Today I am going to talk about a great penny stock trader. I LOVE seeing young people succeed, if you remember this great trader is still attending college and in his early 20’s and now there’s yet another college student/trading challenge student who has spent years studying penny stock trading and is now closing in on $100,000 in total profits** (see all his trades here) since now having mastered the art of making $1,000, $2,000, sometimes even $3,000/day,** check out his story and get inspired by the video interview below:
(we’ve also transcribed this video for my valued deaf trading challenge students!)
Interviewer: Here with Michael. Nice to meet you, Michael. I met you the other day. What we like to do is kind of feature a lot of up-and-coming traders. Got to know you yesterday, learning your trading style. I know you had a good day yesterday. We’d kind of like to know a little bit of your background, what you’re trading, what brought you here. We’re here in Miami at the Market Mastery. What got you in started in trading? What are you doing? What brought you to it, etc.?
Michael: My name’s Michael. Some of you may know me as Huddy in the chat. I’m 23 years old from San Francisco, currently studying finance and economics at the University of San Francisco. I’ve been trading for about two-and-a-half, going on three years right now and it’s been just a crazy, crazy process.
Interviewer: Now how would you…You know, I always like to know the origin story. You know, like the…I read a lot of comic books when I was young. What got you started? What brought you to the markets?
Michael: Good question. So I was sitting in my sophomore year of college and my friend had just invited me to an app called Robinhood. He said it was the beta version and he said, “Look you can trade stocks. It’s commission free. And you just do it.” So that day he invited me, I threw in 20 bucks. I was bored in class so I Googled, you know, penny stocks. I only had 20 bucks in my account so what I can buy? What are the top finance people investing in? Where is Berkshire Hathaway? Where are they? And so I diversified $20 into six different stocks or whatever.
Interviewer: That’s awesome. Like penny penny stocks? Or…?
Michael: You know, I had a $20 account and I filled $20 with six different stocks. So a very small position. And at the end of the day I made two $0.04. And I was pissed off. I thought to myself, you know, “How am I ever going to make money?”
Interviewer: And you had, like, way higher expectations.
Michael: Way higher. So then I started saying, “Okay, what are realistic expectations?” I started Googling it and I’d say, you know, “What do the best hedge funds make in a year?” Twenty to 30% if they’re on top of their game. And I said, “Okay, 20% to 30% on $20 is six bucks. That’s ridiculous. If I picked the best stock, I’m gonna make six bucks.” And I didn’t like that. So then I started looking to the percent gainers for the day and I started seeing some stocks are up 30%, 50%. And then I saw a stock called VLTC, which was Carl Icon. He was invested in it, took a 52% share stake. Stock went from $0.50 to $20-something.
Interviewer: That’s back…we’re back a couple years ago when we called them the billionaire plays were hot and VLTC was one of them.
Michael: And that really sparked my interest because I was seeing on Twitter and StockTwits that people were long at two bucks and they knew to be long and they were selling at 20 and making 1000% gains. And I’m the kind of person that thinks if someone else can do it, there’s no reason that I can’t do it.
Interviewer: Sure. That’s always one of the things I talk about and that’s why we do these podcasts is, I mean, it is truly accessible to anybody. You know, anybody can do it if you want to work hard and you want to study but, yeah, it’s accessible literally to anyone.
Michael: So then as a normal sophomore in college would do, instead of sitting through business ethics and listening to the ethical rules of business, I started Googling stuff. I started Googling, you know, how to…The first thing I landed on was a gap…the name, I forget, but, you know, the stock gaps up and it breaks pre-market highs and you buy it.
Interviewer: Gap and go or something.
Michael: Gap and go, yeah, something like that. And I started with that strategy and realized that that wasn’t really refined. And in life I’ve always been taught to find mentors, find someone who’s made the mistakes that can teach you to not make those mistakes because you can learn from them. And somehow I ended up on Tim Sykes Challenge website.
Interviewer: From Googling penny stocks or something like that.
Michael: Yeah. And so I applied and I wrote this whole cover letter about the kind of person I was and I got accepted. And so that started my career I think it was 2015.
Interviewer: And then had you add, like…I mean, you’re a finance major but had you had, like, any interest in stocks? Or was it more just your buddy getting you Robinhood?
