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Here’s the video transcription:
Tim S: Hey guys, Tim Sykes, millionaire mentor, and trader, here with Tim Grittani. We have a very special treat today, I want to go over Tim Grittani’s story and just flesh out the lessons that you’ve learned, what, this is like your fifth year of training?
Tim G: About five, yeah.
Tim S: Five years from having $1500 to your name to over $4 million. What’s the number one lesson? Start with number one before we get into the past.
Tim G: Do I have to hit the 40?
Tim S: Number one, yeah. No. When you get to 5 million you have to do a blog post with 50 lessons. That’s why I took the easy one with 40 lessons. There’s a great blog post, I’ll link it under this video with 40 lessons that he passed $4 million. Do you like my 40 lessons?
Tim G: Those are good lessons, yeah.
Tim S: Thank you. Thank you.
Tim G: Yeah, I really like them.
Tim S: When you get to 50 lessons.
Tim G: Can’t wait, yeah.
Tim S: …take the easier route. But was the number one lesson that you’ve learned from everything in five years?
Tim G: Number one would have to be cut losses quickly. And really the funny thing is when I kind of hit my rough patch in 2015, which was one of my worst years training, it was still green, but one of my worst, that was the rule I had gotten away from. And up until that point I had been so consistent, green every single month. And then all the sudden I just got really stubborn with NASDAQ’s. I went there, I started experimenting with them and I learned the wrong lessons early, because I would go on these rides where I’d be down 50K. And then, I’d hold it for a week, and then all the sudden it’s back to break even. And I’m like, whoa, well, I’m smart, I didn’t panic out. And then, next thing you know, I take a $290,000 loss, then a $180,000, 105,000, they just came one after another. And… I mean, that’ll wake you up in a hurry and kind of get you back on the right track.
Tim S: I remember on your $290,000 loss, you had a tweet the day before the loss and you took the loss. If you didn’t, it would have been actually more than like $500,000 I think. And you said tomorrow it’s like make or break, it’s time to drop the hammer. And I was like, whoa, that’s dangerous talk.
Tim G: Oh yeah. I mean, not only was I not cutting losses, I was trying to fight them, too. So, I’d be down 100K, and I’d be like, well, okay, like I’m down but I’m not out, like I can salvage this. My average sucks, I’m down big, but I’m just going to hammer this thing at the top and it’ll all be okay.
Tim S: So, this is my number one lesson. I cut losses quickly, that’s my rule number one. But I guess rule number two for me is learn the right process, learn good habits early on. Like when you have a small account you can grow your account using bad habits and you can get away with it because it’s small money. But then if you use those bad habits with big money, then it’s bad. It’s kind of like if you’re a baseball player and you learn bad habits like in the minor leagues, you try and bring that to the major leagues, you’ll get squashed.
Tim G: Absolutely, yeah. I mean, I see in the chat rooms a lot, like this really black-and-white mentality where it’s like oh, well, if I when on the trade, it was a good trade. If I lose on the trade, it was a bad trade. And that couldn’t be further from the truth because again, the process, like the reasons you’re in the trade and just how you even got to that end result matters so much more.
Tim S: I see students get encouraged by wins, discouraged by losses, although, as we both know, losses are actually better teachers. So, you need to really be grateful for the whole journey as a whole. Even though losses suck, especially $300,000 losses, I had a $200,000 loss, but those things so much is part of your market tuition, so you pay that tuition. Obviously, if you cut losses quickly and you try to minimize your losses, then your tuition is less, but you still have to learn them. But I want people to be grateful for their wins and their losses. Not just the wins.
Tim G: Well, yeah, the losses are the best learning tools, absolutely. And even, I can walk away from a trade where I was trying to play a breakout and it just didn’t work. And I got out at my risk like I was supposed to and to me, that’s a good trade.
Tim S: Are there such a thing as good losses?
Tim G: Absolutely. No setup is going to work 100% of the time, that’s unreasonable to expect that. And so, you have to take those losses the times it doesn’t work out. And that doesn’t mean you did anything wrong, in fact, you could have done everything right.
Tim S: And a good loss happens to everybody. I want you guys to understand this, because I know it sounds crazy like you lost money, why are you saying that’s good? That sounds like something losers would say, oh, we lost but we were…
Tim G: We had fun.
Tim S: Yeah. We were polite about it, we were good sports wins or something. But in trading, you have to lose sometimes to learn how to a) cut losses, and to b) take the loss. Emotional education is a big part of this. I like paper trading on stocks and trades, don’t get me wrong, but you don’t get the full emotional education.
Tim G: Absolutely, yeah.
Tim S: Which I think is huge in your success.
Tim G: I mean, I remember back when I very first started, like I had just found your site. I was in penny stocking silver, I was following along, and I was just paper trading. Like kind of [inaudible 00:05:05] in my head. And I think I was like 12, about 12 or something like that, and I was like, yeah, I’m awesome at this. And then I put real money on the line, I was trading. I actually could lose, and it was a terrible start. I lost that $1500 within nine months. It just was so different emotionally to have money on the line. I was shaking, I was freaking out, my heart rate was out of control. It just completely changes the game.
Tim S: Let’s go back to the beginning. So you had $1500, you lost the 1500. And then you restarted with what?
Tim G: Another $1500 of my own. I mean, I had borrowed the 11,000 grand from my parents, and so that was there to keep…
Tim S: To open the brokerage accounts.
Tim G: Exactly.
Tim S: Trade with it.
Tim G: Right.
