Rebel Traders 047 : Carpe Jugulum

Some may say Carpe Diem, which means “Seize the Day” … We have a slightly different phrase we live by, "Carpe Jugulum". Curious? Then listen in as the Rebel Traders break it down...

The Rebel Traders are going to take a sideways look at the trading lessons and knowledge found in the comedic world of one of the favorite satirical authors of both Sean and Phil's that takes a wry look at life, business and even money.

The Rebel Traders are going to have a blast and invite you to join them as they pick apart the wisdom and humor of Terry Pratchett and how this can help you get an edge in the markets...

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Sean Donahoe: Some may say carpe diem, we have a slightly different phrase we live by, carpe . Ready? Let's do it.
Automated: Rebel Traders takes you inside the world of two underground master traders, who take an entertaining and contrarian look at the markets, to cut through the noise of Wall Street and help you navigate the trading minefield. Together, Sean Donahoe and Phil Newton are on a mission to give you the unfair advantage of a Rebel Trader.
Now, here are your hosts, Sean Donahoe and Mr. Phil Newton.
Sean Donahoe: Hey, hey, this is Sean Donahoe and welcome to the Rebel Traders podcast. We have my partner in podcasting Mr. Dibbler himself, how are you doing, Phil? Dibbler.
Phil Newton: Yeah, you've got to do the whole, "Cut me on throat, Dibbler."
Sean Donahoe: There you go.
Phil Newton: I've got a dodgy pork sausage. Well, it's mostly pork.
Sean Donahoe: That's exactly it. Right on a stick. What we're doing here, ladies and gentlemen, we are making reference to one of our favorite authors, Mr. Terry Pratchett, Sir Terry Pratchett, and we're going to take a sideways look at, certainly, the world of trading-
Phil Newton: The trading universe.
Sean Donahoe: Trading lessons and knowledge found in the comedic world of one of our favorite satirical authors and comedic authors, tends to take a wry look at life, business, and even money through the world he created called Discworld. Now, we're doing this just because, well, we bloody well can.
Phil Newton: This a very distinct difference between the Flat Earthers.
Sean Donahoe: Exactly, we're not talking Flat Earthers here, this is more of a ... Well, tell you what, we'll get into that in a minute, but Phil, what else we got? What else we got going on?
Phil Newton: Alternate realities. I'm trying not to do the alt-right jokes here now, as well.
Sean Donahoe: Yeah, it's an alternate reality.
Phil Newton: As we like to call the alt-right, the left.
Sean Donahoe: Well, there you go, Jesus. Anyway, yeah, just .
Phil Newton: Knock it off.
Sean Donahoe:
Phil Newton: Anyway, it's all said in jest, don't take it personal. Unless you do take it personal, in which case you can move on, sunshine.
Sean Donahoe: Indeed.
Phil Newton: We've also got the Rebel Trader mailbag somewhere amongst our nonsense and shenanigans. We've got the bullshit of the week, we call it the hyper, the hyperbole, and more shenanigans of the industry. Somewhere amongst all of this, we're going to find a trade, I don't know where it's going to be, somewhere. Instead of maybe Beanie Babies on eBay, we'll be doing hot dogs and rat in a bun.
Sean Donahoe: Absolutely. Yeah, let's give some context to the inanity here. I'm not really sure where to start, but this is going to sound like a little bit of a book club today.
Phil Newton: Well, bollocks though, it is. It's a little bit of fandom mixed in with trading-dom, and we'll try not to sound like a pair of dumb-dumbs ourselves.
Sean Donahoe: Well, indeed, yeah. There's going to be a lot of valuable trading lessons in here, to be derived from the insanity that we're going to be talking about.
Phil Newton: You might have to dig for them, but they'll be there.
Sean Donahoe: They will be, I guarantee it. We're doing this for fun, as well, because actually both Phil and I, we were talking about this, just because I made a random comment on one of the shows, actually early on in the podcast history, and I actually think it was also before that, as well, that we made a reference to, I made a reference to something Terry Pratchett. If you're not familiar with him, Terry Pratchett is the author, the comedic genius between a series of like 40 books, and many others, but his core, his magnum opus, so to speak, was the series of 40 comedic books, which basically set in a fantasy world, think medieval times, so to speak, but it's a warped world.
Phil Newton: 18th century London springs to mind when I was reading them. Kind of a back-
Sean Donahoe: Kind of. Kind of.
Phil Newton: Kind of-
Sean Donahoe: But it's got wizards, and witches, and dragons, and all sorts of stuff. Now, you might be thinking, "Oh God, it's one of those," but no, it is a satirical-
Phil Newton: Hilarious.
Sean Donahoe: ... it's really set as a comedic twist on life, and mud life, and the social norms, and everything else. It is fricking hilarious. I just found out before we started this show that Phil actually started on exactly the same book I did, which was Guards! Guards!. That particular book was centered around ... It's kind of like London in the 1800s, that's really kind of where it's based on, but it's not.
Phil Newton: Yeah, it's sort of pre-industrial going into industrial, I'll give you that kind of setting in mind.
Sean Donahoe: It's all about the city watch and everything else, and it's just freaking hilarious. We actually had the same starting point, but to give you an idea of context, this is my go to, when I want to read and I want to feel good reading, I want to have a laugh ... I got my wife hooked on this.
Phil Newton: Shoot.
Sean Donahoe: I want to say back in '99 I introduced my wife to Terry Pratchett-
Phil Newton: As the kids might say, that might actually qualify for back in the day.
Sean Donahoe: Indeed, back in the day. Now, my wife will regularly start at book one, work her way all through, and then wake me up in the middle of the night giggling as she's still reading. She's hooked on this for like three hours of reading, which is, you know me, I'll read for half an hour and then I'll fall asleep, she'll read for three to four hours and still be giggling like a little girl, because it's that fricking funny. Seriously, if you haven't got a little bit of Terry Pratchett in your life, you're missing out. He really is one of the-
Phil Newton: You're missing out, big time.
Sean Donahoe: ... gems of literature. Literally-
Phil Newton: I think if you're a movie fan, as well, there's lots of move references in here, as well-
Sean Donahoe: Sometimes, yeah, there's-
Phil Newton: ... which is a very novel surprise because coincidentally, we're also 80's and 90's movie fans. Not such a big fan of the later stuff that they call quality movies, but nevertheless, there's lots of classic references to Dirty Harry in there if you're that way inclined.
Sean Donahoe: Yeah, indeed, it was funny.
Phil Newton: Guards! Guards! Anyway-
Sean Donahoe: Give the premise, you've got to do it now.
Phil Newton: Well, the scene in Dirty Harry that's been referenced is where he's got his Magnum 45, was it, and he's blasted away on it, and the guy that he was chasing-
Sean Donahoe: Pre '57 Colt Python.
Phil Newton: Something like that, yeah, considering I'm not a gun person, I don't know. Who cares, you know? Well, he's fired all his rounds out the weapon, or has he, is what we're lead to believe, and you've got to kind of ask yourself if you're feeling lucky. That was kind of the scene in the movies, but in the Pratchett world, it was a magical, kind of like a little chihuahua sized dragon, and you squeeze it and it'll blow a little ball of flame out. So, the veiled reference to Dirty Harry was, did he squeeze it two times or three times, and is there any more flame left in this dragon, you've got to ask yourself, are you feeling lucky, punk? It's not the type of comparison, it's obviously done a little bit more-
Sean Donahoe: Eloquently.
Phil Newton: Eloquently than the poor farm boy can relay it to you guys.
Sean Donahoe: It's still freaking hilarious.
Phil Newton: It's amusing. It's amusing.
Sean Donahoe: It is. They've even got personal organizers, which actually have a little magic inside them-
Phil Newton:
Sean Donahoe: ... and because this guy's so weird with anything technology, he keeps saying to him ... When he's setting it up, he accidentally locked it into remember his name as, "Your name here," so it says, "Your name here, you have a reminder for five o'clock," stuff like that. It's just satirical wit. It's a plethora of wit, observation, and wry humor that tickles our funny bones.
Phil Newton: What interests me, there's lots of lessons from life that you can draw on, because I think what it does is it puts a different perspective on things, which is the great thing about satire in general, is it puts an alternative view on everyday things, everyday items, everyday experiences, and that's kind of like the point that we're trying to get across here.
Sean Donahoe: It's what we do in our trading learning, as well.
Phil Newton: Exactly, how can we have an alternative look at what we're doing to perhaps get a more enhanced perspective of our experience.
Sean Donahoe: Absolutely.
Phil Newton: Yeah, that's what we're trying to do.
Sean Donahoe: Now, I'm going to start off with a couple of just sideways things, just to show you how much of a fanboy we are here and ... Yeah, I am. I actually have an official coat of arms for my family name. What we did is, I actually, for Christmas last year, I bought a lord and ladyship title, and got that for my wife, so-
Phil Newton: Bought a postage stamp of land somewhere.
Sean Donahoe: Well, actually, I have land in Scotland, so I officially registered it and did the whole shebang, and I am actually Lord Donahoe, it sounds like Lord Vader, but Lord Donahoe, and my wife is Lady Donahoe, and everything else, but we actually got an official family crest and coat of arms made. I actually got-
Phil Newton: Mounted cash registers.
Sean Donahoe: There you go. What we did was, we got the official coat of arms made, and I actually used two Pratchett, I'll call it Pratchett Latin, but they've got this fictional continent in their world that's kind of like the equivalent of Italy, and they actually have their warped version of Latin. Instead of something like , which is, "Because I said so." Now, the funny thing is, people don't know what it means, either one of these phrases, the next one is kind of rude, but again, it looks like proper Latin, except people-
Phil Newton: Pig Latin might be how it's phrased elsewhere.
Sean Donahoe: Kind of, yeah.
Phil Newton: Kind of, but it's a Pratchett-ized version of Pig Latin.
Sean Donahoe: Yes, and the other one I have is , which may sound a little rude, but what it means is, "Bug it if I know." Which I laugh, as well, it's a very British phrase. Even the new house that we're building, we're going to call it the Shades, which sounds all nice and quaint, and everything else, except it's a reference to the main city in the books, which is a dodgy area of town, kind of like London's East End.
Phil Newton: Would it be like ... Yeah, I was going to go for the American version, as you were, in the ... It'd be like a New York in the 70's or something like that, what would be the dodgy area.
Sean Donahoe: I'd go to Queens, or Brooklyn, or something like that, a little Harlem-
Phil Newton: Yeah.
Sean Donahoe: Yeah.
Phil Newton: Somewhere like that. That sort of thing. I couldn't quite say it or think of it quick enough, but that'd be the sort of thing that the Shades is, it's a dodgy back alley somewhere.
Sean Donahoe: Where you could get robbed, stabbed, or driving further into a dark alley, or maybe all three. The funny thing is, is Terry Pratchett's-
Phil Newton: With the various commissions or not.
Sean Donahoe: Yeah, exactly. You have to be paid up with the geld and if you get robbed, you actually get a receipt so that you won't get robbed again in the near future because you have a receipt for being robbed. It's that kind of humor. Yeah, that's what we're calling our house. We're calling it the Shades, which sounds all very nice, but it'll give us constant hilarity.
Phil Newton: For people that know, know.
Sean Donahoe: Exactly. I wanted to call it -
Phil Newton: There's nothing quite like him. We always like to amuse ourselves and there's nothing quite like
Sean Donahoe: Oh, dear. Anyway, let's get to the actual content before he goes off on one, a downward path that we can't recover from. We're going to start with a few basically-
Phil Newton: I think both of us have already gone down.
Sean Donahoe: ... quotes, these are quotes from the book and quotes from him personally, that have hidden trading lessons wrapped in them. The first one is, "Build a man of fire and he'll be warm for a day, set a man on fire and he'll be warm for the rest of his life." I want you to think about that for a moment and again, think about this for a moment, you can teach someone a critical skill like we do every single day, but how many times do people not take their time with disciplined, methodical action, and run through a fireworks factor with a grenade, with a pin out, like they're indestructible. That's where I wanted to take this here today. There's so many people that just go off half cocked, so to speak, and end up blowing up their accounts, or causing more damage, or learning very painfully that they weren't quite ready or they've gone off on a-
Phil Newton: They've set themselves on fire, rather than trying to warm themselves.
Sean Donahoe: Yeah, basically. Where would you come at it? You've seen that, we've seen that. We've probably done it. I'll be honest, I've done it, as well, when I first started.