Michael: So I was an entrepreneurship major before this…This year of sophomore year, I was an entrepreneurship major. I got invited to Robinhood. I found Tim Sykes and I started studying the market for six months before ever putting any money in. And by the time that that six months had completed, I thought to myself, “Okay, I’m learning something that’s not necessarily what they’re going to teach me in school.” I’m learning the logistics and technicalities of how the markets work and how the buyers and sellers influence each other. Supply and demand psychology. School is going to teach me something like the Gordon Growth Model, the fundamentals, how to arrive at, you know, a sound company, whether it’s undervalued, whether it’s overvalued. And so I figured I’m going to change my major to finance and economics so that I can understand the macro conditions, the fundamental conditions, and then learn the logistics of the market through Tim Sykes and yourself and the other mentors.
Interviewer: Right. And that’s a great way to approach it because, you know, I talk about fundamentals every day but ultimately these stocks, we say we don’t care but we do care. You know, we care. We know that many of them will fail. We know that they’re all sketchy stocks but there is a scale on these, whether it is a hot stock in the marijuana sector that we’ve been trading the last few days or blockchain or something like that. Ultimately, we know the fundamentals are no good in any of these but if it’s the right place at the right time and you have that market education that a guy like Sykes will teach you, you’ll never learn at school anyway. I mean, they might talk about irrational exuberance but they don’t talk about, you know, everybody…when you’re looking at level two and you see everybody wanting in this stock and you’re looking at Twitter and everybody wants in. They’ll never talk about that. You’ll never learn that.
Michael: Half the professors don’t even understand that in the first place. You know, they’re taught different.
Interviewer: They’ll call charts and technical analysis mumbo jumbo.
Michael: You know, I was actually reading in my textbook just last semester, I was taking financial statement analysis, and there was the strong market hypothesis theory, the middle, and then the weak. And the weak hypothesis — wow — theory said that technical analysis does not statistically is not accurate. You cannot use it. In a textbook. And I was thinking to myself, “Holy crap. Like, you might be right but, you know, how carefully did you test that? Did you test that for lower float stocks and take out all the hyper frequency hedge fund trading fundamentally traded around stocks?” Just going to the thinly, you know, low float stocks and I think technical analysis makes a huge difference. And so it’s interesting that a textbook teaches that it doesn’t but once you focus in on your niche, well, it does.
Interviewer: Right. And they’re looking at, you know, in my opinion, they’re looking at stuff that that doesn’t apply to…you know, one of the reasons you came to a $20 Robinhood account and came to these low price stocks is, I mean, these are people that are looking to unfortunately get-rich-quick. So there is a lot of psychology going on there that you’re never going to talk about in a class in a college setting because they don’t think about that mania. They’re thinking about wanting to find the next Microsoft and hold it for four years or something like that. We don’t do that.
Michael: And a lot of beginner traders do that.
Michael: You know, they find a penny stock and they’re like, “This is the next penny stock.”
Interviewer: And my history was I’ve had a life-long interest in finance going back to elementary school and I tried the textbook manner. You know, I tried the value investing. I read all of the CAN SLIM books, all the William O’Neill stuff. I subscribe to Investors Business Daily. And I was right there with you…well, I never had a $20 account but I was right there with you. I’m looking at it, I’m like, “I’m doing all this stuff that I’m supposed to do and I’m making a couple percent.” Maybe 5%, maybe I’m break even. And that’s what brought me to find guys like Sykes is I’m like there’s got to be a better way because people are getting rich in the stock market and they ain’t doing it at 2% a year or 6% a year or even…I mean, sure, if you have a billion dollar hedge fund and you make 20%, that’s $200 million, that’s good money but I don’t have a billion dollar account. So now you’re on the journey. You must have done something to get your account above 20 bucks. Did you put more money in? Or how did…What was the next step?
Michael: The whole story, so it started out that my Dad gave me $500. After I got the $20, I asked my dad for $500. And he said yes. And for six months, I didn’t really touch the $500 at all.
Interviewer: And he knew you were going to trade with it? That was the goal?
Michael: Yeah. And I didn’t touch the $500 for the first six months. Every day I would wake up at 6 a.m., I would watch the stock market, and I would send a picture of a stock up 200% to 300% at least two or three times a week, I’d sent it to my dad. And I was going to earlier but, like, so I just updated on my resume that was one of my key traits: opportunity seeker. I go out, I find opportunity. So every day that I saw there was an opportunity that was stock was blowing up 300%, I didn’t know how to play at the time but, still, “Dad, look at the stock. It’s up 300%.” I mean, if I captured just a portion of that, I’m making great money. And so I kept sending him those, I kept sending him those for six months, and I still really hadn’t…I wasn’t into the Tim Sykes thing yet. I was still just winging it.
