Andy and Steve Discuss Coming Back to Trading Post-pandemic

Hello Friends, my name is Steve Gomez and I am actually the very first beta test user for trade ideas back in 2002.

Hello traders, my name is Andy lindloff and I wanted to come in here and give you a little background on myself.

I've been actively trading the markets for 25 years now, 17 years of that was pretty much hardcore day trading, doing about 100 and 50,000 shares a day, a little bit more about me, I started trading part time in 1995 with a small $5000 account with lind, Waldock traded futures commodities and things like that.

So I kind of got my feet wet learning charting and learning trading, but it wasn't until 1998 that I went full time trading since then I've toned it down quite a bit, focusing on swing trading, I will dabble still a little bit in day trading, but my primary focus is swing, Let's see during this 25 year period, I have worked over in China as a mentor.

I was hired over there by a trading floor, I would go over there about one week out of every month and for about two years and I would work with the traders on technical analysis, momentum trading.’

All the aspects that go with day trading electronic trading opened up and allowed people that lived anywhere to buy and sell on the bid and trade stocks, you know, like a market maker would, So that was very exciting and that's where I met Andy Lindelof, he'll meet as well since 1998.

The two of us have been pretty much side by side trading similar styles.

So we're going to talk a little bit about our styles today and try and help people that are coming back to the market and might be looking for the next level of methods in discipline.

In 2008, I teamed up with my longtime trading partner, Steve Gomez and we founded a company called today trader and this was a concept.

It was kind of a pioneering model where people could actually come in and using desktop sharing software could view my screen and watch my trades and see my blood and all that.

Let's see in 2010, a company called Ditto Trade was an online startup.

The concept was I could open up a brokerage account and other people could open up a brokerage account with them and they could piggyback on my trades.

Again, I'm like Andy, I did a lot of day trading early on from 1998 and two around 2009, And since then it's been primarily swing trading.

Swing trading has allowed me to slow down things and I'll talk to you a lot about my methods as a swing trader.

I'll also try to incorporate day trading into some of these concepts and ideas as well.

During this time it was like 3.5 years, we had a documented 83% return.

So it was pretty, pretty impressive, we’ve been featured in the new york times and also in Barons.

And we really look forward to helping the traders who may be new coming into the market or those coming back with a series of videos here.

So we figured it would be a good idea to take over 50 years of trading experience and talk to people who want to hear some positive reinforcement and advice on the best way to come back to trading.

So with that said, let's get started on some questions.

1. What is the best advice you can give to new traders?

Steve: All right, this is a great question to start off with because a lot of people became addicted to trading during COVID in 2020.

The meme stocks, stimmy checks, what have you, everybody had on a Robinhood account and this was a wonderful market and people participated and it got a lot of people interested in, dare I say, addicted to the rush of trading.

However trading is a cyclical event and what a lot of people didn't really see coming that were new by the way was this breakdown and this part here was a very painful experience for the people who enjoyed buying things and watching their accounts rise.

So this broke a lot of people, a lot of accounts were blown up but a lot of people do want to come back and so I've got some ideas.

First off, you need to find out what time-frame you want to trade in.

Okay, you've got to figure out if you want to be a day trader. Do you want to be fast-action?

Can you sit at your screen all day long making quick entries and exits and try and make small hits, singles and doubles or do you have a job and you have an account that you want to try and grow, you can be a swing trader in that respect.

So that's why I chose swing trading.

So find your time-frame secondly, get away from the Furus/Gurus, you've got to find a way to make it work for yourself, the people out there that are giving stickers, they're doing the homework, they're learning their way and it might not always be the way that works for you.

So you've got to get away from having trades being fed to you by gurus, you've got to find your own way, by all means, paper trades simulating trade trade ideas as a trade simulator, you've got to take advantage of these types of tools.

It won't be a substitute for emotions because once you get back into the market as you've already probably figured out, emotions can be very difficult and they can change your methods.