Phil Newton: Yeah, we all have.
Sean Donahoe: What would you say in regards to that with trading? What's the danger zones when you know that you might be trying to cover yourself in gasoline and throw a match on yourself?
Phil Newton: Well, the way I see it is, teach a man to fish kind of reference, or you can take a horse to water, but you can't make it drink would be another way of saying. As Pratchett said it, you build a man fire, he'll be warm for the day, you set a man on fire, he'll be warm for the rest of his life. What does that mean? How do I read it is that people are more inclined to not take best practice advice or suggestions, they're not open minded enough to appreciate that there is maybe a better way. They want to try and reinvent the wheel or discover fire on their own, and as a result, they set themselves on fire. Without looking at what other people have done and learning from that, and those mistakes and methodologies, of the people that have gone before us. Again, they've tried to reinvent the wheel, they've tried to go it alone and make it up as they go along. That's the key element there, they're making it up as they go along, and perhaps not learning from the lessons or hurdles that they're overcoming, or hurdles that other people have overcome. Again, we've all done it, but there's always a quicker way and wouldn't it be better to learn from the person who's set themselves on fire already, and lived.
Sean Donahoe: And lived.
Phil Newton: So that you don't have to have that experience. That's really what we're trying to solve, how I would view that. Yeah, have a plan, follow it, and if you've not got a plan or you're trying to figure out what yours is, maybe you should go and look at what other people have done, so that you don't have to walk on the landmine or walk through the minefield and tread on every landmine. Wouldn't it be best if perhaps one guides you through that minefield, who's got the plan, who knows where all the mines are buried, or most of them are buried. That's how I see this. It's a little bit woo-woo bead rattling and such, but that's how I see it.
Sean Donahoe: Yeah. You can't go with a half a skill or a half a structure and expect to make it. You need to have, basically, a methodical, disciplined plan and strategy that you can apply consistently. Again-
Phil Newton: I think have some understanding with what you're doing, as well.
Sean Donahoe: Even if you're developing one yourself, you've got to come at it from a, recognize where you are in your career, where you are in your skill level, and is it complete. To my mind, no skill is ever complete, it can always be harnessed and honed, but it's always a case of learning new skills.
Phil Newton: Yeah. I supposed to get the analogy again, as you know, I send out a lot of ... I do a lot of daily alerts and send people out what I'm trading. Well, I'm not just making a man warm for the day or giving him a fish so you won't be hungry, that type of analogy, I'm also trying to explain what I'm doing and why I'm doing the action or taking the action that I'm suggesting, when I'm sending out daily alerts. I'm not just giving you a fish to eat, I'm also trying to teach you to fish, as well, so that you can feed yourselves in the future. I always took the philosophy of, if I was to drop dead tomorrow, would you have everything that you needed to carry on where I left off? That's kind of the attitude that I like to take whenever I'm working with someone, or I'm sending out alerts, or I'm coaching someone, it's getting to the point as quickly as possible where if I was to drop dead, then you've got all the skills that you need to replicate what I'm doing at its most basic level, and that's what we're on here. You can feed yourself for the rest of your life, or you'll be warm for the rest of your life in Pratchett terms.
Sean Donahoe: Indeed. Indeed. Again, slow, methodical, and consistent application is the key to long term success. Moving onto the next one, which is one that most people won't think of, but there's actually some smart lessons in here, "Coming back to where you started is not the same as never leaving." Now, this is more of a philosophical one, but it makes a lot of sense when you think about it. Ironically, this is something that I tell people a lot.
Phil Newton: We've come full circle, yeah. We've come full circle. It took 20 years to come all the way back around to pretty much right at the beginning.
Sean Donahoe: Indeed. People are often afraid of returning to the foundation that they've built on. We all have to start somewhere and this is one of the-
Phil Newton: Yeah, back to basics is another phrase. You've got ahead of yourself, get back to basics. Get the critical elements in place and then build on them. That's another way of saying it.
Sean Donahoe: Indeed. Sometimes you go off course and you're not quite sure which direction to take, maybe you've come down too many forks down the road and you have no idea where the hell you are, things aren't quite working out, but returning to the foundation or start is not the same as never leaving because now you have compounded your experience and lessons, and you can start from that foundation. One thing I talk about a lot is, and people talk about the foundation of success and everything else, and okay, you can get all woo-woo about it, but I'm not going to, but I always talk about having a foundation. You can't build an empire on a crumbling foundation, you can't build a building on literally a foundation that is crumbling, it's weak, it's going to fall apart. We're all about-
Phil Newton: Well, I think there's a lesson from the little pigs somewhere, isn't there?
Sean Donahoe: Well, indeed, yes. Do you want the straw house, the stick house, or-
Phil Newton: The straw house, yeah, yeah.
Sean Donahoe: Or the brick outhouse.
Phil Newton: Same principle, there's lessons to be learned. We can describe them many different ways.
Sean Donahoe: Indeed. One thing I'm always about is, before you try and build an empire, you've got to have that solid foundation, and that's one of the things that we very much focus on here is creating that solid foundation that can always be not only a touchstone, but it can be a leap point, as well, to build upon, to compound your skill sets, to compound your strategies. It can be literally the central stone in your foundation that everything builds from. If you go out, you apply either our strategy, your strategy, or what have you, when you have to reset and think, "You know what? I've got off base," you recognize that there's a problem in your trading, there's a problem in your application, you have that cornerstone, so to speak, the foundation of your entire ... Your ethos of trading, where you can say, "You know what? Let me go back to this, let me go back." Here's the thing, you've learned in your travel lots of little things that you might not even have recognized. Some people are afraid to go back to the foundation because they think, "Oh, well, I'm resetting the clock, I've screwed up."
Phil Newton: I'm beyond the basics, I'm advanced.
Sean Donahoe: Yeah.
Phil Newton: Use the martial arts analogy just for a moment. When you get past the advanced stuff, most martial art practitioners say, "Now you know all the advanced stuff, you can forget it and get back to the essentials of how do you just apply the basic function, block and defense, the basic stuff."
Sean Donahoe: I'm going to have to quote Bruce Lee here.
Phil Newton: Yeah. I can't quite remember the quotes, but you get what I'm saying, it's that type of mentality. Now that you know all this stuff, you can forget it and just become like water-
Sean Donahoe: Well, the Bruce Lee quote is directly relative to what you're talking about, that I'm thinking of, is I am much more afraid of a person who's practiced on kick a thousand times than a person who's practiced a thousand kicks one time.
Phil Newton: Go a mile deep on a subject rather than a mile wide if you're going to learn something, specialize, that's what essentially we're coming at here. Understand, when you've got to that certain point, you can then go back to and apply the most basic components, the most basic elements, with the most significantly high level of precision. That's true with anything, not just trading, but life in general. A lot of people would call it specialty, but I think if you can take it further and become not just a specialist in that subject matter, but a subsection of that subject matter, or even a subsection of the subsection. If you can get to that point, you reach a level of mastery that no one else is going to have. That's what we're saying with this foundation, you've got the basics in place, you can start to think deeper, and deeper, and deeper, and you become a master of those three or four things.
Sean Donahoe: Yeah. There's something I come back to, I come back to reset every now and them myself, also use it as a measuring stick of where I've come to, where I've come from. It's something that I always like to have as a philosophical, like I say, touchstone, as well, if you want. I'm going to jump onto the next one here, which I think a lot of people will appreciate, is, "The trouble with having an open mind, of course, is that people insist on coming along and trying to put things in it." That's exactly what we're trying to do, but we're trying to take all the crap out ... You see? I've censored myself twice there in the last few minutes-
Phil Newton: Oh, bollocks, just go for it. Go for it.
Sean Donahoe: Well, yes. We're trying to take all the crap out and all the noise-
Phil Newton: It's all bullshit, we can do whatever we want.
Sean Donahoe: Well, indeed. I'm trying to keep it civil, but sometimes you just can't. We're trying to take all the crap out, we're trying to put the right stuff in, but the problem is, there is a lot of noise that will take you off task and point, and having an open mind and being too receptive to-
Phil Newton: Critical.
Sean Donahoe: Yeah, to the general noise, is going to create a lot of .
Phil Newton: You can take it to the extreme, can't you? Where I've just got to learn this other, I've just got to learn this other thing, before I can do it, I've just got to learn this other thing before I do it, and before you know it, you're pushing more and more stuff in. Then you fall into the trap of what we were just talking about, you're being too general, you're not focusing. Am I on mission, is a question that you hear people talk about in a lot of different contexts. The way that I deal with this is, "Can I do anything about it?" We've had this conversation before, if you hit a hurdle or a problem, what can I do about it now, should I be doing something about it soon? Is it tomorrow's problem or is it next week's problem? Okay, I can't do anything about it right now, it's tomorrow's problem, or do I need more information? Then it becomes next week's problem while I collect further data.
That's kind of how I feel with day-to-day stuff, but I suppose this stems from the, you can know too much. What's the phrase I like to use all the time? I have a little bit of a brain freeze. Intentionally ignorant is another way of perhaps saying it, I don't need to know everything to be able to place a trade successfully, I just need to know what I've already established as important information. Therefore, I don't want to listen to the talking heads because they're all idiots. That's too much information and it starts to cloud my judgment, so I go to the extreme case and I do not need to know it, I do not want to know it, and I am intentionally ignorant on many subjects, so that it allows me to just focus on my own deep knowledge, as opposed to a mile wide experience that we were just talking about.
Sean Donahoe: That's a very analogy. Yeah, I'm always one of question the source of information, be it punditry, news networks, et cetera, what are their motives?
Phil Newton: Verifying, in other words.
Sean Donahoe: Indeed.
Phil Newton: Lots of ways of saying the same things. It's turning out to be a very philosophical type of program this week, but I think it's all very important. Without going through specific examples, obviously we can relay our experience, but you what you do is different from what I do, isn't it, Sean?
Sean Donahoe: Mm-hmm (affirmative).
Phil Newton: That's different from you all loving and adoring listener. Hello, mom. It's going to be a different experience, so you need to figure out what is relevant for you. To be fair, if you like listening to the talking heads, maybe you can use them as a weather vein. My immediate reaction is, if I do hear something from the talking heads, I'm thinking the exact opposite, that's my knee-jerk reaction. That's been proven time and time again over the years, whatever Jim Cramer's is talking about, I want to be thinking about the opposite. If you do that, you're not going to go too far wrong. You can use that information, but I find it very distracting, so I don't. Just trying to figure out what is the right thing for you, I think that's what I'm trying to suggest here , Sean.
Sean Donahoe: Yeah, it's about right. Ultimately, whatever source of the ... Trust, but verify it, which is actually, oddly enough, the theme that came into the vernacular, that was Ronald Regan.
Phil Newton: I was just going to say, I actually came across the phrase again recently, it was Regan, yeah, trust, but verify.
Sean Donahoe: Yeah. It was a Russian-
Phil Newton: I didn't realize it was him.
Sean Donahoe: Someone he knows, I can't remember if it was a diplomat or what have you, but he was giving him a lesson in negotiating with Russia, saying that Russians like to talk in parables, or proverbs, but yeah, trust but verify came from that as a popular thing. It's very true when you're talking about pundits, news networks, or what have you, it's, what's are their motivations? Do they have whatever your source of information is, even us.