Interviewer: Well, I’ll tell you real quick, that is great. Anyone’s watching this, that is such an important lesson right there. So many people just want to go go go go go go and to take that six months and even though you had a trading account now to not trade, that puts you in a very, very small percentile.
Michael: It was tough. It was tough.
Interviewer: Well, especially as you’re taking these pictures of these 3000% runners, for sure.
Michael: Yeah. Yeah, it was a lot of FOMO but it was okay. I knew there was an end goal and I know nothing…you know, Rome wasn’t built overnight. It takes a while. So I had that $500. Pretty soon I was able to con my dad into $1000, so upped it to $1000. And I started to trade on Robinhood with a thousand bucks.
Interviewer: Where are we at roughly now?
Michael: This is six months in, call it, 2014 summer.
Interviewer: Fair enough. I’m just putting together a timeline.
Michael: 2014 summer. I start actually trading, I’m using the gap and go strategy, without scanners because my Mac wouldn’t run it and I was just really using StockTwits and very, very unprepared, unequipped. And I made $200 and I lost $200. I made $400, I lost $400. You know how it goes. And that wasn’t working. So I went out to find more and that’s when I actually found Tim Sykes. And so I found Tim Sykes. I put in all the studying. I went on a trip with my dad to Europe and this whole two weeks that we were there, I was able to talk to him, tell him what I was doing for the past six months, tell him about my major changes, and tell him that this is something that I really want to pursue it. I see a lot of opportunity here.
Interviewer: Now just curious, and you don’t have to…Did your Dad ever do any trading?
Interviewer: No? Okay.
Michael: He’s a real estate guy. He doesn’t own stocks. He doesn’t…
Interviewer: But, okay, so real estate. So he understands investment and speculation.
Michael: And big picture, you know. and so after this trip in August that I was with him and I’m a Tim Sykes student and I’ve been watching the market for six months now, he gave me my first investment of $25,000. I said I wanted to be over PDT. I told him I had no plan on losing it overnight. I had no plan on using all $25,000 in any one trade. I had no plan in margin. I just wanted to be able to trade.
Interviewer: Which is a good idea. You know that I would call it the Tim Grittani method.
Michael: Yeah, I told him, “Dad, it’s just the bank account in Etrade.” It might lose some money, it might grow some money but it’s not going to go to zero overnight.
Interviewer: And that was something I always have admired about Grittani’s story is he borrowed that money from his parents but he never used it. He only used his original capital but he had that so that he could open up multiple accounts so he could make multiple day trades.
Michael: Right. So that’s pretty much what I did. And it took from then…We can kind of fast forward but for the two next years was, you know, the learning curve. For two years, one step forward, two steps back.
Interviewer: Which is standard.
Michael: Yeah. Make a grand a day, lose a grand-five the next day. And so for two years, my account stayed stable. And it was tough. You know, every four months I would call my Dad and say, “Dad, I’m really getting good now. I’m really getting good.” And four months later, I’d call him again. “No, Dad, now I’m really getting good.” And for two years I did that. And I still call him. I go, “Dad, now I’m really getting good.” So it’s just been this long process of really understanding, you know, watching it every day and repetition. Just like you’re putting in 10,000 hours like Malcolm Gladwell says. Or, you know, you’re taking your free throws, whatever it is. You’ve got to watch, you’ve got to get the repetitions. And it took two years for me to start really understanding the chart movements that were going on and focus in on certain days that made sense and not trading the days that didn’t fit any patterns. I took two years is what I’m really trying to say, it took two years to wipe out the 90% of the stuff that I shouldn’t be touching because when especially for me, a young kid who technically is diagnosed with ADHD, whether you believe that or not, I’m trying to trade everything. I was all over the place.
Interviewer: Well, and that’s everybody. And yeah if you’ve got ADHD on top of it…
Michael: Yeah, the next thing I know I’m in Tesla. At one point, I bought Tesla at 146, like two years ago. d I sold at 150, not realizing I was in Tesla at the time and that would have been a great long-term investment.
Interviewer: Oh, sure, yeah. It’s 350 right now.
