The Wolf Of All Streets - Christopher Inks, Founder of Texas West Capital on his Humble Trading Beginnings, Calling the 2017 Cryptocurrency Top, Why Most Traders Fail, How to Overcome Obstacles and More

Episode Date: May 21, 2020

Christopher Inks, Professional Trader and Founder of TexasWest Capital and Scott Melker discuss humble beginnings in trading, making every rookie mistake in the book, working against the whales, "putting the work in", early explosive hot altcoin picks, calling the cryptocurrency top in 2017, why teaching and TA still work when everyone is doing it, human fallibility and the desire to be correct, Elon Musk, The General Rule of investing, common criticisms and misconceptions of trading, diving in face first blindly, the YouTube Purge, beating an unbeatable market and more. --- ROUNDLYX RoundlyX allows you to dollar-cost-average into crypto with our spare change "Roundup" investing tool, manage multiple crypto exchange accounts in one dashboard and access curated digital asset content and services. Visit RoundlyX and use promo code "WOLF" to learn more about accumulating your favorite digital assets when making everyday purchases and earn $4 in free Bitcoin. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 6% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everybody? This is your host, Scott Melker, and you're listening to the Wolf of All Streets podcast. Every week, I'm talking to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, and basically anyone else with an interesting story to tell. So sit down, strap in, and get ready, because we're going deep. Let's go. I'd like to thank my sponsors, Round the X and Voyager, for making today's episode possible. We'll hear much more about them later on in the episode. This podcast is powered by BlockWorks Group, the only events and podcast production company I trust. For access to the premier digital asset conferences and in-depth podcast content, visit them at blockworksgroup.io.

I promise you will not be disappointed. I've been trading for a long time and I've lost money on countless trades for countless reasons. I've bought the top, sold the bottom. I've revenge traded an asset, taking losing positions over and over and over again in an attempt to get my money back. I FOMOed, been greedy, refusing to take profit, hoping to squeeze a little more out of a winning position. I've gone all in on a single stock based on a hot tip only to hold while the asset literally went to zero. I've moved my stop loss down when my trade was invalidated in fear that price would reverse right after I exited my position. I mean, I've thrown away my money for no reason more times than I can count.

Then I met today's guest. I originally found him on Twitter and immediately gravitated towards his clear charts and sensible approach to trading. I actually joined his first quote-unquote paid group, as everyone likes to say, and quickly became a believer. As I somewhat burrowed my way into his circle, we became fast friends and I pushed him to take his efforts to another level and to start teaching newcomers how to approach trading, both from a technical and emotional perspective. Although honestly, I can take very little credit for any of that. Meeting him has been a godsend for myself and many others. So I'm excited to finally have him on the show to share his seemingly infinite wisdom with all of you. So it's with great pleasure that I welcome the man behind Texas West Capital,

Christopher Inks. Hey there. Thanks for having me. Yeah, of course. So I just listed a laundry list of mistakes that I and most other traders have likely made. You often allude to the fact that you've lost a ton of money in the past as well. Can you talk about your beginnings as a trader, your journey, and the hard lessons that you learned on your path to becoming successful? Yeah, sure thing. You know, I've been doing this a while.

I guess we'll say it nicely there. I actually, you know, growing up, I knew that I really never wanted to work for anybody. So I had to figure out how do you make a living without actually working for anybody? And one of those ways was, you know, stock market. Of course, this was back early to mid 90s when I was considering this. So, you know, got out of high school and, gosh, I started off, I think I was paying something like, oh man, this is almost 25 years ago now. I was paying probably some like $200 a month for a physical newsletter that I would get one time a month in my mailbox. And, you know, I know a lot of your listeners may be

kind of young. They may go, what the heck's mail? Exactly. Yeah, you know, just that physical thing we got. And honestly, I can't even remember who it was anymore. It was some trader at the time. And that was really kind of my start there. You know, again, that was before the Internet got out here and all this free information was available. And so what that meant was I went through a lot of the mistakes that still today traders make. You know, one of the biggest questions that anybody that's attempting to teach people how

to trade get is, well, you know, if you're teaching everybody these things, these secrets, isn't it going to change the market? Everybody knows about it, so it's going to be different, right? No, not really. I mean, it's the same thing that people have been doing for, you know, 100 plus years. Nothing's changed. People still come in with the same mentality. And very few of them actually get to the point that they're open enough to listen. I was fortunate when I began that after I made more than a few significant mistakes, I chose to stick around and really kind of put an effort into learning how to do it. And so, you know, again, the laundry list of mistakes and bad decisions that you listed there at the top of the program. Oh, man, I've made them all in spades, you know.

And so many times when I'm out there discussing things publicly and, you know, I kind of chuckle a bit, it's because I still remember today what it was like to make those mistakes and the feelings that you get, the emotions. So, you know, yeah, I mean, you know, one of the biggest mistakes that almost every new trader makes is this belief that they know what, you know, how the markets work. Things that seem to make sense to you when you first come in because they know what, you know, how the markets work. Things that seem to make sense to you when you first come in because they're logical, but they're just not based off logical premises. So even though the conclusion is logical, it's still an inaccurate conclusion. And, you know, one of the biggest things you have to do when you first come in is to understand that usually you're buying or selling from professional traders. You know, we often refer to them as institutionals or whatnot.

But, you know, it can be anybody, a professional that just has a significant wallet size, basically. Somebody that's got the heft to kind of, you know, nudge the market a little bit, I guess. Push you around. Yeah, yeah. I mean, you know, again, a lot of the big things that, you know, we talk about these things that new traders often think, and a lot of that has to do with, oh, and you see it really in cryptocurrencies right now, is, you know, everybody believes, oh, whales. Everybody's scared of whales. They think just because somebody's got, you know, a lot of money or a lot of the asset that they're just going to dump it or make the market do whatever they want. But the reality is, there's still one individual, you know, in relation to the entire market.

So, if the entire market really is much more bullish than what that individual believes, and they go to, if they were to dump on the market in an attempt to push down price so they can buy lower, if they're wrong, they lose. I mean, yeah, they're going to make a little bit of money on what they sold there, but they're going to have to buy higher. And so the reality of it is, you know, most often you don't have real, what people would consider whales trying to dump on the market. But we often, as new traders, come in there thinking that way. And that fear makes us trade emotionally. Was there a definitive moment for you though? Was there a definitive moment when you went from, man, I'm over losing money and something kind of

clicked? You know, I think it's, gosh, man, you know, when you think about it, you lose money a lot in the beginning. You'll have, and what keeps you going is those times where you get lucky. And you get lucky and you're like, okay, now I know what I'm doing. Oh, heaven forbid if you get, if you're lucky just because you're following somebody who made a good call once because then you think, oh, they're always going to be correct. And so then you just blindly follow them. You don't realize it's luck. And then you end up losing more. And the problem with that is though, is that you get to that point where, you know, if you get just enough luck in there, it strings you along and you keep adding money to your account.

Right. You know, you don't necessarily go out right when you hit zero. You kind of keep adding in because you think, okay, I've got it this time. And so for me, back there in the beginning, it was, you know, it was a lot of that. It was, I wasn't one of those who just kind of, you know, put in my money and then was out in three months. I kept adding and kept losing money. Yeah, same.