Phil Newton: We've got our own way of viewing things, so yes, we look at the same information a slightly different way than most people, that doesn't mean that it's right for you, and that's what we're saying. Just because we're doing it and we're successful at what we do, it doesn't mean it's right for you as the individual. The nice, quick example to illustrate this is, because a lot of people talk about day trading and the success that they have day trading doesn't mean that you should day trade, especially if you've not got the time to day trade, it makes day trading pointless if you can't actually do it. There's no need to learn how to do it because you can't apply the skill or the knowledge, even if you knew it, so it becomes a pointless thing to know.
Sean Donahoe: Indeed, indeed. So, next one, which is one of my favorites, and it's right up my alley, "Real stupidity beats artificial intelligence every time." Now, again, many of the ways that we teach trading is very mechanical, almost algorithmic, even though there are elements of discretion in what we do, but when you start getting wild with speculation, you get off your game plan, off your strategy or what have you, you're adding a dose of human emotion, which we all have, we don't have it under check, and sprinkle in a little bit gambler's glee or just raw stupidity, mistakes start happening fast and those mistakes can be very expensive. Especially when you don't even realize you're making mistakes.
So, you've got to recognize your influences here. The ones inside your head, the ones that are leading you, and be disciplined and methodical in your process. Now, again, we can make references to trading plans, which I'm sure we will, but let's take this one and pick it apart a little bit more here. Phil, we talk about this all the time, if you've got a strategy, you've got to follow it. If you've got a trading plan, you've got to follow it, use it as your measuring stick.
Phil Newton: Trade sets up, trade goes on, that's my kind of one liners. Trade sets up, trade goes on. If you've developed your own strategy or plan, or you've bought one and someone's trained you in the application of it, you might have spent hundreds or thousands of hours, or may even hundreds if not thousands of dollars, to have this methodology. In some way, it's been expensive either in time or money, or probably both, it depends on if you've gone live on it straightaway. You've got that expense is all I'm trying to say, but then the problem is that people experience is that they try and then be smarter than the research, smarter than the statistical evidence suggests, and that's the human emotion that you were just talking about, Sean. They're trying to outwit research with human emotion and it fails every time, it really does fail every time.
Sean Donahoe: Absolutely. That's why we try and develop our strategies and the things that we do, to remove that speculative aspect and the emotional aspect. One of our core strategies that we teach here, it's actually one of the Rebel Trader main strategies, is very much a check box type scenario. I won't go into it in detail here because obviously it's outside of the script of what we're doing here-
Phil Newton: Yeah, exactly.
Sean Donahoe: ... but it's literally check, check, check, three or four check marks-
Phil Newton: Type of questions, yeah.
Sean Donahoe: Yeah, it's yes/no questions, is this situation on, is this on, is this on, yeah, okay, place a trade. Okay, now, how do we place the trade for this scenario? Okay, go through that, okay, check that, check that, check that. Do we get the right price and everything else, okay, boom. Does it meet this criteria? Good, all right, send the order, go. What's next? Do we have another one? Okay. It's literally as simple as that. It takes time, conveyor belt is a good analogy, but here's the thing, it's also you have to develop the competence that you can do all that and that you are okay. Human emotion will scream at you that ... It tries to push you into your comfort zone, it tries to push you into different scenarios and make you question yourself and everything else, we all have those little voices inside our heads, the ones that may kind of make you doubt everything that you do, and everything else. Some people have got different backgrounds and everything else, influence in their life that make them a little less self-confident, or a little questioning and self-doubting.
Phil Newton: The really stupid thing is listening to those voice.
Sean Donahoe: Well, indeed.
Phil Newton: I know it's easy to say, but how do you actually apply that, "Don't listen to the voices," because that's what we're talking about with real stupidity. It's listen to the emotional reaction to what you're experiencing. You've put a trade on and now you've got that self-doubt, you've got the euphoria, you're ranging from one extreme to the other, are you-
Sean Donahoe: The temptation to keep fixing your trade that isn't broken.
Phil Newton: Yeah, or maybe you've not got a trading plan and you think that you're smarter, or you want to deviate from your trading plan, you just think, "No, I'm smarter." We're not.
Sean Donahoe: The Vegas mindset, yeah.
Phil Newton: We're all stupid when it comes to money, let's face it, that's why we need a strategy, that's why we need a rule. We need a proven plan to find, filter, and sort stock. In the real world, that would be a business plan, we've got a proven plan, a proven marketing strategy, a proven insert your thing, it's a proven plan of action that you need to deploy consistently, regularly, over time, that produces a profit on average. That's how every business works. In a trading context, how do we stop being really stupid and apply this artificial intelligence that we're talking about almost, this check box, this conveyor belt experience. The simplest thing though, surprise, surprise, Sean, is to turn the volume dial down on the voices that are in your head that we were just talking about.
Sean Donahoe: Indeed.
Phil Newton: We do that with position size. It's a really simple fix. The thing that I've discovered is that, that is predominantly the root cause of most, if not the majority, I think I just said the same thing two different ways, the majority, just turn the volume dial down, reduce your position size. That's going to stop that stupid voice in your head from kind of shouting, "Just do this, it'll be fun. Come on, it'll be a laugh. Go on, put 100 lots on. Come on, come on, just one for the boys. It's a long weekend, go on and do it." That's what goes on in your mind, or maybe not that crass and that obvious, but that's what's going on, that turmoil, that's the stupidity of what you can do. It's so easy to just be stupid and click a mouse. Back in the day, the real back in the day, Sean, we used to have to pick the photo, dial the number, speak to a broker, we had to make sure that we said our trade in exactly the right way so we got exactly the right order on. There was lots of circuit breakers, as I would describe, in the past, to make sure we were doing the right thing.
Sean Donahoe: Absolutely.
Phil Newton: Even then we could still make mistakes and being idiots-
Sean Donahoe: Absolutely.
Phil Newton: ... putting the order on. You get where we're going with this. It's just reduce your position size, that's the easiest thing that you can do right now to just stop being really stupid and start behaving intelligent. Even if it's just artificially intelligent.
Sean Donahoe: There you go. There you go, I like it, artificially intelligent, I like that. So, okay the next one is, "It's said that your life flashes before your eyes just before you die, that's true, it's called living." Love this one. Now, this one is a little ironic because the poor sod died in 2015 of Alzheimer's disease and became very forgetful in his last few months, but-
Phil Newton:
Sean Donahoe: Yeah, indeed. I was absolutely devastated, but it was a long time coming, he was diagnosed a few years before with Alzheimer's and wanted to go out on his terms. He actually became an advocate of euthanasia because he wanted to go out on his terms with his faculties as intact as he could, at the time he determined, but this is really a lesson for most people who don't think about things until it's too late. Think about this, why are you trading? What's your end game? Are you working just for the money or are you working to do something with that money? Are you planning for retirement? Just to make ... We've all got different motivations of what our end games are, but you've got to be working towards that end game every single day. Time is our most precious resource. In fact, I'm doing some training later on talking about time management and making time as efficient as possible, but we squander it too easily in youth and realize just little, potentially, we have left, when, only when, it's too late.
So, are you going to wait until tomorrow to get your trading problems and issues fixed, or are you going to do something about them right now? What are you trading for? Here's the thing, Phil and I come at things from different motivations, we have different end games in mind. Phil is all about, hey, making some money, it's all good, and then-
Phil Newton: It's my primary thing, is trading.
Sean Donahoe: Yeah, it is. Then you go to the coffee shop and relax, and you want a stress free life.
Phil Newton: But I want to do it. Exactly, I want to spend as little time doing that these days, yeah.
Sean Donahoe: It's not because he wants to get away from trading, it's because he's got an efficient use of time and he has a life in and around that. Me, I've got a different motivation, I run, and we've talked about this before, I run multiple businesses, I've got my fingers in a lot of different pies, and trading is one of them. The reason I got into trading and investing in the first place is, I want my money to be working for me, I treat every dollar like an employee, and it better be working-
Phil Newton: An efficient use of resources.
Sean Donahoe: Indeed. Surprise, surprise-
Phil Newton: I know, yeah.
Sean Donahoe: ... I don't want to spend the whole day-
Phil Newton: Before, Sean.
Sean Donahoe: Oh no. At the the end of the day, I don't want to be stuck in front of the screens all day, that's not my main business. Well, it is a serious amount of capital, and it is a serious focus, but it doesn't mean I want to spend my entire of the screens. I want that to be efficient use of my capital for that.
Phil Newton: Sorry, Sean, I got excited with a new thought.
Sean Donahoe: Go ahead.
Phil Newton: It happens from time to time.
Sean Donahoe: I was wondering what that cranking of gears were, the smoke pouring of the systems, yeah.
Phil Newton: Did you hear that grind, ? Someone threw a spire in there and the cogs just got all joined up, and now I've forgotten. What I was going to say, I know you've said this before, you treat your money, your trades, like employees.
Sean Donahoe: Yes.
Phil Newton: That could sound quite crass in that you're not bossing them around or anything, because I know you're not that sort of person, but-
Sean Donahoe: No.
Phil Newton: ... for someone who doesn't know that's how it could be, what I was just thinking about is if you treat your money like your employees in that you're not micromanaging them. They've got a job to do-
Sean Donahoe: Exactly.
Phil Newton: ... they've got their own little plan of action to perform inside the bigger plan of action-
Sean Donahoe: Absolutely.
Phil Newton: ... and in the trades case, it would be we need to stock the move by X number of dollars in the next three months, 45 days, whatever the time horizon is. That's the employee's job, that's that trade's job, but you're not going to micromanage it, you're going to let it do it, because that's what you're paying the employee to do. Here's a list of things that I'd like you to do, here's what I want, here's the objective, you get that going however you feel you can do that best, and you're giving the employee the responsibility to perform the task in whatever way they think is best. I think that's a good habit for a boss to have-
Sean Donahoe: Absolutely.
Phil Newton: ... not micromanaging every ... No, don't put the full stop there, put the comma there. Just let me do my job, idiot. Come on, Sean, back off. That's what we're doing here, we're not micromanaging our employees, and I think that's what you mean by it.
Sean Donahoe: Absolutely.
Phil Newton: I just had a little bit of an excitable epiphany when you brought those two ideas together.
Sean Donahoe: That's exactly it. Now, think about it from-
Phil Newton: Micromanaging.
Sean Donahoe: ... a wider, philosophical point, a lot of my other business interests are fed into my trading, and every dollar that goes in there has one goal, one job, and it's very simple, grow.
Phil Newton: I thought you were going to break into song there.
Sean Donahoe: That's it. Well, I could break into a whole wizard staff that's got a nub on the end, which is a Terry Pratchett ... His take. We could go off on that one.
Phil Newton: .
Sean Donahoe: Yeah, there you go. The bottom line is, we've got different goals, we've got different things that we're doing, but it's efficient use of time because time is valuable, time is invaluable. I actually had, I won't go into this live on air, but I had a recent, very solid wake-up call from a health care, combined with another health scare I had recently, if you guys remember, I had pneumonia a few months ago and two rounds and doses of antibiotics, it was actually pretty bad for a while. What I didn't know is, underlying all that, there was another health concern that could have killed me. Okay, I'll say it, I found out recently I had type two diabetes, so that was a serious wake-up call because you combine type two diabetes and pneumonemia, that can be deadly. My doctor-
