A Scope of My Plans To Become an Elite Trader

Welcome back.  This is a long one but please read the whole thing, I want the message to be crystal clear. I have every intention of one day having my name mentioned with all the greats in this game. And this is how I'm going to do it.

This will probably be my last post for a while. I'm taking my teaching hat off, and becoming the student again. I've decided to fully commit to my trading and really try to make the jump to the "next level", and unfortunately outside of my little circle, this journey will not be a public one. Social media, distractions, PRESSURE (if you read that post), I'll have none of that. It's not that I don't want to share, or that it's too private, it's just something I want to give 110% to, and eliminate all noise. I will be shutting my room down this year as well.

I think this is some very important information I'm about to share today, none of it revolutionary, or perhaps it is, but by the end of this post, I'll have nothing left to say. It will be time to shut up, and execute.

Lets get into it.
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When I started five years ago, trading was something very different to me. It was a game. I liked to gamble, and I liked the rush.  It was fun, I enjoyed the sport of it. This is why most people try to become traders and initially become enamored with it, whether they want to admit it or not. And it's that same reason most people struggle to ever break any ground. Like all true degenerate gamblers, they're inherently lazy, and infatuated with the idea of easy money. They're not interested in learning how to make it and perfecting a craft, they just want it, and they want it now. I realized that to be my issue probably two years in, by mid 2013 I knew I had a problem. I'd make money, make money, make money, try to push, lose it all. I was never satisfied. It was a perpetual cycle of hell. I knew what the problem was, and I did it anyway. It made me realize "Wow...I'm not a trader, I'm just a lowly gambler who happens to trade." And that was tough to admit, but it was true. Until you can approach this like a job, and not a game or a fast track ticket to riches, you've got zero chance. Mine as well pack it in now and save whatever money you've got left. Because you'll never make it. Pay your dues and quietly work your way up the ranks. Five years later, I'm just now starting to get a brief glimpse at that overnight success everyone is chasing.
How about that. Who knew it didn't actually happen overnight?


Moving on to the main point of this blog.


If you've seen me tweeting lately, you'll notice that my beautiful handsome face is no longer my avatar (sorry ladies), and in it's place, this sniper scope. This is actually a fairly common analogy used by traders, but I want to explain specifically why I'm using it.



So... why a sniper scope? What am I targeting? Why not a machine gun or a bazooka? Why not a bull or a bear? Why not, I don't know...a Panda? You get the point. Whats the significance? Well it's quite simple and quite complicated all at once. Lets start to peel some layers off.

The simple part - I want to wake up every morning, pull up my Twitter, and see that sniper scope. To be reminded constantly that everything I do today should be mirrored around the image and likeness of a sniper. Everything he does is extremely calculated and measured. There is no wasted energy. You'll never see a commanding officer call on a sniper and say "Here's your target - shoot him in the leg." When they are in battle, they are governed and driven by the Snipers Creed: One shot, one kill. Trying to do maximum damage with minimal moving parts. Quality over quantity, always. I think the entirety of everything I want to be as a trader directly parallels that of a military sniper. Let's go deeper.

A sniper by trade is the very definition of discipline. Did you know in most instances, their primary mission has absolutely nothing to do with even pulling a trigger? The main duty of a sniper on the battle field is that of reconnaissance, information gathering. By profession and training, they are masters of stealth & process, which makes them excellent candidates to go behind enemy lines and collect information for the cause. Most times they are simply sitting, waiting, and observing. Calculating and recording their findings to be strategically used at a later date.

So let's switch gears for a minute and talk trading now. Are you starting to see the parallels of a military sniper to that of a very successful trader? Think about all the traders you know and idolize who are making more money than you could ever imagine. Do you think they are sitting in front of their computers all day every day, rapidly pressing buttons and trading everything with a pulse? Absolutely not. For all those truly killing this game and who have found wild success, it is about quality. Not quantity. Fewer actions, bigger impact. Betting only when the odds have swung in their favor, they're playing a very different "game" than the one I described above that most traders play.