Tim S: You have to clear this up. A lot of people are like putting you [crosstalk]
Tim G: There’s so much confusion over it, yeah. No, the money was there so that I could have three brokers that helped me around the pattern day trader rule. But I was never taking positions more than $1500 or whatever portion of the account was mine at the time. So, I got nine day-trades a week and that was the perk of having that extra money. But…
Tim S: I’m actually a fan of the PDT rules, especially for beginners.
Tim G: It probably was good for me. That slowed me down.
Tim S: Yeah, because it protects you from overtrading. A lot of newbies think that you have to be in every trade and go, oh, I want to make $1 million. I have to make $10 here, $20 here, and you’re learning bad habits. You’re learning how to scalp, that’s not what made either of us a lot of money.
Tim G: Yeah. And I probably was four or five months in around the time when I did borrow that money and get all those extra day trades. And I don’t think it’s coincidence that that’s when things went down you for me. I mean, most of my losses were trying to box and unboxed some short that I just bled myself away on that because I was just in and out, in and out, over and over.
Tim S: You guys hear that. You don’t need to trade as much as you think you do. We did an interview with Stephen Duff, he just passed $900,000 in profits. He says at most, even when he had $27,000 to start, or now when he has 900,000, he trades maybe once or twice per day on like one or two patterns. That’s it. You don’t need to make like 20 trades in a day.
Tim G: Yeah. I became a lot more active as a trader as I kept on trading. I mean, I do probably trade four or five trades a day now. But the vast majority…
Tim S: I’m not talking about entering and exiting positions, I’m saying like you have one thesis on a stock. So, you have like maybe two or three stocks max that you’re looking at to trade in a day. You’re not trading 30 different tickers.
Tim G: Right. Yeah. I mean, my watch list was always six stocks or less it seems like. I mean the vast majority of my profits really come from a few outstanding trades a month. I mean, the rest of the stuff, it’s great, it can add up a bit here and there, but…
Tim S: We looked at Mark Crookes trades, another Challenge student who just passed $700,000 in profit. 80% of his profits come from 6% of his trades.
Tim G: Yeah, that sounds about right. And the rest of it, I mean, sure, you get that extra 20% profit, but the emotional and mental drain from just trading that much, I don’t know if it’s worth.
Tim S: Trading is very frustrating if you’re just trading a bunch of stuff, you’re like the daily grind, you’re going through all this stuff, you’re like God, this isn’t like freedom at all. This is like slavery. Obviously, you don’t know which is 6% of your trades are going to be the best, you do have to tinker, but you do have an idea. I think what you’ve learned, that you have a few key patterns.
Tim G: Definitely, yeah.
Tim S: What are your key patterns? How many key patterns do you have that you find work reliable?
Tim G: I am actively using at least for right now. I mean and some of them are just the same pattern, different markets. I mean like OTC multi-day breakouts versus NASDAQ multi-day breakouts. I mean, very similar idea, but I like the OTC ones better, I think they’re more reliable. From the short selling side, I still like shorting into major daily resistance. I love the overextended gap down. And that’s one of the ones, I think, from my DVD that I have gotten the most positive feedback about from people. I get the most emails on that one, people saying oh, I love your overextended gap down…
Tim S: You need to watch his DVD trading tickers. How many hours is it?
Tim G: 16.
Tim S: 16 hours with, what, 35 or 38…
Tim G: 35 live trades.
Tim S: 35 live trades. Fantastic job on that. What is the most popular pattern? Explain that.
Tim G: The overextended gap down. So you get one of those big crazy runners, maybe one day it’s up 100%, maybe it has gone up three days in a row from $2 to $10, something like that. Point is, it’s up a lot in a hurry. And you get that first red day were instead of gapping up for the third or fourth day in a row, all the sudden the stock is gapping down, it’s red for the first time. It’s a very logical point for the longs…to start taking profits. You know short-sellers are circling waiting to attack this thing [crosstalk] big shift in momentum.
Tim S: I loved first red day. Tell us about your first red day. Mark Crookes loves first red day. There’s something about your first red day. I don’t know what it is, we all love it. I guess it works, that’s why we love it.
Tim G: Really. I mean the times I get myself in the most trouble is when I’m still attacking green days. And I mean, there can be good trades there, too, on the short side, don’t get me wrong, but there’s also more potential for trouble.
Tim S: It’s far less stressful shorting your first red day because now the momentum has kind of shifted from [inaudible 10:05] backside.
Tim G: Big momentum shift and then clear-cut risk. You’re either risking off of the previous close or the previous high day. It’s a very easy trade and you know exactly what you have to do.
Tim S: But you have to wait for it.
Tim G: And the patience is tough.
Tim S: It’s tough to wait for that first red day because you’re like maybe this will be the first red day. And then, if not, and you have a play like you UPH were it teases and teases and teases.
Tim G: Right. And I think there’s also that little bit of ego involved with it, too, where you want to nail the top. Like I want to have that dead perfect entry, sure. But that’s not the best way to do it. You could be a dollar late in all of these cases and still have plenty of opportunity to size in, and still be patient and ride it back down.
Tim S: All right. Let’s go back to the beginning. So… I’m sorry, we talk trading, we get into it. You have $1500. You lose the $1500, you restock with $1500, you borrow $11,000 from your parents to open brokerage accounts. What did you do then? Because you didn’t have success right away. A lot of people are under the mistaken impression that like Tim Grittani is like a born natural. It took you nine months, I think, to be consistently profitable. And not like make millions but just to be consistently profitable.