Phil Newton: Just proper pneumonia, it's bad enough. My dad had it twice, the first time I was too young to realize what was going on, but the second time, it was many weeks of sitting on literally death's door. It's horrible to see someone go through it, so it's known that you were going through, it's horrible.
Sean Donahoe: Yeah, I had a double bought of it, and the thing is, type two diabetes can actually be fatal in combination, I didn't realize it for at least a year, maybe two years, I've been dealing with diabetes, I just put two and two together with some other weird symptoms that were exasperated, went to the doctor, and they said, "Yeah, you've got very severe ..." Just for measurement, my blood sugars were up, spiking in the 400s, and my A1Cs, if you have any knowledge of diabetes, 5.7 you're considered pre-diabetic, so most people want to be a 5.1 or below, I was at 14. They basically said, "No, you need to sort this out now, you need this medication," and they loaded me up. It's all under control now, thankfully, touch wood. Back down, or heading in the right direction, quite quickly-
Phil Newton: I wish you would stop touching wood, Sean.
Sean Donahoe: Well, indeed.
Phil Newton: It's a child friendly show.
Sean Donahoe: Thank God we're in a podcast and there's not a visual, yes, indeed. Anyway, we're good. Anyway, the point of this is, it makes you question a lot of things you're doing in your life when you have a health scare or something emergency happens-
Phil Newton: That's the whole reason I got into trading, Sean, was because of a major health scare. It also is the way I want to live my life and have more of a lifestyle, dictates how I want to trade because of a major life threatening health scare. So, yeah, I completely get where you're coming from.
Sean Donahoe: Yeah. Again, you've got to think about it now, rather than when it's too late. That's the bottom line is, why are you trading, what's your goal, how are you going to get there, and enjoy the fricking life that you can live.
Phil Newton: I was just going to say that, Sean. I was going to say not just, "I want to trade to make money, bro," what life do you want to live? For me, firstly and foremost, it was financial security, because it was the only thing that I could do for me personally. I couldn't go out and get a job because of my situation, but many years down the line, I want to have a very particular lifestyle, as you explained earlier. I want to live my life a particular way and trading for a short period of time every day, not doing it all day every day like a full time job, it allows me a lifestyle.
Before we did this show, it was two o'clock in the afternoon for me, when we were recording this show, and before that, I've been to the gym, I've gone for a little drive around, I found the nice little coffee shop, I read a book for an hour, I've done a few other bits and bobs. I want to live my life a particular way, I don't want to be at the computer looking through chart after chart after chart, all day, every day. I did that for 12 years and my health deteriorated as a result of that. The point is, is just to add on to what you were saying, is think about the end results, not just from a financial point of view, but also a lifestyle point of view, what do you want ultimately from trading, or just business, or just life in general, and build the life around you. If trading's a part of that, that will help you achieve the lifestyle. I think that's what I'm trying to get to, Sean.
Sean Donahoe: Yeah, that makes sense.
Phil Newton: That's what we're saying, life flashing in front of your eyes, it's calling living. So set the life you want to live up in front of you first, design the life that you want, and then fucking go for it, dude. Just go for it.
Sean Donahoe: Abso-damn-lutely.
Phil Newton: Don't mess around.
Sean Donahoe: Absolutely. So, anyway, here's the next one for you, "It's not worth doing something unless you're doing something that someone, somewhere would much rather you weren't doing." Now, here's the thing, this is actually one of the cool-
Phil Newton: That sounds like a Rumsfeld, doesn't it?
Sean Donahoe: It does, but this is ... Yeah, the knowns, the unknowns, the known knowns, the unknown knowns, but here's the thing, this is basically the core philosophy we have here, because your brokers and financial advisors don't want you being a successful trader. They bank on the fact that you're going to suck. Financial institutions are people on the other side of your trades, want you to be wrong. In fact, they absolutely count on your failing because it's what keeps them in business. They want you to throw all your money into the market so they can get their slice of your ideas or the money that you lose in the market is their gain. Here's the thing-
Phil Newton: Particularly with CFB, spread bet, and Forex brokers-
Sean Donahoe: Oh, yes.
Phil Newton: ... for a smaller trader, there's no one on the other side of the trade, they're making their own market, they're what's called a market maker broker. You might think that you're putting a trade on in the real market, but the reality is, is you're not. Not only are you wrong and they get the commission, but they also get all the money that you've lost, as well, if you happen to be wrong, as well. I know that-
Sean Donahoe: Yes, because they're the ones on the other side of your trade.
Phil Newton: Exactly, yeah. The clue's in the name, they are a market maker broker, they make the market, it's not going into the market, so that's why maybe it's advantageous to go to a legitimate stock broker, wherever you are in the world, and actually go onto an exchange traded instrument like stock, like options, like futures. The other market maker brokers, again, currency, Forex brokers, is the typical one that -
Sean Donahoe: Predominant, yes.
Phil Newton: Predominant, yeah. If it read reminiscent of a stock operator, it's the modern day book-it shop if you want to reference, if you've read it, but yeah, I just wanted to interject that. There's an ulterior motive with a lot of things, so what we're saying is, use a legitimate broker at the end of the day. That's one way to overcome and have that, I was going to say anonymity, but that's not the right word, Sean, what word am I looking for? Help me out here.
Sean Donahoe: Stability.
Phil Newton: Stability, you've got transparency, as well, with the-
Sean Donahoe: Yes, there's lots of in there. Yeah.
Phil Newton: They're making money, but it's the commission, which is what you're paying them for, they're facilitating the trade and nothing else, so they're independent at the transaction, they are the genuine middleman.
Sean Donahoe: There you go.
Phil Newton: That's my philosophy. So, yeah, be very careful. To be fair, Sean, this came up a few times recently where people have been asking me about various brokerages, which I know to be less reputable, but they've got a household name, but because of that household name, every Tom, Dick, and Harry, no offense to Tom, Dick, or Harry, but every person is just asking me about them. These are household names, but what I know is that they're a market maker broker and I've not got much love for market maker brokers. Again, that's their business model, but they're not transparent with how they do their business. It just seems a little bit shady and seedy in the background, in my mind. Yeah, you've got to pay commission, but hey, you're only going to pay commission.
Sean Donahoe: That's exactly it.
Phil Newton: At least that's a known known.
Sean Donahoe: Yeah. I hate to say it, but even on top of that, we also have loved ones-
Phil Newton:
Sean Donahoe: ... or even our family who don't want us to succeed or think we can succeed. People come up to you and say-
Phil Newton: Because we're doing something different. We're -
Sean Donahoe: Exactly.
Phil Newton: ... we're not going to work in a blue collar factory and we're going to retire in 50 years, we're going to get the gold watch and everything's going to be rosy, and blah, blah, blah.
Sean Donahoe: Yeah, just who do you think you are? Bobby Axelrod, Gordon Gekko?
Phil Newton: Mid-teens, mid-teens. You said this yourself, Sean, I was brought up in quite an entrepreneurial kind of background, I didn't realize it back then, but my parents have their own farm, they set their own hours, they worked their own ... They tilled all the land, they did all the rest of it, it was a hard life, but they did their own thing at the same time, they were entrepreneurs, they were responsible for their own life. From my mid-teens, that's what I wanted. I've always railed against the ... I don't want to work for anyone, I want to do my own thing. I didn't know what I was going to do at that point, but that was the mindset, that was the attitude. I would strongly urge people to do their own thing with whatever it is, whether it's starting an online business, whether it's trading, whether it's a real business, bricks and mortar, just go and do something.
There's so much opportunity these days to make it and I'm resisting the urge to say make money, it's about more than money, life, but that's a part of it. There's just no excuse to not be able to succeed at something these days with the wealth of technology and opportunity that we have in this world, in this day and age. Then this really stems, as you can probably gather, Sean, I'm quite passionate about this subject, very similar to you, but it's the people that are trying to put the boots on the back of your neck that prevent you from being successful. That is, for the most part, how the majority of society views the people who are trying to do something with their lives and be better people or better at something. We're outliers at the end of the day, we're doing something different from the majority of people. We're trying to succeed, and be successful, and be responsible for our own actions, and not be reliant on the system. We're creating our own system, effectively.
Sean Donahoe: Absolutely. At the end of the day, that's why we are rebels, that's why we call this damn show Rebel Traders. You are part of the rebel nation and we're damn proud to have you as part of that, but that really is, like I said, the philosophy of what we do here.
Phil Newton: Yeah. Doing the opposite to what the mainstream, the talking heads are on about, the sheeple of the world.
Sean Donahoe: Indeed, we're the lions. We're the lions while the wildebeests go and drink from the stream, knowing that we've got them trapped in a canyon because, hey, it's time for a steak. That's how we attack the markets, that's what we look at. We are very, very much outside of the norm and that's why we're successful at what we do, because most people-
Phil Newton: Dare I say, Sean-
Sean Donahoe: Do it.
Phil Newton: ... to try and be hip and down with the kids-
Sean Donahoe: Oh my God.
Phil Newton: ... dare I say that we ... I know, I'm struggling here. Dare I say that we might be close to being woke, or is that phrase that's out of being popular already?
Sean Donahoe: Just don't. Let's not and pretend you didn't.
Phil Newton: I'm hip, I can get down with the kids.
Sean Donahoe: Yes, you can down with your bad self. Yes, indeed. Dear me. All right, so-
Phil Newton: It's just having that realization that you're responsible for your actions, don't let anyone put you down, and if you want to go and do something, if trading's that thing for you, because obviously we need to keep it relevant to something we're really passionate about, if you want trading to be a part of your life, maybe if trading wants to be a part of your life, too, then don't let anyone turn you off. Just understand it's a business, there's a process to follow, you've got to find your path in business, in the way of operating your business in the trading context, you've got to find out what works for you, and don't let anyone tell you that it can't be done. You just need to find your way of doing it, and if that's with us, then yeah, pick up the phone, we'll have a chat, and if not, go and find your path. It might be that day trading is for you, I don't know. I've tried it, I did okay with it, but if you've not got time to do it, give us a call.
Sean Donahoe: Abso-damn-lutely. So, here's the last one we're going to talk about here, and to my mind, this is the best opening line of a book ever, "In the beginning, there was nothing, which exploded." Now, I love this one and it's one of the, like I said, it's one of the best opening lines of a book anywhere.
Phil Newton: It's deep.
Sean Donahoe: It is deep. However, with trading, it comes from one wee concept, your starting point on your account. Think about this for a moment, it may be a small account to start with, maybe you've got a nice wee chunk of change in your account, you want more, you want it to grow, you want it to explode, but it's going to take time and it's going to be over time-
Phil Newton: Way, I've always referred to exploding up your accounts as a bad thing.
Sean Donahoe: Controlled explosion, rather than the wrong way, which is what most people have, which is an imploding account, I guess.
Phil Newton: Yeah.
Sean Donahoe: Each one of them is their own type of activity, but we want a controlled explosion over time. We want it to go nicely in the up direction. Now, this can all happen with what Einstein called the eighth wonder of the world, compounding, and that is-
Phil Newton:
Sean Donahoe: Indeed. There is a book actually called the Fifth Elephant-
Phil Newton: Point, why not?
