This is the transcribed version of the podcast linked above ^^^
In this episode, host Matt Davio and new trader Tony go through Matt’s daily routine as a West Coast trader owning the markets.
MATT: [00:00:00] Hello I would like to talk to you about the One Minute Trader we are here to take the time-strapped trader and turn them into a profitable, money making machine with daily ideas that give you; the trader on the go a reason to trade with risk defined and profits taken when able. Welcome to the One Minute Trader.
MATT: [00:00:54] Hello again I’m Matt Davio with the One Minute Trader podcast and I’m here again with Tony. And today we have decided to talk a little bit- . I get asked often, you know, tell me about your typical day. Must be fun. It must be you must be crazy must be this must be that you know when when people ask me you know how you’re doing or what’s going on. It must be great. “The market’s going up every day.
TONY: [00:01:26] “The rainbows are out!”
MATT: [00:01:29] Well no. They just don’t realize like how traders look at markets versus probably the way most people look at markets which is they open up their statements. Maybe. If they think the market’s going up.
TONY: [00:01:44] If we are OK. Type passive investing.
MATT: [00:01:46] Yes passive investing they’re putting money away. That’s a good thing. And they they really you know you really shouldn’t. I mean it’s if you’re buy and hold then put it away. put it- especially the young. And I would recommend everybody the younger you are the quicker you can put a hundred bucks a month and 200 bucks a month, 300 bucks, 400 bucks a month. You’d be surprised at how fast. You know the power of to double your money. You know the power of 72?
TONY: [00:02:16] I’ve heard of it yeah.
MATT: [00:02:17] So basically this week you get to 72 percent. So if you could do 12 percent a year.
TONY: [00:02:26] Of your paycheck?
MATT: [00:02:28] Let’s say you have a hundred thousand dollars that your grandmother lent to you. You want to buy a lambo?
TONY: [00:02:37] not nowadays. If you had asked me that 10 years ago probably.
MATT: [00:02:41] So you got two kids and a wife. A Lambo doesn’t fit your lifestyle.
TONY: [00:02:46] I’d buy a nice hammock and then invest.
MATT: [00:02:47] OK. So you spend 500 on a hammock, which is a really nice hammock by the way.
MATT: [00:02:52] Then you got 99,500.
TONY: [00:02:54] I can live with that.
MATT: [00:02:55] OK. So you decided to invest or trade your money if you can get to a place where you’re returning 10 percent a year, in 7.2 years.
TONY: [00:03:11] That’s right.
MATT: [00:03:12] You’re you’re you’re 100,000 will be worth 200,000. OK. So pick the number. If your starting with 100,000 all you need to do is meet, ultimately 72 percent but you’re doing it on a compound basis right. So 10 percent a year if we are dong it simple 100 because 110, 110 becomes 121, 121 becomes 132, 132 becomes 156. Right. And by year seven 7.2. So you double. So right around February you double your money. So that’s a pretty good way of doing that. What if you could a smaller amount 100000 is a smart move. What if you give me 6 percent a month. What would happen to that same hundred thousand?
TONY: [00:04:04] It’s compounding much quicker.
MATT: [00:04:05] But if you make 6 percent a month, month one 106, month two 117, month 3 et cetera. Guess where you are. At month 12. If you made six percent every month?
TONY: [00:04:20] 72?
MATT: [00:04:22] Which means? your money is doubled.
TONY: [00:04:25] You doubled your money, in one year. Do people do that?
MATT: [00:04:34] I’ve done it. I’ve done it with smaller numbers I’ve done with larger numbers. So my goal as a trader. That’s I think that’s a goal to shoot for now. One billion dollars is the you know the law of what our numbers comes into play at some point. But everybody’s got a different level of competency and I think- you know. I can do it pretty regularly pretty consistently with eight figures. I’ve done over the years. So it’s- And the way you do that is you look at top down you look at you know you’re not just trading one item when you have more money. So that means you have to spread the risk right even though you’re still have in theory need the same dollar or percentage risk, per idea.
TONY: [00:05:26] The complexity, it compounds.
MATT: [00:05:29] And the dynamic. You know the nature of the beast is that you get more positions going on and it gets harder to manage. Right. So you have to set alerts. You have to you know you have to be aware of prices and orders. You have to put limit orders and even even you know move stops once a day once a week depending again on your time frame and the type of trading and your methodology. But if you do that you’re really able to set yourself up for success. OK. But you have to crawl before you walk you have to do these things well and have a process before you can do it in here turn 100,000 to 200,000 in a year. You’re not trying to do it with one trade. It may take you 100 trades over that month or over that year. So guess what that’s 8 trades a month. That’s not a lot. That’s two a week. So what are you. So when you come back to your time that’s when you trade a week making, you know, if we are making six thousand a month or six percent the first one you know eight trades goes into six thousand, 750 dollars. It’s not- . So I always like to tell people work backwards like don’t sit there go shit how am I going to do that. Just think about how can I get home one trade at a time 750 bucks. We talk about oil a lot, oil right now on average has an average true range which means high to low over the last month period of a $1.20 even though it’s been cut in a third. Oil at 46 versus 150 a couple of years ago.
