Momo Traders

by Brady Dahl

I started grinding back. I ignored my Suretrader account for the most part and still don’t even trade in it much. My Centerpoint account was on fire, so I just kept trading in that account. The loss was in the back of my mind, but I toned down my trading and starting making $1K

  and $2K days again. For a month or two. Then I started pressing again at a perfect time in the market during this low float craze.

  Is that how you handle big losses or a losing streak? Go back the next day and start grinding?

  Yeah, usually after a big loss I start grinding. That’s the only way you’re going to come back. If you start pressing bigger and bigger the results are just terrible. You put yourself at high risk trying to make it all back at once.

  81 The Youngster

  Have you had unprofitable periods in your trading?

  Yeah, the first four years 1 was not a profitable trader. I kept losing and losing. I questioned whether trading was for me or not. But every once in awhile I d have one good trade that would knock out five losses. I started to realize I could be good at this. But those first years were tough. My parents were against it and wanted me to go to college to become a lawyer or something, but I really wanted to be a trader.

  How did you sustain four years of unprofitable trading and still believe that you’d become profitable one day?

  Well, I’d go three or four months trading an account before I’d blow it up. It wasn’t me just blowing one account, restarting, then blowing another. I had periods where I was trading fairly well. But it only took one trade to blow up. And that’s what happened three or four times.

  How big were your blowups?

  The first account I had was a $40K account. I lost $20K before I pulled the plug on it. In another account, I started with $5K and grew it to S12K before blowing it. I opened the next account with $10K and blew’ that one, too. And the other account I blew was $23K.

  And you borrowed money from relatives the last time, right?

  Yeah. Of course they’ve been paid back now, but I had to hit up my sister and little brother to fund my restart.

  And turned it into what you have today…

  Yeah, since June 2011.

  Did you ever have a specific turning point in your trading career?

  (laughs) Yeah, I shorted NEWL on a Thursday pre-market at $6.00, and it halted shortly after. I was scared shitless.

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  I remember that. I think I told you it was going to be bad news for NEWL and you were going to make a ton of money…

  Yeah, everyone was telling me the halt was good for shorts, but I had about 10K shares short, so I was scared. Meanwhile PLUG was setting up nicely for a long, so I bought 80K shares PLUG while NEWL was halted. Monday I sold PLUG for around $37K profit. Then Tuesday morning, NEWL re-opened after the halt at about $2 per share, so I made like $35K on that. Then I shorted PLUG and made about $13K

  more intraday. Along with some other trades, I had made nearly $100K in a few short days. That was the turning point in my career.

  Because you realized you were capable of making such a large amount of money in such a short time?

  Yeah.

  Even up until that moment, it really hadn’t sunk in yet that you could be successful trading?

  No, not until then. Then I knew I could do this.

  What’s your proudest moment in trading?

  DOMK. It was a pump and dump company. The stock had run from something like 10 cents to five bucks a share, so I shorted it. Then 20

  seconds later a well-known penny stock guru shorted it as well. I ended up making about $10K, the most green I had ever seen in my entire life. I covered dead bottom and the guru covered like 10 cents higher. It was a proud moment because I had just beaten this guru.

  Am I wrong for thinking that way?

  You basically bested someone you perceived as a better trader than you at the time?

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  Then no. Making trades before the crowd, or in this case, before the guru with his own crowd, is just a sign of your improvement.

  Man, I’ve been having days that are ridiculous. It’s hard for me to even believe it. Sometimes I’m at the gym after trading and I’m laughing.

  People are staring at me, thinking, why is this kid laughing? My account says I made S30K today, but my head doesn’t realize it.

  Just poker chips, right?

  I have nearly S350K in trading accounts, S100K in the bank, and $75K

  invested with a buddy of mine. It makes me realize I’ve come a very long way in two and a half years.

  Do you still worry about going broke or blowing up?

  Yeah, I’m a pretty levelheaded guy, but I had a panic attack last week. I was trading in my dream and woke up at four in the morning thinking I was down $185K. I ran down to my desk to check my open positions. I had no open positions. It was just a bloody nightmare.

  That has to be a scary moment.

  It has happened a couple times, but the one last week was the worst.

  That’s exactly why I don’t like to take gappers overnight.

  Do you think trading is an innate skill or can it be learned?

  I wasn’t profitable for the first four years. I’ve heard traders say trading is all instinct, but it’s not. You might have the innate skills to do it, you might have a talent to do it, but you still must learn it. Once in awhile, instincts do come into play, but those instincts come from experience.

  Does one person have a natural advantage over another person? I don’t think so. Going unprofitable for four years and then going two and a half years making money, that’s not instinct. It’s because I learned how to trade.

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  Do you think gut feeling or instinct is crucial to your now that you’ve learned how to trade?