Sean Donahoe: Indeed. Now, to give the context, Discworld is actually resting on the back of four elephants, which in turn, rests on a giant turtle flying through space. Yep, that's the Discworld, so the fifth element or the fifth elephant here was actually one of his books, which was fricking hilarious. Anyway, what we're talking about here is compounding, taking what you have right now, and it's a small percentage of your overall account per trade, and then taking that, and then adding to it. As your capital grows, that one percent grows and grows, as well, because again, obviously you're adding more and more money in the pot, so one percent of a greater number is always going to increase your-
Phil Newton: It's a greater number, Sean, that's exactly what it is.
Sean Donahoe: Well, I was going to say ... I don't know where the hell I was going to go with that, but basically, it grows. Then that means obviously your nest egg is growing faster and then so is your one percent position, and so on and so forth, and it just stacks up over time. That is a controlled explosion. Most people end up doing just fixed amounts per trade and that's, to use the vaguest -
Phil Newton: There's nothing wrong with it, but they stay there. They stay there.
Sean Donahoe: Yeah, they stay there, because that's their comfort zone, but if you, very slowly over time, increase that percentage size, you are naturally compounding your resources and letting those one percent positions grow and grow and grow. That is a very controlled explosion. Even if you've got a small account, yeah, it's going to take you ... The smaller your account, obviously, the longer it's going to take you, but at the end of the day-
Phil Newton: It can be done.
Sean Donahoe: It can be done and it is compounding. I'd much prefer a controlled explosion rather than the complete thermonuclear breakdown-
Phil Newton: Annihilation.
Sean Donahoe: ... of your account, which is what unfortunately a lot of people do. So, that is just a fraction of the ... I mean, I literally could spend 24 hours, at least, on just the quotes from Terry Pratchett. Like I said, this is just a tiny, tiny sampling which we've pulled here, but I do encourage you to think on these points we have discussed here, and get some damn Terry Pratchett in your life. You will be infinitely better for it, I guarantee it.
Phil Newton: Let's make that this week's homework, Sean, because having some pleasure in your life is a great way to grow as a person and an individual, comedy is great for the soul, so yeah, go and buy Guards! Guards!, which was my first Terry Pratchett book, it was a great-
Sean Donahoe: Funnily enough, -
Phil Newton: There's some great Dirty Harry movie references in there, which is more motivation to go and watch it, but just give it a go. That will be my recommendation, my homework for the week, is for you to go and read it, enjoy it, digest it-
Sean Donahoe: Then just some of the others, as well.
Phil Newton: Put some pleasure into your life because having that downtime, that relaxation, it's going to grow you as a person, it's going to grow you as a trader.
Sean Donahoe: Abso-damn-lutely. All good. So, with that being said, let's rock on.
Automated: Now, it's time for the Rebel Trader tip of the week. Brought to you by tradecanyon.com. Ready to take your trading game to the next level? Discover where smarter traders come to get coached by the best and learning to trade just got way easier. Trade Canyon, smarter traders live here.
Sean Donahoe: Okay, so Rebel Trader tip of the week, and we kind of touched on this a little bit, but I think it's worth banging on this drum one more time.
Phil Newton: Went off on Mr. Randy Pants, didn't he? He got side tracked.
Sean Donahoe: Well, I kind of did, as well, it was my fault, but-
Phil Newton: I'll take one for the team there.
Sean Donahoe: Well, you know, I know you like that, darling. Anyway, make time for life. We can get too bogged down in trading and forget the actual reason we are trading. For me, like I said, it's simple, I want to make most efficient use of time and money, that's where I am. I'm a very hectic, busy entrepreneur, I've got my fingers in a lot of different businesses, and it's all collective compounding. That's really my one liner goal.
Phil Newton: As Dutch said in the movie Predator, "I ain't got time to bleed."
Sean Donahoe: Oh, well, indeed, yeah. Geez. That's funny. That's funny.
Phil Newton: All week without an '80s movie reference.
Sean Donahoe: Absolutely. Actually, I've got to go watch Predator, it's a top movie. Yeah, for you, like you said, you want to relax in a coffee shop, read a Terry Pratchett book or some other book. We're going to keep it on Terry Pratchett this week, but the thing is, we can easily get obsessed with trading and forget the reason why we're doing it. This is something that, again, like I said, recently with my health concerns, it made me think a lot and reevaluate a lot of the things is, everything else could be-
Phil Newton: You need the hustle to be successful.
Sean Donahoe: Oh my God, if I hear one more fricking marketer or entrepreneur, consultant, or , "You've got to hustle, you've got to hustle, you've got to 10X your hustle."
Phil Newton: You don't need to.
Sean Donahoe: No.
Phil Newton: That's one way of doing it, just like what we do is one way of trading, there's many other ways of doing it. We get that, we never said that our way's the best way, but there's other ways of doing it.
Sean Donahoe: It's the best way for us.
Phil Newton: Exactly. Guess what? It's based on our objectives. We know what we want out of trading or out of life, and therefore, we've designed our trading strategy, our style, our personality as a trader to really reflect our ultimate objective. For me, I want free time, for you, it's time to do other things, and you're reevaluating yours, but you're not just probably ... You're reevaluating the whole situation, not just the trading. Might I mention that the trading's not going to change too much for you as you reevaluate -
Sean Donahoe: No. Either way . Yeah, exactly, it's the most efficient use of time.
Phil Newton: Because you've already done that. Time intensive. Exactly, yeah. I think that's what we're saying is, is you don't have to hustle, hustle, hustle, grind, grind, grind. Un-hustle yourself and think about that lifestyle that we were talking about, how do you want it? It might be that you've got a day job, you're working 40-50 hours a week already, I don't know, the day job with commuting, it might be 50-60, I don't know your personal situation. Because of time doing other stuff, it doesn't make sense to try and add another full time job as a side business, if that's trading or drop ship, or something else, other business, I'm trying to be general here, Sean, as you can probably gather. You can just do 30 minutes a day or 30 minutes every other day, just think about what you want from the objective or with the objective of, what do I want out of life and how will trading help me achieve that objective?
Sean Donahoe: Absolutely. You've also got to have balance. So many people get obsessed with trading to the point where it takes over their lives and you've got to have balance between what you do and why you do it, otherwise, you'll be on the losing end of that deal.
Phil Newton: Yeah. I wouldn't like to fall into the trap of that work-life balance, I personally think that's nonsense. We've all got the same amount of time in our lives and it's just the case of what you want to allocate to each thing. We've got a certain amount of sleep, we've got a certain amount of commitments with work, but there is no work-life balance. It's how do you integrate everything together. As we keep saying, what's the best use of time and resources, not just from a business point of view, but a life point of view. How can you balance the life side of it? I just caught myself saying it, Sean, and I was trying to avoid it, but that balance in life, it's all integrated. Think about it like what time are you going to allocate to relax with family time, and then maybe you've got a window for trading, and just make sure it's all integrated. That's the phrase I was looking for, work-life integration.
Sean Donahoe: That's a better way to look at it. There you go -
Phil Newton: That's the phrase I was looking for.
Sean Donahoe: Yeah, there you go, that's the Rebel Trader tip of the week.
Phil Newton: Work-life integration, dot com. We're registering it right now.
Sean Donahoe: Let's rock on.
Automated: If you've got questions, they've got answers. Sean and Phil dive into the virtual mailbag for this week's Rebel Traders quick fire round.
Sean Donahoe: Okay, so, the Rebel Trader mailbag, and I'm going to fire this first one at Phil, because this is a question I got yesterday, I answered it, but I'm going to be curious about Phil as he was predominantly a Forex trader for a long, long time, but okay, the question is, do you think Forex will ever make a comeback?
Phil Newton: Does it need to? It's already there. It's not a case of will it make a comeback, it probably will at some point. Define the comeback, what do you want? It's actually a really difficult question, yeah.
Sean Donahoe: This is what I really came at. It was prominent, it was very prominent, everyone was talking about Forex for their own different reasons a few years ago, and it was the same then with binary options, then it switched to crypto and everything else.
Phil Newton: Yeah, against the value of the dollar. From my point of view, will currencies ever make a comeback, because I'm in the UK, the pound against the dollar went meteoric, but the pound against the dollar was ... For every one pound, I could get $2.10, $2.15, which is phenomenal, absolutely phenomenal exchange. Flip it on your side because you're in America, Sean, that's really bad. That was multi-decade lows from the dollar to the pound, going the other way, so it was really bad for you. From my point of view, you've had the comeback, from my point of view ... I'm sorry, from your point of view, you've had the comeback, from my point of view, it needs to make a comeback to get it back where it was 10-15 years ago.
The thing with currencies is, is there's a counterpoint in relation to what, because it's between two parties, two countries, in this case the pound against the dollar, or the euro against the dollar, or the euro against the pound. For every dip, there's a trough because of that paired relationship. If a currency goes up on one side, then it's going down on the other, it's a relationship. If we just talked about the dollar, the dollar's not changed really, the only way it changes in the country is with interest rates, inflation, and all the stuff. If the country starts printing more money because they need it, then it should technically devalue, as well. Will it make a comeback, in relation to what? A comeback from where? Are we talking about it from 2005 or are we going to go back to the 1970?
Sean Donahoe: Well, that's a good point. That's a good point.
Phil Newton: It's not an easy answer. The broad stroke answer is, will it make a comeback? Probably. I think that's the best I can say because it's such a general, broad question -
Sean Donahoe: Well, the general broad question, just to give ... Let me layer a little information because I got a little more information from this person that was asking, is they meant the interest in Forex in the trading community. To my mind, it's never gone. I think there's a lot of noise in this space, there's still a lot of hype, and shenanigans, and BS from the pushers of Forex because it's so easy to get into, you were talking about the market maker brokers.
Phil Newton: Yeah.
Sean Donahoe: Yeah. You were talking a lot about the market maker brokers, which was a very, very prominent thing, and one of the dodgier ends of this market as far as I'm concerned, as well, but they were talking about generally, by the time they got to it, is the interest in Forex, do you think it's ever going to be a hyper market again?
Phil Newton: No. If you imagine, like what we're saying now with bitcoin and cryptocurrencies, I'm not going to bash it folks, so get off your high horse before ... Anyway, what's in right now with bitcoin and cryptocurrency is a new, exciting interest, it's a new technology, maybe there's a currency, it's going to have some real value, the prices are exceptionally volatile, some people are calling it a bubble. You know what I'm trying to say here, there's a lot of general interest, and that's what we saw with currencies back in 2001-2002. What I'm saying, talking about currencies, is that context between real countries, as it were, the exchange rate between one country and another. The reason, or one of the primary reasons, why the volatility increased and the same chatter that we saw when it eventually exploded, 2004-2005, was because of technology, there was a technological shift that allowed the little guy like you and me to get involved in currency exchange trading.
Which prior to, I suppose, the dot com bubble, that the influx of computing power on every household, every desktop, you had to phone a broker, it was a very specialized way of trading, like kind of bonds. Even to this day, bonds are slow, dull, and un-shiny, it's still quite a specialist thing to trade, it's not a mainstream vehicle trade. Although, it's accessible to everyone, it's just not sexy. What happened was, because technology made it freely available, it became the sexy thing and that caused an explosion, a global explosion, in currency trading, not just unique to one country or a geolocation. The whole world had access to that technology, they could start trading it, hedge funds, I had my own for a while, trading funds just exploded, you got 50, 100, 150 million technically small funds, and they just popped up out of nowhere all around the world.