So, you know, check your emotions, try not to trade the first few moments of the market open, it's very noisy, find your timeframe and stop following gurus, figure out your own way.

You can do it.

Andy: Okay. You probably already know there's tons of advice out there on social media and the internet, from a lot of self professed gurus that talk a lot about the same concepts and they, and they sometimes it gets redundant.

Everybody's talking about risk management, everybody's talking about fear greed, stop losses, price targets, all that stuff is good and it's important and you need to, you need to learn it.

But I'm gonna give you an idea here, a strategy that has really helped, you know, my trading and what it is is a lot of traders will, whether it's fear missing out or whatever it is, we'll just pull up a chart and immediately just take the offer and before, you know it, you're, you know, stocks going against you.

So what I've learned to do is not take a trade unless I put a price alert or a bid.

We're gonna talk the long side here because it's easier put a bid for a stock, you know, at a technical level below where it's currently trading.

And I'm gonna give you a great example here today on what I did in this ZIM the other day.

I was watching this, it had a nice rounding bottom here and it had a key pivot level, you know, about a three month high.

And sure enough, it opened up and took off early in the morning, I was probably busy with another trade and before I knew it, the stock was up five or 6% Even though it's a swing trade, I felt I could get a better price.

So what I did is I put a bid in here right above the 10 period moving average.

I think it was 1935 and I took it off my screen.

I forgot about it.

Next thing you know, I am getting filled on this trade and, and then it's turning right at that moving average and it ended up having great clothes on the day and some follow through the next day.

So keep that in the back of your mind.

Guys, try not taking a trade without placing a bid or at least a price alert.

Okay. Below where it's currently trading.

2. What is your favorite trading style or method?

Steve: My favorite method is to try and identify short term momentum on the daily chart, right it for a day, day and a half, maybe even three days tops.

And then get out kind of like a surfer might look for a positioning and self in a swell riding paddling, anticipating a couple of cuts a couple of days, hold back out the back end and set up for the next trade.

Now there's many different ways in which I can identify those.

I've got my personal watch list that I'm always keeping an eye on for all the names I'm familiar with, but each and every day we've got these stock races here and they're showing us what is in play for the day.

You might have your own assumptions as to what you're going to watch the next day, but you might miss the things that actually turn out to be in play.

So as you go through some of these races, you can see intraday push and you'll see a lot of these trades will hold my 10 S.

That I talk about in one of my chapters and the stock races will continue to point you in the right direction.

So let's see if we look at these trades, a lot of momentum going on throughout the day.

This was a big one on friday and then it had a big collapse at the close, but the action is going to be in these races and if they line up on the intraday and the daily chart.

Look, I can get a lot of ideas from these to hold for what I would call swing scalping and basically scalping the daily chart.

Like a day trader would scalp a five minute chart or an intraday.

So idea generation is huge coming from these races because I never really know what's going to be in play for the day.

G seven G S U N has been one that's been active a lot lately.

So now it's on my watch list, but I found it using these races.

And so this is what the crowd is focused on and trade ideas points you in the right direction.

I like to find momentum and then write it for a couple of days, simple as that.

Andy: My trading style can change with the current market conditions.

Let me give you an example that this mankind you see this beautiful kind of breakout we had this was yesterday last trading day I should say that is a textbook break out now.

I would be more likely to take something like this in a raging bull market than I would in this current environment.

Because what I'm doing here is I'm buying at least you know monthly highs here.

So I would rather catch something in this environment on a pullback.

That's not to say this thing can just keep going.

It could but I see I see more failed breakouts in this type of environment.

Then I see stocks that just keep ripping higher. So let me give you an example of something that I may tend to fancy more in this environment and this is something like this P.

S.T.X. Okay, you can see here the 50 period moving average has kind of been the the backstop for this thing for some time now.

3. Did you ever give up on trading as a beginner? If so, what turned it around for you?

Steve: Okay, let's shift gears to psychology here a little bit.

