Rebel Traders 062 : The Tao of Rebel Trading

Step into the Dojo, pull your belt tight and queue the funky 80’s montage music. It’s time to determine if you have what it takes to be a Rebel Trader…

One thing we get asked a lot is what actually is Rebel Trading? What do we do differently? And what does it take to be a Rebel Trader? Well, for over the last year we have shared a lot of pearls of wisdom and shared a ton of strategies. We've revealed our insights on how we approach the market. In this show, we’re going to break it all down and explain what it ACTUALLY takes to be a Rebel Trader…

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Sean Donahoe: Step into the dojo, pull your belt tight, and cue the funky '80s montage music. It's time to determine if you have what it takes to be a Rebel Trader. You ready? Let's rock.
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. And now, here are your hosts Sean Donahoe and Mister Phil Newton.
Sean Donahoe: Hey, hey, hey. This is Sean Donahoe with the new and improved and slightly variant show. We're going to be changing things up a little bit here in the dojo. So I don't know if this is going to make Jackie Chan and Bruce Lee here as we talk about the cheesy '80s music, or if it's Van Damme or Ralph Macchio, whatever his name is, the Karate Kid, wax-on whack-off, whatever it is. But, I am ...
Phil Newton: Really?
Sean Donahoe: I enjoyed -- I really enjoyed ...
Phil Newton: You went really early, this one.
Sean Donahoe: Well, I knew I was going to get you with that. And as always, I am joined by the infamous Mr. Phil Newton. How are you doing, sir? I knew I would get you with that one.
Phil Newton: I'm so infamous I'm not famous.
Sean Donahoe: There you go, there you go.
Phil Newton: They filmed the remake, although not the remake, it's 30 years on.
Sean Donahoe: Sean. I actually, I watched two episodes, and I got so bored with it I was like, "No, they should have just let that die."
Phil Newton: Is it a series? I thought they had done a movie with the same two guys.
Sean Donahoe: What they did is, they did do a new movie with, actually, funnily enough Jackie Chan and I think it's Jaden Smith, Will Smith's kid.
Phil Newton: I saw a movie. It was all right.
Sean Donahoe: It was not. It was terrible.
Phil Newton: It was all right. It had Jackie in it. It's Jackie Chan. I mean you can't ... If that's the lowest you get with Jackie Chan, it's all right.
Sean Donahoe: Obviously, yeah. I'm a big Jackie Chan fan but ... Yeah, they did Cobra Kai, which was the YouTube series, with the two kids that were originally, who are all grown up and kind of big adults now. But yeah, it was painful.
Phil Newton: Well, I thought they were doing a movie with it, to be honest, and it just looked, "No, kill me now."
Sean Donahoe: Yeah. I tried to stick with it for two episodes, but anyway. That's because we have time because we're not doing crazy trading. But, one thing, as we go off on a complete '80s sidetrack here, just showing our ages here, one thing we get asked a lot is what it actually takes to be a Rebel Trader. No, bad '80s pop culture is not required, but a lot of times we do get asked ...
Phil Newton: It does help.
Sean Donahoe: It does help. It does.
But what we want to do with this show today is kind of fill out what it actually takes to be a Rebel Trader. I mean, for the last year we've shared a lot of pearls of wisdom, shared a lot of strategies and insights and everything else, and how we approach the market. So in today's show we're going to really break it all down, explain what it actually takes to be a Rebel Trader.
Phil Newton: I've kind of lost myself there, Sean, because we've changed the format a little bit. So maybe we've got some new surprises later on in the show. You know, we don't have the Bullshit of the Week anymore.
Sean Donahoe: Nope.
Phil Newton: That's surprised me.
Sean Donahoe: Nope, we killed it.
Phil Newton: What we have got, we've got a new segment: Trade, Fade, or Evade?
Sean Donahoe: Absolutely. Yeah. We ...
Phil Newton: It's a little bit of, what was it, the "Snog, Marry, Kill"?
Sean Donahoe: Yeah, basically. We've created the trading version of that, and there is the FML, or FMK, which we will not explain those acronyms. You can imagine what the F stands for.
Phil Newton: You know what we're like. If we can string a conversation out for a couple of hours, we will do. So this is our attempt to try and be quick.