  No. It’s more about consistency. Taking trades over and over again Every once in awhile when you see a trade line up, you might get a gut feeling that it’s going to be a big trade, but I don’t think it’s crucial to my success.

  What are you currently doing to make yourself a better trader?

  I’m trying to develop into the person I need to be. Obviously I’m 23

  years old, making a lot of money… I ’m still soaking it in. I think that’s why I had that panic attack, because I’ve never seen so much money before. I’ve never done anything like this before. So now I’m trying to become the person that it takes to be a million dollar guy.

  Million dollar guy?

  I want to hit a million dollars in profit next year. And I think I’m going to do it. But more than just making the money, you have to be able to sustain that level. Like Bao always says, you only have to get rich once.

  I think I have my trading down to where I need it to be right now.

  That doesn’t mean I’m going to stop learning, because you never stop learning. But I want to expand my mind to be able to sustain that million dollar level. Because you can lose all your money at any time.

  Sounds like you’re discussing becoming a better trader mentally.

  Yeah, mentally. The technical stuff you can learn, but one thing trading will never teach you is how to become a better person or how to fix your ego.

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

  When I see a trade line up, I take it. Some traders might see a trend but not take it because they have confidence issues, whereas I’ll just take it. I think that’s what separates me from other traders. That’s what

  85 The Youngster

  separates guys like Nate, Phil, and all the other great traders on Twitter and in chat. If they see something they like, they take it. I hear people say “woulda, shoulda, coulda”, but they didn’t take it because they’re not confident.

  Perhaps one of the downfalls of a beginning trader?

  Yeah, lack of confidence. And their inability to take losses. Some traders don't want to be wrong and they let ego get in the way, but they’re going to eat shit doing that. You
humble yourself before the market humbles you.

  What do you think other traders do better than you?

  What other traders have over me is fundamental analysis. I’m a technical trader. If you tell me a company’s PR looks like shit, I don’t know how to trade that. That’s where I lack in my trading. That’s what these big name guys have over me. They’re great technical traders as well as fundamental traders. My main goal for next year is to learn the fundamentals. Because right now I might cover my short based on technicals intraday, but these guys have read the PR and know how bad the news is and might hold their short overnight.

  And cash in bigger the next day.

  Exactly.

  What are the trading rules you live by?

  My main rule is to stick to your plan, which means cutting your losses.

  That’s obvious. Second rule is to come prepared to the stock market.

  If you’re walking all sloppy from big losses or whatever from the day before, you are not prepared. I also have a lot of little rules, like don’t trade parabolic moves into close, only trade during normal hours, and don’t short PRs. I could go on and on. Usually during the week, I try to get to a point where I’m not breaking any rules.

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  If you had to pick one thing, what’s the most important thing to remember when trading?

  In the end, you’re lighting to take each other s money You must hold onto your money.

  What are the traits of a successful trader?

  One thing I’ve noticed about successful traders is they have their life together. Nate goes to the gym, has a wife and house. He has his life in order. Phil has his life in order. The most successful traders out there have their personal lives in order.

  How do you judge success in trading and life in general?

  Success in trading is obviously based off numbers. People can define success in life many different ways. A person can say they’re successful because they’re paying their bills on time, they have a family, they have a car… Is that a successful life to me? No.

  What is a success life to you then?

  I’m young. I don’t have kids yet. I don’t want to get married yet. So success for me right now is being able to have extra money in the bank. I’m living the life I want to live. If I want to buy a plane ticket to visit Australia, I can. If I want to go fishing tomorrow, I can. I have no limits right now.

  What do you wish someone had told you when you were first starting out?

  Funny thing is, I was told, but I never paid attention. I’ve notice newer traders get upset when they leave money on the table, but you don’t go broke leaving money on the table. Could you have made more money? Yes. But you don’t go broke taking profits.

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  Do you need to be emotionless and robotic when trading?

  Yeah, you do have to be like that. You can’t trade your P&L. Although it doesn’t affect my decisions anymore unless I’m up huge on the day.

  If I'm up huge, I might quit trading because to me, it’s already been a successful day. But once you let emotions get to you, it can get messy quickly. You have to be robotic in a way. When a trade hits your stop, you cut it. When a trade sets up, you take it. If you don’t, someone else is going to take that trade. Someone else is going to take that money.

  Do you have any advice for leaving emotions out? I think a lot of traders lack that ability and would like to improve in that area.

  It all comes back to confidence. If you don’t take that girl out, someone else is going to take her out. You have to have confidence to take the trade. I would say if you’re too scared to take a position when you see the stock is lining up the way you want it to, there’s only one reason—your position size is too big. If you’re afraid to risk $100 to make $300, you’ve got to cut down your size. Go half or even 25

  percent of your regular size. I think that’s what messed me up in the beginning. I would try to take three or four thousand share positions, which was crazy relative to the size of my account back then.

  Are you able to step away from the market for days or weeks?

