Momo Traders

by Brady Dahl

  What’s something you do very well?

  Repetition. Some might consider it a weakness, but I consider it a strength. I have the same reaction win or lose, which is no reaction. I

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  do the same thing day after day. In fact, my gym routine changes more than my trading routine. We’re seeing a little volatility right now in the market and if you ask me, a lot of traders aren’t coping with it well.

  Not many traders can go up $30K one day and then down $20K the next without it having some kind of affect on them. Especially if that move is as big a percentage of their account as it was mine. But I’m coming into tomorrow’s trading like it never happened. I won’t even think twice about it.

  So you are of the camp that believes you should be emotionless when it comes to trading?

  Absolutely. 100 percent emotionless. Robotic.

  Any advice for traders trying to control their emotions?

  Unfortunately, the best way to calm your emotions is to know that you have a bit of a financial cushion, some money in the bank. But most people don't start with that cushion. Although if you trade the correct position sizes relative to your account size, you can train yourself right from the beginning of your career. But if your position sizes are too big, you're going to be too emotional.

  What other mistakes do you think beginning traders often make?

  They dont acknowledge risk. You learn that through loss. They also follow the crowd, which ultimately leads to their demise. In fact, I probably make most of my money off crowd-following new investors.

  What’s something you do that you don't think other traders do?

  Admit when I'm wrong. All the time. I also don’t over-celebrate when I’m right. It’s so rare for people to actually post their losses on Twitter, but I like to share what I’ve learned from the loss. So I’m probably more transparent than your average trader, too.

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  Do you have any trading rules you live by?

  Ten rules I try to follow are taped to my screen: 1. Pre-market and early morning trading are more profitable than afternoon.

  2. Try to buy/short near the day’s low/high.

  3. Try to avoid buying headlines. Get in before the headlines.

  4. The more stubborn vou are, the more you will lose.

  5. Shrug off all losses if all rules and guidelines are followed.

  6. Don’t chase stocks just to make a trade. If the trade isn’t there, pass, and sometimes don’t trade at all.

  7. Keep tight mental stops while monitoring the stock and overall averages.

  8. Try to make S1K a day, and don’t get greedy.

  9. Do not overtrade. Simple mathematics. The more you trade, the more likely you are to lose over the long term.

  10. Avoid the second big losing trade. You will improve overall returns.

  What’s the most important thing to remember while trading?

  Managing risk. I try to remember that you can blow up your account in one day or in one single trade even. That’s why I assume a loss before I even enter a trade. I know where my stop is.

  What are the traits of a successful trader?

  Robotic tendencies. Emotionless. Someone who is a leader, not a follower. Independent. Someone strong-willed with a strong mind, not easily taken down by criticism.

  How do you judge success in trading?

  Success in trading is just what my P&L looks like at the end of the month. That’s it.

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  What about in life?

  Success in life is doing for others without acknowledgement. I don’t want to list a bunch of stuff, but I coach my son s baseball team, do summer programs, pay for uniforms, help out in his class, hold Math Mania and math classes for students. I do things for charities and for the community that people don’t realize. But as a trader, specifically a successful one, you can make the time to do these things because you are your own boss. Obviously if you don’t have money or freedom, it’s more difficult, but donating your time is how to be successful in life.

  What do you wish someone had told you when you were first started trading?

  I just wish Twitter had been invented, (laughs) To glean insight and advice from professionals?

  Not just advice, real-time advice. Now there’s a whole community of traders out there available to talk to at any point. Just to see what types of trades professionals make is invaluable. There are so many different tools at your disposal that just weren’t there when I started out.

  What do your friends and family think about trading?

  My friends never ask what I do for work. A lot of people probably think I don’t even have a job, because I’m always coaching and volunteering at school. My family really doesn't say too much. They know I'm able to provide for my family, but my mother probably doesn't know to what extent. The only one who did was my dad, who passed away nine years ago. But I'm the type of person that if you don't ask, I don't tell.

  Are you addicted to trading?

  Absolutely not. No way. If you asked me five years ago, I would have said yes, but I’ve learned over the years that there's just no way you

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  can follow even' tick of the stock market. And I’m so much more relaxed because of it. I probably trade better because of it, too.

  If you could change one thing about the market, or its participants, what would that be?

  I hate the “kabooms.” When I watch the NFL and see Dez Bryant do a ridiculous dance after a catch it makes me sick. And you can apply that to making money on a trade. I know a lot of these traders need to sell themselves in order to get followers or subscribers, so they want to look smart and shout from the rooftop how great they are, but I cannot stand it.

  What are your goals these days?

  I have an income level goal of making $30K a month. I want to keep my consulting positions. I also have a goal to take at least four vacations this year. It sounds like a strange goal, but I've never had four vacations in one year.

  Where do you see yourself in five to 10 years?

  Doing the exact same thing because I want to be doing the same thing.