Tim G: Right. Yeah. The timetable was February 2011, sign up to your service. May 2011 I had my first trade. And then, I believe it was about August 2011 where I blew up my $1500. So, September I just started building. I refunded it with money…I worked at State Farm all summer, so I had the money for it, thank God. And I just tried to learn from what I did wrong. I recognized the overtrading, I kind of realized okay, I need to focus on where I’ve been the most successful and where am I the most comfortable? And I just narrowed my focus way down to one or two set ups that I liked the best at that time.
Tim S: How did you learn to do that so quickly? Because a lot of people are in that spot where maybe they’ve lost $1500 or they’re tinkering. How did you know to narrow it down?
Tim G: Well, I did been doing it at that point for four months, five months. And I mean I probably was averaging about five trades a week. So I had enough trades, and I was tracking them. I mean I ran all of my trays onto an Excel and then I would [crosstalk] yeah. Tracking, absolutely.
Tim S: Keeping a diary, being meticulous and seeing what works and what doesn’t work.
Tim G: Yeah. I could go back and see what I had been winning and what I had been losing at.
Tim S: So, you saw that if you minimized, you would do better.
Tim G: Right. Oh, yeah. The blow up, like I said, was mostly trying to box and unbox. That was short selling. I was very new to [crosstalk] I hate it, too.
Tim S: I suck at it.
Tim G: I was just doing it last month and it still messes with me.
Tim S: I can’t do it. You learn what you can do and what you can’t do. And it’s okay to not be able to do something. Some people think like they try to master all these strategies, and they have to succeed at everything. And you know, we’re not all Michael Phelps. We can’t win like 20 plus golds. Like have one or two really good things and you’re still…
Tim G: Yeah, and it’s fine to branch out later, like very slowly.
Tim S: But accept defeat.
Tim G: Accepting defeat and accepting loss is a big thing.
Tim S: And it really attacks your ego all angles.
Tim G: It does. Because if you see other people nailing a play that is just not in your arsenal at the time, you feel bad about it. You say, well, what’s wrong with me that I can’t now this that everybody else is, but that’s not the whole story.
Tim S: Because we have different personalities.
Tim G: Exactly.
Tim S: We have different strengths and weaknesses. So, you found that by minimizing your trades, your results were better.
Tim G: Oh, by far. Yeah. Because I did cut down to just longs. I was just buying new promos, I was just buying OTC breakouts, and I was comfortable with those, I felt like I understood them. And I have seen good results there, so it was easier for me to enter these trades and stay calm and not panic so much.
Tim S: And you gained more confidence because you saw the results piling up.
Tim G: Right.
Tim S: A lot of people ask about how do you gain confidence? You gain confidence through success. You have success through testing.
Tim G: Right. And I started to see also, I mean they weren’t all that common, new promos or OTC breakouts. So, there were times where I would go two or three days in a row where I wouldn’t make a trade because one of my set up wasn’t there.
Tim S: What did you do when you weren’t trading? Were you sitting? Were you like [crosstalk]
Tim G: I was still watching.
Tim S: …rocking back and forth like an addict? Like I need a trade. Were you like sucking on the thumb?
Tim G: Well, I was also in school at the time, so I need to be in class. That helps to have that distraction and other responsibilities. I’m also content just to watch the market and watch these patterns play out and kind of try to familiarize myself with this specific stock.
Tim S: Do you watch the market when you’re not trading?
Tim G: Oh, yeah. I mean I’ll get away sometimes.
Tim S: So, you have like a beer and you’re just watching sports?
Tim G: It can be, yeah. I mean especially if there’s one that I know that initially, it’s going to be really high on my target list, so I’ll want to watch it maybe a day or two in advance and…
Tim S: Just to get a feel.
Tim G: …just to get a feel for the action, yeah, and how the thing moves. But I did learn the lesson that it was okay to go a few days without trading and that I was still going to be able to make plenty of money.
Tim S: So, how did you do? You went back to the $1500 and with the $11,000 borrowed, how did you do over the next year? Take it year by year.
Tim G: Year-by-year. Okay, well, I know that [crosstalk] if I refunded September 2011, I know by the end of 2011 I had gone from $-1500 to plus… I think I ended 2011 +$4300. So I dug out and then some. And then started 2012 is when I was full-time trading. I was done with school. I had a December graduation.
Tim S: No more State Farm?
Tim G: No more State Farm, no. I was living at home trading full-time and by the end of…
Tim S: And you had the confidence to trade full-time after just making four grand?
Tim G: Well, I started to see the results. I mean, September was a green month, one of my first ones. It was only a few hundred dollars, but still, it was in the right direction after all the failure up to that point. And then October was a little bit better, November was my first really big win, where I nailed the big promotion and made a little over $2000 on it. And so, it’s hard not to be confident after that when month after month is green. And so, I knew that I was just going to keep on slowly scaling up and I started to actually have a little bit of cushion and I knew I could branch out a little bit and I could afford to make some new mistakes with new set ups.
Tim S: Gotcha. So, you’re making like two grand a month, roughly.
Tim G: Gosh [inaudible 16:27] remember them all. I mean January I think was [crosstalk]
Tim S: This is all on [inaudible 00:16:29], by the way [crosstalk]
Tim G: It is on [inaudible]. Yeah, I’m trying to do it by memory. January I think was maybe $1500, February 2012. And then February, gosh, I don’t remember what February [crosstalk]
Tim S: …March 2017. We just have to time stamp it. People get confused [crosstalk]
Tim G: Well, March 2012. March 2012, yeah. I know that by the middle [crosstalk]
Tim S: This was five years ago.
