one example. You know, I have lists of stocks that are doing unusual volume and I'll sift through those every day, things that get halted and then uh other things uh one layer forward of even having models that trade and enter and exit. themselves. Like I said, not a huge percentage from you know, my my PL but um something that could could grow and and be more important in the future.

Last question here, Kenny, uh and I think this is quite fitting given the time of the year. As we're about to roll over into twenty twenty two, how do you prepare? How do you set yourself up for a great year ahead? What sort of things are you doing around this time?

Yeah, well number one is uh recharging. Um so I I'll typically take a vacation around this time and uh I'll be going to the beach here for the first time in a couple of years uh next week. So looking forward to that and Spending some of the time there to look over my numbers. see what worked, think about goals for the next year, um, how am I gonna go about trying to hit those goals, making sure they're not too P and L focused because so much is dependent on what the market gives you.

Um, and then and just making sure you uh you're doing the things to not get burnt out, staying motivated. and uh and and putting yourself in in a good place psychol uh psychologically.

Do you have any idea what some of those goals may be? You know, it's funny. I I've been kinda thinking about it a little bit, but I haven't really sat down and did a proper, you know, uh write up uh thought. My goals are certainly shifting at this point in my career where this year, for example, you know, with a new new baby, a lot of my uh my goals went away from

taking some time away from the screens and spending more time with family and being home for all that stuff. And I actually think that's been really good for my trading, uh, because it's just made it less important and made it so that even on a bad day, you know, the next day doesn't bleed in a bad day doesn't bleed into the next day rather. As far as you know, work and goals specific to trading, uh haven't really given it too much thought yet.

Uh had a good year and and been in trying to just enjoy the end of the year a little bit and then we'll figure it out here within the next week or two. I know you said earlier that's not a good thing. Yeah, especially earlier on, you were kind of like doubling your performance each year pretty consistently. Um, is is that still the case?

No, I d that's not the case anymore. I think uh I've hurt hit a point where uh and I think most experienced traders hit a point where the the market really dictates your your P and L and you can always improve and get better and and And then if you had the same market the second time, maybe you'd do a a lot better. But, you know, the market's been really good the last couple of years uh as so many people have gotten into trading. We had so much volatility with COVID.

There's been a lot of stocks that have been flying crazy and providing a lot of opportunities. So there's no guarantee that that's gonna continue. Um, so that's why I said it's you really it's really hard to I really try not to set PL goals anymore and I really didn't think this year would be as good as it was, but you never really know. So that's why you just try to Do your best every day, push yourself, um, and then things kinda fall into their own

Just one more thing I'd be curious to know about. Um, how has your mindset and your attitude towards trading evolved as you've had more success? Yeah, a lot of new traders come in, they're very um eager, excitable, that kind of thing. You've been doing this ten or more years, had um, you know, vast success. How's your attitude and uh mindset to trading change?

Yeah, I think it's just less important now. And I think anyone that trades long enough and has a couple of years money in the bank it just becomes A lot easier to trade and deal with ups and downs and dealing with the slumps. And uh it still hurts every time but it hurts for a lot less time and the next day is a lot easier to to not make mistakes uh when you've been trading for a long time. So

Yeah, I think through all the ups and downs you just become all pretty pretty level headed, I think. Um and that's always been my ammo a little bit as well is just don't let don't get too high or too low. And that that has certainly gotten easier over the years as you just see more and you deal you you have more experience.

Okay, Kenny. Well I appreciate you taking the time to do this. It's been um just fantastic to have the opportunity to speak with you. I I don't know why we didn't do this sooner. Yeah, that was great. Thank you. I know you keep a pretty low profile online. Uh I always ask guests at the end, like, is there anywhere they can go to follow you, find out more about you? I I don't know if you have an answer for this. Yeah, I I I'm not a big Twitter Instagram guy, uh not big with the social.

Okay. All right. Well once again, Kenny, greatly appreciate your time. Thank you very much. Thanks for having me. You've reached the end.