Michael: Right. So that’s the whole I was all over the place. I sent Mark Croock all my trades. He said, “Michael, you’re in a bunch of large-cap stocks and that’s where you’re taking your biggest losses. Just look. Why are you trading large-cap stocks? When have I taught you to trade large cap?” And I was like, “You’re right. You know, Mark, you’re right. I don’t know why I’m doing that.” And so I stopped. I narrowed down my focus into the actual patterns that were taught in the specific day that they happened, not three days later where now it’s at that price. No. The day that it needed to be is where I needed to start focusing.
Interviewer: Yeah, I mean, and that’s something I think again that is so often overlooked. I tell this story all the time but it’s like you can with a smartphone and 500 bucks, you can start trading today. I mean, we could have…the cameraman over there could start trading today.
Michael: I see it on the bus all the time. People are just looking at their phones.
Interviewer: Exactly. But no one…And the problem is it is possible to be profitable day one but you have to be an extreme outlier. And the biggest thing that I like is that you took that six months and you left that 500 bucks rotting in the account and then, once you got the capital, you still just took that long-term approach and you didn’t expect to turn $25,000 into $500,000 in a year. There are rolling wolves but there’s very few of those, and that’s why I talk about looking at charts till your eyes bleed. I mean, you just got to see it, see it, see it, and then eventually it starts clicking and you start avoiding the Teslas and all this other stuff.
Michael: Because there’s better opportunity.
Michael: And to go off the Dux and the Roland, I mean, seeing their success is just absolutely amazing and they’ve been such a great help to me personally in the chat just seeing their trades, understand the chart and going off of that. And as a trader that I’ve been in the game for so long and to see these newer traders doing so much better than me was on one level inspiring but another level really the opposite where it was just like I was getting down on myself because now these guys are doing it and I’m still being left in the dust. So that was really interesting to see but it also, like I said, was a huge help and influence because of their commentary in the chat and their video lessons. It has improved my trading.
Interviewer: Yeah. I always say when you look at those extreme outliers, it’s anything. It could be sports, it could be business, it could be trading. But use them as inspiration, know that that’s the possibility, but you’re in trading, it’s just you. It’s only you versus you. You control your losses. You control your gains. You control what you do every day. So be inspired by those guys but never hold yourself to some different standard because they’re doing things that you’re not. I mean, if you’re profitable, the thing is, if you’re profitable, you’re in the top 5% already. If you’re not in the top .0001%, that doesn’t mean you’re not a good trader and it doesn’t mean you’re not growing. I mean, you’re a young guy. You got 80 years to trade, 70 years. However long you live. I mean, you’re so far so early in the journey to be profitable.
Michael: It’s exciting.
Interviewer: Yeah, it is. I tell you, I talk about on stocks and trade pro a lot, I’m like, “Man, you know, I’m an old man.” I didn’t have the internet when I was your age.
Michael: Must have been so different.
Interviewer: Yeah, it was like you always had an interest in technology, always had an interest in trading, but in 1992, well, or when I was your age, 1996, I couldn’t get an ETrade account. I couldn’t get online.
Michael: Couldn’t look at a chart.
Interviewer: Yeah, exactly. If you got the Wall Street Journal, it was all just tickers and prices.
Michael: And you’re making some calls to put in some orders.
Interviewer: Yeah, exactly.
Michael: On a payphone.
Interviewer: And where do I start? Yeah, with the payphone, yeah. I had a cell phone but it was a bag phone. So I always talk is, you know, I’m jealous. I wish I could have gotten started at 23 and especially in this market.
Michael: This market environment, yeah.
Interviewer: Yeah, I mean, it’s like there’s never been…I’ve been in this game for 10 years and 2007, 2008, 2010, those were good years but 2014, 2015, 2016, is just incredible. And if you got those skills and you got that discipline then, I mean, you’ve got a skill that you can use the rest of your life.
Michael: And, you know, it’s nice because over the two years, thinking back, that was all preparation for…like, recently we just had the Bitcoin and the pot stocks blow up. And I have seen this happen, whether it’s the shipping sector with drives or whatever it was, AQXP. There’s so many…
Michael: KBIO, yeah. I remember all of them blowing up and I wasn’t prepared at the time and I missed them. And, yeah, there was FOMO and, yeah, maybe I lost some dollars here and there, but now two years later when they happened again and they went through their cycles, I was ready to strike. And I made the…so I make a profit off of it.
Interviewer: Now, where are you…so now we’re up to present-day, you know, kind of like where are you at in your profitability and where is your trading at right now?