Sean Donahoe: Yes, it is.
Phil Newton: When we're talking about stocks and trading opportunities, for what ...
To be fair, Sean, for the last 12 months, we've tried -- in vain I might add -- we've tried to find the trade. So we thought we'd be pretty obvious this time and go and actually look for the bloody thing.
Sean Donahoe: Well, this is it. Well, what we do is, we tend to go on and talk about a hundred different things, and then ...
Phil Newton: We embellish. We twiddle our vast mustaches when we embellish.
Sean Donahoe: Okay, there you go. So we're going to get right down to it, right here, always finding where the trade is. But what we're going to do is we are going to talk about ...
Phil Newton:
Sean Donahoe: Well, that too. But we're also gonna talk about the Tao of Rebel Trading. So hence the martial arts reference at the beginning here. We are gonna be breaking down what we call the Five Core Pillars, the tenets, the mission of being a Rebel Trader.
So I'm gonna start with, number one here, it's a drum that we bang every now and then, but it is one of the core tenets of being a Rebel Trader is ...
Phil Newton: Or in Phil's case, a bongo.
Sean Donahoe: A bongo, indeed. Yes indeed. We know that Phil has those bongos.
Phil Newton: I like to bang those bongos from time to time.
Sean Donahoe: I've gotta use the Dire Straits reference, "banging on the bongos like a chimpanzee." So there you go.
But "that ain't working, that's the way we do it." The trading for nothing, and the returns are free.
So, anyway. That's about as close as I can get to that song.
Phil Newton: That was quick. Full improv points there.
Sean Donahoe:
So anyway.
Phil Newton: We're trying to make the show shorter, we're not winning straight away. Go on. Let's go.
The art of Rebel Trading.
Sean Donahoe: Yes, the art or the Tao of Rebel Trading.
So the first one I wanna talk about is: trading is a business. Now here's the thing. We don't treat trading like a hobby. You treat trading like a hobby, you are basically just giving your money to the market. Because you need to have that specific mindset that this is -- first of all, you're putting money into the markets with the expectation of a return. Which means you've got to treat it with all the seriousness as you would a business.
And Phil always talks about his High Street shoe shop. Again. We're trying to operate at a profit. So you have to take it as seriously, you know, you come at it with the right mentality. But this is a great little way to generate a profit from your efforts. As you would any business.
What's your take on that?
Phil Newton: Let's be fair, I completely wholeheartedly agree. And again, just like any other business, you don't have to be, as we like to, you don't have to be all day every day operating that business. Because one of the benefits of the way that we can do trading as a business is that you don't have to be in the trenches all day every day flicking through chart after chart.
You know, under those typical guises of, "This is what trading is." 'Cause when you've got a systematic approach to anything, it can be time-efficient. And that's what we advocate. So as long as you treat it as a business from that point of view, where you're opening up the shop every day, you're going through your systematic approach. I refer to it as the production mind. You go through everything and you find stocks, you track and monitor your portfolio, and you measure your success. Just like you would do with a real business. We're just doing the financial trading equivalent of running our business from day to day.
And I think that's the most important thing. I was speaking to two people this week already, and I said, "Trading's not for you until you can change your mindsets." Because they were so ... I'm trying to think of the right word, but they were so focused on it as if it was a hobby. They were looking for the widget that was gonna make them a successful trader. You know, it was like which golf club is gonna make me a better trader. That's the question that they were asking. "If I use this golf club, or if I buy this set of golf balls, will that make me a better trader?" No.
You just can't get people to see it. And I suppose the analogy is, you can take a horse to water, but you can't make it drink. You know, these days I haven't got the patience to try to convince someone of something that they don't want to be convinced about.
Does that make sense, Sean?
Sean Donahoe: No, it's absolutely true. We come through this every now and then with students who want us to help them be a Rebel Trader ...
Phil Newton: It's not my job to convince someone that my way is perhaps, or my viewpoints -- I'm not saying my strategy is the best way, but my viewpoints about trading is the right way to do it. 'Cause everyone who's successful at something comes at it with a professional mindset.
Sean Donahoe: Yeah.
Phil Newton: Whether it be sports or something operating at a professional level. In this case it's financial trading, but. These two guys, they're not there yet. They're still treating it like a hobby. They're still looking for the shiny button that's gonna make it all work.