Tim G: I remember specifically that I had this deal with my parents because I was living at home with them, and that really helped to keep my expenses down. Then they weren’t totally convinced about the whole trading thing, so they wanted to see results more than just what I had been able to do up to that point. So, it was I needed to make 10K by the end of March 2012, on pace for $40,000 a year, which is probably like about the level job I would have gotten out of college anyway.
Tim G: So, I do know that by the middle of March I had made that $10,000 goal. And then by the end of the year, I was at $120,000 maybe. I can’t remember now.
Tim S: So my first year I went from $12,000-$120,000, roughly. And that was… Granted, that was the bubble, very differently. But when you get that first six-figure year under your belt, your confident explodes.
Tim G: Oh, absolutely.
Tim S: Because now you’re tinkering. You have your strategies. You have your spreadsheets. You feel comfortable. It’s not like you’re never losing. We’re not on a mission.
Tim G: Right. There’s still plenty of losses. Really what helped vault my account that first year full-time was the new promos, that was one of my best and most consistent strategies. Again, one of the ones I had been doing since the beginning.
Tim S: In this strategy is dead right now.
Tim G: Pretty much, yeah, it is.
Tim S: Understand that. So, when you look at his profit and chart and it’s not just like, oh, look how easy it is, it just keeps going. You’re looking at and adapting to a different strategy. Different pattern after different pattern. When one pattern dies, you’re looking for something else.
Tim G: I’ve had to learn new things along the way.
Tim S: And that’s good, that’s how it should be. Promos are dead right now. Maybe they come back, maybe they don’t. It doesn’t matter. You have new patterns. So, you’ve made your six figures, then what do you do? You go to the Maltese. When do you go to the Maltese?
Tim G: Maltese was October 2012. So, I had just… Actually, I think 2012 was about 150. Because when I went to Maltese I was at $100,000, I had just passed it.
[Audio changes to outdoors]
Tim S: So, we’re here at the Maltese with Tin Ritanni.
Tim G: What up guys?
Tim S: How’s it going, dude?
Tim G: Not bad.
Tim S: This is your first trip overseas, right?
Tim G: Yep.
Tim S: So, how long have you been a TimStudent?
Tim G: I’ve been in Tim [inaudible 00:19:01] for a couple of months now. I was penny stock [inaudible 00:19:02] for the last year and a half.
Tim S: You upgraded your life.
Tim G: I upgraded my life.
Tim S: How much have you made in the last year or year and a half?
Tim G: The last year and a half I’ve made about $115,000.
Tim S: And that was your little milestone. And Michael Goode was [inaudible 00:19:15] I think the student has potential. And I was like, who is this guy?
Tim G: Michael Goode sent me a little stuffed duck. It was awesome. Like he did this…
Tim S: I saw the stuffed duck…
Tim G: I still have the stuffed duck, yeah. I’ve got to remember what… Like he had this little system back at the time where like if you said a certain smart number of things a week in the chat room, he would award you with duck points and if you got five duck points, you would get this stuffed duck sent to you by Michael Goode. And I think I was the first winner of the stuffed duck.
Tim S: Congratulations.
Tim G: That’s how I knew I was on the right track.
Tim S: Michael Goode really helps mentor you because he was with the Challenge and he was with, explaining the promos and everything. That’s his game.
Tim G: Oh, yeah. He [crosstalk] He was a huge help with that because he…I was watching him and anytime one of these big promos was announced, he would always be posting a $5000 gain or more and I’d be like, how do they keep getting these fills [?], how does he see them so fast?
Tim S: Do you remember a webinar he did for Challenged students and it was like he optimized his email to get it like an extra like two seconds faster. And I was like oh, my God, this is crazy. But it worked.
Tim G: Yeah, he thought we had to think on that stuff, I remember. I mean I had something like 15 email accounts strictly for promotions. And I would sign up to the same website 15 times because I knew they staggered their emails and I wanted to make sure [crosstalk]
Tim S: …you promoters are in for a treat when you watch this.
Tim G: I wanted to make sure I would get the first email. And so it was pretty ridiculous, and I would like be running tests of these things where I’d be like I’d send one of my promo email accounts, the test email and I’d have three different email server things open and I’d say which one gives me the quickest popup alert and [crosstalk] I noted that [crosstalk]
Tim S: …I’m dressed like this because this is how Tim Grittani dresses, T-shirt and gym shorts. His wife is here, too, and we’ve got [crosstalk]
Tim G: …sandals.
Tim S: And we’ve got the sandals. So, this is what we do.
Tim G: And these are my nice flip-flops.
Tim S: So, this is all in his honor. I don’t normally dress down like this, but it’s kind of nice, I like it. It’s really comfortable. I need like a Gatorade and a Pop-tart. You know, I could be Tim Grittani.
Tim G: That’s all it takes.
Tim S: I don’t know. Sorry to interrupt, but… All right, so you have these promos working, you’re at 150,000, then what did you do?
Tim G: I believe started 2013 is around when promos started to die off a bit. One of the main promoters got shut down. At least it was sometime that year, I think. And I just remember that year, 2013 getting off to a crazy start. I think that by the end of February, I was up as much as I had made all the previous year. And that was also around the time that Fanny Mae was becoming active and that was one of my darling stocks and still is where anytime it gets really crazy active, I’m there waiting for it.