Michael: So I joined Tim Sykes, let’s say, August 2014. So August 2016 was…I joined August 2015. So August 2017 was my two-year, this past August was two years. And that’s when I started noticing a difference in my profitability. That’s when it started becoming…my due diligence was not as good as it should be. I can admit that. But I started tracking my daily profit/loss and I started realizing that four out of five days I was profiting. And my one loss would be a little bigger than I wanted, but still, it was four days of good trades and then one day of bad trades. And that was different than the one step forward, two steps back. Now we were going four steps forward, two steps back. And that bred some confidence. I knew what I was doing at this point. It had been so long that I could now take what was working and what I was really doing well at and focus on that. And so then starting in August I went through all of Tim Grittani’s webinar videos. I watched every single one. And then I watched all of Trading the Tickers.
Interviewer: What I love, again, is you found you were consistent, you found you were growing as a trader, but yet you still went back and did more fucking homework. That’s what I love. Because, again, with trading so often people are like, “Oh, I got it. I don’t need to watch video lessons. I don’t need to read books. I don’t need to review my trades. I got it.”
Michael: But it’s repetition. It’s the free throws. It’s you got to keep taking the shots. So I started rewatching all of Tim Grittani’s webinars. I bookmarked every single one and every day when the market would close or when I was bored at night, I would just watch the webinars. And then an interesting idea dawned on me. I saw so many plays starting to repeat themselves that going September, October, November, whenever I saw a certain setup, I would go match that setup whether it was in Trading the Tickers or in one of his webinars, I would go watch him trade that exact same setup.
Michael: And so that the next day when I go to the market, I would literally trade the exact same way he did six, a year ago, two years ago, whatever it was. And it started working out. And so that was really big. So now I ended up watching Trading the Tickers I think five times through.
Michael: I mean, it wasn’t just, you know, start on Chapter 1, go to Chapter 9, but it was, okay, I have a multi-day breakout here. I’m going to watch multi-day breakouts tonight and then tomorrow I’ll be prepared. Or I have an extended gap down, so I’m going to watch the overextended gap down tonight and then be prepared tomorrow. And that was, you know, it just gave me a really calm head going into the market. And then I started…
Interviewer: Well, and it’s nice, I’m sure from your perspective, to kind of close that loop because here, I mean, it’s a great DVD. I recommended it to everybody but it’s a few years old. And here you’re matching it up to the 2017 market. and you’re like, “These guys are right.” You know, “Sykes is right. Grittani’s right. Croock is right. Bohen’s right.” It’s the same stuff over. Now it won’t be biotechs. It might be shippers or it might be weed or it might be blockchain but it’s the same repeating sell over and over again.
Michael: Right. And so that takes us to this November where I started really becoming consistently profitable. And then I took it to the next level and I went, “What am I missing now?” And it was stats. I don’t have stats. Dux has stats. Tim Grittani has stats. I don’t have stats. And that’s because of my due diligence. I’m not very organized. I’m not very good at Excel. It seemed like a challenge, you know, which is a weak through process in my mind. So I was like, “All right. I’ve got to start tackling this. I’ve got to start making stats.” And so far, the stats that I’ve created for certain days for certain setups have helped me guide me along my trade that…these stats help me realize whether the trade’s on my side, whether it’s acting the way I want it to act or whether it’s not. And the majority of the time, they act one way, because of my stats, and then this day that it’s not acting that way, I know that this trade is not working out. And so that’s helped my confidence and it’s helped my covers. I have certain areas become more appropriate because I know generally where the stocks should close, what I should expect. instead of just guesstimating, which used to be a thing.
Interviewer: I think so much and something that I try and talk about on the podcast and in Stocks and Trade Pro is, I mean, a lot of trading is what you don’t do. You know, if you can avoid stuff that doesn’t work for you, if buying breakouts doesn’t work for you, you avoid that, that can make a huge difference. And yeah, it’s hard because trading, you sit there at that computer for eight hours, you want to do something, you want to press the buttons, but if you got those stats and you know, you’re like, “Well, this is just nothing that works for me.” Now all of a sudden, you’ve got a flat day versus a down 500 day or a down 1,000 day and now you’re not taking that one step forward, two steps back type thing.