And yeah, so one day I kind of looked back at it and I said, man, this is just ridiculous. You know, I keep putting money into this system and I know it has to work because people are doing it. Somebody's making money. Somebody is, exactly. So all I have to figure out is how are they making money? Obviously what I'm thinking isn't working. And so that then began my trek to kind of understand

absolutely everything I figured I could possibly understand when it came to trading. I was most interested in understanding why does the market move like it does? How does it move? Because these are things that I thought I understood when I first came in, but my bank account told me otherwise. Yeah, that makes a lot of sense. And let's talk about why you decide to start teaching traders,

you know, how to be better. I remember us kind of joking about crypto Twitter and me and you kind of harping on the point that there was all this bad information and somebody just needed to present good information. What is it that you saw in that specific community that drove you sort of to the decision to open your own shop and start teaching? Well, it's funny, you know, my training has always been for me. And it's been secondary. It's just been a way for me to kind of, you know, live the life that I want to live. And it's been secondary. It's just been a way for me to kind of, you know, live the life that I want to live. And part of the way that I want to live life is I actually enjoy education. So, you know, I've been to... Yeah, you have like 50 degrees. I'm telling you, you know, for me, it's just enjoyable. You know, it's just what it is. And

so, I was in law school, go figure. And I actually, I'd had a Twitter account from a while back, but I never really was much of a social media person. I'm old. I don't really care for it a whole lot. And one of my professors in law school required us to have a Twitter account because she was going to connect with us that way out of class. So I did that. And, you know, of. So I did that. And,

you know, of course I was trading and, you know, I'd heard about Bitcoin back in 2009, 2010, and I'd always said, you know what, I'm going to get this mining thing going. And that sounds pretty cool. If that works out, that's going to be a great thing. I fell behind, forgot about it. And so it came up again as I was there in law school and I started looking around then because I was on Twitter now, really kind of exploring it. And I came up on crypto Twitter. And man, I'll tell you what, you know, I really started earnestly looking at crypto Twitter back in January or so, December, January of 2017. As I entered the cryptocurrency market. And what I noticed on there was a lot of just so much stuff

and all these things I went through as a new trader started coming back in. So, you know, you saw real bad analysis on there. You saw pump and dump groups were just huge. And they're like, pay this fee and we'll tell you when we're going to pump and you can be in on it. And most traders think, oh yeah, okay, well, I'm going to do all right there, failing to realize that they're going to get in after the pump's going and they're still not understanding enough about how things work to actually get out in time. So they're going to lose money anyway.

You know, and we saw that and I was like, man, this is really bad. And I would see these responses by these, what appeared to be new traders based on their responses. And they were eating this up as if it was the Holy Grail. And I mean, all I saw was these pump and dump groups getting fatter, getting bigger, making money. I saw these people just getting people to join things and to pay them money based on this really poor analysis.

And so, I went out there and I just started, you know, saying things, you know, I started talking about things. I talked about buying XRP back there when I bought it in, gosh, what was that? I remember it was like 15 sats or something. I mean, crazy. No, no, no. With the XRP, it was six hundredths of a cent. Yeah. It was the doge. Yeah, it was crazy., 100% yeah. It was the doge. Yeah, it was crazy. It was back there around March or so of 2017, April, somewhere around there. And yeah, I was telling people, you know, that's probably good by there. We saw XVG.

That was the one you were just talking about. Yeah, that's how I was thinking of XVG. I remember you saying, oh my gosh, man, it's crazy. Yeah, yeah. That one was, you know, that was, I think it was probably the end of May of 2017. I'd let people know, listen, we're buying at 7 and 10 and we're looking for, you know, a really large move. And people were ignoring, you know, we had a few other ones great there. But, you know, I'd put it out there and, you know, I'd get a couple of nibbles,

nobody really saying anything, but I was just kind of putting out there. And then the real thing kind of happened there. I think it was, guys, what was it? Trig. Probably August, I think. End of August of 17 there. What was that crypto call? I think it was Trig. Trig. Yes. Yes. Yes. I remember. I remember. That's where I, that's effectively when I finally was like, oh, wow. Yeah. I think the call at the time, I think you said we were going to look to do like an eight to 11 times or something like that. And it went up there about 10 times or something. And then people started actually approaching me going, hey, do you have a group and this and that? And at first I was like, nah, nah, you know, we don't do all that. We don't do all that. And then I thought, well, maybe it's a way that, you know, maybe we can kind of combat what's going on here.

But at the same time, I'm a firm believer that if you get everything for free, you never really understand the value of it. So there's this disconnect when you receive something for free versus when you have to exchange something for it. You have to, because if you're paying money for something, then you had to exchange your time to make that money. And then you had to make a decision to use that money for that versus something else. So for many people, it tends to give them more of, okay, well, I'm going to be more invested in this. And so, you know, again, that's where it started there. And you know, man, you were right there at the beginning with me. Yeah. From day one.

And that was also a crazy time in the market. And how we kind of got into that. Yeah. It was such a crazy time in the market. And it's just amazing to look back because I, you know, obviously we made a lot of money and there were all these incredible trades, but the thing was, as well as the market was doing, it appeared that a lot of people were getting destroyed. Oh, yeah. Yeah. I mean, you and I had, you know, multiple conversations, especially as we got toward the end of Q4 there of 2017. And we were looking at things. And I remember at one point in there, gosh, I believe I think it was something like I'd saw this. I don't even remember who it was,

but it got a lot of play throughout crypto Twitter. And some guy was saying, oh, it was going to be 80,000 by February or something. And it was only like 15,000 there in December. And I believe, I remember talking to you, I said, man, I said, if we aren't at the top, we're pretty dang close to it. And right there, we were almost about 16, 17,000. You told me. You called it. Yeah. I was like, there's no way.

I said, not only is it big enough that, you know, that he's saying this, but that it's getting a lot of play. And, you know, again, a lot of times new traders come in here and they hear these mantras about, oh, you know, retail buys the top and sells the bottom. You know, there's a bit more to it than that. But generally, that's what we were seeing at that point. And, you know, it was just kind of, it was those ridiculous calls like that. That was just, yeah, no, at that point, we'd already run up pretty big. It was time to kind of pull back. But like you said, you know, in spite of all the

money that was available to be made at that point, I mean, people were still losing. They weren't, you know, they were continuing to push further. They weren't sensible about taking profits and whatnot. Or they just didn't understand, I guess, the interplay between alts and Bitcoin and were too overexposed to one or the other at the wrong times. Because really, I mean, if you were trading alts, it was a matter of perfect timing. Oh, exactly. Yeah. Yeah. Yeah. What a, what a crazy time. So then, I mean, you, as I know you, you went from kind of being this simple group to going full on educator. I mean, you created a college level course, basically on trading and obviously, uh, have a discord group to support it. Uh, so talk to me

about, you know, that decision and how that's been for you. Because like I said earlier, I mean, for myself and for many others, I mean, you're really the person that they look to, you know, to understand how the markets move and how to approach trading. Yeah. I mean, you know, again, at the beginning, you know, I really didn't know what I was doing. And to be honest, you know, trying to explain how to go about learning to trade at the beginning, it takes some time. You know, you can't just automatically tell somebody who's brand new, listen, this is what you have to do. And so, what's happened over this past two and a half years now has been this gradual development of where we've gotten to.