Tim S: That’s where you made $200,000?
Tim G: That was May, 2.13, yeah.
Tim S: Wow.
Tim G: Because I remember, I think right around that time [crosstalk]
Tim S: So, you like doubled your net worth in like a day.
Tim G: Pretty much, yeah. Because at that point, I think my [inaudible 22:05] had me up about 300K and then that day I made is a $200-something, so I was like, wow, I almost just like you doubled what I’d done in the past year and a half.
Tim S: So, in so in 2000, I mean this was like two years into my journey. I had my first $100,000 day. And I only had like $175,000 to my name at the time. So, $250,000 to my name, I bet my $175,000. I bet big. But I had grown my account so much in one trade. And when you make that kind of trading day, like it really opens your mind as to the possibilities. You know, like wait a minute, this isn’t like a $40,000 a year potential job. Like how do you get to that point? There’s a whole blog post if you Google how to make $200,000 in a day. You wrote a great guest blog post, but how did your mindset change from before that trade to after that trade? Did you start betting bigger and start seeing like…
Tim G: I definitely got a little more comfortable with more size. I mean, I think I withdrew some money from my accounts pretty quickly after that because I didn’t want to lose it all back. But you know, just to have that knowledge in the back of your mind that like your… You don’t really have to worry about bills anymore. You know, like that really changes trading when you don’t have to worry about meeting expenses and there’s no pressure to make X number of dollars a week or a month. Once that pressures off, it becomes a video game. It really does.
Tim S: This is an important point because in an ideal world, obviously, we are human we do think about expenses and bills and most people watching us do start with a small amount. If you can get that mindset from the beginning we’re like okay, this is money I can lose, this is not money used for like rent or living expenses, then you kind of take a little emotion out of it, a little bias out of it, and you can play the charts better, I think.
Tim S: Oh, completely, yeah. Like I totally…
Tim G: But it’s tough to get to that point because you look at money, even if you make $1000, you’re like, oh, all those bills I can pay. But you have to separate it.
Tim S: Yeah, like I cringe when I get the messages people saying, like oh, I have $500 and I want to start trading. And that’s like all the money I have. Like that’s not a position to succeed, it just doesn’t. Because it does usually take at least one round of failure. One account blowing up. And like I said, you can’t be worrying about like oh, this is my rent money. Like it’s got to be money you can afford to this. And that really helps the mental side of the trade.
Tim G: Well a lot of people start forcing trades. And let’s go into this a little more, I hope you don’t mind.
Tim S: Oh, sure. If you feel like, okay, rent is due I have to make $200 or $500 this week, you start forcing trades, because you’re like, I need to make this. Here’s a good trade. Oh, no, that’s a bad trade. Then you get out. Slippery slope. You start making terrible trades and you’re losing, you’re going the opposite direction, or your learning bad habits, and you’re not giving yourself time to focus on the best place.
Tim G: Right. There’s that… There’s definitely that pressure where you just feel like you have to do something, make something happen. And I also have seen in with traders, even if they’re in a position where they’re not worried about bills. I see it from the sense of, well, like I want my month to be as good as last month. And, you know, I’m not on pace. I’ve got to make something happen. I’ve fallen into that. I’ve done it more times than I care to admit. It’s a very tough thing to battle, that mental side of it, that pressure you put on yourself to make X number of dollars a week.
Tim S: With you agree that really successful training is more of a battle I love you versus yourself and your emotions and your ego.
Tim G: Oh, absolutely. I think that that’s what ruins most traders is the emotional side of it and the ego side of it. These patterns are rocket science, they probably are the easiest part of the whole thing, just see a pattern and recognizing it. And once all those emotions come into play, making a plan, sticking to it, and all the things attached.
Tim S: Did you have greater expectations for yourself once you made that $200,000 in a day?
Tim G: I think so.
Tim S: Is that when you started saying, oh, now I have to do this more.
Tim G: So, you put pressure on you. Even though it opened up your mind, it also added to some pressure. One of the things about trading is that it really feeds on greed. And no matter how much you make, you always want more. There’s always that next level you want to get to. You know, I make 100K, I want half a million. I make half a million, I want a million. A million, I want two.
Tim S: This is Jewish mentality, it’s not just trading. Have you had your bar mitzvah yet?
Tim G: No.
Tim S: We need to get you to convert officially. You understand the Jewish grade, I own JewGreedy.com. I haven’t done anything with it.
Tim G: Whether it’s great or just wanting to better yourself. You know, like I said, it becomes like a video game, you want a new high score. I mean, and then if you’re having a month where things aren’t looking like they are going to go that way, you can’t get yourself into a lot of trouble.
Tim S: Yeah. It’s a slippery slope. I say this very often where some people who have problems, I say just stop trading for a week, or take 100 share positions, or paper trade, just cut the addiction. Just cut the pressure. And it’s amazing when they come back refreshed. Because you have taken some trips and you don’t necessarily treat as much, and you come back refreshed. Ducks just took a trip, then he had his best week ever.
Tim G: And it helps. It really does. You need to clear your mind. Usually, my trips come after a big loss. I like, okay, well, I just screwed up big, I’ve got to take some time off, regroup. And for once, I’m actually entering a point here where I’m taking some time off and I haven’t had that big loss. So, every time I feel like I’ve gotten a little bit closer, the last time was right before your conference, the UPLMQ got me. That was great.
Tim S: You were recording earnings, right?