Listen. Trading is indeed a game, and it is gambling, for sure. If you say it's not, you're lying to yourself. BUT, that doesn't mean you can't consistently win. I'll steal an idea from Tom Dante here: think about a casino - "The House". They gamble for a living. Yet they always win. Why? When you walk into a casino, they're willing to take a gamble that you'll  lose more money than you make at their tables. Sometimes they're wrong, but usually they're not. Although they're indeed gambling, it's with an EDGE, and over the long haul, as sure as death and taxes, they will always win. This is the concept I'm trying to emulate with the "sniper" mentality, of only trading the best setups. Only throw your money in the middle if there is a clear EDGE. If there's not an edge, what the hell are you doing trading it you undisciplined schmuck??? Of course you're going to lose over time! Remember why you're here - to make MONEY...not to constantly TRADE.

If you find you have an insatiable craving to just always be trading, looking for trades, over trading, chances are you're playing a child's game, not working a job. Your mindset is not correct and needs to be addressed immediately. The first step is acknowledging that.

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Everything I do from here on out, I want it to be modeled after a sniper, not a mad man running in guns a blazing trying to trade everything that's moving.

I've had the pleasure of meeting and befriending Alex Temiz this year (@AT09_Trader), and this is the exact way he's begun to mold his trading style of late. LESS trades, MORE size, and QUALITY ONLY. He'll be the first one to tell you that since moving more towards this type of trading style, he's making more money than he ever did when he was very actively trading. I'm experiencing the same result since making the switch. He goes into some detail on this in a recent interview which you can find here, check it out if you haven't, some really good stuff in there.

I think it's just non-debatable that almost every trader trades too much. It's unnecessary, and it can be very easily fixed with a little discipline. Let me give you a visual example.

Here's a PnL of mine I dug up from almost exactly one year ago today. Pretty good. About +1600 in realized gains. I traded quite a bit back then, so probably all said and done after commissions and fees, that's about a net of +1200 or so. 11 names traded!! Probably 30-40 trades who the hell knows, a LOT. I looked like this for 8 hours straight. Just madness lol.


heh...NUGT was $88/share. Remember when it was $160?


OR, here's one trade from the afternoon of 4/24/17. Guess how much this one cost me? I was sitting on the Ask adding liquidity and getting rebates, so close to nothing.



11 names, 30 trades, $400 in commissions = $1200 net profit
1 name, 1 trade, $~0 in commissions =          $1200 net profit

^ is the point I'm trying to make here. Huge difference in activity, same end result.

Hopefully that adds a little color to what I'm trying to say. If you're running around doing 1000 share scalps all day, that's fine, but guess what? Scaling into one good trade of 10,000 shares is just like taking 10 scalp trades. Except you're in a QUALITY setup, and you DON'T need to be right 70-80% of the time to see some really nice profits. Scalping and piking in the long run will just have you doing a whole lot of cancelling yourself out, wearing yourself down mentally and financially through commissions, and not being very profitable. Can there be exceptions? Sure, there are exceptions to every rule. (I'm lookin at you Max! You're a beast brother, don't know how do you it lol) But as for the other 99% of you, it's not going to work out very well.

Also, it's not to say you can't make a nice living by scalping and make some decent money. You can. But I don't want to make decent money. I want to make GREAT money. And I think in order to do that, you'll need to graduate from scalping eventually - as it has it's limits.

This is the answer guys. I really firmly believe that. For many reasons. Find LESS trades, with BETTER entries and range, and hold them LONGER with more size. Not to mention with this type of trading style, you can have a LIFE, you're not chained to a screen for 10-12 hours a day. You get your good entry in the morning that you were stalking, it starts to move in your favor fairly quickly [that's how you know you got a good entry], you set some hard stops overhead at your determined risk level, and you're done. Move on to the next task, and just let that one work. You're gonna be in the trade for a day or two often times, longer if it's working and hasn't hit your target yet, so no need to sit there and stare at it all day. It lightens up the stress load and provides so much more freedom to go do other things. For someone like Alex, it allows him to help out his dad at the family business in addition to trading. For me, it's going to allow me to start investment projects outside of the market to generate a steady stream of passive income soon. You can't multi-task and do those things if you are chained to your desk and have to scalp trades all day to make money, it's just not practical in the long run.

Also, isn't that the main reason we trade anyway? Seeking financial independence and FREEDOM? How can we have the freedom to do other things if we're sitting at a desk all day every day. You're no more free there than you were at your old 9-5 desk job. I believe this type of trading allows you to both maximize your profits, and maximize your LIFE, your flexibility, wrap all that up into a ball and we'll call it maximizing your potential.