You know, it's been this back and forth and finding out what people respond to and what they don't and how to approach them. Because at the end of the day, it doesn't matter what I know. It matters what I can say in a way that convinces somebody else to listen. And, you know, we're already, when it comes to a new traders, if you're trying to explain to them, listen, the way you think about things is not correct. And the way you're thinking about it is going to make you lose money. Most traders are not ready to hear that. They have to be open to at least considering that their point of view is going to be wrong. Most of them never't. I mean, you know, that goes back to what I said earlier about, you know, people are like, oh, well, if you're teaching, then isn't everybody going to know what's going on? So then it doesn't work? Well, no, because realistically, 90 plus percent of the people that hear what I say on a daily basis, don't take it seriously. They don't take it seriously at all. And so most of the people, it's in one ear, it's out the other, you know,

as you know, anytime you're out there in public, you know, social media, people tend to take shots at you and whatnot. And it's just a product of what it is. They're not going to be ready at that point and they may never be ready. Why is it that so many of them fail? Why is it that so many traders fail? Why can't they learn? I mean, you touched on the emotions. I cut you off a little bit earlier. I mean, what, what is it that's so deeply ingrained in humans that they just can't get out of their own way? It's just, I believe it's really just this human nature to be correct. Um, and so, you know, you're, you're wiser. Like I am, you know, you've been around a little bit, you've been through the years. That's a nice way of saying we're old. Yeah. You know, prior to all this social media and stuff that's going on here. But the way that

social media and the internet and the global connection and all this kind of interplays, I think it really adds to this feeling that people believe that just because they have an opinion, that that's okay, that that's great. And that's just fine. But what they miss is, you know, okay, sure, it's fine to have your opinion, but shouldn't you always be looking to validate that opinion and or find a reason why your opinion is not correct so that you can at least head toward a truth, right? And so, I think what happens is with all this social media, since interconnectivity and whatnot, and I think people just adhere even stronger to their personal biases. You know, when it comes to politics, it comes to religion, it comes to sex, all these things, people have their opinions, period, in the sentence, and you can't convince them otherwise.

You get online and all of a sudden, everybody's an expert economist, right? You get online and all of a sudden everybody's an expert economist, right? You get online, everybody's an expert, you know, in politics and in government and all these things of which many of them have no exposure to at all, you know, whether educational or experience. And so, you know, this is just human nature that you take a position and you just believe you're right because to say you're wrong is to admit fault. But realistically, I mean, we are, as I like to say, we're infinitely fallible by design in life, much less in the market. You know, the same in the markets there. We're going to be wrong many more times than we're going to be right. And the market somewhat amplifies that. Exactly. Exactly. Because you get on there and now you've got money on the line.

Or again, as we go back to the internet here, especially things like crypto Twitter and social media, you know, now you have this reputation. And even if you're using a fake name and a fake avatar or whatever, you still know it's you. And so you have a hard time, you know, admitting that you're wrong because you go in with these oh i guarantee it's going to do this oh it's definitely going to do that and then you know when it doesn't you kind of keep holding going oh god you know i hope it goes back up there so that way i don't look you know so i can save face so i don't look like i don't know what i'm talking

about here in front of everybody and i think that really adds to it. So there's this age old debate. Does technical analysis work? How do you respond to that? Oh, I think this is one of my favorite things, because if you've been a trader for any amount of time, then you know there are two. There are two classes of traders or two groups. Basically, you have your technical analyst, you have your fundamental analyst. And I'll tell you what, the fundamental analysts believe they are, you know, head and shoulders above technical

analysts every day because what they do takes a lot more reasoning, a lot more, you know, they've got to take, you know, balance sheets and, you know, cash flows and SEC filings and all these things into consideration, you know, and economic indicators and everything to kind of figure out where, you know, price may or may not be headed. Technical analyst, you know, if you're a pure technical analyst, all you have to do is look at the chart if you're doing it correctly. And the thing is, I believe that what's going on is in the chart, you know, regardless, like, okay, my best example here as a technical analyst, you know, back in May of 2018, I mapped out what's going on with,

you know, the Dow Jones, the S&P and all that. And, you know, complete with the move up to the move down to the move way back up, you know, I said potentially up to around 30,000, it got up to 29,500, complete with the next move down. And, you know, I did that again, May of 2018. You know, I talked about it on YouTube, I published it on TradingView. I mean, so it's not like I'm just saying I did it, you know, I did it. And what happens is, you know, we had that drop from that 29,500 there on the Dow and all of a sudden everybody's like, oh, it's because of COVID. Well, you know, again, this is something I had already outlined prior. So, if it wasn't going to be COVID, it was going to be something else. So, everything is already in the charts. And the reason why it's in the charts is because you have this, you know, when you're looking at how do things, you know, how can you

predict something? And we talk about the crowd, right? And so, if you have one person saying one thing, it's a lot less likely to be correct than if you have 100 million people saying whatever they're saying and you see what that group all together is really saying. And so that's all the price action on the chart show you is that everybody that's involved in that, it's showing you, you know, where they're going. And so of that, you find out, well, where is it lopsided? Where is the heavy buying and selling, you know, at? And so again, if you learn to read that, that price action and volume correctly, well then you don't need to wait for news. You don't need to wait for fundamental analysis.

You know, again, we had a lot of big names here calling the bottom of the stock market drop here. And, you know, they say, hey, we're going up from now on. You know, I'm open to it, but at the end of the day, there's nothing on here that says we're going to. I'm still, you know, leaning toward a lot further downside. And so, yeah, I mean, I'm a big believer in technical analysis. And the best thing about that is a lot of people aren't excited about accounting. They aren't excited about law. So, trying to read through SEC filings or, you know, statements from businesses and all these things is not their thing. They're not interested in that. But anybody can learn to read what's going on in the charts. It's interesting because I, you know, one of the criticisms, and I view it this way to some degree

too, is that it's a self-fulfilling prophecy, right? You look at the chart and everyone's looking at the same chart and therefore these things happen. But isn't that kind of the point? Isn't that why it works? Because of what you just said, you're looking, you're basically as you, to quote you, it's a visualization of human emotion, right? That's what you have always told me that a chart is. That's what you've always said. So the fact that it's a self-fulfilling prophecy is why it works because you can see what people are thinking and what they're going to do. Yeah. Yeah. I mean, exactly. You know, when you, when you just kind of just bare bones and take it out of there, I mean,

that's exactly what it is. You know, it works because it works. It works because you see what's going on, you see what's happening. So, you know, if you're paying attention properly, you trade with the market rather than against it. You know, you trade with what the larger accounts are doing because they have more, you know, when the market moves, you have retail, which is a bunch of small in general, you know, a bunch of smaller accounts that don't work together as a group. You know, you don't have like a hundred thousand people calling each other on the phone going, Hey, we're all going to buy at this level. And so what you have is you have some larger accounts and they have a significantly greater capital base on them.

And so it's easier for them when the market's weakening, you know, whether it's moving up or it's moving down and that trend is weakening, it's easier for them to kind of nudge it around. And so if you're looking at the charts properly, that's what you're looking at. That's what you're seeing. So, yeah, it fulf easier for them to kind of nudge it around. And so if you're looking at the charts properly, that's what you're looking at. That's what you're seeing. So yeah, it fulfills itself. Yeah. I mean, you have this insane base of knowledge. So I've seen you over the years, obviously, mostly because you're teaching or I think maybe you get bored with one strategy and switch to another or, you know, we've all done that. But I've seen you trade with almost every single existing indicator, every strategy, you know, I mean, Wyckoff, whether it be Elliott Waves, Ichimoku Clouds. First of all, at some point you learned all of that.