Tim G: Yeah, they called… They had earnings overnight and I wasn’t aware of it and I got stuck. But it’s so funny because like a day or two before that I had said, okay, well, I’m on vacation, it’s time for the conference and all the stuff. And then, I got sucked back in and then I took that big loss, and I was like, oh…
Tim S: Pulled you back in.
Tim G: I was so close.
Tim S: Pulled you back in. But the lessons are good from the losses.
Tim G: But yeah, anytime you’re starting to feel a little burned out, you know, maybe if you’re better than me at getting away before the big loss happens, just even a week off, like that can make such a big difference mentally, you can come back so refreshed.
Tim S: I agree. So, all right, we keep getting distracted. After your $200,000 gain in, what was it, May 2013?
Tim G: May 2013, yeah.
Tim S: How did you do the rest of the year?
Tim G: So, that would have put me up about close to half a million. I think I made another $400,000 the rest of the year. So, I think 2013 was about a 900K profit year. Because I hit the million in December. That’s what it was. December 2013 was when I hit the million, yeah.
Tim S: I remember the CNN article, it’s real. Some people think the CNN article, like you, photoshopped it. I was like it’s a real thing, they went through all your trades, it was like crazy.
Tim G: I’ve had the people who were like, oh, I didn’t think you were a real person. I go, that’s funny.
Tim S: We’re an internet means I guess.
Tim G: Yeah.
Tim S: Let’s just talk about that for a second. Because a lot of people I know have asked me about this. You paid $200,000 in a day, but then for eight more or seven more months, six more months, you only make another…only make another 400,000. Can you explain that?
Tim G: Yeah. I mean, the thing about Fannie Mae was it was just such a rare opportunity, I had never seen anything like it [crosstalk]
Tim S: …picture those charts, that entered A, the more you run up, the morning panic, the bounce [crosstalk]
Tim G: Well, the volume. The volume is what made it so scalable. I mean it was an over-the-counter market stock and traded I think 200 million shares that day. Like we haven’t seen anything come even close to that any time since. Except for every now and then Fannie Mae will fire up a 50 million share day and that’ll be kind of fun.
Tim S: Yeah, they had fun a few weeks ago.
Tim G: Yeah. I missed most of that. I was really pissed off. But…
Tim S: It’s okay.
Tim G: Yeah. But I mean one of those big opportunities was there and in that case, it was Fannie Mae, and I managed to take advantage. And I only took advantage because it had done one in March also and I had screwed that one up. When it had the move in March, at that time it was like a $0.20 to $1.20 move or something like that. And then crashed down to $0.50 in a day. And I made 15K that day, maybe 20K. And I walked away from that day. You know, one of those days where you walk away green and take away isn’t, oh, well, I made money. It was a good day. The takeaway was, wow, I could have done so much more with that. Like I didn’t trade that well.
Tim S: So, the difference between a $15,000 profit day and a $200,000 profit day is what?
Tim G: I guess the big difference, in that case, was there was some stubbornness on a short the day of that 15 K profit. I had started sorting too early, I got myself kind of stuck, I was scared. And I really just had to back off and I couldn’t be aggressive. Whereas the day I made the 200K, I had a couple early shorts, and I cut them immediately, every single time, as soon as I could see I was wrong. And then I was positioned to nail the top when it finally cracked, and then I played the bounce, and then I shorted it again. So, I mean part of it was because I was singing pretty much the exact same pattern for a second time, but I didn’t make the same mistakes as I did the first time. So again, it goes back to learning from mistakes, embracing those losses.
Tim S: We’ve seen this pattern again, too. It’s not just on Fannie Mae. I have a blog post with Lithium Corp. like LTUM.
Tim G: All those great lithium stocks, LEXG, yeah.
Tim S: It was an exact. Like I’m taking crazy pills, like I compare the charts. It’s exact like minute to minute, 27 straight green minutes and then 34 red minutes. I am like…
Tim G: And then straight up green again.
Tim S: So, you wait for this pattern and next time you’re obviously going to be prepared. You have a few rounds under your belt.
Tim G: Yeah. There was one recently that I was hoping would do it and didn’t quite pan out OWCP a couple weeks ago. And I kind of botched that one a little bit, it just wasn’t as smooth. But yeah, next time we see those, I’m ready.
Tim S: The one thing I want to really reinforce here is that training is not like a 9-to-5 job. And this screws some people because 9-to-5 jobs, you have normal paychecks, weekly, biweekly, bimonthly trading, you might make 200 grand in a day and then 400 grand the rest of the year for six, seven, eight months. I had, back in the year 2000, I made $730,000 in the first four months. This was the crazy bubble. And in the last 10 months, I lost $8000, just testing out new strategies. There was no more breakouts to buy, I was only buying breakouts I didn’t do short selling. But to see that dichotomy, people were freaked out. They’re like what are you talking about? Did you totally lose it? If you go like that. But it’s based on opportunities if you learn to focus on the right patterns.
Tim G: And I try to remind myself of that when I’m having a slow or a couple slow weeks. Where I say like, okay I’m just going to trust that the opportunities will be there again and just not do anything stupid in the meantime to try to force it.
Tim S: And that is when, frankly, you can go out and live. Like we kind of live like crazy lives where we are so focused when there’s a good play, like nothing else really matters. But then when there’s no plays you can go out, explore, live.
Tim G: Yeah. I remember…what was it, the summer of 2014 maybe or 15 [crosstalk] I took two [crosstalk] I took two months off. I didn’t trade like all of June and all of July.
