Episode 96 ... "Nico" (71:07)

Has two 43" screens, Dell multi-clients, 12 usable virtual screens, 4K resolution
Previously four 24" screens and one vertical 28"
Ikea desk
Aug 2016 best month to date [podcast recorded in Sep 2016]
Worked for software development firm out of high school
Wanted to make more money
He didn't want to take core college courses, just computer science, dropped out
Built his own software development business from nothing
First client he had was a successful stock trader
Discovered that microcap stocks moved 20, 30, 40% in a day
Lived paycheck to paycheck in the beginning, had no savings
Had to save up money for a year to build trading stake
[Blipped out some bad habit?]
Do not quit your day job! Try something on the side first
First trade in early 2007, bought AAPL, no time horizon, sold dame day for $100 gain
"Easiest $100 he ever made"
Didn't want to work in a cube and make $100
Used Telechart by Worden Brothers in 2007, had built-in chat window, that was cool!
Charting appealed to him, fundamentals "too much work"
Timing the market using charts -- instant gratification
Did not know about shorting at first, just went long
Microcap market of 2007, he made $20K just getting long microcap runners
He thought, "this is easy" -- worst thing that could happen
First account was $5,000 with Fidelity
Either the market changed or his luck ran out, but he kept "pulling the handle" (slot machine reference)
Second year lost all his profits, cold reality slammed him in the face
Now he understood why trading is "damn near impossible," 90%+ fail
Lost consistently for the next seven! years
Easy to lose trading profits, hard to lose "legitimately" earned income
Started to put his size in check, started trading small, $5,000 positions, maybe $10K
He would hit periods of profitability during those seven years, but then give it all back
He was making a good living as a software developer, trading losses didn't really matter, "slow bleed"
Three steps forward and five steps back
At one point he had over $25K, not shackled by Pattern Day Trader rule
Wished he didn't exceed PDT rule, wasted a lot of time and money
PDT rule exists because of degenerate gamblers (like he was)
Loves solving problems and puzzles, thought he could figure out the market
This shit is tough, I'm getting my ass handed to me, small size kept him from blowing up
As the years passed, self-doubt crept in, but people supported him despite his failures
Periods of profitability gave him hope
Can't be luck alone, because he's losing more than he's making [made me laugh]
Reached end of his rope, had a serious sit-down talk with himself, sick of adding money to trading accounts and losing it
Went full-time, stopped growing his software biz, focused solely on the market
Never had Facebook, MySpace, Instagram, Snapchat
Traded in isolation for those eight years, floated around, went nowhere
Discovering Twitter changed everything for him, every trader is on there [even good ones ;-)]
Discovered shorting, those first eight years were long only
Investors Underground gave him a connection to good traders
His software biz big enough, successful enough, he can make his own hours, and has savings
He loves shorting, 90% short, 10% long
"Flying Pigs" ... short the microcap junk companies doing dirty stuff to boost stock price
Fluffy PRs, huge gaps up, presents good opportunity to short
Look at pre-market movers and gappers
Look at pre-market unusual volume
Has a watch list called "Pigs" ... every pig encountered is added to the list
Has 200 pigs on his list
Pig list sorted by net % change, former runners appear once again, no homework needed
Top of the net % change list become his candidates for shorts
Wait for the backside, "crack VWAP," or "high of day rejection"
Shorting the frontside is stepping in front of a train, have to make an educated guess where the top is
Controlling your size is everything, don't be a gunslinger
He isn't comfortable sizing up because he still has lots to learn
One bullet shooting only necessary if you can't scale in
You can't improve what you don't measure [smart]
Account balance alone isn't a truly useful measure
Start plotting your equity curve
Puts everything on Twitter to curb his degenerate gambler impulses
Stopped overtrading, being impatient
He's the rare guy who thinks you should post your P&L publicly [I say: bad idea]
All about accountability, kept him from being reckless
Aaron mentions that you must have measures other than P&L to measure success [from "HF71"]
Track your daily P&L in great detail
Take a scientific approach and measure what you're doing
Develop good habits ... he had bad habits for eight years
Identify what you struggle with: Are you impatient? Are you a degenerate gambler?
Don't trade in solitude, surround yourself with better traders who are like-minded
One wolf hunting for food isn't going to eat as well as a member of a pack
Boy Scout system, try to keep each other out of trouble
Has developed spreadsheet for trade tracking, willing to give it away from free
Lots of people pay for TraderVue, but can just use his spreadsheet
Twitter: @inefficientmrkt