I don't know. That's how I feel about it. It's all still relatively new to me as well. Even if it meant slightly less profits than trading every day all day, I'd still probably choose this path just because of the freedoms it allows elsewhere. BUT...you can actually make more this way, so why would you not strive for this as the end game?
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Now, this is not a solution that can be applied everywhere to all trades, and I know not everyone can afford to trade like this yet. But you can start by practicing the root ideas intraday. And like EVERYTHING in trading, which I'm sure you've found out by now...nothing is that simple. You still have to understand share structure, situational trading (who's trapped, who's not) and be able to digest news and read SEC filings to find the very best trades to utilize this strategy effectively. And there is surely a place for scalping in trading, it's just your job to know the difference when a home run potential trade rolls around not to pike out of it. I'm not saying to stop scalping, I'm just saying do it less, and focus more on trying to catch larger moves over longer time frames. All of this is simply my opinion on the matter, and how I feel the best way to trade is.

And another thing about when you do find "the good ones"...theres another trader I talk to almost every day now who I'm not going to name, but his philosophy is simple. When he's in a trade, it's always a good one, and you are NOT pushing him out of it. Imagine a pig is consolidating under VWAP for a while. If it starts to pop and break up towards it, 99% of traders will shit their pants and cover thinking VWAP squeeze coming. While the 1% making 99% of the money are licking their chops. When proper research is done and you know you are truly dealing with a pig, they welcome higher!
I'll talk to this trader all the time and send him a message and say "Hey you short $XYZ yet?" and he'll usually say something along the lines of "yeah I started but want higher." "please higher" things of this nature. How many of you get in a short trade and wish it goes higher? Probably not too many.

These little mentality shifts when you encounter a "niche play" for you make all the difference.
Pops thru VWAP on volume where everyone is stopping out, they're adding. Thats the difference. Will you sometimes get nicked up a little bit by sticking your neck out and doing this? Sure you will. Part of generating larger profits comes with taking on bigger risk as well, but it's all relative. Not "reckless", just relative. If you see someone lose 10-20K on a trade and say "wow that guy is reckless and stupid", you may not know that he's trading with a million dollar account and risking 1-2% just like you are. Or maybe you're risking 5-10% a trade on your $5000 account, which would actually make you far more reckless than him actually! It's all relative.

 (I'm short PHMD as I'm writing this on Wednesday 4/26, its 1pm. Its consolidating under VWAP, most would freak if it popped 1.80s-.90s towards VWAP like it did at 10am, but I've got multiple short orders sitting out above VWAP to add into all the panic covers. Thats what separates the sharks from the bait. Understanding situational trading, knowing if it's truly a news scenario, or if it's just a trading vehicle scenario, when to be aggressive, and when to back away.) PHMD is up on no news today & light volume. Why on EARTH would it go higher here? Why? Does that make ANY sense to you? Of course not. It's a turd. So if it rips through VWAP, you better believe I'm adding and not panicking.

That type of mindset is where I'd like all my trading to live. How do you get that mindset? By paying your dues and watching pigs play out over, and over, and over, and over, and over again until it becomes second nature, you literally develop a sixth sense just by watching price action and digesting your surroundings of whats going on. That's the best way I can describe it. There is NO overnight or fast track success formula, no MAGIC setup, and no GURU/FURU who will get you where you need to be. Not a single one. Sustained trading success comes from within. End of story.


I'm rambling now, you get my point. Let me wrap this up.
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If you approached me a year ago, or even a few months ago, none of this was my focus. I was an extremely active, intra-day scalper focused on whatever was moving, always cash every night, and always a couple hundred dollars in commissions every day. There is a better way.

I want to wake up in the morning before I start my scans, see that sniper scope on my page, and be reminded of exactly what my mission is and what I'm looking to do that day.

Remember the process of a sniper:

First, I'm looking for inefficiencies in the market & large % movers in Smallcap Land [The target/enemy] Once my target is acquired, it's time to begin reconnaissance. To go behind enemy lines [The SEC Filings] and gather information for the cause. Then, should the time come when I need to attack, I'll have my weapon tuned & ready, preparation complete, and the Snipers Creed in mind: One shot. One kill. QUALITY over QUANTITY is always the focus. No wasted energy. No in-out-in-out-in -out due to impatience or indecision.