Tim S: How was it? Where did you go?
Tim G: We were mostly…Purto Rico, back in Chicago. We bounced around a little bit, but…
Tim S: That’s cool.
Tim G: It was cool, it was just two months where I did nothing. I would check my scanners at night, I would see like, oh is there anything going on in the market, nope, nothing interesting, okay.
Tim S: Did you think you career was over or were you…
Tim G: No. It was fine. Like I just knew things were a little slow and you know typically summers are a bit slow, so…
Tim S: For the last few summers.
Tim G: Last summer was crazy. That was the busiest summer I’ve ever seen.
Tim S: June and July, it was like are you kidding me? This is my time off. I look forward to my time off and then it like… Okay, let’s get to 2014, so 2013 is in the books. You’re already past a million right, like right around… I don’t even remember exactly when it was.
Tim G: It was December 2013.
Tim S: We flew out to…
Tim G: It was…oh, the ticker…I can’t remember the ticker now. This stupid pump that I shorted. I made like seven grand on it. That was [crosstalk] was it nine? Okay.
Tim S: I made nine grand. I was like…
Tim G: The details get hazy.
Tim S: I was like you just made nine grand. You’re like, eh, nine grand. Yeah.
Tim G: Yeah. That was what was so fun about it. I remember doing that seeing…like one of the articles for CNN, I think it was where I talked to the lady and I was like it’s not like I made a half a million-dollar trade to get there, this was just another old trade.
Tim S: Yeah. And you said it like… This was on Fox and Friends and you were like, yeah, I made nine. You were like, I made nine. Like nine grand was just nothing. This is what happens when you make too much too quickly, but…
Tim G: You stop appreciating it.
Tim S: 2014, what did you do?
Tim G: Well, 2014, the first three months was wild. The OCT pumps were pretty much done in terms of the new promo releases, but the OTC market was crazy because all the marijuana stocks are going up.
Tim S: I remember.
Tim G: And I was all over those. I mean every day there was another big opportunity. And I think within three months and 2014 I had made another 600K. It was such a [crosstalk] I remember both of those.
Tim S: I messed up MDBX. Remember when it was at 80,000 [crosstalk]
Tim G: …exact same day.
Tim S: Yeah, GRNH went over $1.00.
Tim G: GRNH I lost like 60 grand and MDBX, I think I made 60 grand. Like they kind of netting each other out. That was in January, I think. And I remember being really mad about that because, again, it was a stubborn hole that kind of screwed up what could have been a great day.
Tim S: I remember MDBX, I shorted, I made like five bucks a share and it dropped like 40.
Tim G: It was also good because it snapped me back into focus for the next two months of the marijuana craziness. So, I remember struggling a little bit in April and May of that year because of all that crazy marijuana stuff, that kind of ended with… What you started to see was these really sketchy OTC companies where there’d be a mining company and they’d put out a PR thing, like, oh, we do marijuana now [crosstalk]
Tim S: Hey, they tried. They’re pivoting. That’s a legit… I’m kidding. That’s a joke.
Tim G: But the FTC caught on and I think three or four got halted in a couple weeks’ span. I got caught in one of those halts, but that completely killed the sector and OTC pretty much died off after that for a solid couple of years. And so, in April and May, I was kind of looking around and I’m like where are all the plays? Like what am I going to do? Because at the time I hadn’t really gotten into NASDAQ trading yet. And you know, after making 600 grand in three months and all the sudden you’re making very little compared to that. I started pressing [crosstalk]
Tim S: …thinking about going back to State Farm?
Tim G: Of course not. I started thinking about NASDAQ.
Tim S: I think their cool commercials came around that time. Bom, bom, bom, bom.
Tim G: Jake from State Farm. Khakis.
Tim S: Yes. So, you have the khakis. You could’ve been that. You could’ve [crosstalk]
Tim G: I am Jake from State Farm.
Tim S: You missed your calling.
Tim G: Yeah, okay.
Tim S: So, 2014, you’re figuring out what to do. How did you adapt?
Tim G: Well, so I realized there was really no more money flowing in the OTC market, so I had to find a new market.
Tim S: You go where the money is.
Tim G: Exactly. Yeah. I adapted, so [crosstalk]
Tim S: You adapt. Some people are like, oh, my pattern doesn’t work anymore, what am I going to do? Adapt or perish, okay. Dinah Shore 101.
Tim G: I went to NASDAQ and I knew nothing about them, I’d never traded them before. Well, maybe I had a little bit here and there, but I didn’t have any kind of comfort level with them. So, the very first thing I did, I knew I wanted to focus on the same kinds of things as OTCs, I wanted the volatile ones. I wanted the ones that had unusual volume and lots of range. So, I would run a scanner at the end of every day where I would say show me every NASDAQ today that closed up 15% or more. And then I would put those into a spreadsheet and I would see how did they do the next day. And the whole idea was after a big strong green day where they tend to continue, like should I be buying these and holding them into the next day or with most of them fail and fade off [crosstalk]
Tim S: You tested.
Tim G: I tested, yeah. Like I wasn’t really even trading them I was just tracking them. I wanted to have some kind of idea like what kind of bias I should go into this with.
Tim S: How many spreadsheets did you have?
Tim G: I don’t know. I mean… I probably made at least 10 different setups I’ve tried to track over the past few years. But that was the simplest of it, where it was just like, oh, here’s the stocks that are up with good volume and let’s see what they did the next day. And so, that kind of pointed me in the short bias direction because I would see a lot of them would tend to gap down a lot and then would fail and fade off. Then I started to craft some strategies around that, and start to try to trade those and figure out how to make some good money off of them.