  Are you trying to diversify with the money in your savings?

  I do have a little invested in real estate, but experiencing losses like SPPI has ingrained in me a need to have a huge capital cushion. All these savings accounts are like coffee cans in the backyard, (laughs) It’s just frustrating to earn less than 1 percent on them, but I know that’s not the way the world’s going to be forever. Historically interest rates are usually high, and the average is around 4.5 percent, so if it just gets back to that, things are going to be great around here.

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  171 The Student

  The Student

  ”I’m only interested in the part of the chart that has volume.”

  Tim Grittani (@kroyrunner89) is a 25-year-old Colorado trader who recently came to the community’s attention after passing a million dollars in profits while in Tim Sykes’ Millionaire Challenge program.

  He grew up in the upper middle class suburbs of Chicago where his father started his own business in the buying and selling of railcar components. The freedom and autonomy of being in business for oneself rubbed off on Tim, who even struck a “make it or break it”

  deal with his parents in order to continue trading after college instead of getting a job.

  In the mere three and a half years since, Tim has turned what was essentially prize money won from his own sports betting into over $2.3 million in trading profits.

  When did you first get interested in the market?

  In high school I was in a paper trading contest where you trade the market with fake money, but there was a glitch. The game was soon figged because you could see what stocks were already up during the premarket each day and still buy them for the previous day’s closing

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  price. Everyone soo
n figured it out and grew their accounts by 10,000

  percent. It wasn’t a realistic simulation, but it was interesting. I also had an uncle who was always into the market. I remember him telling me I had a mind for the market and that I should give it a try sometime. But while I was in high school, Texas Hold Em and the poker world was blowing up. An amateur, Chns Moneymaker, had won the World Series of Poker so everyone thought they could do it.

  My friends and I really got into it and started playing for money at this little traveling casino where you only had to be 18 years old to play.

  They got away with it legally because they would give the rake to charity or something. But I had really good success with it for the first summer. Probably just dumb beginner’s luck, but it got a lot tougher after that. I’m sure I lost money overall.

  You play online too?

  Yeah, during college. But my parents were really trying to nip that in the bud, dishing out punishments when I got caught playing poker online at home. But I was fed up with poker anyway. After you lose enough you get fed up with anything. And that’s when I really got into the NFL and sports betting. I opened up some sportsbook account online and was successful at first yet again. I tried to take a statistical approach to it. I did stuff like upload stats to a spreadsheet every week and make formulas to predict score totals. My junior year of college I entered a free-to-enter sports betting contest with over 700 other people and won it. The prize was $5K put into my account, but the rules said before I could withdraw the money, I had to make a certain dollar amount of additional bets with it. So I bet more and turned it into over $9K. I thought I was really good and could possibly keep going, but same as with poker, the next year the wheels fell off and I lost at least half of it back.

  You must like math. Most people don’t enjoy developing formulas with NFL statistics…

  Definitely. Math was always my strongest subject by far. I went to college for finance. But developing formulas with NFL stats was just

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  me trying to make sense of it all, trying to find an edge. What can I do that other people aren’t doing? I would also search online forums about betting, looking for NFL picks from guys who knew what they were doing. The guy who seemed to stand out had a system where he’d input all the stats and the system would spit out his picks. That inspired me, at least partially, to try to figure out a system of my own.

  So how do you go from losing money betting sports to deciding to trade stocks?

  It was a combination of a few things. I was well into a finance major but wasn’t really enjoying much about it. I could tell the accounting classes and financial planning classes weren’t for me. But I didn’t want to change majors so late in the game either, so I searched for other options. That’s when I first started thinking about trading.

  When did you place your first trade?

  About a year before graduating college. I opened a little $500 account and honestly just starting buying stuff. That’s really all it was. I bought penny stocks because I wanted something cheap and volatile. I wanted something that could make me 20 percent quickly. I would even punch in random tickers and buy them if they were cheap enough. Needless to say half the account was gone in a couple weeks.

  Half the $500?

  Yeah, so I quit trading just as quickly as I had started. I cut it off because obviously I had no idea what I was doing. I went back to the stock forums and the Internet looking for somebody who consistently picked winning stocks. Basically I wanted to be spoon-fed winning picks like a lot of new traders, or at least find a system I could learn.

  And what did you find?

  Not much. I never found someone on the forums I thought I should follow, but one of the forums had a Tim Sykes advertisement. I

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  clicked on the ad and watched the little video. It wasn’t about Lamborghinis and the millionaire lifestyle like it is now. It Was an instructional video on how pump and dumps work. It was all new and interesting to me because it sounded like a very predictable area of the market. That kind of hooked me.