I am here to find these above average plays, to bring SIZE to the party, and to IGNORE everything else. Not to scalp $XYZ for .15c. I don't want .15c, I want $1.50. I don't care if Stock X just ripped higher because of a buyout rumor, or Stock Y just got accused of fraudulent accounting and the bottom is falling out, or if Stock Z just popped because Adam Feuerstein tweeted out that his dog Bo thought it was a great buy and it tricked all the algos into buying it. I don't care about any of it. I'll have my scope targeting one thing and one thing only, my premeditated targets, with blinders on for everything else.

Always running to the next shiny object intra-day out of FOMO is what all undisciplined/bored/gambler traders do, and it's a losers game in the long run. If you don't believe me, try it.

This is how I'll be trading moving forward, and how I plan to reach all my goals in both trading and life. It all starts with unwavering discipline and a never-ending desire to continually become a better version of yourself every single day. And the only way to do that is if you push the money to the back of your mind, and fuel your journey on passion, not greed disguised as passion.





Reconnaissance. Accuracy. Conviction. Quality. Patience.

One shot. One kill. 

Good luck.

- D

Comments

  1. Excellent...excellent blog Dante. I hope you the very best on this new endeavor. I’m on my very early stages of trading but this is something I’d like to focus on in the future, after I have built myself into a real and consistent trader. The first time I hear about trading the “best of the best” was while watching some videos online about a couple of years ago on a LX21 Vegas presentation. This is it https://www.youtube.com/watch?v=gXzJm85mtns, I hope you find it useful.
    We will be missing your posts, but we are alike. When something is important to me I like to give it my 100%
    Good luck!

    ReplyDelete
  2. This is the most truthful article on trading that I've ever come across. My trading journey involved blowing up my account multiple times due to my reckless trading habits. I'd always consistently win trades only to give it all away days, weeks, months later in choppy market action. I took a mental break for a long period of time, I reviewed why I made failed/bad trades, and my conclusion was exactly the same as yours. Make less trades equals bigger profits. The key to consistency is sitting on your hands, not chasing FOMO, waiting for "YOUR" ideal setups not some trader groups or stocktwit tweeters, you have to be responsible for your own trades (success). I realize your post will fall on many deaf ears, and a lot of it has to do with experience. Failure in the market is the best teacher as it humbles you. My failures have taught me to become more disciplined, and defensive. Defensive in terms of protecting my capital. This isn't a side hobby for me, this is a job, I treat it as such. I only enter trades with volatility, volume, and a clear direction. Recognizing price action moves intraday takes focus, discipline, and patience. A lot of traders don't have all these qualities to succeed, most aren't honest with their own results, and are only looking for a quick buck. Over the years I have noticed patterns in the market, that give me an edge over an inexperienced trader. Especially studying the price action and behavior of certain stocks. In terms of the way I trade, I feel most traders setups are to complex. You know the ones I'm talking about with 10 monitors, a bunch of indicators, etc. I'm a follower of K.I.S.S. principle, a lot of my trading is done by reading volume, the tape, and getting a feel for the price action. I don't use special indicators or fancy trade software, I keep it simple and focus on price action. I have the trader mentality as well of not being shaken out of trade. If you have confidence in your trade, then trade your plan. A lot of new traders tend to sell to early on their setups as they don't realize the importance of a trailing stop. In the end most traders are just gamblers in the market that will make easy money at some point and then there courage will build, they will start to feel they are invincible like Superman, nothing can stop them from success only to see the market turn on them in their next trade. Trading is a lot like surfing, you get a feel for it through experience. Trading is the worlds biggest chess game, everyone positioning to make their moves, but their can only be one King.

    ReplyDelete
  3. Beginners in the world of CFD trading can search everywhere but they are not likely to come across a trading website such as FXB Trading which is full of smart kinds of software that helps predict the trends. This website offers platforms with STP/ECN environments and this is a big help for people trading in the CFD market.

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  4. WOW, Dante! You're something else. Thank you for answering my questions again and again without me having to ask :)

    ReplyDelete

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