It's like, we send out some daily alerts, surprisingly, every day, Sean. Hence the name, "daily alerts."
Sean Donahoe: Yeah. There was a clue there.
Phil Newton: Hence the name. Surprise, surprise, the clue's in the name, as always!
But the message that I got back was, "I'm following one alert." Okay, so, in this month so far, I've sent 22 alerts out. It's at least one a day. You know. And sometimes it's a little bit more, but he's following one alert, hoping that that one alert is gonna be the one that makes him all the money. And it doesn't work like that.
To put that into a business context to show how stupid it is, it would be like opening up the shop for one hour, for one day, out of the seven days and all the hours that you could be open. He's only opened up between 10:00 and 12:00 on a Monday, and is wondering why no customers are coming in to buy his products.
Sean Donahoe: And he's got all those shoes on the thing, and ...
Phil Newton: Yeah. He's got all those shoes in the shop to shove. Say that five times. But that's the difference ... in the real world of business, you wouldn't do that, is the point, I think, Sean.
Sean Donahoe: Yeah.
Now this also leads nicely into point number two, which is: Trading should be efficient, streamlined, and consistent. Which is kind of again what Phil was just referring to. If you're running a business, you need to have the consistency. You need to have your processes streamlined. We're portfolio traders in that we have a rolling portfolio with one trade a day. That's all you need to consistently beat the market, is one trade a day.
If you're doing it in the right, consistent, streamlined manner, you have an efficient process and strategy, and if you've got all that nailed down, then you have everything you need to consistently beat the market. You don't have to be locked in front of the screen all day, like some people -- this is something we'll get to in a moment -- but some people think that being a trader, you need six monitors, each one with a different chart. You're in there, it's like the Matrix, you're going in, you're going in hot. You know.
No, it's not like that at all. Some people do that, and then they burn out in a few months.
Phil Newton: , Sean, I have traded that way.
Sean Donahoe: I've traded that way too. I thought ...
Phil Newton: I've gone from one extreme to the other. And you know what, you can do it. But you can only do one thing at a time.
Sean Donahoe: Exactly. I mean, I've been there where I've had the six monitor setup, actually on my desk I have a $10,000 computer, which is one of the biggest most powerful systems you can get, that powered everything. But actually, I use it for video processing and all sorts of other kind of stuff as well. But at the end of the day, it was like, "Okay, I've got a supercomputer here, I'm ready to take on the market." That was my attitude when I first got started, and then very quickly realized, "Oh, this is bullshit." I can do this on my phone, I can do this on my iPad ...
Phil Newton: The funny thing, Sean, is I did the same thing. I got the big ding-dong processor and all the rest.
And I hardly use it for the thing that I originally bought it for, which is the trading and the platform and all the rest of it. I mean, it's great. It runs fantastically. I've got no complaints there. But you know what the most important tool out of everything that I have? Even if I didn't have the computer, as long as I had internet access on a mobile phone, I could trade successfully with all the free tools that are available on the internet these days. But if I didn't have my spreadsheets, which is on Google Docs, and is essentially a free service anyway, but if I didn't have that spreadsheet that would help me track and monitor everything, then none of the other stuff matters.
Sean Donahoe: Absolutely.
Phil Newton: I just think it's funny that, because we've got an efficient streamlined process, you don't need all the fancy tools. Don't get me wrong, they make it easier. But you don't need them. As long as you've got a systematic approach to track and monitor everything, and put the next trade on, that's all that matters. So the most important tool that I've got is my spreadsheets.
Sean Donahoe: There you go.
Phil Newton: And I just think it's crazy how ... But when you first start out, you think, "It's the tool, it's the charting, it's the whiz-bangs, it's the widgets." And all the rest of it. You don't need them.
Sean Donahoe: No, absolutely not. And it is very strange ...
Phil Newton: approach this, and the way to monitor all that, to keep you self-efficient, streamlined, and efficient. But the real money is made with that spreadsheet. And if I didn't have that, as the heart of everything, then none of the other tools matter.
Sean Donahoe: No, it's very kind of ironic that that's all it takes. It takes one core process, it takes one core setup, and it mitigates and pretty much negates everything else. But one thing that this is also leading into which, again, becomes the natural progression from the first two that we've mentioned, is that trading should not be stressful.