So, the trading volume between the popular currencies kept increasing and increasing, and that meant that the volatility from the price points, the range of movements, kept exploding, it made it exciting, you could make a lot of money day trading, which is what I did for 12 years. You see where I'm going here. The fact that we're talking about currencies, like the pound or the dollar, that's exactly what we're seeing with cryptocurrencies right now. This is what I mean by it, I've seen this before, that's why I can't completely say it's a bubble. We've seen that bubble, that explosion of technology and trading volumes increase in real currencies, and now that's gone away. We might see a range of movements increase, they are cyclical, they come and go all the time, but maybe in the future it'll get better, but we've had that bubble, if you like, that explosion, the heightened excitement and interest in currency trading. We're not going to have that again because it's already happened, it was a one-off occurrence.
Sean Donahoe: Okay. So, what else is in the mailbag?
Phil Newton: Well, I'll step off my soapbox now, Sean.
Sean Donahoe: I'm trying to kick you out from under in there, just to-
Phil Newton: Oh, yeah. I kind of zone out for a minute there, but that's how I see it, Sean, whether someone agrees or disagrees, I don't care. That's my view and I'm entitled to it.
Sean Donahoe: Absolutely, and 100% agree with you, just for reference, as well, because again, a lot of these-
Phil Newton: .
Sean Donahoe: There you go. At the end of the day, there's a lot hype markets, a lot of ... The problem is, when there's a lot of hype, it also brings out all the dregs of the trading world.
Phil Newton: Yeah. Buyer beware. Buyer beware.
Sean Donahoe: Absolutely.
Phil Newton: Just to underscore that final comment, Sean, there's a lot of ... The barrier to entry's exceedingly low now, it's kind of like the lowest dollar amount that allows to open an account, I suppose kind of like Amazon with some of their services. What is it? The SESES service, data services?
Sean Donahoe: Yes, and a lot of their AWS services.
Phil Newton: Price one, and they won the price at the bottom. We've just seen that with currency brokers, they're priced at the bottom. You can open an account with $50 and get yourself an iPad Nano or whatever it is that they're giving away these days. The barrier to entry is exceptionally low and that means that it's just a churn and burn, bucket shop type outfit. It's bad from that point. We need some regulation to tidy it up, is my view point. Anyway, soapbox speech, again, I just hopped back on there for a brief moment. I'll step off again, Sean.
Sean Donahoe: That's okay, I'm going to hide the fricking thing now, but go ahead. What else is in the mailbag?
Phil Newton: All right, take a breath, I'm just going to center myself. Okay, question-
Sean Donahoe:
Phil Newton: Question for you. Yeah, rub my earlobes, Sean. "Why do you both trade the US markets and would you trade other markets?" That's interesting because I kind of touched on that in my previous rant.
Sean Donahoe: Kind of, it was kind of -
Phil Newton: It was kind of a sense why I'm not trading, for instance, anymore. You've kind of got the background of what I'm doing. The excitement's gone. I'm answering your question here, Sean, but I think it's kind of linked to the way I-
Sean Donahoe: Go ahead. It's fine.
Phil Newton: ... answered the previous question. I might as well cut ... -
Sean Donahoe: I'm going to have to get a violin soundtrack every time you say that.
Phil Newton: The object of a trader, as far as I'm concerned, is not to be a currency trader, or not to be an options trader, or not to be a bond trader. My objective is to trade from fluctuations in price movements on exchange traded instruments. I think that's the first time I've said that way.
Sean Donahoe: That's a bloody good thing, you should write it down because that's a very good way to put it.
Phil Newton: That is my overall objective, is to make money from price fluctuations, to be even more general. Because of that objective, to make money from price fluctuations, I could be trading Beanie bears on eBay. That's what happened in the 90's, you could buy a Beanie bear for $300 in the morning and by the afternoon, you could flip it for $1,500. We've seen digital equivalents of that with some of the bitcoin offerings, you could buy a bitcoin kitten or whatever was going, in the morning and dress it up, and in the afternoon you could flip it for $1,500. That's the modern equivalent of flipping Beanie bears on eBay. Equally, I could go and do something else. What I'm trying to get to, Sean, is that as a trader, I'm looking for the best use of my time and resources when I'm looking at the financial market. I'm trying to evaluate not what is good to trade, which 10 years ago is currencies, to tie it back to the first question. 10 years ago, the best use of my time and resources, because of the things that I mentioned, the best thing to do in 2005, 2006, 2007, all the way through to around about 2009-2010, was to trade currencies, real currencies, not the crypto nonsense, but real currencies.
That was the best use of my time and resources. Then the volatility, the price fluctuations, dried up by comparison, so I'm looking for the next opportunity. As a trader, I'm looking for opportunity and what is the next opportunity? I think it's going to be an increase in volatility. That's kind of like a posh way of saying there's a bear market that's going to happen, because when volatility increases, it usually means that something bad in the market is happening. Not like a flash crash, I'm talking about a healthy bear market that might take anywhere from six to 18 months to unfold, so we're going to see a contraction in either the US or the global economies. So, because of that expectation, I'm positioning myself ahead of an increase in volatility. The best use of my time to position myself ahead of that bear market happening and an increase in volatility, is to trade stock options. Now, right now we're at a global and historical low in volatility, so right now, I'm mostly a buyer of options, given the overall environment, and I'm pretty good at picking direction, so I trade directionally.
Sean Donahoe: And you're doing very successful in advance of what you're saying is a big volatility movement, even though you've been doing this for a while now, you've still been very, very, and we both have been very, very successful in what we're doing.
Phil Newton: On average, 65% of the time I'm picking the right ones. I'm doing all right, brother, I'm doing all right.
Sean Donahoe: That was very good.
Phil Newton: Veiled reference to Shop. Just so you get it, but I kind of lost my train of thought there, I zoned out a little bit. So, when the bear market happens, I'm probably going to flip from being mostly a buyer of options because the environment dictates it, to being mostly a seller of options, I'm going to be a seller of more options and more option selling type strategies when we have the bear market because the environment's going to be more right to be an options seller. Now, I'll probably still be trading very similar, I will add strategies, rather than remove other ones and stop one and trade the other, I'll be doing more variety, but different options strategies that involve selling strategies.
That's what I'm preparing for. So, why do you trade the US market? That's why I trade, I'm trying to prepare myself for what will happen and not trade what has happened. Currency traders are trying to tell you that currency trading or Forex trading is the best thing since sliced bread because that's what they've been taught, and they don't open their eyes and look around for the opportunity. They're only touting what they think the best thing is because the barrier to entry is low and blah, blah, and all the other bollocks that goes along with that. So, as a trader, I'm looking for what will be the opportunity. Again, I'm a few years early, but you know what, Sean? I'm not going to be late to this party.
Sean Donahoe: No, absolutely. My pure reason for trading primarily the US market is going to be one word, liquidity, because everyone is in the US market, it's the most active market in the world, I see that as the biggest basket of opportunity. I'm a seller of options, I'm a buyer of options, I've got my fingers in a lot of different pies-
Phil Newton: You want to get a good price for them.
Sean Donahoe: Yeah, again, it's where most of the information is coming from for creating the information that I can compile and study to find those prime opportunities. So, for liquidity, for just pure volume and opportunity for options, the US market is my primary focus. However, I do also look at, from an investment standpoint, not so much as a trading, but from an investment standpoint, emerging markets, I look at different regions in the world and I've got some fingers in some pies in those, but it's more of an investment standpoint because I'm looking at longer term, not active.
Phil Newton: Because you've got diversification in your approach. You've got some longer term, speculative investments. You're not looking at the boat in them, I would imagine. Similarly, like you had a finger in the pie of the cryptocurrencies, you didn't fully load up the boats-
Sean Donahoe: No.
Phil Newton: ... but you had ... Well, I know you had perhaps two fingers in that cryptocurrency pie as opposed to one finger, because you saw the-
Sean Donahoe: I had about 10%. I had about 10%, but again it was-
Phil Newton: So, it was three fingers.
Sean Donahoe: There you go.
Phil Newton: The point is, is you saw an opportunity that you wanted to exploit and like I said with the currencies, it's not going to come around again.
Sean Donahoe: No.
Phil Newton: Once all this excitement has died down and a little bit of tightening of regulations, which will happen-
Sean Donahoe: Yeah, exactly.
Phil Newton: Yeah, let's get a slice of this pie, that opportunity won't be there anymore. Just like 15 years ago, it's not there anymore now in Forex trading, the opportunity's just gone.
Sean Donahoe: Yeah. I saw the opportunity in 2013-2014-
Phil Newton: Yeah, -
Sean Donahoe: 2013, I was looking at it, 2014 I decided, "Now, is the time," because I saw the right position. Again, I'm going to qualify this, a speculative investment that I allocated-
Phil Newton: You had a finger in the pie of speculation, that's it. You didn't load up the boats, and that's the sensible way of doing it.
Sean Donahoe: Indeed. Again, I cashed out right at December before the crash of crypto-
Phil Newton: For you.
Sean Donahoe: Well, again, it was ... We called it.
Phil Newton: I was like, this is it. This is-
Sean Donahoe: We called it.
Phil Newton: I remember the conversation, not just on the podcast, I remember our conversations. I remember sending you a message saying, "This is it, Sean." I cannot remember what the news title was, but it was something like ... I don't know, the Farmer's Digest or something stupid like that, it was a random article from one of those non-finance related industries, let's just put it that way, I'm just going to say Farmer's Digest just for flippancy, but it's now the time that you should be buying bitcoin from the Farmer's Digest. Talk about plows, and cows, and pigs, and chickens. Your job is not to comment on the finance world and as soon as I saw that headline, it was a message over to you, "This is it, Sean," and you were already on the edge anyway, but it was just-
Sean Donahoe: Oh, yeah.
Phil Newton: ... interest, and then I sent you that message, and then I got that back, it said, "It's funny you mention that, Phil. I've just cashed out."
Sean Donahoe: Indeed, yeah. I made the Scrooge McDuck prediction as I called it back in mid-December-
Phil Newton: Exactly, and then the following week, that's what we did. Yeah.
Sean Donahoe: Yeah. That was it and again, I'd already pulled all my cash out and sure enough-
Phil Newton: We got to the same conclusion for different reasons-
Sean Donahoe: From different angles.
Phil Newton: Different ways, yeah.
Sean Donahoe: Yeah.
Phil Newton: My point of view was more from the sentiments and it was just ... When people start commenting on things that they shouldn't comment or don't normally comment on, in my flippant example because I can't remember what the publication was, the Farmer's Arms, why is a Farmer's Digest talking about finance and the stock market? More specifically, cryptocurrencies. That's not their thing, baby. That's not .
Sean Donahoe: No. No, indeed.
Phil Newton: Why are they talking about it? That sentiment, just a little bit of a tip of the day there, as well. A bonus tip.
Sean Donahoe: Here's another mark on the calendar, Phil's talking about fundamentals.
Phil Newton: Yeah. Well, it's not quite, it's sentiments, but this also stems from what we said earlier, early, early, earlier, right at the beginning of the show, is whatever the general public is doing, do the opposite. When Jim Cramer's talking up Apple stock, maybe I want to reconsider my position, maybe I want to unload the boat, rather than load the boat. Apple, bad example, it's always a good stock at the moment and I see where the Buffet teacher has filled his boots on it, hasn't he?
Sean Donahoe: Indeed, indeed, yes.
Phil Newton: It's like whatever the general public is doing, the general public is representative of the general public, the general public is last to know anything, why would I want to be part of the unwashed masses and be a part of the crowd? Do the opposite, that's my knee-jerk response whenever I see anything to do with sentiment, and that's what we're talking about here.
Sean Donahoe: Okay. Last question then, sir.
Phil Newton:
Sean Donahoe: I don't know why I'm giving you this one, because you probably have no fricking idea, but I think it also has a generic context, "With the US midterms coming up later this year, do you think that'll have an adverse affect on the markets?" This is actually, funnily enough, a little bit of an Andrew question, but I'm going to fire it at you because .
Phil Newton: Yeah. Maybe you could get him on the Happening Now Report, it'd be interesting to see his perspective, because he's got more of his finger on the pulse with genuine fundamentals, not fake fundamentals, which I'm always banging on about, but real fundamentals, which I don't mind talking about.
Sean Donahoe: Yeah. I think this one has a general tone though for all politics, all elections in any market.
Phil Newton: Usually what happens is, it's more like a pause button set, it's not necessarily an adverse affect, it's more like a pause button gets pressed, like everyone's holding their breath, waiting to see what happens, and maybe certain sectors, maybe the broad market's pausing ahead of certain economic events that could cause some expectations for the future. That's normally what happens, it's normally the pause button gets pressed on the markets if there's any hype or expectation around the midterms. Personally, my view is I trade through such events because what I don't know is if the pause button will be pressed this time, because it doesn't always get pressed. Like typically Christmas holidays, it's typically a quiet period, December's usually got lower volumes, but it doesn't meant that the markets don't stop moving, it just means that there's lower volumes being traded, which might cause the pause button to get pressed, but will it be pressed? I don't know that, so I typically trade through events.
Holiday seasons, it's the same thing. The sell in May, come back on, whatever the phrase is. June, July, there's less people at the trading desks because they're on vacation, they're summering in the Hamptons or whatever it is that they do. You get what I'm saying here, Sean, it's the same principle, the pause button typically gets pressed. This is seasonality, this is cyclical nature of the markets. Sometimes the pause button gets pressed, sometimes it doesn't, I don't know when it will or when it won't. My decision many years ago was to trade through. If I have to trade through a period of crappy market conditions, then so be it, because I know that if its normal services resumes, there could well be some very big, exponential movements because of those low volumes, it won't take much of a trade to cause a big movement. So there can be some very big profits in these times, as well, just because of that low volume situation.
Sean Donahoe: Yeah, absolutely. Absolutely, and the same here. I don't care. I don't care about the midterms, I don't care about ... At the end of the day, too many people are going to be clenching their butt cheeks, and they're holding their money back, and businesses are going to be-
Phil Newton: You can always find a reason not to trade.
Sean Donahoe: Yeah, they're finding an excuse not to trade. To me, there's still opportunities, there's still money flowing, there's still opportunities happening, and I want to be primed positioned on opportunities I see, all the way through midterms. So when the midterms roll out, what I'm likely expecting to happen will accelerate as the money flows back into the market in the right directions. A lot of the times, a lot of these positions that we look at or companies that we're looking at, are already planning in and around their budgets, their overall game plan-
Phil Newton:
Sean Donahoe: ... not giving a damn about what is unknown. Exactly, yeah. You're banging on the nail there. They're looking to do what they're doing, but the money might start flowing if there's like the Democrats gain more control back in the House, I think it is, and what have you, then people are going to be like, "Oh dam, what's going to happen here," or, "Oh great," depending on their individual-
Phil Newton: There might be some sector fluctuation, I think is what you're dancing around there.
Sean Donahoe: Yeah. At the end of the day, a lot of the times that we've seen this, and I've kind of backtracked this and studied this, fundamentals, through history, is usually what happens is, it's a pause, but the direction doesn't change, it accelerators, once that's over, because the money's flowing back into the market. For my mind, and again, historically through my own studying of this particular aspect is, I don't care. I really don't care. I'm going to be trading on anyway, I'm not going to let it stop me trading, the problem is that, yeah, there might be some volume quietening down the closer we get, but at the end of the day, there's still volume there, there's still liquidity, and there's still opportunities. Trade on. I'm not going to worry about-
Phil Newton: Welcome to the dark side, Sean.
Sean Donahoe: Absolutely. Absolutely. With that being said, let's rock the hell on.
Automated: Don't forget, if you have a question you want to ask Sean and Phil, just go to tradecanyon.com/RTquestions and your question may be featured on a future show.
Uh-oh, what's that smell? It's time to call out the Wall Street shenanigans, mainstream confusion, and outright hi-jinx and hokum of so-called experts. Yep, it's time for Bullshit Of The Week.
Sean Donahoe: Okay, so Bullshit Of The Week, and Phil said earlier on he's not going to bash on crypto, well, I'm not going to bash on crypto either, but this is a crypto related story. It's the duplicity of the noise that we're talking about here a lot, the news networks that talk out of both sides of their mouth, again.
Now, surprise, surprise, literally in one group, on one popular website, I'm not going to link it here because, again, I don't want to give credence or anything, but it's just ... Okay, I'm going to give you four headlines-
Phil Newton: It's another example of the news with their own agenda and not reporting on the news.
Sean Donahoe: Indeed.
Phil Newton: It just happens to be about-
Sean Donahoe: It's idle magnetism and that's it, it's attention whoring.
Phil Newton: It's a hot topic still though, which is why it's relevant.
Sean Donahoe: Indeed. So, there's four articles in the same section above the fold, in other words, you don't have to scroll down, it's kind of an old newspaper adage-
Phil Newton: An old news term.
Sean Donahoe: Indeed. It's four articles in the same section, talking about bitcoin, too bullish, too bearish. From a respectable, and I put that in quotes, financial news network, all opinion pieces, but only serving to self validate your preexisting opinions. If you're bearish on bitcoin, you're going to find two articles that support your opinion, if you're bullish on bitcoin, guess what? You're going to find two articles that support your opinion. There's no taking a stance or a stand, they're not really informing, they're just reaffirming whatever you already have.
Phil Newton: Now, if there was good reporting, there would have been one article that was well balanced and considered that showed the pros and the cons of the point that they're trying to make. If you read-
Sean Donahoe: And a conclusion.
Phil Newton: Their own conclusion, but no-
Sean Donahoe: Or they make a conclusion based on the evidence, but no, it's-
Phil Newton: No.
Sean Donahoe:
Phil Newton: It's too difficult to report on these days.
Sean Donahoe: Apparently. Okay, here's the titles, and you make up your own mind. "Bearish on bitcoin, these charts may change your mind about cryptos." Here's the next one, "Why bitcoin could rally more than 70% in the coming week," says, okay? Then, okay, here's the two other sides of this-
Phil Newton: An anonymous source is my favorite.
Sean Donahoe: Oh yeah, indeed. "The advent of bitcoin futures spot the sell off in 2000," says San Francisco's Fed. Then, "Bill Gates says he would short bitcoin if there was an easy way to do it." So, two bearish articles, two bullish articles, and-
Phil Newton: When did he say that? That's what comes into my mind, when did he say that? I think he said that before Christmas, that's an old quote.
Sean Donahoe: Indeed. I think that was-
Phil Newton: And this is a new article.
Sean Donahoe: Yeah.
Phil Newton: For a slightly different reason, I think this just hides bullshit again, just more stuff, because that's an old quote and what, about six months later? Five, six months later? Now it's a fresh article, allegedly, and again, it just highlights more nonsense of how the media manipulates to incite ... To be fair, look at my reaction, they're inciting a reaction with one of those headlines. That's what they're trying to do. I think I just fell into the trap of what they're trying to achieve. If I would have seen that, I would have clicked on the article and guess what? There's going to be adverts on that article and I'm going to read everything that supports my view on bitcoin because Bill Gates said it, but what I'm really angry about is, when was the quote? I'm going to be searching for it, maybe I start clicking on adverts, and all of the sudden, they get paid.
Sean Donahoe: Indeed. Now, again-
Phil Newton: That is a good case in point of what we're trying to highlight here.
Sean Donahoe: Indeed, it was what we were talking earlier is, what's the motivation for this? Have they got your best interest at heart? No, they've got theirs. Theirs is their advertising revenue, which is normal, I've got nothing against that, but at the end of-
Phil Newton: It's their business, nothing against it, that's how they make money, but it's click bait.
Sean Donahoe: Indeed, but at the end of the day, you've got to have that noise filter, that's what we do, that's what we talk about. We're your noise filter, we really are. We're also your entertainment, as well, but we are your noise filter and that's what we like to do. So, there you go, ladies and gentlemen.
Phil Newton: If you insist on reading the news, and there's four articles that are pro your opinion and against your opinion, read all four of them, and-
Sean Donahoe: Abso-damn-lutely.
Phil Newton: ... read between the lines-
Sean Donahoe: Balance.
Phil Newton: ... and draw your own conclusion. That's the difficult thing to do, it's the hard thing to do, and it also explains why I'm intentionally ignorant. I don't want to do that.
Sean Donahoe: Indeed.
Phil Newton: That's the way I deal with it.
Sean Donahoe: Absolutely.
Phil Newton: Until Sean says, "Read this article," and then I go all off and on.
Sean Donahoe: Yes, you know, I do like to lay the soapbox in front of him every now and then with a newspaper-
Phil Newton: You know what buttons to press.
Sean Donahoe: ... nicely folded and neatly there with a headline right in front of it, and then just watch him jump on it, and shout as loud as he can, so it's all good. It's one of my entertainments.
Phil Newton: It's like the financial version of Jackass going on behind the scenes here, "Watch this, watch him go off on one," he just sets a firecracker and runs on me, "I'll just send him this bitcoin link and see what happens."
Sean Donahoe: Yeah. Actually, that is very true. All good fun. So, there you go, ladies and gentlemen, that's it for this week's show. Thank you for listening. Please remember this show is not free, we do put a lot of time and effort in here, bringing you entertaining content.
Phil Newton: Well, Sean does, I clearly don't.
Sean Donahoe: All right, I was going to give you credit and 50% of the credit there, but yeah, okay, fair enough, but anyway.
Phil Newton: Only 50%?
Sean Donahoe: Oh geez. See, I'm being generous. Anyway, it will cost you a five star review, just go to tradecanyon.com/rebeltraders, where you can subscribe and review us on your favorite way to hear the show, this helps us reach more traders just like you. What else we got going on, Phil? How can they contact us on the Facebook and Twitter machine?
Phil Newton: Well, I like the way that you prompted me to keep me on point there.
Sean Donahoe: I was trying, I knew what was coming.
Phil Newton: Trying to keep me on target there. You can connect with us on the same link, tradecanyon.com/rebeltraders, you can find us on Facebook and the Twitter machine there, as well. It's been an emotionally disturbing session this week, hasn't it? I think everyone's relieved for this to be over, so what have we got coming up next week?
Sean Donahoe: Well, we're going to take a little trip to the East, a little bit of philosophy -
Phil Newton: Oh, philosophy, I like it.
Sean Donahoe: Yeah, yeah. We can say a little Phil-sophosy.
Phil Newton:
Sean Donahoe: You're damn right we're not. Okay, we're going to take a little bit of a trip to ... A little bit of a martial arts theme, somewhat, but we're looking at-
Phil Newton:
Sean Donahoe: A little bit of zen, but we're looking at the trading samurai versus the trading ninja. I'm going to come at this from a completely unusual aspect that you've probably never considered, but we're going to have a lot of fun with this one. With that being said, ladies and gentlemen, we'll see you on next time, next week's show. For now, rock on, enjoy yourselves, and we'll see you soon.
Phil Newton: Happy trading.
Automated: For more cutting edge trading advice and a free trader workshop to help you build a personalized trading plan, and make smarter trading decisions, go to tradecanyon.com now.
Automated: Futures, options on futures, stock and stock options trading involves a substantial degree of risk, it may not be suitable for all investors. Past performance is not necessarily indicative of future results. Trade Canyon Incorporated provides only training and educational information. If you actually understood and listened to this, then that means you are awesome, congratulations and well done. Notice, this product may contain nuts.

