And uh, ultimate I kept coming to was like well, what would I rather be doing do I want to continue engineering? no at least at the time of what was out there. I couldn't see myself being as excited every morning as I was about trading. I I call it quarter million loss cuz it was the same trade but it was two different Brokers um 125k the first day, 125k the second day. yeah it was one.

It was a wake up call but at the end of the day I Also need to understand that like if price actions telling me something different I can't in the name of delution hold my short no matter what I made like just over 200 Grand on that particular trade but I soon realized later down the road that same setup had just bigger risks or or Worse put it this way, instead of pushing myself to trade, I wanted to be pulled like I wanted something so good to be like you feel dumb to miss the trade. It's so good. If you were to tell me that as a 21-year-old sophomore in college, it was possible to make thousands of dollars in my dorm room. I Will tell you no way, that's a scam, but our guest here today actually did it after losing more than half of his $6,000 account initially.

Kyle did not give up, he refunded his trading account and really Dove deep into identifying strategies that worked for him Kyle has since then turned that small account into over $3 million in profit in this podcast. You're going to learn trading strategies that work best for growing a small account under PDT Rule How to master stock selection and aim for high probability trades Trader Psychology and how Kyle developed a high level of discipline in Risk Management Spoilers Kyle is a really rare case in trading. He's extremely self-conscious and reflective, which is the main reason why he has not blown up a single account in the six years that he's trading. Make sure to hit the like button and share this video with your trading buddies.

Now let's dive into our conversation with: Kyle Williams Welcome to the Humble Traders Podcast Kyle Thanks for having me! This is such a delight! Thank you for making that 2hour drive from San Diego up here. Totally! Absolutely it's It's not too bad of a drive. it's pretty easy straightforward so if you don't mind sharing like what kind of Trader are you to audience and what kind of trading style are you focusing on right now? So I am I'm a short biased Trader uh I do go long I do go both ways but but I would say 90% of my profits are on the short side. um I like to say I'm so bull I'm so bearish on bullish like I Love I love when stocks go up, but ultimately it's because I I enjoy shorting them to have them come down and gain that kind of momentum.

Um, but yeah, I'm a I'm a momentum short seller. Um, and and most of the momentum I trade comes from smaller priced um Nano or microcap stock. So any stock under I think my sweet spot's like three to four bucks. Okay, um, but I will trade stocks that go into the 1020 range like if they start at five and then run up to to 20 25.

Uh, that's totally fine with me. It's whatever that, wherever that volatility is, um, an extension comes from I Love end up shorting. You know that's most my profit is shorting those kind of stocks. So did you always start with short selling? Waiting for a started trading when I first started I was pretty I was pretty open to shorting and longing.

It wasn't when I first started like I only want a longer I only want to short I Actually remember when I first opened up my eirt account very almost too freely willing to test it all and try try it all with really without knowing what I was exactly doing. and uh, it wasn't until about a year in or so that I finally realized shorting was probably the better Edge that I can develop. Um, but my first setup I ever learned actually was going long. So I you know I've always had it in me to go both ways, but just the way it ends up is 90% of my profits end up being on the short side.

So I think a lot of Traders myself included we when we start we didn't know shorting was possible so that's why I asked you the question but I realized every stock I bought just like end up going down. so I'm like why don't I just do the other way then Yeah exactly. So how many years ago was that when you got into trading So it was the summer of 2016 um and I remember specifically cuz I I was a freshman going to sophomore and college and I was mechanical engineer and I knew I didn't want to do that for the rest of my life I just knew it wasn't something I enjoyed the math aspect of it. but in terms of actually being an engineer and maybe building something wasn't really my strong suit.

but uh, but I found a lot of interest in just stocks I've always been interested in stocks from the beginning like I had my like the best thing my dad ever did was have me try to buy like uh he had he had a mutual fund I bought as a kid. um but I think one time we yeah Well so so I me get back story to that is when I was gosh I want to say seven or eight years old I had a best friend who got money for doing allowances from his parents. okay and I remember asking my parents like why don't I get an allowance like that and so we kind of made a deal. like if I you know pick up the dog poop, take out the trash and like wash the dishes every dinner they would give me five bucks a week and my parents the best thing they ever did was they said okay Kyle if you can save up those $5 a week up to like 20 weeks like save up 100 bucks we'll take that money from you if you're willing, if you if you let us and put it into a mutual fund um and at you know 9 10 years old I I don't know exactly what a mutual fund is All I know is if I'm not going to spend this money, they've pretty much convinced me that like it's going to grow like okay sure okay um and that was the money that actually helped me start trading with I Essentially what happened is when I was then back to the college part when I tried to look and find what I else what else would I wanted to do besides you know make a handle engineering I ultimately came across the the show The Big Short not the show the movie The Big Short where talked about the whole my favorite movies really good movie yeah uh and it when I first watched it I had no idea about half the stuff they were talking about right? I just I Just knew money was moving around, the economy looked bad and then it dropped right.

um I had no idea what it actually meant but I ultimately realized like the economy fell what 50 60% or whatever it was. Yeah and at this point I'm 20 years old I had completely forgot that I even had this mutual fund at this point this has been maybe 10 years now. Okay and it made me realize like did my mutual fund drop 50% like was I was it affected by this whole thing that happened in 2008 that I had no idea about I'm like what uh I was probably like 12 years old at the time, right or not? No wait I don't know the math. like 14 or 15 maybe.

but um and essentially I ended up looking up the the ticker of the mutual fund or the fund itself and yeah, like I lost 50% and that it was a huge it was a huge I mean it came back obviously with the overall markets by the time I looked in 2016 but it had kind of um it was a a very W big wakeup call that like wow if I don't try to manage whatever this money thing of the stock market is I'm going eoms forward the fure that's what me into to fure what exactly trading was because at the time I was so I was such a a beginner I didn't even know the term like trading it just knew I need to manage money than just holding it. Yeah, and ultimately I ended up cashing out that mutual fund because it just followed the market if not underperformed after like fees. Uh and at the time it ended up being like 20 grand saved up. Yeah, I mean I stuffed it I mean um Christmas money uh, birthday money and it just it just turned into that over time.