Michael: Right. And so to go off that, I didn’t mention this but very important to mention, in August right around the time that I started becoming really profitable, I decided to only short. I decided I know from my stats I’m not good at longs. For whatever reason, I get scared, I don’t get the right entry, support’s not as easy as me to guesstimate as a top is. So I understood tops. I understood overextension. And so I said to myself stop longing because you suck at it and start shorting. And what I realized in making that transition to cut out all of my longs was that sometimes where I would try to long a breakout, it would be a perfect short setup. And I would long it, I would lose money, and it would end up being a perfect short setup. So I realized if I take out the longs and just think only short, only short, I’m not going to miss that short setup and I’m not going to lose money on the long that didn’t work. And since I’m more profitable with my shorts, since I’m confident, I understand them more, I should only be shorting. Longing doesn’t make sense. And so taking out the whole idea that I could long, like there wasn’t even a thought in my head, “Long this stuff.” No, it was short, no matter what. I wasn’t going to long. No matter Roland did, I wasn’t going to long a stock. I was going to short. And that was huge. And then I realized what shorts I was better at than the other shorts. Shorting parabolics, that’s a really tough move to make. But when trend reverses around a red green move, that’s an easy one. And so I started realizing what are the layups, what the stronger ones, what are the harder ones, what should I use size, what should I not use size. You know, feelers are fun. You know we’re all a little bit of an addict. It’s an adrenaline rush so sometimes you’re going to throw out some feelers but you got to know what is worthy of placing down your bet.
Interviewer: Yeah, I think one of the biggest temptations, as I always call it like the hand on the stove, everybody, new guys, they all want to short the parabolics. And that works, you know, but it’s hard. If you can wait for that high a day reject, the late-day fade, the green the red on a stock that’s been up so many days in a row, those are the high percentage setups. Where guys get in trouble is they short that front side of that move, if they tried shorting Ford today, they were in trouble, and then they also don’t have the discipline yet. They haven’t spent the two years to see the charts and know what these things can do.
Interviewer: If you’ve seen a DRYS or you’ve seen a KBIO or any of these other ones, you know that if this thing ain’t working, I gotta get out.
Michael: You gotta get the hell out.
Interviewer: And that’s what the new guys don’t do. They haven’t been through those…or whether or not, I mean, I wasn’t in KBIO but I know guys that were, you know. And so I’m like, “Hey, if this low float stock is pushing high day, high day, high day, and I’m short, this is not something I want to stay in.” And that’s where the new guys get burned.
Michael: And I also think the hard thing for new guys is when you do see that parabolic, that FOMO, regardless, and you see Tim Grittani or Dux and they short at the top, and you’re just like, “All right. It’s possible.” But what new guys don’t really realize is that’s a hard short. the next day when it shows clear trend reversal, that’s the easy short. But the patience or the in the moment or the minute by minute just watching it, you lose sight of the global picture that it will have a trend reversal. It’s just a matter of when and waiting for it and getting the top of a parabolic short is just insanely tough.
Interviewer: Yeah, I mean, day one low float stocks, parabolic, you can make money shorting them but, man, it’s hard.
Michael: It happens, yeah.
Interviewer: And it’s blown up many a new trader.
Interviewer: But, yeah, that’s why we…I say it until I’m blue in the face but it’s like, just wait til day two, day three. There’s still plenty of money to be made on these.
Michael: And if you know your setups, you’re going to be able to hit day two or day three because it’ll show the setup.
Interviewer: So you had a good day while you were here at Market Mastery yesterday. What was the play? Was it a short? What was the setup?
Michael: So yesterday was actually really exciting because it was a long setup.
Interviewer: Nice. I like it.
Michael: So obviously now that we’re six months removed from August, like, I do like to try out some longs, especially in such a bullish market. It’s almost foolish not to. So I’ve been tracking all the pot stocks for the past three weeks and I really have a good grasp on how they move. You know, Tim Grittani always talks about on his webinars, you throw out a ticker, and he goes, “I haven’t watched it. I can’t give you any advice.” And whether it fits a pattern or not, he hasn’t watched it. He can’t give you advice.
Interviewer: Yeah, that’s something I talk about all the time is, you know, keeping your notes, keeping your notebooks, Evernote, writing stuff down. I always, always say, “Avoid the random stocks.” I mean, if it’s just a runner and you’re like, “I’ve never seen this ticker,” try and avoid that. But if you’ve been watching this thing for multiple days, I mean, if it’s XMET and you’re like, “This stock goes red to green every day,” because you’ve been watching it for months, that’s where your edge is. If you trade random tickers that pop up, you might do okay but it’s much…
Michael: Someone else has the edge on you.
Michael: And someone’s got the drop and you’re going to get dropped.
Interviewer: Very well put, yeah.