The reason we're doing this book is we recognize that a lot of people got a taste of trading and the lifestyle and the enjoyment of it, but it's not easy, it needs to be treated like a business, it's not a casino and you have to have real expectations.

So the first thing I would say is coming back or even starting from scratch, you're gonna take at least six months to really figure out what the heck is going on all around you.

There's a lot of things happening, There's a lot of moving parts.

Therefore a quick recommendation is to sim trade, this is our trade ideas, simulation trader and it's very simple the way you can do one click buy and sell along with the charts, manage your risk manager stops, there's a lot of technology that will help you.

So if you want to go out and just make your mistakes with real money, by all means do that.

But yeah, it took me almost six months before I started to figure it out.

And so those first six months there was a lot of self doubt like can I really do this?

So I'm just, I'm bleeding this account and at some point you have to kind of throw an emotional switch that stops looking at the money in terms of, oh, I just lost a down payment on a car last week or you can't put a dollar value to it.

It has to just be a business, it has to be numbers, you've really, you gotta be zen.

You've gotta find a way to emotionally detach and tell yourself well, you know, if I don't make this trade, there's always another one.

If I don't make this trade, it's not the worst thing in the world.

You, you just, you can't beat yourself up.

You can't start to focus negatively.

I don't like to trade when I'm sick.

I make horrible decisions when I'm sick, but it's very easy to get discouraged.

Now I will say as also in the intro, a lot of people had a lot of success on the way up and when the market changes, you have to adapt and change yourself.

And that's the hardest part.

I saw a lot of people make a lot of money in early 2000 only to give it all the way back because they didn't learn how to short sell.

So take your time, Use the simulator, try as much as you can to emotionally detach from the dollars and cents that you see and just understand that it is a game.

So I hope that helps.

Andy: Okay, great story here.

I thought I'd let you watch a little little race, why I, I told this, but started trading in 1998 and Probably about, let's see October of 1998 and around about September of 1999, I had taken a $50,000 account all the way down to $8,000.

And I was thinking, okay, this is probably coming to an end, what am I gonna do?

So what I did is I started getting my resume ready and I got it all prepared.

And I was thinking, well, you know, worst case scenario, I have to go back into the workforce, you know, put back on a suit, go work for the man.

I accepted that fact And amazing thing happened when I, when I accepted that I basically lost all fear.

In other words, I was willing to accept the outcome should I not, you know, make it in trading.

And I was ready to move on if you know, if I blew up the last 8000, luckily I had a nice office manager who believed in me and gave me enough risk capital to basically get things going and turn it around.

So it was almost instantly, once I lost that fear That I was able to turn things around and had an incredible year in 2000, of course, the market helped that year.

But nonetheless, you still had to trade it.

And it was like I said, it's amazing and you have to let go of that element of fear.

You know, if you want to succeed in trading, and I was just a prime example of that.

So there you go, that was my story about almost failing and quitting.

4. How do you manage risk when things weren't going your way?

Steve: Managing risk is your number one job as a trader.

And sometimes it's the hardest thing to do to admit you're wrong and just rip the Band aid off. Sometimes you have to do that.

So I'm gonna walk you through a real time trade that I was in.

This is a very long swing trade, it's a silver fund PSLV and I was long from down here, this is the 10, the 20 and the 50 day moving average.

And I use these to gauge when it's time to exit a long term position.

So in this case I let it continue to bounce off the 20 day moving average and then we got up here, it got real choppy and I didn't like that, but I held on but I noticed this one day right here, a big pull draw down with a bottoming tail wick bouncing off the 50 at that moment, the 50 day moving average became my risk management because if it can't hold that, I don't want to be in it.

The 50 day moving average is a, just a wonderful general health indicator.

So what happened was is this was a real shot across the bow for me on this day, I thought we were breaking out and here we go.

But horrible close.

We call that an engulfing candle.

So that was a red flag, number one.

And I told myself the next close below the 5th Day moving average.

I'm out and it didn't take long.

There was my signal candle and I've saved myself all this headache, but I might reload down here on the 200.