But I think everyone has this like maximalist view of their own and you sort of, you know, just go between them flowing like water. Is that because it just happens to be the way you look to the chart that day? Or is it because, I mean, I know you always say sort of that, you know, technical analysis at the end of the day should fit your risk management strategy. I know it doesn't really matter what indicator you use as long as your risk is managed. But what is it that keeps you kind of moving between these different indicators and ideas? Well, I mean, at the end of the day, the reality of it is, you know, new traders come

in and they're all hyped up on it. They want to say, okay, how can I look at the chart visually and know where price is going? But the thing is, they don't want to put in enough time with a single indicator. They'll get a new indicator. And we see this on crypto Twitter a lot where they'll get in with it, you know, the flavor of the week and they'll use something. And then they don't, you know, they just kind of, you know, just half around with it. You know, they don't give any real effort and then they go, oh, it doesn't work. And then they go on to the next flavor of the day. The reality of it is, though, is all these different ways of reading the market really

do, if you do them properly, they all lead to the same general areas. Now, some are a little bit more efficient in different timeframes than others. Some are more general, others are a little bit more specific. But at the end of the day, if you're using them correctly, they take you to the same place. So, part of what I do is because, you know, again, a lot of this is the teaching and getting our members to understand and our students to understand that, you know, you don't have to have somebody online telling you, oh, the way you're looking at the charts is just stupid and that indicator or that method doesn't work. The goal is to get them to be independent and to believe in what they're doing so that they can take the time to learn it and then understand

that it is going to take them to the same places once they get that practice. You know, training is just like any other skill. You have to practice it. You have to do it consistently. You're not going to be a pro football player if you don't put in the time and effort. And, you know, of course, we may say that, you know, some people may never get there, but you certainly aren't ever going to get there if you don't put in that time and effort. So, training is no different. So, when I do that, you know, a lot of what I do is because, you know, again, we have so many students and members watching what I'm saying and what I'm doing. So, again, it's just constant reminder that, hey, however you're looking at these charts, they all lead to those same areas. But other times it is. It's about, you know, if I'm trying to…

Keep it fresh. Yeah, Yeah. You know, and you try to look at different timeframes and you know, in one area, it may just look like, I mean, in one area for a daily timeframe, it's good analysis. But if you're trying, if somebody's interested in what's going on on the hourly timeframe, that may be too general, you know, so you switch to a different indicator or a different way of looking at the chart in which you can maybe get better feedback on a shorter timeframe. It's interesting. You talk about taking the time to learn, you know, likening it to be a pro athlete or any other job. But interestingly, I think once you have done it enough, you can really

look at a chart naked and very quickly decide what's going on and where you're interested, probably set some alarms and close it. I always joke at this point that like, I basically trade like 10 minutes a day. Yeah. I mean, that should be the, I mean, you know, everybody's got their own reason for doing the things they do. Everybody, the things that make them the trader or investor that they are is unique to them. The things that make me who I am are completely different from the things that make you who you are that make, you know, the next guy different than the way he is or the next girl that different from the way they are. And that, you know, and that's a big thing. And so, but the goal

is to stay in long enough so that you become comfortable enough and you get used to seeing it because what it all comes down to when you're seeing that it comes down to noting that price action and volume that's really what it is whether a trader recognizes that or not you start to see those levels of support those levels of supply and and um and uh demand and that really kind of starts you know you start seeing these patterns coming out, these more viable trend lines. And, you know, that ultimately, I think, you know, if you're a trader and you're trying to get in there, I think that should be what you kind of seek to get to that point at some point in the future. But that doesn't come overnight. Like you said,

you know, once you've been into it a certain amount of time, which includes putting in a certain amount of effort during that time, you know, that's the only way you can get to that point. Otherwise, you know, if you're not paying attention to it, you're just not paying attention to it and you won't see it. Right. But you've made a living trading for a very, very long time. How much time do you actually spend trading on a daily basis? Oh man, no. These days? Yeah, no. A few minutes a day, basically. I mean, really, I spend most of the time, I mean, I look at the charts more than I generally like to these days, but it's because of WC.

For other people. WC, you know, providing analysis and everything. But as far as me personally trading, oh, yeah, no. A few minutes a day, really. You know, I look in the morning, I may glance in the middle of the afternoon and then the evening, but then I'm also not usually trading five minute timeframes. You know, I'm a little bit larger timeframes, four hour usually, daily maybe, because I'm not

interested in getting rich overnight. I'm interested in safer trades, less risk involved in it, higher probability of the trade playing out, those types of things. I think you just touched on a really important point, especially in the crypto community. I think that most people come because they think they're going to get rich overnight and they want to be traders because they think they'll get rich overnight. They don't view it or realize that it's to some degree a job like any other, you know, and a grind. Yeah. You know, and it's so great seeing that. And I say it's great seeing this because, again, you know, I've traded, you know, equities and options and, you know, commodities and Forex. And I really love Forex, you you know the forex is my favorite

um but spending so much time in forex before crypto came out really became a thing it's funny because you see the same mindset as those people who went into into um forex because many brokers in forex they offer you this huge amount of leverage and uh you know you're looking for small movements. And then, you know, it's the whole same idea. And then so the people that are selling, you know, they're usually not selling this idea of here's why and how markets really work. They're trying to sell you on some silly little system that, you know, maybe it works for them. But I tend to be under the belief that it really doesn't. And even if it did work for them, again, those things that

make them who they are as a trader investor are going to for them again those things that make them who they are as a trader investor are going to be different than those things that make you or me or anybody else so why would i buy somebody else's system and assume i'm going to get these great results even if they've gotten so you know it's the same thing going into that that you see here in crypto people come in because there's a lot of volatility. There's a lot of leverage, especially, you know, with these derivatives now, you know, perpetual swaps are a big thing, you know, BitMEX, FEMIX, Bybit, Deribit, you know, all these things. And so they think all I have to do is buy the lowest price and hold, and it'll make me rich pretty quick because there's a lot of

movement in there. And unfortunately, that just ends up being the wrong way to think about it. That's why, you know, if we think about it, that's the mindset that most people come in with. And yet, as you well know, well over 90% of new traders are out within 90 days. They're completely broke out within 90 days. And're completely broke out within 90 days. And so there's a correlation there between the way they're thinking and the fact that they're not making money. Yeah. I mean, it makes a lot of sense and it's incredible that they fail so quickly, especially when if they just bought and waited a while, they'd probably make money in a trending market. Roundthex.com is one of my favorite companies

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That's investvoyager.com, promo code SCOTT25 for $25 in free Bitcoin and start trading today. You know, traders underperform investors to a tremendous degree in general, unless you're, you know, a unicorn trader who can actually beat the market. Oh, no doubt. Exactly. Exactly. You know, and part of that, again, part of that is this desire to, it really stems from this desire to get something for nothing. It's this idea that you can just put your money in the market and the market will reward

you. But, you know, that isn't the way it works as you well know we know that you know statistically the shorter your time frame the more likely you are to lose to algos we know that if you're if you're trading the hour chart or less you are significantly more likely to lose to an algo then you know to lose money to an algo than you are to make money if you're trading a four hour or daily time frame or larger then statistically you're much more likely to actually profit. But then that requires patience. And again, you know, we come in back with the whole emotional, you know, because we're human beings, we are emotional, period, end of sentence.