Michael: And so POTN is…If I’m going to buy a breakout chart, like I said, longing is not my strategy. So if I am going to long a stock, it’s gotta be picture fricking perfect. It’s gotta be a 52-week and all-time high. It’s gotta have no resistance overhead. It’s gotta have the volume.
Interviewer: Which is exactly what we talked about a little while ago.
Michael: Right. It’s got have volatility. And so POTN showed all that yesterday. It is extended but it has had two weeks of consolidation in between $0.18 and $0.30. And it held $0.29, which was the breakout for the whole day yesterday. And so on dips, I was getting in as close as I could to $0.29. And just like they always do, especially with OTCs, late day, once all the volume comes back into the market and everyone notices there’s a breakout happening, it goes. And so POTN went from $0.29 to $0.36 at the close. And I longed it, Tim Sykes longed it, and it was a great trade.
Interviewer: Yeah. And that was, what, like a $3,000 profit?
Interviewer: Nice, nice.
Michael: I was always long on THCT, which was a beautiful OTC.
Interviewer: See, I was thinking that was the one you were in but you got out of that early.
Michael: I was in, I was in.
Interviewer: Yeah, that’s right. Okay.
Michael: I had 5,000 shares at $1.05. Bought in on the dip because the breakout was at a dollar. It went on $1.05. It was a little illiquid so I didn’t want to take any kind of crazy size, and $1.05 to $1, it’s a 5% chase from the breakout. So, you know, at most, if I’m going to lose, it’s going to be 5%. That’s kind of big for me personally. So I got it at $1.05 and end of the market close, I was kind of watching. So my plan for the day was to let POTN…I was to buy POTN on the breakout, let it close, and use red green the next day as my risk. I had the exact same plan for THCT, buy the breakout and use red green the next day as my risk because I watched all the pot stocks go in the past three weeks and they’d set their first green day and then the next day, they would not break red green and fly. So with the possibility of them not breaking red green and flying, well, I knew if it broke red green, trade was over, get out. And I knew that if it didn’t close…if it closed anywhere above $1.05, I’m making profit. So it was a good risk-reward situation. Unfortunately, at the end of the day, I threw up another ticker on my chart as, you know, so many people have made this mistake before, I threw up ACBFF on my chart, a stock I’m not watching at all throughout the whole day. ..
Michael: And it has been a sector leader in the past, which is why my mind tricked me into kind of watching it and it was kind of breaking out…
Interviewer: Which is a good throught process. It’s a solid thought process, yeah.
Michael: And I saw it starting to fail as POTN and THCT started popping off. And so I thought, “Okay, I’m already…” From $1.05, THCT at this time was at $1.20, I was thinking 10% to 15% gains right there, and POTN was from $0.29, it was $0.32. Again, I was thinking 10%, 15% gains. And I saw ACBFF crashing and so I took my gains. And that wasn’t an intelligent sale, thinking back, because like I said, my plan was to let them close and use red green as my risk the next day.
Interviewer: And that’s, again, something I talk about all the time, is, you know, you had your idea, you had your plan, and you let an outside source influence you.
Michael: ACBFF never had anything, regardless of the strong price action some sector leader was having that day, which it only had at the end of the day, that was never the plan through the whole day.
Michael: These stocks were acting completely on their own.
Interviewer: You never mentioned ACBFF anywhere in your thought process.
Michael: And so I let this outsider of a stock just completely influence my sells, which is that’s not very intelligent.
Interviewer: Which is very common in, you know, chat rooms, stock twits, Twitter, etc. You have your own idea, your idea is working, and then you’re letting it grind up and then you start reading stuff, you start looking around, you get somebody saying, “This is coming, that is coming.” And then you let that outside source violate your plans.
Michael: The worst thing to do is to go to StockTwits and start reading what they’re saying.
Interviewer: Yeah, exactly.
Michael: Then it’s like, “Oh, my god. There’s news coming out? Wait, there’s not news? There’s a financing? What are they all talking about?” But, yeah, so I ended up selling THCT at $1.20 right before it went to $1.80 in the next five minutes.
Interviewer: So, yeah, if you want to look that ticker up at THTC on…
Interviewer: Yep. On January 18 went from, you know, $1.20 to $1.80 in, what, 10 minutes or something like that.
Michael: It was ridiculous.
Interviewer: So now how many shares did you have?
Michael: I had 5,500 at $1.05. So had I at least let them ride until the close, which was the plan, red green, at $1.80, that would have been fantastic profits.
Interviewer: Sure, sure.