Now, Phil would be one to tell you -- I think he's got a little story about being a day trader. I think he was doing it for, oh, a couple of years.
Phil Newton: Like "12 Years a Day Trader." Like one of those bad B-movies.
Sean Donahoe: Indeed. But again, you know ...
Phil Newton:
Sean Donahoe: Yeah, there you go. Coming with popcorn and everything else. But for a lot of people, they go into trading, and they're going in, I was making the joke earlier, "going in hot." But at the end of the day, people go in there like it's going to be a battle. Like you're going in and you're gonna be a gladiator in the market. And the problem is that, again, you're committing a lot of monies, a lot of emotion people have in and around money and everything else.
But to me, I actually find trading incredibly relaxing because of the way that we approach it as Rebel Traders, which is, we don't want to be glued to the screens and in front of the markets all day long. We don't want to have giant home run positions hoping for the best, scared that we're gonna lose our money on everything else, because we have a very -- I would say systematic ...
Phil Newton: Because it goes back to those tenets, which is, it's a business, and no business operates that way.
Sean Donahoe: Yeah.
Phil Newton: I mean, in all the big businesses, sure there's gonna be stressful times, but because of the strategies and the processes to keep everything streamlined, when there's maybe a hiccup with the business, then you've got systems in place to ease the stress. And get you through the tricky times. Just like every other business. And it's that first tenet built on the second tenet, the second tenet builds on the third tenet, you know. Everything's this natural progression, which I think makes these principles really interesting.
'Cause you can apply all of these with little tweaks and adjustments to most areas in your life. You know, this is how you become successful at pretty much everything, not just trading. This is how, as we regularly say, this is how you adapt what you would do and most people take for granted in the real world of business, whether you've got a shoe shop or you've got a multinational corporation. These principles are applied to trading. When you apply them, you simply become successful.
So yeah. A big part of what we do is, it shouldn't be stressful. We've got systems in place to help us when, "Eh. Something weird's going on. What do we do when something weird goes on." Okay. We go back to our systematic approach, we go back to the basics.
And if it's something new that we've experienced, then maybe we can put a process in place to help us with that situation in the future.
Sean Donahoe: Absolutely. And a lot of what we do, funnily enough, actually removes the emotion because we make it almost algorithmic. I mean, there's a discretionary element to what we do. But we make it so it removes the emotion, it removes the, what we'll talk about in a moment, a lot of risk. It allows us to do the process of trading very systematically, efficiently, and consistently, so we take that human element, that emotional stress, the investment, funnily enough, the emotional investment in the money that we're putting into the markets, because we can trade with the certainty that we have a positive expectancy strategy that is gonna generate returns for us consistently, pretty much in any market conditions, and that we can do what we do day after day, week after week, month after month, year after year.
And because of the process that we have in place, it does mean that we can trade today, tomorrow, next week, next month, next year. Which means we have the certainty that what we're doing, we don't have to stress about. And that's it, because we can do it again and again, it's repeatable, it's predictable, and consistent. Which for a lot of people in trading, unfortunately, they don't have. They're coming up to the plate, so to speak ... I hate to use baseball references, because I have no idea about the damn sport. So my references may be off. But they're coming up to the plate hoping or praying that because of what they're doing with trading is that every hit is gonna be a home run, because that's what's gonna make them the money.
Well, the problem is, that's unrealistic. We want singles and doubles. And you know, hey, you hit three out of every ten balls that are pitched to you, you're a hall of famer. You are not gonna hit ten out of ten home runs. Just doesn't happen. So again, you want to have that kind of foundation, that basis, that you can come at the markets again and again with that mindset, and be able to bloody sleep at night.
Phil Newton: Just some quick tips, 'cause the novice is so focused on doing what you just said there, by swinging for the fence, treading as big a position size as possible, and looking for that one big position. And the reality couldn't be further from the truth. The exact opposite is what's gonna get you big consistent profits, is to trade smaller, to trade more frequently, and use a systematic approach which is what we keep harping on about every week.
You get those three things, then your stress levels are gonna be reduced. 'Cause then you're not worried about the one position working out and hitting a home run.