So and is that your seed to start trading with? Yes, So that was pretty much I I pretty much pulled out. Um, all of it used most of it to either start buying like a software education and then funded a a $6,000 E account. So yeah. so in a way that mutual fund really is.

it helped me for sure if I didn't have it. I I mean I was I was working a part-time job at the time as as a as a in a restaurant and so I probably could have eventually saved up from that cuzz. I I was always been I've always been a Frugal spender I haven't really was never one just blowing my paycheck kind of thing. but uh, I definitely would not have had enough to just immediately start.

I would have had to save up for sure. So you started in college with that $6,000 small account? Well, it's not small, but nowadays it's a small account right? How did that go when you first started trading with that $6,000 Um, funny cuz I so the first couple of Trades I took one specifically I had I had made IID followed like an alert right I started with Tim syes so he put out this alert and you know everyone says don't chase alerts I've done those too and of course you know little old me as beginner like oh I was like yeah whatever I'm just going to buy this this stock with with with him okay the worst thing it ever was was it was a winner it was a huge winner I made like 450 bucks or 480 bucks I think and uh and I thought this is amazing like there there's I I've always learned or or heard traders who have that one trade that gives them the bug of like this is incredible like I want to keep doing this this trade was that for me to the point where I thought I figured it out and this was like two weeks in you know so naive yeah um that by I mean a week later I'd pretty much give it all back so it was a huge slap in the face but it was a good slap in the face in the sense that from then point on on to the next qual. it's you know six to seven months I had dwindled that 6K account down to like 2,300 so down about like 70 perish or whatever it is. So you were like slowly kind of taking these like losses following alerts.

um so I guess to to clarify. so that once I started following a few more alerts and started giving all that money back, that pretty much stopped I learned that lesson very quickly. um the all the other losses was just me trying to test things out trying to figure out strategies. um sometimes e the point of even gambling just oh I think the Stock's going to go up and I just buy it having no idea what I'm actually doing right.

um The Good the best thing I did I just didn't take any large losses after that. like after giving back that 480 bucks I never took any Lo loss bigger than 100 200 bucks. but it was like death by 1,000 paper cuts, right? It was like slowly bleeding every month to the point where like when I by the time I started 2017 uh yeah, I was down. you know, like four grand.

like 3700. So so what made you decide to kind of cuz in college losing $4,000 out of 6,000 that's what. 70% maybe or 80% of the account? What? what? What made you decide to keep pushing forward Cuz you in college you're studying to become a engineer right? you have a future ahead. Why? Why are? Why did you like stay with trading and trying to make this you know this job, this potential career work Yeah I think I think I found an I found a passion for it that persisted through Um and persevered through because I I had thought about a lot of times cuz totally during during that period I there were definitely moments of quitting.

There are definitely moments of like what did I get myself into yeah, like what's the point right and uh, ultimate I kept coming to was like well, what would I rather be doing um if I'm not doing this if I'm not going to try to give it the best shot and figure this out, Do I want to continue engineering? No, Um. Do I want to switch Majors which I eventually did I switched to a finance degree Um, but even in the finance degree like I couldn't at least at the time of what was out there I couldn't see myself being as excited every morning as I was about trading. um to for context like I'm not a morning person I I I would sleep until 10: A.m. 11: a.m.

every morning if I could. and so we me waking up you know on the west coast at like 5:30 every morning to prepare was like totally out of my comfort zone. but like the love and passion I had for trading, what got me to do that and I couldn't at the time I just didn't have anything else that was like that could even I could even think of of having that level of of interest in something like that You know, like in college I Would you'd have to you know tear off my or like pluck hairs to get me to read? You know, something painful to read? uh to read a book for college. But for a trading book I I I've read more books on trading than than any other book topic ever.

I'm not a reader like I don't like reading? um it's just Swit a major to do this. Yeah, yeah, so it's it. Just it just was something like what what would I rather be doing and I just kept doing and and persevering. So and obviously you made the right move right? Yes, yeah.

so you switch your major and you're trading that $2,000 account. What kind of got you to eventually to? you know everyone goes red slowly hopefully red to Green How did you get to that point after having a $4,000 draw down? So yeah. So once at at my lowest point of that account, I I had officially come to the conclusion that I need to just stop trading right? Uh, to the point where it's like clearly I all my trading up to this point has led to losses and so I need to take a totally different approach of what I've been doing to to have any kind of profitability right? Um, and so ultimately came to the conclusion of like I need to wait as long as I need to wait I don't care if it's one week, 3 weeks a month, two months until I wait for something that I feel is so I'm so confident of a strategy or so confident of a potential trade to take that I instead of put it this way, instead of pushing myself to trade, I wanted to be pulled like I wanted something so good to be like you're you're you feel dumb to missed the trade? it's so good. And ultimately I came across um Fanny May FNMA okay uh, which is I think it's below a buck now in terms of trading but back then in 2016 and 2017 it was around I think three or four or five bucks and it had this pattern that played out every year or so and I think it ended up happening about six for not six years in a row, but six times over the last two or three years where it would have um, you know, 30 minutes of straight buying like a just perfectly you know, trendy morning Spike and then a full hour ofra straight selling so it be it' go from like say break even on the day to up 30% and then with an hour down 30% so like a full 60% kind of moved up and then down and then that led to this huge kind of Bounce move where it was like the you can see it on like the level to and like the buyers and sellers where literally the selling would dry up and all of a sudden all these buyers start coming in where it's It turned into a panic dip by essentially um and that setup I had but I didn't even know at the time but I actually had been studying watching videos on it I didn't know it was going to be a setup of mine but I I had watched enough times to understand like this is a setup I can comprehend and know how the how it actually works in the market and so when I saw that happen I said I've seen this before and so I I I Dip bought it and made like I made like 25 bucks but back then in eay this is when commissions were $10 in and $10 out.

Okay, weren't free anymore. Um so I made 25 bucks but paid $20 commissions I made like five bucks. Uh, and it was but that was the one obvious trade you've being waiting for. It was yeah, it was the first trade I think I know what's going to happen and I was right right.