(Click the time stamp to jump directly to that point in the episode.)

[00:09] Show Introduction

[02:34] Phil: A little bit of fandom mixed in with trading-dom.

[02:40] Sean: There’s going to be a lot of valuable trading lessons in here derived from the insanity that we're going to be talking about.*

[07:37] Phil: The great thing about satire generally is it puts an alternative view on everyday things, everyday items, everyday experiences and that's kind of the point we’re trying to get across.

[07:49] Sean: It’s what we do in our trading.

[07:51] Phil: Exactly, how can we have an alternative look at what we're doing to perhaps get a more enhance perspective of our experience.

[11:40] Sean: We’re going to start with a few quotes from the book and from him personally that have hidden trading lessons. So there first one is, “Build a man a fire and he’ll be warm for a day, set a man on fire and he’ll be warm for the rest of his life.

[12:00] Sean: You can teach someone a critical skill like we do every single day but how many times do people not take their time with discipline, methodical, action? What’s the danger zones?

[13:18] Phil: People are more inclined to not take best practice advice, not open minded enough to appreciate there is a better way and they want to try discover fire on their on their own and end up setting themselves on fire.

[14:55] Sean: You can't you can't go with a half a skill or half a strategy and expect to make it. You need to have a methodical, disciplined plan that you can apply consistently.

[17:14] Sean: People are often afraid of returning to the foundation that they’ve built on.

[17:23] Phil: Get back to basics, get the critical elements in place then build on them.

[21:30] Sean: I come back to reset every now and then myself as a measuring stick of where I’ve come to and where I’ve come from.

[23:02] Phil: If you hit a hurdle, what can I do about it now? Is it tomorrow’s problem or next week’s problem? Do I need more information? That’s how I deal with day-to-day stuff.

[23:35] Phil: I don’t need to know everything to place trades successfully. I’m intentionally ignorant on many subjects so it allows me to focus on my mile deep knowledge.

[24:15] Sean: Question the source of information. What are their motives?

[27:04] Sean: Many of the ways we teach trading is very mechanical, almost algorithmic.

[28:40] Phil: The problem that people experience is they try and be smarter than the research, smarter than the statistical evidence suggests and that’s human emotion. It really does fail every time.

[29:14] Sean: One of our core strategies is very much a check box scenario. It takes time, you have to develop the confidence that you can do all that. Human emotion tries to push you into your comfort zone and make you question yourself.

[31:17] Phil: In the real world that would be a business plan, a proven plan of action that you apply consistently. In trading context, how do we apply this conveyor belt experience and the simplest thing is to turn the volume down on the voices in your head.

[35:37] Sean: The reason I got into trading in the first place is I want my money to be working for me so I treat every dollar like an employee.

[36:54] Phil: In that, you’re not micromanaging, they’ve got their own plan of action to perform inside the bigger plan of action.

[41:15] Sean: Think about it now rather than when it’s too late. Why are you trading, what’s your goal, how are you going to get there?

[41:50] Phil: Trading for a short period of time every day allows me a lifestyle. Set the life you want to live up in front of you first and go for it.

[43:00] Sean: So here’s the next one, “It’s not worth doing something unless you’re doing something that someone somewhere would much rather you weren’t doing.” Financial institutions count on you failing because it’s what keeps them in business.

[44:55] Phil: There’s an ulterior motive so use a legitimate broker.

[51:01] Sean: Maybe you’ve got a nice chunk of change in your account, you want it to explode but it’s going to take time. We want a nice controlled explosion over time, nicely in the up direction.

[52:07] Sean: What we’re talking about is compounding. Taking what you have right now and there is a small percentage of your overall account per trade and adding to it as your capital grows that one percent grows as well.

[53:15] Phil: It can be done.

[53:19] Sean: I much preferred the controlled explosion than the complete annihilation of your account. I do encourage you to think on these points and get some Terry Pratchett in your life.

[53:55] Phil: Having some pleasure in your life is a great way to grow as a person and an individual.

[54:40] Rebel Trader Tip of the Week

[55:14] Sean: Make time for life. We can get too bogged down in trading and forget the actual reason we are trading. I want every dime I make to work that much harder andmultiply in all my other businesses. It’s allcollective compounding effect.

[56:14] Phil: You need the hustle to be successful.

[58:12] Sean: You’ve got to have a balance between what you do and why you do it, otherwise you will be on the losing end of the deal.

[58:41] Phil: What’s the best use of time and resources to just from a business point of view but from a life point of view?

[59:30] Quickfire Round

[59:47] Sean:Do you think Forex will ever make a comeback?

[59:50] Phil: Does it need to, it’s already there. It’s not a case of will it make a comeback, it probably will at some point.

[1:00:26] Phil: Because I’m in the UK, the pound against the dollar went meteoric but flips it on your side in America that’s really bad. From your point of view you’ve had the comeback but from my viewpoint it needs to make a comeback.

[1:07:22] Sean: Why do you both trade the US markets and would you trade other markets?

[1:08:15] Phil: My objective is to trade from fluctuations in price movement on exchange traded instrument. Because of that objective, I could be trading beanie bears.

[1:09:55] Phil: As a trader, I’m looking for opportunity. What is the next opportunity? I think it’s going to be an increase in volatility. It might take anywhere from six to eighteen months to unfold so we’re going to see a traction in either the US or global economies. Because of that expectation I’m positioning myself ahead of an increase in volatility so the best use of my time is to trade stock options.

[1:17:58] Sean: With the US mid-terms coming up later this year, do you think that will have an adverse effect on the markets?

[1:18:36] Phil: It’s more like the pause button gets pressed; everyone’s holding their breath waiting to see what happens. Personally, I trade through such events.

[1:21:00] Sean: There’s still opportunities happening I want to be prime positioned on opportunities I see all the way through mid-terms. What I’m likely expecting to happen will likely accelerate.

[1:22:28] Sean: There might be some volume quieting down the closer we get. There’s still volume there, there’s still liquidity, there’s still opportunities. Trade on!


[1:23:00] Bulls**t of the Week

[1:23:23] Sean: It’s the duplicity of the noise that we talk about here a lot. The news networks talk out of both sides of their mouths again. I’m not going to link it here because I don’t want to give credence.

[1:23:46] Phil: It’s another example of the news with their own agenda and not reporting on the news.

[1:24:15] Sean: It’s four articles in the same section talking about Bitcoin - two bullish, two bearish from a ‘respectable’ financial news network. All opinion pieces but only serving to self-validate your own pre-existing opinions. Not really informing, just reaffirming.

[1:26:19] Phil: They’re inciting a reaction with one of those headlines. There’s going to be adverts on that articles, I’m going to read everything that supports my view against Bitcoin. Maybe I start clicking on adverts and al of a sudden they get paid.

[1:26:57] Sean: What’s the motivation? Theirs is their advertising revenue.

[1:27:24] Sean: We’re your noise filter and that’s what we like to do.

[1:27:34] Phil: Read between the lines and draw your own conclusions.

[1:28:14] Sean: Okay, that's it for this week. Thank you for listening to the show!Please remember that this show is not free.It will cost you a 5 star review on just go to tradecanyon.com/rebeltraders where you can subscribe and review us on your favorite way to hear the show.This helps us reach more traders and investors just like you.

[1:29:14] Phil: You can connect with on the same link, you can find us on Facebook and on the Twitter machine Sean, what have we got coming up in next week?

[1:29:55] Sean:
We’re looking at the Trading Samurai vs The Trading Ninja. We’ll see you on next week’s show.

[1:30:23] Phil: Happy trading.


3 Key Takeaways From This Show

  • Decide WHY you are trading and what your goals are
  • Design your trading around your goals and be ruthless about your time dedicated to trading efficiently
  • Ultimately, live your life and don’t trade time for money, trade time for FREEDOM and let the money take care of itself

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