  And you’re not trading at this point, just researching…

  Yeah, just researching. So I signed up for Sykes’ program because I wanted to learn. But I was also still looking for someone to follow. I didn’t have enough money to short sell, so I looked at his track record for long trades, created a little spreadsheet, and calculated what kind of exponential returns I could get if I had just followed his picks trade-for-trade starting with $1,000. That was actually a big motivator early on because I wanted to be spoon-fed now and ask questions later. I wanted the quick money, not a nine-to-five job. I worked at State Farm in the summer, and I hated the office environment. I was actually lucky I signed up with Tim when I did because it was around this time that my parents got wind that all my money was gone. They knew I had won the football betting contest and turned it into $9K. I was fortunate that they were taking care of all my college expenses, so they knew I shouldn’t have blown through my own money yet. They threatened to pull the plug on the college funds if I didn’t give them access to my bank accounts, so I had to start budgeting my spending.

  They saw that three days prior I had spent $400 or something on Sykes non-refundable pennystocking silver plan, and I said, “Sorry, can’t do anything about it now.” They wanted me to focus on school instead, so I couldn’t trade right away. Which was really a blessing in disguise because for the next three months I just watched and tried to learn how to trade. Eventually I talked them into letting me open a $1,500 account, and I made my first trade in May of 2011.

  What was it?

  I can't remember if it was truly the first trade or just one of the first, but it was a new pick from Awesome Penny Stocks, the promoter. I had watched a few of their prior picks, trying to find a pattern I could

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  play, and this one was on Day 2 or 3 of the promotion. It was trading between $.06 and $.066, so basically in a 10 percent channel, and I bought it near support with intentions of selling it into a pop. It promptly failed and broke down. I lost 10 percent or like $150 on my first trade. It was a terrible start, and it had been my own trade decision. I wasn’t following anyone. So that pushed me even more into following someone else’s alerts instead of doing my own thing.

  So you start following Sykes5 alerts?

  Yeah, it was a combination. I didn’t know what I was doing. I was blindly following. One of the first times I followed him the trade went against us and he cut his losses, but I couldn’t do it. I was down too much and didn’t want to realize the loss. I got lucky as it came back to near breakeven, but that was just another example of me being completely in over my head. I moved back home over the summer and worked for State Farm again so my trading was limited to maybe two or three trades a week. Meanwhile I kept telling my parents I needed more money because after I executed a trade my money would be tied up until the trade settl ed. So they loaned me money to bump my account up to $3K with the stipulation that I couldn’t trade with their portion of the money. Only my money was fair game.

  How did it go after that?

  Well that’s when I really got into the idea of short selling. I wanted to short these terrible companies when their stocks ran up, so I asked my parents to put $10K into an Interactive Brokers account for me with the same idea that I would only trade with my money. They did.

  Throughout the summer I watched all these fantastic promoters like Best Damn Penny Stocks, Penny Pic, and Awesome Penny Stocks push stocks, and I started to learn. I watched Michael Goode in Tim’s chat buy these promotions on Day 1 and sell for $3K to $4K profit.

  He did it again and again every time there was a new pick, so I got really interested in learning how and messaged him. I learned about market makers, routing orders, and stuff like that.

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  Were you profitable that summer?

  I started off down but got back to even pretty quickly. After three
months of juggling trading and work I was up about $300 total and lost it all in one trade. All my profits for the summer were gone. It was really frustrating. I thought I had learned my lesson, but then I went back to college and within a week or two I had lost $1,300. I wasn’t working anymore, so I had a lot more time on my hands for trading. I even scheduled my classes around trading hours as much as I could.

  So you ended up over-trading…

  Very much so. And I was still experimenting with many different strategies. I had learned the concept of boxing shares from Michael Goode, but I soon discovered I couldn’t mentally handle boxing. I would think the stock was about to break down so I’d sell my long position for a loss. Then it would hold support, so I’d panic and buy it back. Then it would get weak again, so I’d sell and take another loss.

  Finally I’d get squeezed out of the short side, too. Pretty much all of the $1,300 of losses was attributed to really impulsive, dumb boxing trades on LBAS. By the time I was flat on LBAS, it was a disaster.

  You lost on both sides…

  Yeah, and when you look back at it you wonder what the hell I was doing. The stock traded sideways for like two weeks. It wasn’t even tradeable. That was a wakeup call that I needed to focus. I had some money from working at State Farm over the summer, so I started fresh with a new $1,500. I forgot about boxing and all the other random strategies I had been trying and focused on setups with which I was most comfortable and had the most success. I had seen so many daily) breakouts work well on the OTC market, especially on promotions, so I knew I really wanted to focus on those. Plus I had yet to nail a big promotion on Day 1 like I had watched Michael Goode do so many times, so I wanted to find a way to make that work.

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  You caught the end of the “good ol’ days” on the OTC Market…

  I caught the end, yeah. I wish I had started trading just a few years sooner. When I finally focused on good setups it was already the last semester of my senior year of college. But my trading improved quickly. Within a month or so I had made back about $600. And I had finally nailed an early buy on a promotion for $200 profit. That was a really exciting trade for me, because I knew I was on the right track.