Um, to the point where it it became. It gave me an essence of repeatability. It wasn't just this random buying or selling of a stock, it was like wow, this has happened before and it just happened right now and it can happen again. Um, and so that was really the first setup for me of this.

Panic dip buying idea that uh, that got me to stay consistent. um to actually have something repeatable versus just you know, quotequote gambling buying because I think something's going up or selling because I think something's going down. Let's go like I mentioned many times before on this channel most Profitable Traders I Know they reinvest profits from Trading into other longer term investments that will grow their wealth passively. This free tool is not only a portfolio management tool but also a social platform that allows you to follow other Traders investors and see their portfolio.

Holdings This tool is Blossom Anyone can download Blossom for free and connect the app to your Brokers safely. They do not share personal data For example, you may have different Holdings in Robin Hood Vanguard or Weeo. Well, you can now securely connect them all under one portfolio analytics platform. There's also a social feed for you to connect with other Traders or investors who are following the same stocks and you can even see their returns and what kind of Trades they've made in the past.

For example, on my profile you can see all my investment Holdings how much I'm up or down on the year as well as my recent buys or sells all in percentages so make sure to check out Blossom it's free to use down below I'm an Ango investor in Blossom so I would love to hear your feedback down below. So this Panic de bike strategy is that kind of the first proper strategy that you started following and growing that small account. Yes, that was that was the first setup I ever really learned and and and got profitable. with that that really started growing that e account out of the hole that I was in.

Um, and ultimately that's actually what then led me to learning how to short sell because a lot of these pening dip buys that I was buying was from stocks that were up 100 200, 300% over a few days I see which led to that panic and so that's what kind of it it helped me create this kind of I guess not Diversified portfolio but this this, uh, two-handed four-handed backhand strategy where it's like okay, if I can short it before the Panic comes and then cover my short and then immediately Di I like flip it, then it's like a two in one kind of trade and then and those were the two setups that really grew my account. then from Back Down Under um, you know, call it down 4,000 bucks back to then break even. Um, and for context the when I was down $4,000 ER trade was never been a good short selling broker and so by that point I did have one more or one more I guess Savings of $4,000 in my account. Okay to where I had then used those like four.

So I lost $4,000 I took $4,000 more and opened up an IB account. I see and that was my short account. so I never refunded the the E trade but I just used that 2K or 2300 to dip buy and then the new $4,000 account at IB to short sell. So I just used those two accounts to then eventually get back, break even and then onward up up from there.

So you actually have dedicated accounts for each of the two strategies you were trading? Yes, yeah, eade E Trade wasn't that good at shorting um, Otc's In fact I don't think they even offered OTC shorts but IB did. Interactive brokers did and and you have to be 21 I think I right when I turned 21 in February of 20 17 I I funded the account cuz I I knew that was like perfect linning of like realizing you know I can learn um to to short these dip buys that I've been trying to buy and early on were you trying to learn to scale in or was it just when entry when exit for all those strategies so I was I was under the P so I didn't really have the luxury of scaling in right? So the pen and that's kind of why the penic did by work cuz even if even if I had the ability to scale in the Panic dip Byy is it was such a it's such a quick thing. Like the the turn from a panic into a bounce. it's such a quick it really happens in a matter of seconds to a minute at most and so there really is no option most of the time to try to like slowly scale in I mean you have youve got one entry kind of thing.

Um, so it worked out great because under PT that's all I really could have which was buying once and then selling once and so that's really what it was. it was I try to buy that bottom, have it bounce and if it broke that low, I'm either selling for a loss or I'm selling into the bounce for for a gain. Yeah, so since you have two accounts, you can you could trade six day trades one week. That's also why I wanted to open up because it it helped me I knew even even if ER trade, let's say E Trade did offer good short selling.

Yeah, at that point it's I'm still only limited three trades per week. So opening another one and then getting six was again another strategy that I wanted to use just to help lighten the the impact of the PDT for sure. Yeah and what? and I know you were trading in college parttime. so what was your kind of like your routine like while in school to trade right when? I So when I and I think being on the West Coast helped me a ton? Um once I realized trading was what exactly what I wanted to do and that was going to take up most of my time I immediately then structured around the market market hours.

so if the Market opens at 6:30 or Pacific Coast time I would try to trade from you know, 630 to the close. Uh, that wasn't always the case. sometimes I had to pick classes that were like midday. so I I'd pick classes at like 9, 10, or 11 where you know there's nothing really going on in the market I would I'd always make sure to be keep the first hour and the last hour of the market open cuz that's usually the most volatile or or just important times to watch right and then I So if I had to I'd pick like one class middle of the day.

um, but most times most semesters I was able to pick classes that were after the 1:00 so the market would close I pick classes at 2:00 3:00 4:00 sometimes I'd pick night class at like 7:00 and then end at 9. Yeah, um and that's kind of how I did that. so so call it Monday through Friday or Monday through Thursday I do pick afternoon toight classes. uh, trade in the morning and then on the weekends I would either do homework that I've kind of slacked on uh or I would or then you know, weekend nights I would then work the parttime job.

So like Friday night Saturday night Sunday night or sun or even Mon morning we had brunch. sometimes we serve brunch. um that's the times I would work my part-time you know shifts at the restaurant. So so did your kind of your college like schoolmates or classmates friends in college ask you like wonder what's this guy doing Why is he always in his dorm room staring at the chars? Yeah so I so I I I lived at home so there wasn't There wasn't any like arching roommates or people kind of in my business.

but like my close friends I told I told them about it and they were supportive. but I also think they just didn't even have a clue what I was doing. they just didn't even bother to to look into it. CU none of them were really that big into or understanding of the stock market at the time.

Yeah, um so they were supportive. not really looking into it. most people, maybe co-workers Sometimes there were situations where co-workers were asking what I was up to and I definitely I definitely became more introverted around that idea of telling people mainly cuz I I knew the and maybe maybe your your viewers know exactly what I'm talking about the the um the essence you give off when you tell people you're day trading. it's like oh so you're you're unemployed and trying to gamble.