Tim S: Cool. Did you figure it out in 2014?
Tim G: Yes and no. In 2014… So that was when I started my really bad habits where I started short selling these things pretty aggressively. And sometimes I would just be too early. And I mean, at this point, keep in mind I’m up about $1.6 or $1.7 million, and I don’t feel like I have a whole lot to lose. So I had a very aggressive mindset where I could be down 30 grand and just kind of shrug it off and say, well, okay, I’m just going to add. And [crosstalk]
Tim S: And most of the time you’re okay.
Tim G: Every time I was okay until October [crosstalk] and that’s when the $290,000 loss happened. I remember one that stands out… Well, there’s two that stand out. One was GPRO, the camera on a stick. And they IPO’ed, they ran for a few days and I started short selling and I got stuck and I remember being down $50,000 on GPRO and just kind of sitting back, relaxing, not panicking and maybe two or three weeks later, I finally recovered it up to break even. And then RADA, that was another one where I shorted it at like $3. They put out earnings mid-day and it squeezed up to $6. I was down almost 100 K on that and it closed at $6, and I remember like really sweating that and thinking okay, what the hell am I going to do if this opens at $8 tomorrow? And it keeps on squeezing to $10 or $12. Like I’m going to take a ridiculous loss. And instead, it gaps down, faded off, and within a week I was out of that for like a $5000 loss [crosstalk]
Tim S: So, you’re learning bad habits.
Tim G: So, I learned really, really bad habits because I was going on these rights and getting away with it.
Tim S: Yeah.
Tim G: And you know this happened to me at least one dozen times in the summer and early fall.
Tim S: And then it catches up to you.
Tim G: And then it happened in 2014, the $290,000 loss where I start shorting at nine, I’m of $3000, then I break even, then I’m down 10K, and then I’m adding, adding, adding… And it just spiraled out of control.
Tim S: You recovered at what, 21?
Tim G: And it went to 30.
Tim S: I remember that. And I was banking you, that you [crosstalk]
Tim G: Yeah, because I had a lot of shares [crosstalk]
Tim S: …it’s like my billionaire student is going to blow up. This is not good. I remember your tweet, I’m going to drop the hammer tomorrow.
Tim G: Yeah, that would’ve been pretty ugly.
Tim S: Do you still have that tweet?
Tim G: I’m sure I have it somewhere.
Tim S: You said drop the hammer. I was like who is this? You don’t drop the hammer.
Tim S: Yeah, [crosstalk] doesn’t drop the hammer.
Tim G: That’s the Tim Grittani’s in trouble talk.
Tim S: I remember. I was freaking out. I’m glad you recovered.
Tim G: I at least… Because that happened… I mean, getting nowhere with those rides and playing the ridiculous size I was, before lake happened I was $4.2 million that year. And then lake knocked me back to about 300K. So, rest of the year was close to breakeven after that or maybe small gains. Maybe I ended the year up at $1 or $1.1, but I mean I definitely didn’t recover all of my lake loss by the end of the year, I know that.
Tim S: And it’s like a logical.
Tim G: Oh, it was killer. It was absolutely killer psychologically.
Tim S: Can you hear the drums outside by the way?
Joey: A little bit.
Tim S: Make sure they hear it. We’re in St. Maarten, by the way, just randomly. We are not [crosstalk]
Tim G: Just hanging out. Yeah.
Tim S: We are not like, we’re just in the Caribbean. It’s kind of cool. There’s like Caribbean like real hard-core still drums being beaten. We’re going to go to the buffet. What is it, the fish buffet?
Female: [inaudible 00:41:48]
Tim S: The pirate [crosstalk]
Tim G: The pirate night.
Tim G: The Pirates buffet later. Sorry. We got interrupted. So, you made roughly… How much did you make in 2014?
Tim S: I think I ended the year up around $1.1 million. But you ended on a really bad note.
Tim G: Really bad note, yeah.
Tim S: And how did you recover from that? Did you learn right away what you did wrong?
Tim G: No. I didn’t learn right away. I mean, I knew what I did wrong, but I didn’t learn from it. I still made the same mistakes [crosstalk]. And that’s what got so frustrating and why 2015 was a crappy year emotionally for me. Well, let’s see, I guess early 2015 wasn’t so bad. I think… I mean, I still made some mistakes but by maybe May 2015, I was up half a million, yeah. And then I took my $120,000 loss on PBMD. And that one just started as a boredom short. That was a classic example of hay this week’s kind of slow, let’s make something happen. Here’s this random stock, it ran really big for some weird [crosstalk] Well, yeah, at the time, though, it was like up from 130 to 200, and I shorted a bunch over… Like to 20,000 shares, I think, overnight on day one because I’m like, oh, well these have been gapping down lately and then all the sudden it’s been gapping up [crosstalk]
Tim S: Bad habits.
Tim G: And it opens up at 250 or 300 and squeezes me up to six and I had added, added, added… So, yeah, $180,000 loss there. It took me until September to almost dig out from PBMD and then I took a $105,000 loss on CNAF. And again, very similar story, just into early, stubborn, fighting.
Tim S: Adding, adding, adding to shorts is not okay if you have a small account. If you have a big account, you could somehow dig yourself out of it. Sometimes it works out until the time it doesn’t, but when you have a small account do not do that.