  Right now it’s proving impossible. My plan was to take this entire week off, but so far I’ve successfully done that for half a day. I’m addicted to my work. I love what I do.

  So you consider yourself an addict?

  (laughs) There’s a difference between an addict and being someone who’s dedicated. I see myself as being a dedicated person. If someone opens a business, they’re going to be dedicated to that business. Just because they’re minding the store every day, doesn’t mean they’re addicted to it. They’re dedicated and motivated. There’s a fine line.

  Don’t cross it.

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  89 The Scanner

  The Scanner

  “I didn’t want to buy a stock when I was 15 and sell it when I was 80.”

  Phil Goedeker (@OzarkTrades) is a 30-year־old trader from St. Louis who turned $5K into a million dollars in nine months while still a senior in college.

  His parents weren’t wealthy but always put him in the best schools, stressing the importance of not only a quality education but staying busy and being physically active. While earning an accounting degree and his MBA, he played collegiate volleyball and some sand volleyball in the A VP league before an injury to his back put an end to his athletic days.

  He has always loved the market, and although his parents wouldn’t let him be sedentary or play video games as a child, he certainly developed a knack for pushing buttons because he currently earns over $1 million a year in trading profits.

  How did you first learn about the market?

  When I was 15 or 16 years old my family vacationed at a place called Lake of the Ozarks in Missouri. It’s a huge lake with like 1,300 miles of shoreline. It’s a big party lake, and there’s a lot of big money, fast boats, and huge houses down there. I started thinking I would like to

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  have those things and a life like that. So what can you do to get them?

  You can get a job as a doctor or lawyer, but those professions take a lot of schooling, effort, and energy, and you can’t do them until you’re older whereas I thought anyone could try trading and learn the stock market, and at any age. That’s when I first became interested.

  Did you try trading at all at that point?

  No, it was just studying, doing things like reading the business section of the newspaper every day and finding articles about the stock market. Although I did start investing in some mutual funds with my dad. He didn’t know much about the stock market, but he knew a little about mutual funds, so I bought a few with a couple hundred bucks.

  After that I just kept doing more and more research and studying the market. It was obvious people were making big money in the markets, but I was trying to figure out how. It was a slow process of familiarizing myself with the terms people were using, like “going long” or “going short” and basically just trying to figure out how to make money trading.

  So at 15 years old, did you know you were going to be a trader?

  No, I had no idea. I didn’t go out a whole lot when I was younger.

  Sports took up most of my time, but I just wanted a hobby, a side interest. The market filled that role because it all seemed like a game to me, just a big game you try to figure out how to beat. I heard about people like Warren Buffett, Peter Lynch, and even Jim Cramer, who were beating the market and making huge money. I thought why not me, even on a much smaller scale. My interest in the market just slowly evolved. It went from reading the business section to reading books to researching on the Internet, which was done at the library back then because we didn’t have Internet at home yet.

  Take me up to the moment you decide to place your first trade…

  First I read several books, but most of them were about long-term traders or investors like Buffett, Lynch, and Benjamin Graham.

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  Buffett
’s thing about buying a stock and never selling didn’t appeal to me at all. I wanted to sell. I wanted to make money. I didn’t want to buy a stock when I was 15 and sell it when I was 80. So long-term trading never appealed to me. But I kept researching anyway, and somehow I picked up on day trading. I studied the market for years but didn’t start trading until I was 18 or 19 and a sophomore in college. Freshman year I had really gotten into studying charts and patterns and realized that was where the short-term traders were making their money. I realized technical analysis is what I wanted to start doing, so I opened my first brokerage account with my mom as co-signer in order to get a margin account.

  So you placed your first trade sophomore year...

  I don’t really remember my first trade. When I started I wasn’t even day trading, I was swing trading. I opened the account with only around $3K and was going to school and playing sports full-time. I could only trade when I had free time, but I still placed at least a couple trades per week. I’d buy a stock that I thought might be breaking out and hold it for a few days or a couple weeks.

  Have you been trading continuously since then?

  Yeah, for the last 10 or 11 years or so.

  How many years did it take to make trading your primary source of income?

  It took two years before I was profitable. I made about $3K working for my dad in his warehouse each summer and then I’d slowly lose it over the course of the school year. I had a few wins in there but most were losses. I did that both sophomore and junior years. I was studying the market more and more, but I just couldn’t find my niche.

  I couldn’t figure out how to be consistent. Then my senior year I figured out how to go short. I figured why not since every stock I picked went down anyway. Maybe I could just pick stocks that go down for a living.

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  How did you do?

  My first short ever was CAFE. I think the company was named Host America. It was trading at $4 or $5 when they put out a press release mentioning something to do with Wal-Mart. In three days the price shot to $15 before sort of settling a bit. That’s when I shorted it. I went all in with my $5K account and within a day the stock was halted.