You know what I mean there's that. there's this context or this, this this this thing you give off when you talk about it like that and so for me I tried to just not tell anyone cuz I knew how I knew I knew what their are most likely their reaction was going to be yeah and it didn't stigma yeah stigma. There you go. that's the word and uh and I knew their stigma didn't change how or what I thought about it or how I was going to impact or how I was going to make an impact on it or impact me.

and so I tried to keep it as hush as I could. but I mean my parents knew my my mom was supportive, my dad was obviously uh, very critical. very um you know how are you going to actually pay for this like this is you know I for example I would make 50 bucks and like that's cool but like that doesn't pay the bills and I'm like yeah I know just wait and see you know and now he's he's he couldn't be prouder you know I proved him wrong. So I guess in a way the fact that you were kind of isolated at that time was good because you needed to focus on trading.

Yeah, Absolutely. I I would say in terms of like having the the college experience or or ging The Freshman 15 right? Yeah I It didn't happen for me because one I lived at home so it was different but also too right I I for a long time even even my friends that I had from high school. I there was a period of a few months where I definitely saw them very little if not at all because I really immersed myself in trading. um I actually remember the very first month that started like my profitable trading that or my streak to being profitable and going back Green from being red okay, um, was in May of 2017 and I don't think I went outside, you know I I really think like for like 12 plus hours a day that whole month I was I was just immersed.

um because I was right I I like felt it I was right on that cusp of really becoming truly consistently profitable and so I mean I really Yeah, that was all I did for at least that month. Um, of course I was studying four or six hours maybe before then. but I I just for some reason I remember being a little hermit and really, that's all I did in the month of May I think that's what it takes though. Like, you really need to be able to do that right and mind nobody else's business but your own right? So coming back to Small Caps for a second I Know that's what you focused on in terms of small cap.

Trading Long and short but mostly short. How? how do you think nowadays the small cap environment has change cuz obviously 2020 and 21 were great, but nowadays it's a little bit iffy. like what? What are your thoughts on that? Yeah, totally I mean 2020 2020 21 were yeah, amazing years, incredible years and almost to the point where I a lot of traders who had traded the do kind of years or bubble compared it to that and I was like wow, this is that what this was like? That's incredible you know. But yeah, 2022 was definitely, then the like, the the boom and then the bust right and 2022 was definitely one of the toughest years I've personally traded I was able to be profitable but I ended up giving about half my year back in the process like I had made uh, call it roughly around 800,000 the first 6 months.

um, but then the next 6 months just gave it all back like not all of it, but 50% or so and so that was a huge kind of uh, a slap in the face and I was worried 2023 was going to be very similar in terms of how difficult it would be and and and it wasn't going to be this easy walk in the park. like 2020 and 2021 were um for me individually 23 2023 feels like the not exactly, but actually the more steadier market like 2016 and 2017. Le that from my experience and learn or remember, um back to the norm and I say that because I remember myself and all these other Traders watching what drone pal is saying about the Fed and what are interest rates doing and what is inflation doing? Where everyone was so fixated on like how is the economy going to get through this period of the 2020 and 2023 market and as 2023 went on I felt like that that level of pressure or that focus on these things started to dwindle and now it's just a steady Market where we can just trade. We don't have to worry about what's going to happen to the economy tomorrow.

Um, it's still not the same, right? We're still there's still lot iy Waters of like interest rates are still high and and it affects the market. Um, but in terms of small cap I Still think there's been a decent flow of opportunity. it's just more spur-like so like you'll get two weeks of really hot Runners and momentum and then two weeks you got to learn to take your pedal off the gas and not trade or or take less risk right? Um, and I feel like it's been like that most of the summer October This year is started to feel like it's more consistent. um mainly cuz I think we're going into the winter period which is typically a more busier cycle for Small Cap in my in my personal experience.

Um, but yeah, most of the summer and fall was like week of hotness, slowness, week of hot slow um and so adapting that and that's and that's why I think I've handled and felt really good about 2023 because I'm usually pretty good at that. um at adapting to different Market cycles. and the and the way I do that is like if if I don't have a setup I don't have a trade period so like I could see. you know say 10 setups in one week when it's hot and be like great it's hot.

but then if the med next Monday is slow and I don't see anything well I don't see anything. so what am I what do I trade? Perfect Example is this week yesterday and today I didn't take any trades because I'm looking at the market I'm looking at my scanners and yeah, there may be stocks moving, but there's nothing that I know how to make money on and so it's a very binary thing of like the switch is off well I don't trade. You know there's no set up for. Yeah, in some ways it's um, since you're predominantly more short biased.

in some ways, that's good because you can react as opposed to if you are long bias, you almost have to be on that first day. If you're short bias, you can wait for that first day to happen and then short it the secondary days or whatever. Yeah, that's a great Point That's probably also why in the beginning stages I Definitely gravitated towards being a short bias Trader simply because I was never quick enough to be able to catch that first hour or that first day of the move to to catch that momentum upwards. but once it went upwards, then I was like okay, well if it goes too much upwards now I have a day or two, even three days sometimes to prepare myself for when it actually starts going down.

Um, definitely there's you need to be quick. Um to to Really capture a lot of good, good long setups for sure. Yeah, Do you so do you prefer to short the second day or do you have what do you feel about shorting the first day? Let's say you have a very hot stop the first Green Day or the first? yeah, the first runner of the day most I would say I I Try to stay away from it most of the time. Um, sometimes if there's like dilution or there's some kind of maybe the news is total.

if you look into the news, maybe it's total BS Like sometimes they'll be like a case study news and they said we've had seven seven people. Try this study. You know it's like okay, well, seven people, That's not very, you know, but it's only if you really can look deep into that. um, 95% of the time I won't short them because for that reason, like that's the first time you're getting buyers in and most shorts that I see people take on those usually lead to losses and none of my big wins are from those kind of Trades And so again, back to the whole like where am I making my most money and where are my best setups popping up that that area or that time of the day or that day specifically? um is just not it So yeah? I I Try to stay away.

