Notes for Chat with Traders, Episode 125

I just discovered this podcast called "Chat with Traders." It looks really interesting and I plan to listen to them all (in reverse order) and share my notes for each one.

Episode 125 -- Matthew Hoyle (58:35)

• Dutch?
• Born in 1984?
• Head hunter
• Formerly an options market maker, in Amsterdam
• On trading floor for six years
• Started at age 13? Is that possible?
• Exchange went electronic 2003
• Didn't go to university despite opportunity to go to the best (in Holland?)
• Went into head hunting in 2003
• Makes more money as a head hunter than he did as a trader
• Paid seven figures as a trader
• "Executive search" is the high end, "experienced hires"
• Recruitment is volume-based
• Relationship-based business
• Doesn't hire for "arcades" (where people bring their own money)
• If a head hunter calls you, listen, don't just hang up
• People (traders) like to talk about what they're good at
• "Manual" trading firms disappearing, everything is automated now
• Don't apply for stuff that you're not qualified for
• Most firms want to hire fresh grads, *not* experienced people
• Mental arithmetic tests used as stress tests
• Technology + trading is the key combo ... must be able to program
• Don't bother learning Java now, must know scripting languages
• Old point and click traders hire coders to automate what they know
• Paul Rotter, a classic point and click trader, "The Flipper," retired now
• Whole industry is automating, all algo traders now
• Experienced manual traders making a bit less money every year now
• Strict division in some firms between tech side and trading side
• Shortage of C++ programmers so severe they'll take any age
• PDT, Renaissance Tech ... they want academics, will take old guys
• Perks are nice, but retaining people all about compensation 
• Formula-based percentage of trading profits
• RenTech has zero turnover ... extremely highly paid people
• Discretionary bonus models; team-based structure, profit distribution
• Pit traders in Chicago haven't vanished entirely, just much smaller numbers
• Prop trading within banks did completely disappear for awhile
• Hiring is based on volumes first and volatility second
• Virtu has only 150 employees worldwide
• Volatility high means traders hired, volatility low means tech guys hired (fight latency wars)
• Volatility and volumes both low, layoffs hit hard (hedge funds, prop trading)
• Banks not as nimble as hedge funds, way overstaffed, full of dead wood
• AI is going to be big, lots of demand for people who understand it
• A trader with one strategy, a one-trick pony, will never be hired
• You have to be passionate in the interview, don't be negative
• People will hire you because they think you'll make them money, it's obvious
• Do mock interviews! Practice makes perfect. Use Glassdoor to get the questions
• "Thank you for inviting me."
• www.matthewhoyle.com
• Twitter: @MatthewHoyle

Keepin' It Flirty

Still on a Rachael Price and her Giant Mouth kick ... silly silly song, but I love it. God she's good. And the band is growing on me too. 

http://wfuv.org * Follow @wfuv: http://ow.ly/flLAg Lake Street Dive performs "Side Pony" live in Studio A. Recorded 1/27/2016. Host: Carmel Holt Audio: Caroline Inzucchi Cameras: Sabrina Sitton, Nick D'Agostino, Kristen Riffert, Joe Riccobene & Emma Carey Editor: Sabrina Sitton & Nick D'Agostino

One Disaster and One Near Disaster

THIS POST HAS MULTIPLE UPDATES SO SCROLL ALL THE WAY DOWN

The day trader I wrote about earlier has had some bad luck of late. Study these two charts closely to learn from his mistakes. APHB CETX

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Update: Another near disaster on May 18th ... can you spot what he's doing wrong? GLYC

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UPDATE: June 1, 2017 ... MBOT

UPDATE: June 8, 2017 ... ABIL

July 18, 2017 in CAPR 

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December 4, 2017 ... PXS and ASTC ... same old story, gets stuck in a Flying Pig, doesn't exit for a "small" ten or twenty thousand dollar loss ... I assume he adds to the losing position in an attempt to improve his average (475,898 shares traded in total), but price keeps rising (high in PXS was $12.22!) ... says he was down 98K, made some back when PXS finally broke at 2:45 PM. ASTC same thing, just less dramatic (smaller size probably and smaller move).

December 22, 2017 ... short SGLB ... $39K loss ... nearly half a million shares traded. 

December 26, 2017 ... when the "halt resume" washout long fails, this time in FTFT ... ~$44K loss ... over 600,000 shares traded. 

Jan. 4, 2018 ... CNET and CPAH ... nearly a million shares traded.