We'll see how that goes.

But the important part is to have a plan as to when to get out.

The worst thing you can do is to just become a hoper.

Once you become a hoper and you're in a position where all the trades are under the moving averages, you're on the other side of the mountain, the momentum has broken and there's no need to be in there.

Give yourself some psychological and risk capital and let your t plus to sort out, give your some dry powder and move on to something that's gonna work better.

But the most important thing to do is to have your out ahead of time and don't waver, don't become a hoper and say, well, maybe it'll turn around and I'm right in the markets wrong.

No, the chart doesn't confirm your theory anymore.

So you've got to get out

Andy: I once had a broker tell me, “Andy, I've never seen anybody dig himself out of a hole like you can.”

So I was good at that at least anyway.

I want to give you some ideas of how you can manage risk when things aren't going your way.

The first thing you want to do is get control of your emotions.

Nobody needs to be trading emotionally.

Okay, It's just a recipe for disaster.

So make sure you get those emotions in check before you start trading again, reduce the trade size.

And I know you've heard this, but I don't think people realize how much you really need to reduce that trade size because the whole idea start to putting together winning trades.

Okay, They don't need to be big, they just need to be winning trade.

So if you're accustomed to trading 500 shares, maybe bring it down to 100 even 50 if you have to.

Okay, focus on good entries.

Entry is the most important part of the trade.

Okay, So whether you're buying Pullbacks,, breakouts, make sure the good breakouts, if you're buying them, because if you have a good entry, the more likely your trade is to be profitable, manage downside risk.

Now you want to do this maybe more than what you're used to because it's probably the reason you got into a hole because you weren't watching the downside.

So make sure you're watching that downside risk, get out quick trade less.

Okay, Common sense.

You want to trade less until you're profitable again.

Okay.

And then I added this.

Take profits, and I should have put take profits quicker.

Okay.

Now, I know you're taught to let your winners run, okay.

But you're not in a situation right now where you want to, you know, try to let winners keep running and turn around on you and be a negative trade.

The whole idea here is to put together winning trades.

So take the profits quick and watch that downside.

All right, guys.

5. What is your favorite set-up and how do you play it?

Steve: Yeah, my favorite setup is to try and position myself for an, an anticipatory move out of consolidation.

Some people would call this a bull flag here and I'm not against playing stocks under $5 because you can get some really good percentage moves on those.

So this is mindmed MNMD, noticed that it had a nice push early in the year and then it broke out of this consolidation.

I actually participated in this trade and it was my bread and butter trade.

Watching this consolidation break I anticipated with an entry here on the 10 S.M. A.

This was day one and I participated in day one and took the stock home.

It closed on highs.

There's no reason for me to think that there would not have been follow through the next day.

But the next day is when I kind of turned into a cellar.

I let the continued momentum or a gap up in this case,, continue into the day to, and then I start taking my profits.

It's been my observation, especially in the recent markets, that momentum can really go for about a day, day and a half.

And after that day and a half, the second day when lunchtime starts to come in, a lot of traders get itchy and they start looking to take profits.

And that's when I incorporate that risk management where I go to my 15 minute chart and the minute the price breaks down below and closes the 1st 15 minute candle of the 10 period SMA

That's my signal to get out.

So I like to anticipate you know and and participate and then fade out and there's nothing better than putting out limit orders above and having people that are late to the party.

I think we've all been there, the ones who are chasing you're feeding it to them so contrary, keep this in mind.

You've got to be contrary when you trade.

I'm anticipatory in the entries and if they work for me then I start to fade out of them and sell them to the people who are chasing.

Never ever be the person who's chasing.

If you're chasing three green bars on the daily chart, you're just asking for a pull back to the to the means.

So I try to avoid that.

Good luck.

Andy: Okay when it comes to swing trading, I'm not a trader who typically likes to chase breakouts.

A great example would be on this BERY

Those who chase this breakout after earnings right here.