But emotion and trading is going to lead you to losing money. It's going to lead you to not following through with your plan. It's going to lead you to not following your risk management. It's going to lead you to being bored, you know, especially when price moves sideways. And so you feel like one, either you're going to miss out, so you enter just to enter. Or two, you enter early before you get confirmation. But again, price is trading sideways. Sideways is just noise. It's up and down along the same price area there. And yet, so people, like you mentioned there, when you come up with Q4 of 2017, when the market was just going crazy with cryptos, and so it was easy to make money

on the move up, but there were still sideways. And what you'll find out with most traders, especially, you know, non-professionals, is they're okay with direction. Directionally, they're usually pretty good. They just come in with too large a position size, too much leverage, and then they can't weather that up and down, that sideways movement. But the thing is, the market itself generally spends 70, 80% of its time moving sideways. That's interesting. So that touches on something that you always preach, which is that all that truly matters, no matter how you look at the chart or what you do is risk management.

So can you talk a bit about risk management, basic strategies? I know you could probably talk about this for 10 hours and I've heard you do it. But I mean, even down to like portfolio management, we talked about investors beating traders. So how much of your money should generally be, you know, in a longer term holds, how much should you be trading with and then how should you manage the risk on that trading portfolio? Sure. You know, again, if we go back to when I first started, you know, I listened to a lot of the big general things that were out there. And as we've come up through here, you know, things like modern portfolio theory come out and modern portfolio theory says, you know, again, you should be diversifying your assets. And so what people do, for instance, in the stock market

is they go, okay, well, I'll diversify amongst different sectors. So I'll have mine, I'll have some money in miners and then I'll have some money in, you know, in utilities and I'll have money. And, you know, the problem is if the market itself goes down, you're going down, you're not, your diversification within that market doesn't save you. Right. You're diversifying with correlated assets, basically. Exactly. Exactly. So then we go to the next step. Okay. So then you diversify outside of, you know, not, I mean, it's, it's good to diversify within it, but then you also need to diversify, you know, outside of

it for when the market itself does go down, uh, which unfortunately is a thing that a lot of people found out the hard way, uh, you know, uh, here in cryptocurrencies, when, you know, we hit that all time high there at the end of, uh, in December of 2017 and everything went down after for the most part, you know, all cryptos, everything went down with Bitcoin. And so then you look at, okay, how do you diversify outside of that market? And so the general rule in diversification, you know, this old traders adage is 70% of your money goes to investment. When we look at it this way, 70% goes to investment, 15% goes to trading if you want to trade it and 15% in cash. So the reasoning being that,

first of all, before you even diversify within your markets or outside your markets, it's the idea that what you just said earlier, which is the longer you're in a position, more likely, you know, the more likely you're going to be profitable in it. It's the same thing that Charlie Munger and Warren Buffett push, which is time and, excuse me, time is your best friend when it comes to investing in appreciating assets. In stock market, cryptos, these are appreciating assets. So you put 70% in there because you understand that the other thing I said earlier, which is we are infinitely fallible by design, which means we are much more likely to be wrong than we are to be right. So we have to protect ourselves against that. So if we look at it that way, we go, okay, well, if we're trading, that means we're making a lot more decisions,

which means a lot more opportunities for us to be wrong. So if we put the biggest bulk of what we have into an investment and we don't worry about when the market's going up or down because you've got a long timeframe on that, you're fine. And then you have cash because you always want to have cash for when the true buy the dip opportunities happen. You want to be able to buy at those lows whenever possible. Your trading is the other 15% and there you go. There's your,

if you really want to be a trader, you work with it, you know. But even within that, then you have to use good risk management. So, what do we talk about? Well, the way that most new traders start out is that they come in and they say, okay, I want to buy at this point. And if we're lucky, they'll decide that they want to sell at some point before they even get in, you know, as a stop loss. And they both know they won't actually do it, but we can leave that for another conversation. Yeah, exactly. You know, the goal is before you get in a trade, you should know exactly where you're entering, where you're exiting on your take profit and where you're exiting on your stop loss. And it shouldn't be just simply, well,

I guess I'll put it there. There should, There has to be real understanding of why you're going to put a where because what happens with most traders when they decide to exit or even if they use stop losses is they don't understand things like supply and demand structures and where all this stuff is. And so, they inadvertently put it right in there. And so, then price tags them, tags their stop loss, kicks them out of the loss, and then it continues in the direction where they would have made money. So you have to back in to everything. You have to back into your position size. So you look and you go, okay, where do I want to enter on the chart? So no matter how you're looking at it, you find a, here's where I want to enter. And then you say, okay, where do I want

to take profit? And you figure that out. The tricky part is figuring that stop loss. But however you do it, you figure that stop loss. And then from there, only at that time can you actually figure out how much you can put into your position, how much leverage you can use, things along that nature. If you're doing it the other way and figuring out your size first, then you automatically limit where you can put your stop loss or your take profit or whatnot. And, you know, it's that simple change in the way you're thinking there that can save you a whole bunch of money. I'm known for often saying that you make your money with your risk management, not with your take profits and whatnot. Right. It's interesting that you just touched on it. I mean, the common mistake is putting

that stop loss right where, you know, the market is looking for liquidity. And it's funny, I read, I think I read it on Twitter somewhere recently, someone made the analogy, they said, you know, if you can't spot the sucker at a poker table, you're probably the sucker. But then they actually said that if you can't spot the sucker at a poker table, you're probably the sucker. But then they actually said that if you can't spot the liquidity on the chart, you're probably the liquidity. Exactly. Exactly. And, you know, at the end of the day, again, you know, the market really, what we look at on the charts is just this visual representation of what's really going on. What's going on in the charts is not what's going on. It's a representation of what's going on, which is why we then, which is why I'm such a fanatic

about price action and volume. But so when you get on there and you see these things going on in the chart and you're trading against the chart, if you're just trading what you're seeing there, you're not really understanding. The idea should be understanding what's underlying. Why is price moving the way it is? Why does the chart look the way it does? Why are these patterns developing? You know, again, a lot of traders, they gravitate toward maybe classical charting, but many times it's just patterns. Because to them, it's an easy way for them to say, okay, well, you know, it's going to do this, this or that. But then they, you know, they become disillusioned with it because they

find out that usually, most of the time, price doesn't do what they think it's going to do. Because it may look like the pattern that they're looking for, but what's going on underneath is not really, you know, leading to what they expect. So it's this whole, this, this movement between fear and greed. And so if you're a, you know, a normal functioning, whatever that is nowadays, a human being, you know, basically we're saying somebody that doesn't have a, you know, a strong mental challenge, you know, one way or the other. Basically, your movements from highs to lows are about the same as everybody else's. We all kind of get to the, you know, if something good happens, we get elated and our, you know, our inside our mind, you know, we get really excited.

But it always reverts back to that average. It doesn't stay up there. Or again, we get, you know, if something sad happens, we get really sad. And again, if you're a normal functioning adult, you know, it goes back, you know, you get over it at some point and it gets back to that average area. So, if we look at the market, it's just a whole bunch of these people going through that same thing at the same time. Well, generally, price often pulls away from and reverts back to the mean, which is about the same area that everybody's looking at. So, if you are one of those people that you go and you put in a, let's say you want to go long and the market's coming against you.