Yeah, so you're more of a shorting the secondary days right? Okay, and do you ever swing those shorts? Let's say you think you know a lot of these extended stocks that can like sell off for multiple days, right? Do you like swing trading overnight and um I will if I think the stock is still extended enough. So like let's say like um I don't know a Stock's run for two days straight from $1 to like five so like 500% Huge huge move and if the first red day or the the first time it goes down is only down 10% 15% and we're still up, you know, call it 400% Yeah then yeah. I I might be very willing to swing only because I know statistically there's still more downside to be had versus if it's only up 100% And it's down 10% Like well okay, it's only up 80 90% Now it's not. As there's still not enough down there's not as much downside as a stock that's still up 100% even after having the first day of downside.

Um, and it's kind of a it's more of an art. There's not an exact Stat or science I have it but it's a rule. like the more exted it still is even after the first day. Will like give me an indication of like how how much is it worth it for me to swing or try not even swing sometimes I'll cover and just look to Resh short the next day as well.

Sometimes I'll do that too. So I used to love swing shorting but I forgot what stock it was. it was during Co it was one stock that had a first red day but it was just such a small pullback. red day and then kind of Consolidated and the next day kind of RI back up higher.

so I stopped doing and that's something to be careful too of and that and that's most times. I'd rather I'd prefer to just cover and then just Resh short the second day for that reason sometimes it's just not worth the stress. Um, and and I would say during the during the 2021 and 2020 Market I probably did that less because I knew how strong everything was. In fact I actually the what period I think it was the December through February of 2020 into 2021 I had made almost just as much if not more on the long side cuz that's that.

was like the peak of everything where everything went. So nuts. where I would have like 10 long positions at one time I had you know too many charts I I there were sometimes where I just wouldn't even look at certain charts because I would just buy a stock and then put a stop loss and then stop watching because I had eight other stocks to watch. It was that insane.

So definitely um, during depending on the market environment period. shorting overnight definitely is has its uh, disadvantages for sure. So since you also dabble in Long Mhm, where have you I understand you make most of your money from shorts, do you take do you take the biggest loss or like most of bigger losses from the loan side then or how does that? no I would well yes and no but for different reasons. So like my biggest trading losses are from the short side uh my biggest I want I want to say they're trading but really it was.

It was me diverting from my strategy and trying to be kind of a long-term investor. Let's call it. um okay so entally essentially I'm long but I have I've had a few like 50 60k and then like 100k losses. um on the along side mainly cuz I just bought stocks for the long term and they just went to crap and this was over.

This was ending 2021 and into 2022. so right into right when the bubble ended right into the recession I just kind of I I not I chalk it up to like I had too much money I made too much money to do it to know what to do with and like oh well I have you know 300K to just park in these stocks that I like and over the course of 2022 they just were down. you know, 40, 50, 60% Okay so it's more like a swing trading loss. Yeah, it turned right so and that's why I say that because it was never really any of my long strategies in terms of day trading.

it was like I'm just going to throw money at these stocks I like them and it turned to be the the a worst possible time to do that. So and eventually I took those losses. so that's why they were bigger. um but in my brand ey compartmentalism, they were separate from my quotequote you know long trading strategy.

Yeah okay so I guess the actual trading loss would be the the shorts yes My My My By far my biggest losses are on the on the short side. well I guess and the the one big trading. the one big trading loss on the long side I can think of is actually what kind of burst the bubble of 2020 and 2021? Um, it was February 2021 and it was a panic di buy um I had made more money on Panic di buys than ever before in that year because everything everything panicked and everything just huge huge bounces because the volatility was insane. um and I I had a bad habit where a new kind of trend that I had seen was instead of like I said what I learned is when they Panic you get one entry like you get one time to try to buy it and bounce it and either it fails or doesn't Yeah during that hot Co Market it would bottom once, fake out and then bottom the second time.

So it happened where I would actually have to cut my loss and Reby and it happened so often I said you know what I'm not going to I broke my own rules I'm not going to cut the first time, I'm just going to add on the second attempt and then it worked and so I kept doing that and doing that and it worked and that's why you know it was. You can call adaptation but at the same time I was also breaking a rule and it was only a matter of time till one of them doesn't bounce the second time and then I met with a bigger loss than I wanted. um and the tiger MN or M mnnf right or I think it was mm OTC yes okay it was one where it it panicked, bounced maybe a few pennies a share and then keep panicking and then it and just all day it turned into this like Panic slide bounce so like this huge grind and It ultimately led me to just keep buying like on like a habit at this point just keep buying the new low and before I knew it late day I'm like this isn't bouncing and I have a way too big a position. um and so I eventually sold that for like a 90k loss that day.

Um and that was my new biggest loss at the time and was on the long side for me just getting breaking that rule so consistently and finally realizing like that pattern is not happening anymore like I need to go back to sticking to that one attempt because they can just keep bleeding. um and so so yeah that's that's my biggest loss at least on terms of trading that setup. Yeah, what about your biggest loss in terms of the short s side? So uh my biggest loss was was in it was two technical trades um on HKD um both were1 120,000 $125,000 each. but the reason why there were two trades is because they were in two different Brokers So I had two brokers who pretty much took the same position I don't I don't know why at the time I took the same entries yeah, pretty much same average same size I don't know why I separated it other than than one account was I think one I was trying to day trade the other Tr I was trying to swing um and so on I remember it was a Friday I was short from like the one 7s 180s in HKD HKD went to 2000 right? Yes, okay, that stock.

Okay I didn't trade that stock but I heard So this is the beginning before the the disaster right? and so I'm I am Essentially it came to me just ignoring all rules. Really? I mean I I had I had said you know if it breaks over 200 100 I'm going to cut the loss goes to 250. don't cut it. Then it panicked all the way down to like 150 a full you know, 100 points or $100 a share.

Downside I said okay, that's this is the beginning of the end, right? that there's no way this can recover from that. kind of, you know, over the of two three hours it kind of grinds back. it ends up being at 200, then it breaks 250 and I kind of deer in a headlights just freeze. Um, and you held that position through when 150? Yeah, okay, yeah.

um and so I essentially I just broke 250 I froze and it then went to 400 within the next hour and at this point like I'm just Frozen I'm like I can't believe it I'm almost in shock at this point. Um, along with then being stubborn and and maybe greedy of like I don't want to take this loss. finally on the on the the swing trading aspect of it or the sorry the day trading aspect of it I realized I need to I need to exit this like this is. this is clearly not good.