Sean Donahoe: Yeah.
Phil Newton: You're then more focused on putting the next trade on, and the next trade, and then you're in your spreadsheet and you're minding your positions. And you're just looking for the next trade. You're opening up the shop every day for business, and you're, to use a farming analogy, you're planting seeds.
A farmer wants to plant a crop. We're not hunters, you're not always gonna find this thing to hunt every day, but if you plant crops, then you can farm every single day. You can farm ... well, you can farm your crop.
No, but you know, some of that crop's not gonna work out. Some of it is gonna grow and you can take it to market. Then some of it's gonna be absolutely exceptionally and win prizes. And that's fine. But unless you plant that crop, unless you plant a seed every day, then you're not gonna have the opportunity to farm and to put food on the table every single day, every single week, every single month.
You know, it just suddenly becomes less stressful. And it's so counterintuitive as well. When you trade more frequently, but with smaller position size, then it's surprising how less stressful that can be.
Sean Donahoe: Absolutely. Now here's the thing. People often say, "Well, if you're trading smaller positions, you're not gonna get the kind of percentage returns and everything else." So this leads into point number four: Trading should capture the advantages of aggressive strategies without risk exposure.
Now what do we mean by that? Well, the way that we trade allows us to basically, funnily enough, take advantages of the effect of aggressive strategies. But it's not about the money you make, it's about the money you keep. They are in unison. It's a symbiotic relationship. So we always want to have measures in place, part of which we're doing by, again, having a rolling portfolio of stocks, trading smaller positions, trading more frequently, giving ourselves safety net, so to speak.
And with some of the strategies we use, we're always looking to protect our capital but take advantage of potential high probability moves, and leverage that the best that we can. What do you say about that?
Phil Newton: Yeah, I suppose a lot of people actually think that, because you're trading a smaller position size, you've not got the opportunity to profit big, as it were. 'Cause it doesn't seem counterintuitive, which is often why most ... but the novice trader typically is over-aggressive on position size, but they've not got the strategy or the competence or the capabilities to back it up. And I think that's when most people kind of confuse this, "Am I conservative or am I aggressive" nature.
So what we're trying to do is, by reducing the position size, we get to not stress up the individual trade, which allows us to put the next trade on, which then means that we can start to take advantage of more aggressive trading styles, while still being more conservative in our approach. We're trying to fuse the two things together.
So a more aggressive trading style is to trade more frequently. And then that brings its own benefits of trading a portfolio of stocks, which is how the professionals trade. So we're trying to fuse these two things together, by trading a variety of opportunities in a portfolio. Again this farming analogy, you plant a seed every single day.
But where it's counterintuitive, and it's not obvious for most novice traders, is you're trading with small position size. So it doesn't seem that you'd be able to make the profits.
But, again, if we use the real world example, you're not hoping that one customer comes in and buys every product on the shelf, are you?
Sean Donahoe: Exactly. No, that's exactly ...
Phil Newton: And that's what a novice trader does. Yet in the real world of business -- this is the real world business equivalent of removing our risk by having a variety of different products, and then advertising to enough people to bring enough people in to buy that variety of products.
That's what we're doing by trading with small position size, trading more frequently. We get the benefits of conservative trade risk strategies, but adapting an aggressive overall strategy to trade more frequently without filling our boots on any one individual trade idea, so that we have this average profit, consistent profit.
I'm a proof of my own system, Sean, eh? It fuses those two things together really nicely, and until you've actually done it and tried it, you'll never believe in the process itself. 'Cause every novice thinks it's one trade, as big a position size as possible, and hope for the best.
Sean Donahoe: Absolutely.
Phil Newton: And the reality is the exact opposite.
But again to compare it, it's what happens in the real world of business. You don't expect one customer to come in and buy every product on the shelf. Sure, it can happen, and it does happen from time to time, but the reality is, that's like swinging for the fence. You can't hope for one customer spending a lot of money to come in every single day. It doesn't happen. It might happen once in a blue moon.
So we've got to have strategies that account for being able to trade every day. Just like a real business.