So, now you're, you know, you're losing money. Usually, about the time you decide to sell, because you'll hold off and you'll hold off and you'll keep convincing yourself it's going to go up. And usually what you find out is about the time you decide to sell, that's about the time price reverses. You'll sell and price maybe go a little bit further and then it'll reverse on you. It's always the bottom. It's really incredible. It is. Or you buy, you know, you put off buying. You're like, oh, I don't know. I'm not sure if it's going to continue going up. And then you get excited at the top. Everybody that was buying in in Q4, especially toward the end of Q4 2017 in Bitcoin, you know, buying at $13,000, $15,000 right there before it hit,

you know, basically $20,000 there, which would have been a great profit. But they had finally convinced themselves to get in. And now they were convinced that it was just going to continue up forever. And so you get stuck, you know, and you buy the tops, you sell the bottoms. And basically, when you buy the top, what you're doing is you're buying the selling by the professionals. You're buying, they're selling right to you. When you're selling at the bottom, they're buying up. That's why price reverses on you about where you're looking at. Like I said, you end up getting caught. You touched on something earlier that I want to go back to when we were talking about the 70, 15, 15, because it's amazing listening to you talk about trading and to see how little ego there really has to be in it for you to be profitable.

So what strikes me is that even though you've been profitable for years, decades, you still will only trade with 15% of your portfolio. That's one. And the other is when you talk about the fallibility of humans is that you say that you're going to be wrong more than you're going to be right, which means that you're actually sort of planning to lose, not to win. Right. And so those two things I think are counter to probably how new people or even people who've been in a long time and have a huge ego think about trading. I mean, why is it that even though you're good, you're profitable, you could probably make all this money that you still limit yourself to, you know, that 15% basically? Well, you know, at the end of the day, it just comes down to, you know, it's habit. When you develop a good habit, you know, at the beginning and you stick to it, it just follows you through. I don't have this need to act as if I've got, you know, $50 to my name

and I need to make, you know, a million dollars by next week. And so, in doing that, it takes a lot of stress. It takes a lot of emotion. It takes a lot of stress off me. It takes a lot of emotion out of the trading because now I can sit back and I can wait for better trades to happen and to ride them more profitably. You know, again, we talk about new traders when they first come in, there's so many things you have to battle just because you're a human being. You know, it's this desire to always be right, this desire not to lose face in front of other people, this desire to have people like you. So you want to put correct, you know, in terms of what we're talking about here, you want to put correct analysis out there in the public. So you can

walk out and say, look, I got it right. Look, look, you know, and people can pat you on the back. But the problem is all of that just leads you to overall just to lose money. You're, you can't possibly remain, um, profitable for any amount of time if you're doing that, because you're always fighting that part. The ego. Which means you're always fighting that, you know, against always being, uh, incorrect. You know, that fallibility. Yeah. It's so interesting. I mean, you just see it with so many people and it's funny because we have social media. We literally see it play out in front of us.

All day, every day. When you were originally trading, it's not like you had this sort of, I mean, it's funny. It's almost like a counter indicator that's publicly out there, but you, you didn't see it. You know, you got your newsletter and you made your decisions and, and you went about your life. So there's this thing, there's this idea, which again is sort of, I don't know if it's inherent to this community or beyond that like a successful trader should be so successful trading

that they should not have to do anything else for money. Right? We hear it all the time. I know you hear it all the time and that it's a criticism. So first of all, we've already established that once you're really good, I mean, you can spend a few minutes a day and make a living.

Yeah. So what are you supposed to do with the rest of this time? Well, you know, and that's exactly it. And, you know, and part of that, you know, is again, from the way that we as society look at things, you know, there's this old thing that goes around that says those that can do and those that can't teach uh you know and that's maybe true to a certain extent but you know again we always have to be careful when we look at these generalities and then apply them specifically because the reality of it is some of us really enjoy helping people uh you know i know you do. I do. You know, I get something out of it. It's not because I'm

some great, you know, that just the fact that somebody else is getting out of it is what it is. You know, I get something out of helping somebody. When somebody comes back to me and they go, man, you know, I've had members here. I had one member who said, you know what, Chris, it took me seven months of listening to you. And he said, finally, one day it just clicked. He's like, it just finally clicked. And he's like, oh my gosh, it has been so much easier to trade since it has. And just, you know, yeah, I'm excited for them. I'm glad that it did click and that they're able to finally glean something off of it. But at the end of the day, you know, that builds into me as well. You know, that makes me feel good. So, you know, we do that. Other things, man, you know, what happens if something happens? Right. What, you know, we never know what tomorrow may bring.

I mean, are we seeing that? I mean, isn't the entire world witnessing that as we speak? Oh, man. 30 million jobs. Yeah, yeah. You know, I just saw something here that said, I think from Fed Chairman Powell's speech earlier today, where the Fed's going to release a survey that said something like 40%, oh gosh, I think it was something like 40 percent of households under $40,000 a year lost a job in March. And so, wow. I mean, that's huge. And so, you know, in terms of if you're doing something else, this is something I'd love to put, because some people really love what they do for a living. They really love what they're doing. You know, maybe they love, you know, the helping people. Maybe they're, you know, I don't know, maybe a doctor or something. They really enjoy that. Or maybe they're doing other

things, you know, where they're helping people in a way. And so, trading allows them to continue doing it or maybe to do it somewhere else where they would enjoy doing it more, but maybe the pay is not there. You know, if you're working, you often have to choose between, well, do I want to go to this place where I feel like it's not as great as environment is where I'm at, but I'm going to make more money. You know, if we had to choose, we'd want to do what we want to do, which makes us happy and not worry about the income. So trading allows people to do that. Now, for people like myself or yourself who are able to do well when we're trading, you know, why, why, oh God, why would we do all this other stuff?

Because it gets boring sitting around. Who wants to sit around all day? You know, some people, maybe they do. I've tried it a bit. I'm not. We've all been there. I mean, that's kind of paying your dues, right? I mean, when I was first trading Bitcoin, I probably stared at the Bitcoin chart itself in some context, like 12 to 14 hours a day. Right, right. Yeah. So, you know, again, just because you're a successful trader doesn't mean you can't have other interests. I mean, if you look at people, heck, look at Elon Musk, right? He started out back in the 90s. I can't remember what that silly little company was that him and his brother had, and they sold it for whatever it was, 200 million. But they didn't just stop there. They went on,

they continued on. You know, he went on and he, you know, put together PayPal, sold that, went on, you know. And so now he's got Tesla, he's got SolarX, he's got… SpaceX, right? Yeah, of course. Yeah, he's got all this stuff. And so you could say the same thing to him. Well, why don't you just run one business? Because for certain people, there's a drive to create. And I really think, and I think for most entrepreneurs, there is that drive. Most, if you're a true entrepreneur, you enjoy the creation. You're not a big fan of all the little stuff and whatever, but you love creating something.