Um so I end up getting out in like the high 300s was the first 125k loss I still have the swing idea on which is also you want to swing short it? yeah I sweaty now right? Okay and so I had so that was the first trade, the first half of it gone I still had the other broker with the same position and the same average down the same amount. Why? I chose to hold up I don't know it was, it was again as denial at this point I'm just I'm EX half of it. but I'm like you know what if the other half works the next day like it'll be okay Monday comes around, it doesn't even break down I remember I think it held 400 like all day long and I'm like this is the exact opposite of what I thought was going to happen. um the good part about it was that I I eventually came to the light at the end of the tunnel like I knew many other TRS unfortunately who just never came to that realization and just kept holding.

Um the best thing I did was get out of my own way and be like you need to get out of this. um and so I covered that other half at like 400 um before it went to 500 and then 700 and then by the next day was what? 2,000 right? 2500? God um so yeah. so pretty much I I call it quarter million loss because it was the same trade but it was two different Brokers um 125k the first day, 125k the second day. yeah a lot of lessons from that loss.

Yes yeah uh, it's just it was one of it was a wakeup call. it was it was. It was the really the theme of that 2022 Market where I gave back half my half my year on the fact that I just had I was the market gave me too much money too soon you know and it was a it was a a lesson I needed to learn of like you know if you don't take care of what you've made you will give it back like it will go back into the market if you're not careful and that that was a you know huge call it slap in the face and a reality check. So yeah, I think HKD is one of the first wave of super lowf float, super sketchy fundamental SEC violines the the Chinese stock.

That kind of got a lot of short sellers. there was many others that follow that like amtd like uh see something uh top this year yeah TP yeah g GDC Gcg GDC one of those yeah yeah yeah there was a lot of there's a lot of as as Short Selling has got more popular. There's been more and more uh squeezes that have been, um alarming. It's definitely.

it's very different from previous years where I had you. You maybe see some hot runner or some hot move once a year and it was maybe a 500 to 1,000% move. Now we're seeing maybe a couple times a year of these moves that are going 3,000 4,000% over the course of a day or a couple days and it's it's scary. it's it's much more.

It's that much more important to have a a risk management and risk um system in place because if you don't like you could very well get caught in one of those you know? So yeah, I Think it used to be like if you use SEC file Lings and do the research on the delution and you have access to shorts it used to be that was an edge nowadays I Feel like that's the downfall of a lot of short sellers unfortunately. Yeah, because you get so much conviction from the filings, right? Yeah, there's if there's like so much solution and a group of short sellers are like yeah, this thing has to go. It has to go down right the the is saying um and that's why you know I will look at SEC Voles I will look at if how dilutive a stock is but at the end of the day I Also need to understand that like if price actions telling me something different I can't in the name of dilution hold my short no matter what I think that that's what causes these squeezes is that too many short sellers are then get stubborn and by one one gets squeezed out another one and then it's this this upward spiral effect of everyone just squeezing each other. and uh, because no one wanted to admit the fact that dilution is just not having an impact on that particular day.

you know? So yeah. so thank you for sharing with our audience your biggest loss? That that must have been like a really painful memory. Absolutely yeah, yeah, it was. Um, luckily it was at the point where it was money I can afford to lose, right? And that's how I've always kind of used getting over emotionally big losses.

Is that it's not that I lost that money, it's that I I'm in I'm fortunate enough in a position or I is to get to lose that money right? Um, it's like it's like the way the way I see is. like my very first big loss was I lost $4,000 not not in the overall account but say in 2018 I had a $40,000 account like I had been profitable I took a loss of around $4,000 in the first hour of the day and that was my first gut punch. Very similar to what like HKD would would have done or did to to me. Um but what I got over it was like I get I I just lost $4,000 in one hour and I lost $4,000 in my first account two or three years ago.

Yeah you know, so like I' I've it was it's always a a reflection of like look how far I've come doesn't mean the loss is okay, but it's like you're all right. the world isn't you know, falling apart So remember Traders I'll always tell you to learn from the mistakes that these Pro Traders are making rather than focusing on how much money they make. This is how you can improve your trading by absorbing all the lessons from these. Pro Traders Remember to hit the like button if you're enjoying Kyo's story.

So tell our audience about your kind of how you select your stocks to trade because that's equally as important as like having the right strategies right? So how do you pick these stocks that has enough? I guess liquidity and like that. good stuff for you to enter. In and out. Yeah! so when I first started trading, I was very broad because I was such a small Trader volume and liquidity didn't really matter to me because it was so small.

like if I had a 100 share position size. Well I could trade something that only has a couple thousand shares trade in the day cuz I'm so small now that I I would like to trace fairly big size. not not the biggest, but certainly way bigger than I started. I need stocks with volume? So so I I'll love to scan for stocks that are trading at least a few million to to tens of millions of shares a day.

Um sometimes it's the Lesser is okay, but again, it also depends on dollar volume of the Stock's price. Like 10 million shares of a $1 stock is way different than 10 million shares of a $10 stock. It's the dollar volume is different. So I definitely need millions of dollar volume traded because I could take anywhere from a 50 to a $200,000 position on any given stock.

So it's like I need I need that liquidity. get in and out. That's the first thing um in terms of like from my like the short sell, it's very similar to I said where it's like um that first screen day gets my attention where a lot of shortss might take losses, they get squeezed or whatever I don't like to touch it I then love to watch those first green days turn into second green days. maybe three, maybe four.

um at the most I think I've seen like 10 green days in a row where they just it just keeps on going right? Um, and I'm then at that point the higher it goes and the more green days in a row it goes I get more and more interested in when's the first time it's going to go red like when's the is the Because: if I'm a short seller and there's no say, let's say there's no delution. The only way I'm going to make money if a stock goes down is if there's long selling. Yeah, I can't I can't I can't Um I can't count on other shorts shorting with me because ultimately that that usually will lead to a short squeeze. Like if there's too many shorts in a stock.

then we all cover together. Well there there you go. we all squeeze ourselves. So the only way I confidently feel like a Stock's going to go down is if there's more long selling than shorts covering and or buyers buying.

