Episode 156 ... Michael Katz (59:45)

Has three kids, two boys and a girl
Started in markets, late 1990s, then in his late teens, during internet boom (born 1980?)
Opened first account with a couple thousand dollars
Blew up a couple of accounts early on
Discovered equitytradingonline ... Gary Roth
Seven Points Capital (Mike Mangieri, Gary Roth, Mike Katz) started as execution firm
Started trading "parity" on NYSE
Parity: buy on the bid through the floor broker, could easily scratch the trade, "risk free"
Getting good locates is a key edge a prop firm can provide [don't I know it!]
Scalping with size in high volume stocks within $5 to $20 range
Trades 50 million shares a month
Uses hot keys
Scales in and scales out
Has 15 different set-ups, each with its own rules
Descending triangles in low-cap trash names that have flown ("Flying Pigs") ... look for a lower high
Enters within the triangle, enters the break of the triangle, enters the retrace to base of triangle
ECN rebates don't make much difference to his P&L
Trades eight to ten names on any given day
Will swing trade ... if it's green and it's working, he'll keep it; then exit rules come into play
The best trades start working right away
Whatever is gapping, he'll notice it
Uses scanner to find intraday setups: volume, volatility criteria
Watching volume important to him
Recommends Anna Coulling's book, A Complete Guide to Volume Price Analysis
He looks closely at Volume Profile
Consistency is what differentiates great traders from lucky ones
Need a clear and definable edge
Avoid large losses, scale back when you're not performing well
On the other hand, scale up dramatically when you're feeling in the zone
Always knows where he's getting out before he gets in
Amateur traders just hope for the best, never even consider their exit when wrong
Risks a fixed dollar amount on every trade
Sizes his positions based on stop price and fixed dollar loss, determined in advance
If he breaks his rules, he sizes down, slows down, takes a day off
Rule breaking very important to pay attention to [recognize when you're going on tilt]
Taking losses quickly, which most people can't do, itself is an edge
Reading order flow, observing patterns, also both edges
Big fan of journaling
Sports, trading, poker are all the same: you have a game plan, you execute during the game, then review the tapes afterward
Over time you develop a trading method
He still loves watching trading videos on YouTube, seeing what other people do
He's willing to learn from everywhere he can, then makes it his own
Can't imitate someone else's method, only yours will work for you
Establish rules for each set-up
Surround yourself with good, smart people who can mentor you
Be careful because there are false gurus and DVD sellers out there looking to take advantage of you
There are great traders on Twitter (mentions SmashTheBid) who are under the radar; seek them out
Katz says some kind things to Aaron in parting
www.sevenpointscapital.com
Twitter: Michael_Katz11