And so, you create things and then you create more things. The next thing you know, you have multiple things coming at you. But the other side of it, again, is what goes on with income. You know, anything can happen. So, if I'm trading today and I don't know, something crazy happens, the internet goes down, what do I do? You know, what do you do then? If you've got another business, maybe a local business, okay, now you've got something else that you can, you know, potentially keep that money coming in. Multiple streams of income, of course. Exactly, exactly. You know, and just even me personally, what if something happens to me where I'm not able to trade anymore? You know, how do I continue to provide in the way that I'm used to for, you know, for my son? You know, my family, how do I do that provide in the way that I'm used to for, you know, for my son,

you know, my family, how do I do that? You know, so multiple streams of income allow you other channels of revenue just in case something happens. Yeah. I think one of the things that you said really early to me that really stuck and goes with all of this, which I've, uh, you know, repackaged many times is that trading should give you two things, right? You always say time and money. Yep. So, you know, and that really resonates with me because, and it should with anyone. The thing is that most people never get to the point where they get the money part. Right. Unfortunately, they just lose. But I mean, you know, I really don't understand what, why you wouldn't want to, as you said, create more with all that free time. And you happen to be a good person who

wants to help others. The other thing about that, I mean, trading is such a personal sort of pursuit. Yes. And so even if you're successful as a trader, you're not really contributing, right? I mean, you may be contributing to the market in some way, but most people want to leave a mark, I think, in some way. Yes. And so like, even if you only educate or you go out and do whatever it is, even if you're volunteering, I mean, you want somebody to remember you when you're gone, you know, and some accomplishment that you have. And I don't think there's anything egotistical about saying that. And I think that's what teaching is. I mean, I think that, you know, you have that sort of effect on people

and that you'll be remembered for the way you helped them. So I just think, I mean, I just, that criticism that you shouldn't do anything but trade just makes me laugh so much every single time. Well, you know, and I think a lot of that starts from, you know, just when people begin. You know, again, it's that whole, you know, whether they want to believe it or not, when you come into trading, you're not special. And I mean it, I always mean it in the best way. It means that you're going to make the same mistakes that pretty much everybody makes when they first start to trade. And that's okay. Because what that means is you can forgive yourself and you can make the decision to do something about it. You're not stuck with this. Oh, I'm just terrible trader, which means I'm terrible at life, which means I'll never amount to anything. You know, all this

downward thing, you know, when you recognize that as you come into trading, you're just like everybody else, you're gonna make those same mistakes. You know, it allows you to be, it allows you to, you know, to, to get better at it. But when you're coming in like that, because you're thinking that same way, again, that's what you kind of, you know, deal with. When you have new traders, they come in and they give you a hard time about, you know, having other businesses or helping other people learn, you know, and to them, because all they can see is how quick can they get from zero to a million. And to them, that means when they do that, then they can just go off

and they can just go and not do anything for the rest of their lives. But what I found out from a lot of the very successful people that I happen to know, they're all pretty much like myself. They're like you. And yeah, you get to that point where you have that money, but then you want to continue doing something. You know, you may have started thinking, man, I would just love to have the money to be able to not do anything. But the reality of it is once you get up there, you get to creating more and more. Yeah. I mean, it's a fact that people like retirement is terrible for a lot of people who are motivated and working people. I mean, retirement literally kills people. Very much so. I mean, look at Warren Buffett, almost 90 years old. That guy still goes to work every day. He makes the decisions

for his company. I mean, you know, it's what it is. Now there's going to be some people that are going to enjoy, you know, making their money and just being able to just goof off for the rest of their lives. But what I've found is most of the people that I've come across that have been successful in multiple different areas throughout life, they're not comfortable just sitting around. They'll try it for a little bit and they get bored. It's that same drive that allowed them to become successful in the first place that continues pushing them forward once they are successful. So we were talking earlier, just going back to something when we were specifically talking about technical analysis and you talked about people sort of drawing lines and

patterns and classical charting. And I think that that sort of is like the gateway for most traders, as I've seen, maybe it's the most simple thing, but it never seems to go their way as beginners. And I think that there's a lot of nuance and maybe that people miss the context. I mean, you always talk about it, like you'll see a person draw a pattern at a bottom when it only is, you know, only as valid at a top or something like that. But why do they, I mean, you know, just drawing lines on a chart does not work, right? Right, right. But, you know, again, when you come, again, you know, we drawing lines on a chart does not work. Right. Right. Right. But, you know, again, when you come again, you know, we, we go back to these, these same misgivings that people

generally have when they, when they first, you know, start on their, their trading journey and they come in and they have no clue what they're doing. They don't know how the market works or why it works the way it does. And so they have no idea about anything in there. So it's like, you know, you're not going to jump in the cockpit of a plane and land it, right? I mean, if you don't know what the heck you're doing, you know, if you don't have to, you know, if your life depends on it anyway, well, you might have to, but you're not just going to do it out of nowhere because you don't know what you're doing. And so it's the same thing in the market. You know, people come in, they don't know what they're doing and they go in there and they try it. And so as human beings, what we tend to gravitate toward

are patterns and groupings. These things help us identify and make quicker decisions, you know, just in life in general. So you come into the market, you have no clue what's going on, but you see there may be a pattern forming there. So you gravitate to it because it's an easy way to do it. You can come in not doing anything. You can say, oh, it's supposed to look like this picture. And if your head sees that, it thinks it sees that picture, well, there you go. But, you know, even with classical charting and whatnot, it's not enough just to see the picture. You know, you have to understand what is price really kind of doing here?

You know, because otherwise, you may be seeing that picture way too early. And, you know, again, then you jump in before you get confirmation of a reversal or something. And then price continues going without you. And you go, well, that pattern, you know, that pattern didn't work out. Well, it was likely not really that pattern to begin with. But it's human nature to find patterns and to group things. That also means that most people bring their bias with them to the chart in the first place, right? I mean, if so, like if, if you're like emotionally bearish, you're going to look at

a chart and immediately things are going to jump out to confirm your bias. So how do you, you know, how do you eliminate bias and that emotional feeling from your trading when you look at a chart? Effort and time. Excuse me. Part of what you can do with that, honestly, is just time in the market. You know, just spending time in there and getting a feel for how things move. Every market's different. So if you have, you know, equities, stock market, if you have cryptocurrencies, these are, you know, markets that tend to trend upward. If you go to Forex, it's a market that moves sideways. And so each market, you have to get a feel for how it moves, how price action moves, acts and reacts within that market. But it just, it really is. That's one of those things that takes time. And the only way

you're going to be in there long enough is with good risk management. Because if in general, if I'm here 25 years later saying, listen, you're still going to be more likely to be wrong than right in life. Well, then if you're brand new, you should really be serious about that. You should understand that you're definitely going to make a lot more bad decisions than good decisions. So you have to have good risk management to weather the storm until you start making more and more of the good decisions, the correct decisions. And, you know, again, that all comes together with time in there. You start noticing, well, you know, where is this trend going? As you said, after being in for so long, like you have, you kind of look at a chart now naked and you go, okay, yeah, I kind of see where price is moving here. But you don't get that immediately. You to have a bias period in a sentence. And that bias is most often going to be wrong.

At least wrong on the timeframe you're on. Again, I said, you know, a lot of traders, they'll come in and they have the correct idea of which way price is going. But that's usually the larger trend. But they try to get in on a shorter timeframe with too large a position. So they're liquidated or stopped out prior to price actually going in the direction they want it to go. And so, yeah, you know, that's a hard thing. It's practice. And so, risk management, risk management, and just education and understanding how the

market moves and why it moves the way it does. I think those two things help a lot with, if not, at least helping keep your bias at bay, at least protecting you against it. Yeah. I mean, to that end though, when you're a beginner and you're coming into the market and you want to learn, how can you do that without losing all of your money before you're actually good enough to trade? Because you're not going to have a great risk management strategy. You may have a slight understanding of markets, but I mean, is it paper trading or does paper trading not work because it doesn't have

the emotion of losing actual money? I mean, how do you come in and survive those first months and years? Well, again, I think the biggest thing is what is opposite of what most new traders do. They come in and they trade immediately. But again, you're entering, you're doing something that you have no clue how it works. You're playing between goalposts that you don't know where they are, boundaries that you don't know where they are, with rules that you don't know how they work, and you're just automatically jumping in. So when you think about it that way, you're going to lose. I mean, there's no two ways about it. You're going to get lucky every once in a while it that way, you're going to lose. I mean, there's no two ways about it. You're going to get lucky every once in a while, but overall, you're going to lose. So I think the first thing is you don't start trading immediately.