And so the the you know, let's say that stock is Up 3 days in a row. I'm looking for signs that sellers are finally realizing oh crap if I don't sell now I might take a smaller or I might take losses or a smaller gain later. Um, and sometimes that's the first time it's ever gone red in the day. Like percentage wise, Sometimes that's the first time a morning Spike has tried to go up and immediately fails versus the last two days it actually went for the first like 30 minutes.

Uh, maybe it gaps down the first day. all these little things that I'm trying to look for to to show me you know it might just just look like those little things like oh, it's just a gap down what could that possibly mean But then if you put yourself in the thousands of people who are along, they're thinking like oh crap I was up 500 yesterday now I'm only up 400 today I better get out. Yeah, um and you get a thousand of those people selling and all of a sudden you you result in something that you know caused the stock to go down for the morning. Um, that's that's really what I like to look for.

Yeah, so you care a lot about the psychology of those long buas Trader Like how they think when they're most likely to sell and then hop in when they're right trying to unload. That's really the basics of of the markets, right? You need to understand the the mechanics of why a stock is moving in either direction and it's either there's only there's only four ways, right? It's either Longs are selling Longs are buying, shorts are entering or shorts are covering and so it's hard to tell whether it's selling or shorts entering or buying and shorts covering. but again, given where you're at in the pattern, given where you're at in the stock, whether it's overextended, whether it's overbought, oversold, all these kind of indicators, you can kind of put together to build a story of like, well, okay, I don't know how many shorts are covering, but I I can assume most are probably or I don't know how many Longs are selling, but it's likely most would sell right here or or or feeling at least uneasy that they might want to sell here. Um, that kind of idea.

Yeah, do you kind of stock your stock, stock your stock for like the entire morning. Or like when. Especially when it's having its first green day. and do you how? what's your process like I Guess that's my question.

Yeah, so part of that part of the yeah I say that all the time stocking the stock. Um, because right? if I if I because I'm not taking it long on the first screen day and I'm watching it I like to see can it go a second day? Can it go a third day and then again, the more days in a row it goes, the more interested I get So then yeah. every morning I am watching I'm like okay, is this the first day it's going to go weak or like, okay, it's had morning Spike The last two days in a row Is this going to be the third day has a morning? Spike I'm trying to look for the characteristics behind a stock, right? Every stock I think has its own personality in some way shape or form and so finding out what those characteristics are better help you make I think more informed decisions when it's actually time to enter your position? Totally. Oh okay, so does that mean you'll have? Let's say, you know, two days out of the week with no trades, then if you're just watching a stock, right? Okay, yeah, yeah.

like today today I just watched. Um I don't remember the ticker. but I just watched stocks today I didn't trade, watched a few that I was watching. You know because none of them were really setting up.

But I thought to myself, if they can get to these prices or if they can go in these directions, I'm going to be that much more interested. So I'm watching how they're moving. Are they even strong enough to get to those points? Are they weak enough? Like how do they look? How are they acting today? What are other people saying about them? Um, stuff like that? Yeah yeah. I think I'm very impressed with your patience.

especially the charts you post online like you have like a couple entries. Like we said, there a couple entries and you wait like entire day for an exit. Yeah, so how do you sit through consolidation after you've entered a enter a position? Whether it's long or short and it's taking its time, How do you sit through that? And how do you know ultimately when to get out? So for me, it's really about the trade plan. Um, and in the in the earlier stages of my trading justess journey I struggled with patience because I didn't know the importance of sticking and staying in that trade plan.

So if I just got bored or I got uncomfortable and I could have been uncomfortable for any which reason like I just I had a random Daydream that I I'm going to take a loss even though the Stock's doing nothing. so I just I just sell right. Um, ultimately I I I had to retrain myself to realize like if I'm still in the trade and a setup calls for a certain type of move to happen. like let's say I'm shorting for that first kind of red day or that first down day.

Yeah I know for me that first down day should offer at least 10 15 maybe 20% of downside. So if I'm only up 5% I haven't got stopped out yet or I have my I have my stop loss I'm only up 5% Let's say the Stock's only down 5% and I have conviction that you know 80, 70, 80% of the time this should be 10% lower then there's nothing for me to do I have to just let the stock move for me versus me trying to make it move like just by watching it right? like I'll watch it to know in the case there's indicators to show me like okay, this is this has been too weak for too long or this has been too strong for too long. Um, but ultimately I I I I always side on the sign of caution of I need to stay in this trade plan as long as I need to to let it play out because there's been so many scenarios where I may think a Stock's too strong and then the last hour of the day it just falls apart or I think the St Stock's too weak and all of a sudden just rips right back on me. right? So there's there's so many different ways of stock Move On Any Given way or time or day, but on average of least any particular setup you're trading having an understanding of how much it should move and in what direction it should move is what's important because I think that's what gets me to stay in and that fact that like, there's more downside, there's more money for me to make you know on average.

So so yeah, so that means do you also track a lot of statist uh, statistics on these stocks? Yes. I I I used to be when I first started out. I used to be a fan of trading or of tracking the actual setup itself like learning about it like the penic did buy. I definitely tracked even if I traded or not I wanted to to track it, how it worked and how it moved nowadays I've I've taken enough trades where I will just journal and track my own trades and use that as as kind of my data set only because yeah, maybe I miss some trades maybe I don't trade some well.

But what I learned is you know you may have a a a setup that works like I know it works, you know it works, your neighbor knows it works, but then when it comes to actually trading it, some people can't trade things and that's okay. like I know certain setups work, but I am I will always be unprofitable with them for whatever reason it's my personality. um I can't I don't find the right entries I'm not quick enough I'm not fast enough. Um, for whatever reason I can't trade them and so for me, it's not only enough, it's not enough to just know that it works statistically, but it works when I take the trade and I it's like how how much how aligned can my trading fit the stats right? because I'm a discretionary Trader right? If you're A if you're an Algo based Trader where you let the computer trade for you, then yeah, you can probably align the the computer to trade exactly how the stats tell you.