Sean Donahoe: Absolutely. Now, one thing that we also do is we are primarily options traders. We don't want to trade the underlying sub because of the actual capital tie-up to trade those larger positions. We use stock options that allow us to do a lot more with a lot less. That allows us to do a lot of different ... basically, to efficiently use our capital -- in its own way, again, it's all based on the actual strategies that we actually apply, and some of those are what we call the Rebel Trader strategies in and around this. But that allows us to take advantage of these more aggressive styles of trading that Phil was mentioning, but also at the end of the day, again, protect our capital, use our capital more efficiently, so that our money -- and I always refer to our positions on the money, in the markets, as almost like employees in your business, working in the most efficient way for you.
You are managing your overall portfolio like a business. Again, you're the manager. Each strategy could be considered its own department in your business, and all the positions of money in those positions, using those strategies, are basically like the employees doing their job every day, making you more money. That's the entire business in a nutshell.
So that's why we do this, and that's again, we can then leverage those positions with aggressive outcomes, but mitigate all the risk as much as possible so that we're protecting our overall capital, so again that we can trade tomorrow.
Phil Newton: So we're in business tomorrow, as well.
Sean Donahoe: Yeah. Exactly.
Phil Newton: 'Cause that, again, what the novice doesn't think about, is they're so focused on, "How much money can I make today?" Whereas the professional -- I want to say professional trader, it's just someone who's successfully and consistently trading for profits.
Sean Donahoe: Yeah, we're not talking about institutional traders and everything else.
Phil Newton: Yes, yes.
They're so focused on being in business tomorrow and next week and next month, that they just want to apply their consistent strategy and methodology and remove the risk and put the next trade on. So they're focused on putting the next trade on, and keeping the risk small enough so that if it goes wrong, it's not the end of the world.
You know, and they're two opposite, polar opposites. Novice trader, "How much money can I make?" Professional trader, "How little can I lose?" And until you start doing that, the "how little can I lose" mindset, then most novice traders are not gonna succeed.
Sean Donahoe: Yeah.
And, you know, it just came into my head via other means, the guy I was talking about earlier on, was not ready for this ...
Phil Newton:
Sean Donahoe: Tim Roth. Tim Roth.
Yes, via tin foil hat. Signals received.
So yeah. Tim Roth. I always get those two mixed up. But yeah. Yeah, I mean at the end of the day, that's what it's all about. But that also leads into, which I think to me is also the most important tenet of Rebel Trading 'cause both Phil and I actually live and die by this, is trading facilitates a lifestyle, it's not a lifestyle in itself.
So yeah. Here's the thing. We don't want to be, and I wanna put it in quotes, "that trader." We don't wanna be glued to the market every day, and like "Oh yeah," and brag about, "We're this fantastic trader." And that's it. And like I mentioned earlier, "going in hot." I'm not a gladiator in the market. No, that's not who I am. That is not what we're about. But, hey, trading facilitates whatever else we're doing in our life. You've gotta live your life.
Phil Newton: It's a part of what you do, it doesn't dictate what you do.
Yeah I suppose it comes out to this knowledge, man. No, if you wanna do it from 9 to 5, as a job, then great. But personally, I find that this -- I don't want to swap one day job for another. That's really what it comes down to. And if you're doing this around your other regular commitments ...
'Cause I only realized recently that I'm probably an anomaly when it comes to this. You know, trading is my sole and primary source of income. And the reality is, most people don't want that or have that. They probably want it as something extra on the side. So when I think about that context, what we do can be done around other life commitments. You shouldn't be adding a second job, you know. You don't want to come home after the other commitments, you know, whatever it is that you're doing in the real world. You don't then want to spend every spare moment flipping through chart after chart and add another 30, 40, 50 hour work week trading and doing that around your other thing. You don't want to do that. It's not healthy, for a start.
So this is why we're completely focused on, you know, just be efficient. Fast and efficient. Find, filter, insert your stocks. Get done. It can be done in 20, 30 minutes a day when you get used to the process. You know, if you want to do it for an hour, do it for an hour. Great. Let's set yourself a timer. You don't need to be doing this, looking through hundreds of charts for hours on end, and creating a second job for yourself. 'Cause you're gonna make yourself ill, you're gonna destroy your family life, and you're gonna have no social life.
And that's no way to live!
Sean Donahoe: Yeah. It doesn't have to be a sacrifice one way or the other. And this is one problem I think a lot of people have with trading ...