It looks beautiful, but look what has happened since you've had 123456 days of pull back there without a bar reversal.

So what I typically like to look for are these setups that had a move and then had these consecutive down bars and then by the reversal above the high of this setup bar right here I call it now.

What I like about this trade is my stop is defined.

Okay and where would my stop stop be?

It would be below this setup bar low right there.

So in this case the stop would be if I just went and looked at this low it is going to be below six a 61.

Okay so now my stop is to find, all I do is I need to do is need to manage profits.

Or if I want to reduce risk and cut it, if it comes back to my entry that is fine too.

But typically this can be a very explosive move.

Unfortunately this one is not the market we're in is kind of conducive to this kind of action.

But nonetheless I love the reward to risk ratio in a trade like this.

So look for those breakouts that have consecutive Pullbacks and then that bar reversal, those can typically be very profitable trades and not only that can be explosive at times, profits.

You know, profits are subjective.

Some may look for a two or three day move.

Some may look for a two or three week move, so I like to define the risk to the downside and then let it, you know, let it work from there.

6. What are your go-to indicators and time-frames for charts?

Steve: When it comes to indicators and timeframes I keep it extremely simple.

I like the 15 minute chart for the intraday and the daily chart for my bigger picture.

That's my go to time-frame now the indicator is also extremely simple and I only really use one of them.

It's a 10 period simple moving average on the daily and the same one on the 15 minute there.

So I use it and anybody can use it as a day trader or a swing trader.

But when I use it it's usually to try and enter a trade on the, on the, on the daily there you can see those tests are a nice pullback in an entry point that continues to move higher.

If you're a day trader and you're riding momentum once the price breaks as you can see here, it came in and then broke the 10 S.M.A

Right there.

That's what I call the signal candle and it's very important to recognize the signal candle must close below the indicator.

So in the case of Apple, this is a consumptive trade if I was in apple from down here and riding it for a few days and I decided it was time to take profits.

Once I'm ready to take profits, I'm looking to the 15 minutes.

So I shift to the intraday and the moment I see the first candle close below that 10 SMA

That's my signal candle, that's when I quietly get up and head to the exits of the movie theater on fire And doing that usually saves me a lot of headache and a lot of profit give back because that's the idea is to try and hold on to these profits as long as you can.

So again, it's also important to notice on the daily chart, there was an attempt to close below the 10 SMA

But it didn't, the price bounced back up and that's an extremely bullish indicator to me.

So I like to keep it simple.

If you use too many indicators, you start to get over analysis, paralysis, that's not good.

You want to just get a simple rhythm going and whatever works for you.

It could be an ATMA

It could be the weapon, could be whatever you want.

But this is what I use for timeframes.

One indicator, The 10 SMA

Pretty simple.

Andy: Chart indicators. This is something else that can be very subjective.

Okay, what works for one trader may not work for the other and vice versa.

It's, it's, it's very subjective.

I like to keep it simple.

Okay, I think you're gonna find me and Steve pretty much on the same page on this one.

But for the intraday chart, I like to use a 15 minute chart and like I said, I'd like to keep it simple.

All I have is a 10 period simple moving average on the, on the 15 minute chart.

I just like the way it it kind of guide, we call it this sometimes a little guiding hand on this momentum stocks as you can see here in john Deere the other day, this would be yesterday just had a really nice move after earnings kind of consolidated going sideways and as soon as that 10 period moving average came up, just kind of forced the action higher.

Once it broke through that back through that 10 period, it gets really sloppy.

So the 10 period and also I like this, this is brian Shannon's you know, five day moving average.

So another one that I keep on the 15 minute chart as far as the daily goes, I have four moving averages are all simple and it would be a 10, a 20 a 50 a 200 you see John Deere down here.

So boy, that's about it.

I like I said, I don't, I don't use the wop that much at all.

I do like volume, I can always keep an eye on the volume, but a few moving averages and volume indicator is really all I need.

Just I don't like to get too convoluted, you know, and and try to look at too much too many indicators.