Michael: I’m past it.
Interviewer: But, you know, you never want to play the coulda, woulda, shoulda game.
Interviewer: Or you learn from it.
Michael: But I do want to play the stick to my plan game because that’s how I would have made profit. That’s a lot of traders, sticking to the plan is the hardest part. You know, Tim Grittani always says this and I love Tim Grittani quotes. “Have a plan, trust the setup.” And that’s so crucial to everything. You know, trust the plan, have a setup.
Interviewer: Because that’s, and again, that’s how you get better too because once you take in outside sources, other information, you’ll learn from them, but once you’re in that trade, it’s your trade and nothing else should influence that. You should have it all…you should have your, I call it like an if-then statement, like in programming. If this happens, I do this. If this happens, I do this. This is my stop. This is my goal. Avoid the noise. I’m giving presentations about that in trading. So that’s awesome. Now where are…let’s fast forward to today. You’re still in school?
Michael: Still in school.
Interviewer: Okay. So what’s your kind of goals and what do you plan on doing in the future?
Michael: That’s a good question. So I’m actually figuring that out right now. I graduate USF in May.
Interviewer: Okay. So you’re close on graduation.
Michael: Yeah. I love stock trading and it’s pretty much the only thing I really at this age that I really love, you know. And I’m sure that can change in the next 5, 10 years, you know, big picture, but for now, I kind of want to pursue what I’ve been going after for the past two-and-a-half, three years. I mean, I think that’s a smart move.
Michael: I also have the degree behind it so the question is, you know, after I graduate, do I want to go work for a hedge fund? Do I want to make some cold calls? Do I want to continue my trading? It’s a hard question. And my goals were never about, you know, a dollar amount. It was always about being successful. I saw an opportunity to take advantage of…
Interviewer: Learn the process.
Michael: And learn the process, exactly.
Interviewer: Getting good at something, yeah.
Michael: And so that is my real and only goal right now. And I want to take that into…well, I mean, in the whole life story, I want to move to London.
Interviewer: Okay, cool.
Michael: In theory.
Interviewer: Why London?
Michael: I’m the kind of person where if I get set in my ways, if I get comfortable, I start deteriorating. If I have a bunch of good friends that I love and I have a lot of fun with and I get really used to all that, that’s bad. I get into some poisonous habits. And so as I’m graduating college, I know that I need to leave those habits behind. I need to go meet new people. I gotta expand my comfort zone.
Interviewer: Which, again, this is the time to do it. You’re young. You know, you’ve got no commitments.
Michael: And I can trade anywhere in the world.
Interviewer: And you can trade anywhere in the world.
Michael: So it’s time for me to expand my horizon and I need to get somewhere where I’m not going to feel comfortable.
Interviewer: Sure. That’s an awesome attitude. I love that.
Michael: Yeah. And so I’m a West Coast boy. I was born in Los Angeles, born and raised, moved to San Francisco for school. It’s time to go to the East Coast. Or further.
Michael: New York is an option because that’s the finance sector. That’d be ideal. London would be a cool option because I would like to apply to some Masters programs over there.
Interviewer: And obviously London is another financial center of the world as well.
Michael: Yeah. So my goal is to be profitable enough in stock trading so that I can apply to somewhere like the Lemmon School of Economics and say, “Hey, this is what I’ve done. This is the kind of person I am. But I want to learn more.”
Michael: And see if, you know, a kickass trading portfolio with a kickass resume with a kickass GPS can get me in there. So trading is a means for me to get into Masters at the end of the day. Money’s money. Everyone…yeah, money’s money.
Interviewer: Yeah, exactly. But, yeah, I love that you’ve got that planned out. I wish I was that smart when I was 23.
Michael: I thank my Dad for that.
Michael: He’s a good Dad.
Interviewer: I don’t know if I had any goals beyond tomorrow when I was 23.
Michael: My Dad always tells me, “Have a 10-year plan.” So this is part of the 10-year path. I wouldn’t say it’s set in stone because, you know, I’m 23. I really don’t know. But I have a general direction and I’m going to pursue that.
Interviewer: Cool. Well, hey, I appreciate it. Mike, it was nice meeting you.
Michael: It’s a pleasure.
Interviewer: It’s a great story. And make sure we’ll connect and, man, it’d be awesome maybe to have you back in a few months and maybe when you’re living in London at your hedge fund. We’ll follow up with you again.
Michael: Thanks for taking the time.
Interviewer: Yeah, thanks, man.