If you're discretionary, you have your own emotions, you have your own thoughts, your feelings, your your your life choices. Like all these things can add up to end up making the trade either better for You or worse for you. Um, and so I think it's important at least for me I like to track how I trade setups in conjunction with the actual stats. so I can show myself like okay I'm actually trading them correctly earlier I know you shared your biggest trading loss.

Do you remember your most memorable or the biggest win? Yeah I have I have I have two and one is one I'm really proud of and one I'm not so proud of. Um, okay so the one I'm not so proud of was the Tiger Lyt. Um, lyt was another sketchy lowf float kind of scammer stock. um but instead of squeezing it dropped like a rock and that's why I think those some of these squeezers are so go so massively because so many short sellers have gotten they like they're like flies to a lantern right where we all see these stocks that can you know have these huge amounts of volatility and for a long time they didn't squeeze and they dropped like 80% in a day.

Um, huge, huge, huge huge moves and so I was one of those short sellers who wanted to be a part of that. that that setup right? Um, a lot of people call them like liquidation place because the stock just gets destroyed right? Um, and Lyt was one where there was very little squeezing, there was almost no squeezing and I got short a very large position and it dumped 80% Um I made like 170k in one account and then like another 30 or 40 another. I made like just over 200. Grand on that particular trade um or that setup which is great but the problem is there was HKD there was Iog there was top.

There's all these ones. There were also this scammy sketchy tickers that everyone wanted to drop 80% and they did the opposite right. So I'm not proud of it because it's like yes, it worked out and yes it it was it. it.

It gave me a big gain, but I soon realized later down the road that same setup had just bigger risks or or worse. I See so it's not like you not proud of it because you broke the rules of bag holding like with HKD but it's more so you feel like that particular trade doesn't actually happen that often. like where it doesn't squeeze and just go right. that and along with the fact it's like you know I made a lot of money.

but the risk I took to make that much money knowing now what can happen if they didn't let that happen and they squeeze it instead. the risk reward is just very scary. Um, you know, like that could have been that LT even though I made 200 Grand that could have been my first HKD before HKD You know I just didn't know it at the time I didn't know that was a possibility. How hard they can squeeze a stock like that? Um so right.

I Maybe maybe it's that. I'm not proud. it's just that I didn't know any better, right? Um, the trade I'm really really happy with to this day was my first six figure gain. uh this was in.

this was also in February of 2021. um the ticker. W Ndw Okay this was an OTC I think it's still an OTC um it was one of those tickers that was was hot during the whole year. I think it started at one or two bucks and by the time that that peak of that bubble uh I think it touched 40 bucks.

So just this huge huge run. Yeah and it wasn't all in one day. it was like over two months. It just first run was like from four bucks to 10, then from 10 to 17, then from 17 to 25.

and before you know it, the last huge run was like from from 25 to 40 and um and I had been trading it every single time it ran up. like so whenever it got extended I would short it. make some money. Okay, short it some more.

make some money. So it's like I had already traded this setup from this particular stock. like four times it was. it was like The Fanny May example earlier in in the episode where where I said they I've seen this happen four or five times um now was happening in the matter of 3 or 4 months instead of years and so when it touched 40 bucks then I think it closed like 33 34.

um I had seen it happen enough time I said the odds of this being a red day tomorrow is like super super high. uh and so I just shorted a large amount of size I think I risked about 15 or 10 to 15 grand of the loss which is big I don't nor like to risk that but because all of the indicators were in my favor. um I thought it was a very ideal kind of short play. so I took bigger risk.

Um, it dropped as low as I think the high high high 20s Clos at like 31 and again back to the when when do I decide to swing or not? Well you know we we topped out at 40 bucks, we're only down to 31. This run started from like 25, but really this thing's up from four bucks two months ago, you know? So I put all that together and I'm like you know what this this could go back like to the 20s like lower 20s. um so I did hold overnight and the next day it panicked to 22 or like 20 21 and I covered in 22. um made like 104 grand.

Um and that was that's why I'm I I say I like that one more because that's that is like the perfect kind of red day pattern for me and that was by far the just the biggest um gain on that particular setup that I've always felt good about in terms of risk award in terms of understanding it well enough. Um again the opposite of lyt of not knowing what I didn't know. Um so yeah, that was. that's still today.

One of my favorite trades. Yeah, so you do sizing a lot more for those perfect A+ setups. Okay, I think we learned that term recently from lens saying it's exponential bit sizing. Yes, yeah.

okay yeah I'm not I'm not I don't have a a a perfect exact formula for how I choose to like exponentially bet. But yeah, after about 3 to four years in I had started to realize like there were not all setups are created equally and I don't mean that in a breakout equals a dip byy or a delution short means a a parabolic short. I mean like this breakout is way different from that breakout, right? Because this breakout might only have five things going for it like it might might have. Okay news.

It has okay volume. Maybe the breakout level is like it's kind of sketchy, but it's it works versus the breakout that happens next week. It's got great news. It's got a billionaire investor.

It's got no dilution. It's got huge volume like there's There's a scale in how good indicators can be and so the better. I can find trades that have almost all the indicators going for it. It's like the star start aligning.

you know? and if they do that then I then I it calls for more risk. Yeah, absolutely. So I know you call yourself a discretionary Trader But I think the way you think about these setups is very systematic. Yeah, I would say so.

I try I try to even though yeah, I I am I'm technically discretionary. but I definitely try to discretionarily align with the with the the system or the strategy as much as possible. Yeah so I think I think that's one of the things that a lot of new Traders lack. They don't know how to categorize their trades and they don't know which trades to focus on.

They don't have those A+ setups and they don't know how to identify them because they don't the criteria. It's all over the place or they may not even have a criteria right? What would your advice be for those? Traders struggling with that that yeah this is a this is I think why trading can be so difficult because it's such a it's such a two-sided thing and and so on the