You learn, you at least learn what is this market that you're getting into? How does it work? Yeah, I think that's the biggest thing you can do. And then as you get through that initial point and you learn about risk management, then you can move into paper trading, which is just basically an idea to say, the good thing about paper trading is, is it allows you to actually act as if you're going to trade. So you can test out new things you're learning. Maybe, maybe you're just learning Elliott Wave. And you know, Elliott Wave is a bit more subtle when you're doing it, especially when you've got subdividing third waves and stuff. And so, you know, by paper trading, it allows you to make the mistakes you're definitely

going to make at the beginning of learning a new system, but without losing any money. But that, you know, again, that comes after the education part. Everybody want to jump in. Are you going to jump in the water, you know, without knowing how to swim? I mean, you're kind of silly if you do, right? Yeah. Yeah. I mean, I still pay for trade regularly. I still pay for trade. Oh, it's a great way, especially if you're trying something new, if you're learning something new. And I'll tell you what right now, you know, you've said this often, you know, I'm a big fan of it. If you're the smartest person in the room, you're in the wrong room. If you think you know everything there is to know about a thing, just understand that you're probably at the point you're going to start losing or you'll never be able to advance beyond where you're at. And so, you know,

when it comes to new traders, you know, if you're coming in there, don't just jump in and throw in money without understanding what you're doing. Learn about it first and then start paper trading and then put in the money. If you do that, you're still going to lose a little bit but nowhere near as much as you're going to lose as if you come in and just kind of throw money in there. But if you're absolutely hell bent on joining something that you have no clue how it works or what the rules are or how the players act or react, then you absolutely have to at least spend time and learn risk management. You have to. If you're not, you're just, there's just nothing you can do. There's absolutely nothing you can do.

You're going to lose your money. And you'll probably lose it on one trade instead of 50. That's the hardest part. You touched on this earlier. It's kind of this idea. I believe it's actually the technical term is random reinforcement, right? That the market basically, in a short timeframe, at least, it punishes good behavior and rewards bad behavior. You know, you said before you come in, I mean, this was me in crypto and pretty much everyone, depending on your timing, you come in, you throw something at the wall, you make a ton of money and you're, you think you're a genius, right? And nothing can go wrong, but then like you lose all your money. And then the flip side of that is that you actually

learn a system and you, you do all this thing, but then like you have proper risk management, but then you lose 10 trades in a row doing it right. You know? And so then you're basically being punished for being good. And then what do you do? Of course, you like take some stupid trade and make a ton of money and you're back on the other side again. Right, right. Um, go ahead. No, you please. No, no, I was just going to say, I was just going to agree with you there. Yeah. You know, it happens in, uh, you know, in the reason why we then move out of, okay. You know, you, you know, the reality of it is if you're trading, you're going to get on stints where you lose consistently or you win consistently. It's just, it's going to happen. It's one of those things. Right. so it's all about sustaining over time. You can't even test a system in that short period of time.

I mean, I guess that's what I'm getting at there, right? Even if you're a genius for a month, you're probably getting wrecked long term. Yeah, and that's one of the worst things a new trader can do when they come in. Again, coming into a market here, this thing that they have no clue about and so they blindly follow somebody somebody says buy here and sell here and they get lucky and they get it right or maybe they get it right a few times and so that trader then thinks you know all i have to do is do what they're saying and i'll be right without realizing everything that's involved and the likelihood that maybe that person is just getting lucky and then they lose it all

you know it takes you could lose everything what we often see with um with social media here as you'll see an account come up there and they'll say you know do this and do that right so you buy and sell and they'll have a couple of good trades and they'll look great and then the next trade it'll wipe them out because they don't, you know, they've gotten lucky a few times. And, and, you know, you have to be able to understand that a lot of that on there is going to be that luck. And you don't want to trade according to luck because, you know, you're not going to be lucky all the time. You're not going to be lucky most of the time. Casino. So you have to be able to protect yourself.

Do what? I said, then you got to go to the casino. Yeah, exactly. Exactly. You know, I tell people, man, here's the, at the end of the day, here's the deal. If you're not serious about wanting to learn to trade, if you're not serious about wanting to understand why the market does what it does, how it does what it does, then really you're much better off taking your money and going somewhere else. Create memories because at the end of the day, as much as I love to trade at the end of the day, when you're much better off taking your money and going somewhere else. Create memories because at the end of the day, as much as I love to trade, at the end of the day, when you're on your death bed, nobody's sitting there going, man, I should have bought that green Lambo along with that blue one. You know, you go through those memories in your head of times and that you spent with family and loved ones and places you've experienced and cultures that you've enjoyed, you know, and that's what you go through. And so if you're not serious about really learning

how and why the market does what it does, then you should take your money and really just make memories because at the end of the day, at the end of your life, that's what's going to matter. You mean, I'm not going to look back and wonder why I didn't go a hundred X long on a Digibyte. Man, if you are, I don't know what to say. I mean, I honestly, I think that's a great place to kind of wrap it up because if that doesn't make the point that we've been trying to make this whole time, I don't, I don't know what does. So, so where can everybody find you, follow you,

learn from you moving forward after this? Oh man, you know what? You can follow me there on Twitter. I'm, you know, I get in these stints where I'm a little bit active, but you don't tweet enough. You know, sometimes I'm not, but when I do post information, it's usually something you should be paying attention to. And you can get that at TX West Capitol on Twitter there. You can check us out at howtotrade2win.com. And so, you can get the information on, on joining us and, you know, our education, everything we do there. Uh, you can also follow us on Twitch, uh, twitch.tv forward slash Texas West capital. Yeah. Because you were a part of the YouTube purge. Oh man. Yeah. What is up with that, man? I had seen it all the time. Do you have any

insight as to what happened there i still don't man i you know uh i sent the uh you know when you get deleted like that automatically they give you this link to this uh thing you can fill out that says hey you shouldn't have deleted me because of this reason and that um you know and i did that right away and so now it's been what uh going on a month a month and a half i never heard from him. We've tried to contact him on, you know, Twitter or yeah, you know, they're, uh, they're helping whatever. It's nothing. It, you can't get ahold of them. So it's crazy. I mean, not to keep going, but like that, if that doesn't show why a trader should do other things or imagine if you're a YouTuber for a living and one day they just pull the switch on you.

Or Pomp had his, you know, temporarily, but his Twitter account deleted. And all of a sudden you lose everyone that you followed. You're, you know, this counterparty risk, I guess, or your risk of being shut down. I mean, it, you know, I remember Tone Vays, I think I kicked off BitMEX and then basically came out and said, all of my money was being made on referral links on BitMEX. So, I mean, luckily you're able to pivot to Twitch and you have other things going

on, but that just, I mean, that exemplifies everything we're saying here is that if you're counting on one thing to survive that thing, that rug can be pulled real fast. That's right. That's right. You got to protect yourself against those things that you have no control over. Perfect, man. Well, thank you so much. I know we could do this for like 10 hours, so we'll probably do it again very soon. But I know you have people you need to actually go teach right now. Well, I appreciate you having me on here, Scott. Yeah, we'll do it again soon. Thank you.

Let's go. Hey, everyone. Thanks for listening. New episodes go live every Tuesday at 7 a.m. Eastern Standard Time. Links to our Apple and Spotify channels are in the show notes. You can also follow me on Twitter at Scott Melker to continue the conversation. See you next week.