Jan. 5, 2018 ~$58,000 loss, long $CNET ... over half a million shares traded ... fighting it on the other side after a bad loss previous day. Clearly "day after" revenge trading ... ugly but happens to the best of us.... 

Jan. 9, 2018 $FORD ... this one no doubt caught a lot of Pigs Players off guard ... then why they tried to reverse long after the squeeze to $4, smackdown: 

May 7, 2018 ... BLNK a runaway, trapped short, tried to average down down down, just gets more and more stuck, pulls the plug at the top: 

May 8, 2018 ... Another large loss, this time from the long side. I assume he did his "halt resume" play here with insane size and it instantly "dumped" on him to the tune of 60-80 cents ... but it's just a guess. 

May 11, 2018 ... -27K, wrong side of another runner, HEAR, apparently with "half size," which is fortunate... otherwise the loss would be twice as large. 

New one for June 18, 2020 … short UONE with a realized loss of $244,833. Must have averaged down, taken the loss. Tried again though with twice as much size (martingale method), lost again. Tried once more with twice as much size again, lost again. Stopped trading (or the market closed). That’s my guess:

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July 20, 2020 … no details again but over a million shares traded so I assume some kind of martingaling occurred … realized loss of $166,000.

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July 22, 2020 … 315,000 loss the bulk of it in $MXC … what’s happening is that TheShortBear is posting huge wins every week and I believe Madaz is trying to compete, taking larger than normal risks in an attempt to keep up. He should be aware of this and try to get things back into check.

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September 21, 2020 … says intraday loss over $500,000 … he’s taking 10,000 share positions in Tesla, it seems … his competitive zeal to “keep up” with TheShortBear may be making him take unusual risks?

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October 9, 2020 … a new record loss, $995,000 in VVPR … got him coming and going it looks like. Pretty vicious jam above the opening range high … then “switching bias” resulted in getting “dumped on.” Possibly while martingaling bet size the entire time.

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ETF Trading Portfolio Update -- May 15, 2017

No changes this week.

Funny Not To Care

This lead singer is really good, love her voice, close your eyes so it's not marred by her white girl dancing .. she deserves a better backing band than these hipsters.

Lake Street Dive live at McCabe's 8-28-11. video & audio by Wayne Griffith.

Dissecting a Madaz Play

Madaz shorted $TCCO this morning and I wanted to dissect the trade. 

First, we know he was watching $TCCO because it was the number one Up Gapper:

At 9:39 AM he tweeted that he had "nailed" it for $5,200 having shorted "4ish average" and covering $3.50. 

Now let's look at a micro timeframe chart here, 10 second bars ... that should read "pre-open high $3.70" not "high $3.70."

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Later at 9:54 AM he tweeted that he covered his final 2,000 shares at $3.20 bringing the total gain to $5,800 ... $3.20 is 30 cents below $3.50, times 2,000 shares is $600 additional, that makes sense, I guess. 

Here's the chart again with the $3.20 level marked.

Finally, he tweets his P&L, which he does every day, win or lose. 

What's revealed in the P&L is that he realized $5,942.85 by shorting $TCCO, generating 10 tickets and trading 66,096 shares. I'm not sure if the shares and tickets numbers mean he bought and sold 33,048 shares or bought and sold 66,096 shares, or 5 buys 5 sales, 8 buys 2 sales, 9 buys 1 sale, etc.? Maybe some kind reader can enlighten me via email (or Twitter).

Let's assume that he bought 33,048 shares and sold 33,048 shares to make the $5,942.85. That's almost exactly 18 cents a share. So we have to assume that he is averaging into the position and averaging out of it, and was able to walk away with 18 cents of profit.

If he simply shorted 33,000 shares at $4 and covered 33,000 shares at $3.50, he would be making over $15,000 on the trade, not $6,000. I'm not sure how much of a difference the final 2,000 shares covered at $3.20 can make.

I'm just thinking aloud here, I'm trying to make sense of this. 

A bigger question is *why* did he begin shorting where he did to build a 30,000 share position with a 4ish cost basis? Was he "reading the tape" and built the short based on that? This thing traded up to $4.40 ... if he were short 30,000 shares from 4 and it ran on him, would he get out at $4.40? How much slippage would he suffer? Was he willing to risk $12,000 to make $6,000?

I'm just thinking out loud here, trying to make sense of this. I'll update the post as I continue to think about it, and incorporate any other wise people's thoughts, with credit of course! 