TONY: [00:07:25] From its normal range.
MATT: [00:07:27] Well it was $150 a barrel. Now it’s forty six dollars a barrel and it’s still almost 3 percent wide every day. OK. And one contract moving 75 cents makes me $750. There it is. You think you can make money trading oil.
TONY: [00:07:51] I think you can.
MATT: [00:07:52] It’s volatile. You know if you have a methodology if you have a strategy. So I just broke it down for you. You had $100,000. Right. Your goal, your goal is- . I think it’s fine to have goals but don’t live by them. This is going to be adapting and you’re not going to be you know at this level right away probably. But you don’t have to hit home runs. Right.
TONY: [00:08:17] Exactly.
MATT: [00:08:18] I mean you have to hit home runs. You could you could actually have you need eight. We trade at 750. You might end up having 12 that are 750 and lose four to 750 and you had a couple that were you know maybe 300 hours in a couple of lots of 200 hours at the end of the day actually made $7,200.
TONY: [00:08:38] -but your net. Yeah exactly.
MATT: [00:08:40] And you did a few more trades because there’s a few more opportunities in oil. So 8 trades a month.
TONY: [00:08:49] Yeah that’s your solid plan.
MATT: [00:08:50] Just a solid plan right there. That’s your plan. How do you go about doing that. Well what I do. Here’s how my typical day looks like and I don’t trade just one item but I’m usually up 4:30 or 5:00 in the morning and I live on the West Coast. I get up, I feed the dogs, and let them out. You know make an egg usually no toast try not to and I make a cup of ice coffee every day, all year winter / summer it doesn’t matter.
TONY: [00:09:18] I can vouch for that. I’ve met Matt in the dark at 5:30 a.m. at the office.
MATT: [00:09:23] I never drank- I don’t like hot drinks. I only drink iced coffee so please send me your Starbucks gift cards. Because I can use iced coffee.
TONY: [00:09:35] If they send you 72 a year.
MATT: [00:09:39] I’ll turn them into 144 the next year. But seriously you know having the process showing you have to be consistent because if you don’t- if you’re not getting there at the same time it’s important. The routine is important. Right. I also say find time to get away from the screens even if it’s after the market closes. Get away walk. Nature is the best. I think smelling something, seeing, touching, and being outside. So whatever it is you like doing do something move through the world move ultimate golf, run, walk, hike, you know, go coach your kids games, whatever. Whatever it is you like to do. do it. Get away. Free your mind a little bit so you can refresh. It’s like anything I mean many of my best ideas come in the shower or when I’m driving. I can’t look at the screen. That’s my favorite time. Honestly.
TONY: [00:10:31] If you’re going over something and you’re out there moving around, all of a sudden it just hits you.
MATT: [00:10:36] I mean it does look even trying to think about you got to get away can’t just always be consumed by markets and they’re open 24/7 really now especially Bitcoin. I mean it’s open trading Saturdays and Sundays, it’s crazy. Don’t have to be there all the time. OK.
TONY: [00:10:52] And it’s healthy not to be there.
MATT: [00:10:55] And you also know you know during my day like I can tell you there’s an opening and closing. Those are the best times to trade. I prefer closing over the opening it’s more important to me the number on the close the day close is important. The week close is more important. The month close, then the quarter, then the year. And so on. So the longer the time frame the better for me.
TONY: [00:11:20] OK.
MATT: [00:11:22] So I’ll spend my day kind of you know doing my scans. I’ve got some scans that they run on the items that I trade and they only pretty much trade futures and a few stocks and a few options. So looking 6000 charts anymore I might be looking at 10 every day that are active. Yeah. I mean I look at 30 but 10 are active. And then I may be in 2 to 8 of them.
TONY: [00:11:48] Now you’re just question there. Have you refined your process to be that way or is it because the market is- .