Two readers have written in with their comments, both full-time traders with many years of experience:

“As to his trading TCCO today your guess is good as mine as to how those 60k+ shares were distributed within the 10 tickets you mention. What I find odd here is that based on his strategy as explained in his various YouTube videos, he doesn’t short unless price is at or below VWAP and below pre-market highs. Maybe he has some nuances to his strategy that I am not aware of, but this particular TCCO trade is opposite of how he “normally” trades short. If he goes long its almost a reverse mirror image of this TCCO short trade. I believe most of his trades are cleared through ETC.

Based upon one of his recent tweets about getting enough rebates to cover commisions, I am led to believe he probably hits bid/ask for entry/exits about half the time, otherwise why “advertise” you covered your commissions with rebates.

From my viewpoint, if his trades are real, he is scaling in and out hiding share size but what is sketchy to me, based upon experience, is that he is able to move 5k-30k lots without moving price dramatically and getting full fills. The volume in the majority of the low floaters he trades in my opinion can’t absorb the share size he is using and getting filled without adversely moving price. I trade them from time to time but the only way I can get multiple thousand lot fills is to piece it out hiding shares at various price levels and even then I end up not getting full fills and have to cross the book and hit bid/ask to close position.”

“First off, it’s 33,000 in and 33,000 out for his total shares. And yes, his risk to reward is completely skewed. I’m not a fan of how he trades. If he got short on this around 4 and especially because of the super low float he could have just bid whacked 10,000 share blocks and knocked the price down himself easily.

There was no reason to cover where he did. He claims to use the three minute chart and if you take a look at it there was no reason to only get such a small piece of that move. I really think the only reason why and how he has made money is because of the sheer size of his positions.

An answer to your question of why he would short there is because we are familiar with the name and also super low floats. You get to know these things over time and this is textbook: it hit half dollar resistance and pulled, and once these pull it’s over and can be pretty safely shorted.

Especially if you look at that last green candle and how big it is on the three minute chart. It’s going parabolic and that’s a dead giveaway that it will pull back. These stocks are a completely different world, but once you get to know them, they are highly predictable. He does know his set ups, but I really think he gets scared out of his trades because he is using too much size. He would be way more profitable if he sized down even a little bit.”

He Grabbed His Pants, Took A Better Stance

Here's the silver-tongued Sammy Davis, Jr. in an amazingly tight brown pantsuit singing Jerry Jeff's great song: 

This is Sammy Davis Jr.'s Version of "Mr. Bojangles".

Trailing a Stop in LBTYK

I sent out this short set-up in $LBTYK for April 27 to everyone who signed up for my free Daily Trading Idea ... sign up now if you haven't already done so.

Here's the image I sent in the email ... I checked my records and I did short $35.10 at 2017-04-27, 12:09:35 on ISLAND, no doubt by accident after transposing the numbers ... I do this at least ten times a day, make trading mistakes I mean ... confidence-inspiring, I know).

Seven days later it looks like this:

So the question is what do you do when it gaps below the target? I'm going to cover half tomorrow morning and trail the stop above today's high of $32.54. I can see this thing going down to $29 or even $26, but I want to take half off the table now. If you have any better ideas, I'm eager to hear them (on Twitter or via email), and I will share them in turn!

Initial risk was 44 cents and the target was over $2 away so the risk/reward was 1:5, and if I cover near where it closed it will be closer to 1:10 ... a "ten bagger."

Sign up for my Daily Trading Idea today, it's free!

UPDATE: @DavidTaggart suggested moving the stop to the high of two days before every time it makes a new low. @Contrahour suggested an Average True Range based stop, which is a little more complicated, so I'll go David's high of two days ago for now.

ETF Trading Portfolio Update -- May 8, 2017

DZZ reversed, but remember that I'm going to switch the GLL once it too reverses. There was bizarre action on April 24 in DZZ which has thrown off the trend following system -- another reason to drop that ticker and track GLL instead.

Make a Paper Boat, Light It, and Send It Out

Mink's bassist sings the Spanish portion ... I always wondered about that.

I also like to say to the rats in the locker room, "Hey Mr. Gym, I can see the shape you're in..."

Willy DeVille (August 25, 1950 -- August 6, 2009) was an American singer and songwriter. During his thirty-five year career, first with his band Mink DeVille (1974--1986) and later on his own, Deville created original songs rooted in traditional American musical styles.