MATT: [00:11:56] I mean when I used to take stocks I literally would. This would be, once the market closes I’d spend four hours going through the charts just clicking to the next because there’s 6000 plus stocks. You can’t keep up with them. And even with a lot of the scanning tools it might give you 200 and that list is always going to change. So you have to refine it like in stocks I would say it’s got to be trading. It’s got to have a average trading volume of a half million for me to consider it, shares a day. Otherwise you’re going to end up with stock doesn’t trade 600 shares a today. You’re not going to trade that. You got to have liquidity. You got to have transparency. So that’s all part of your methodology. So the first couple, you know, hours are important. And then usually gets low from let’s say 8:30 here, (PST) you know until 11:00 or 11:30. So it’s two or three hours is a good time to work out, walk around, make some phone calls do some more scanning for, you know, if the market’s really slow try to look in some other areas that maybe haven’t delved into so this job is more about hunting and searching and treasure.
TONY: [00:13:09] Yeah.
MATT: [00:13:10] You know it’s not very you know the machine and we are not I am not trained to trade against the algorithms and beat them with faster Ethernet. It’s not my game and it shouldn’t be years. So don’t ask me questions about it because it’s irrelevant. I mean yeah it’s going on. Yeah it sucks but there’s always innovation. I mean there used to be who used to be chalkboards then they went to LED screens. That’s what it was yeah. I mean chalkboards. I mean you look in the old trading rooms they literally had chalk erasers and fist fights because “I thought there was a seven no it was a one” right. I mean it was funny. Yeah. I mean give me a better place. Also be careful what you wish for. Technology is great and it sucks but mostly it’s great. Move forward. And so there’s still an opportunity for us to find ways to make money. So that’s the typical day. Then you have the last couple of hours where things are moving again. You also have things on the calendar like FOMC.
TONY: [00:14:21] When you say towards the end of the day what hours do you mean?
MATT: [00:14:23] Well that would be, on the east coast, would be 2:00 – 4:00.
TONY: [00:14:30] OK.
MATT: [00:14:31] Here it would be 11:00 – 1:00.
TONY: [00:14:33] OH the trading hours. Not talking about like wrapping up your day now.
MATT: [00:14:37] So there that’s often I like to put entrees at the end of the day because I’m not a day trader.
TONY: [00:14:43] Yeah.
MATT: [00:14:44] So I’ll get move sometimes that are- . Because day traders are getting pushed out of their positions the wrong way. That works to my advantage that maybe they were short. So they’re stopping out and driving the market up. I can tell, because I’ve been doing this long enough, what that looks like is also some.
MATT: [00:15:08] So you’re poised for the next day.
MATT: [00:15:09] They get trapped. They I sell it to them. They buy it. They take their loss. I start my position. It’s never a zero sum game. Just because I need my it doesn’t mean you’re going to lose money. So we don’t care who’s on the other side of the transaction. Don’t concern yourself. Just have your process and do it.
TONY: [00:15:31] Follow it.
MATT: [00:15:32] Follow it. And if you have to day trade once again I don’t I’m not a fan of day trading. I just think it puts a necessary pressure because of the fact that these market makers know it’s a trap game and they would rather trap you 80 percent of the time and then help you the 20 percent they do. So this is the problem, I usually can’t get out where you like to get out as a day trader.
MATT: [00:15:56] And that’s what makes the market take those jumps.
[00:16:00] Yeah. We were looking at the NASDAQ today and you saw they jammed it up at the end because everybody that was short just needed to go back down again. It’s not going to go down today. It will go down again sometime. But it wasn’t going to today because it had exhausted itself today. So then after that market closes I’ll often, for me it’s only lunch at 1:00 or 1:30. I’ll work out if I haven’t. Doctors appointments, take kids around, I got 4 kids. Always something to do and then you know prepare kind of for the West Coast the Asian markets open five for the green six for everything else. So kind of have my mobile phone where I can see where things are opening on the futures and then midnight here on the West Coast is when the European markets open. So I’m often up at midnight just- . Often but not always. Depends on the market how volatile they are right now when volatility is low, I really don’t concern myself with too much overnight information. I’ll set limit orders: buys and sells. That’s about it. And that’s really how my day looks. And then rinse and repeat, do it all over again the next day. It’s got a nice rhythm to it. For me when I’m traveling I try to either travel during closed U.S. hours, right or, let my wife drive. Or the three teenagers I have that have licenses now they can drive.
TONY: [00:17:34] It’s a scary thought.
MATT: [00:17:36] I have four teenagers but three of them actually have licenses and I’ll let them drive and then again with technology that can be on you know a Mac Pro and two iPads in the back of the car, makes 12 hours go fast, driving down to California. So that’s it. That’s really how my routine goes. And thanks for asking. As always please like us on iTunes, Stitcher, Soundcloud, Spotify.
TONY: [00:18:09] Where ever you are listening anywhere.
MATT: [00:18:11] Yeah tell your friends hopefully this is beneficial to you and we will be back at your next time. Send any and all questions to [email protected] and thanks for listening and we’ll talk to you next time.
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