Phil Newton: Make it a part of your life, not as an alternative to life.
Sean Donahoe: Yeah, exactly! And at the end of the day, and this is where I think a lot of people fall down with trading, is they're doing that exchange of time. And again, it's taking away from the relationships.
Phil Newton: Yeah. "12 Years a Day Trader" sob story, Sean. You know, that's what I did. It was 24 hour markets I was trading at the time, and it was a horrible experience. It made me ill. I resented doing it, at the end of that stint. And I wanted to change the way that I did it. So, didn't want to be glued to the screen, I didn't want to spend 14 hours a day doing it. I didn't want to be on call to the demands of the market, my positions, and my portfolio. And I thought, "No, I don't want that anymore." I flipped the narrative. I dictated what my portfolio was. I dictated what times I should do. I didn't want to do it all day so this reflects the style of trading that I have.
Because, hey, doing it the other way was not healthy. It was not productive. The sacrifice, as you said, Sean, the sacrifice of other things -- it doesn't have to be that way. Why should you have to sacrifice free time, social life, you know, health? Sanity? You don't have to sacrifice any of those things. It should be a compliment to your lifestyle.
So, again, the comparison that I always make, Sean, is if you've not got time to day trade, what's the point learning how to day trade? And yet people want to do that for some reason. Yet they don't have the time to do it. So there's no point learning how to do it!
Now, the skill set is essentially the same, whatever time frame that you do. So if you don't want to wait five years for a trade idea to work out, maybe investing's not for you. Go into the other extreme. But maybe there's that somewhere in between. And that's where I sit. My time horizon's 45 days. So I'll get paid on my trade idea sometime between now and the next 45 days.
You know, and that's my sweet spot. That was my decision. And based on those requirements, that I can start to kind of use all these tenets that we've been talking about to dictate how my trading style should unfold so that it compliments the lifestyle and the life choices that I want, and not the other way around.
Sean Donahoe: Absolutely. No, this is the key, key point. I mean, Phil, he spends, wouldn't you say less than 30 minutes a day trading, in actuality?
Phil Newton: The reality, it takes 10 minutes.
Sean Donahoe: 10 minutes.
Phil Newton: For me, to write up -- 'cause we send out a daily letter. To write the reports and to take all the screenshots, and to write a few words, it takes me about 20 to 30 minutes to let our subscribers know what we're doing as well. So it takes ...
Sean Donahoe: What we're trading.
Phil Newton: Yeah. It takes me about 30 minutes to do all that. But if you didn't have to do any of that, it can just take 10, 20 minutes.
Sean Donahoe: Yeah, I mean for me, I spend -- yeah, about 30 minutes, and again I've got a lot of other things that I do in my life. I run multiple businesses. So again, what I do is I take my profits and a lot of stuff from my other businesses and I put it into the market. I make those little employees, the money, grow in the market. So any profits I make from all my other businesses exponentially grow in the market.
And I spend about half an hour a day. And honestly I do a little differently than Phil, I actually do a lot of looking up fundamentals as well, because I've also got a portfolio of investments, longer term investments, on top of my trades as well. And so I'm looking at what's going on in the world, doing some perusal of the news, kind of getting the facts and things.
Phil Newton: You do extra stuff. I was gonna actually say. The absolute minimum is 10, 20 minutes a day to do it. But then if you've got time and your situation allows, "Ooh, maybe I'll just investigate this." It's a bit more long term.
Or there's a situational thing that may be, like with Facebook the other week. Maybe there's a situational thing that you want to take advantage of. You've got the ability and the means to, "Ooh, something situational to take care of." But you don't have to, is the point. If you don't have the time, maybe you've got a meeting to go to. "Ooh, maybe I'd like to do that, but I don't need to do it," because you've got your regular process taken care of. That part just to maintain and manage . That's already done with. So everything else is a bonus.
So I think the highlight, Sean, is the strategy that we use as flexibly enough to do everything. So if you've got an extra hour and a half or two hours in the day to basically do some extra research, then yeah, sure, you can do that. I'm not saying don't ...
Sean Donahoe: Mm-hmm (affirmative). No, you don't need to.
Phil Newton: Exactly, yeah. It comes down to the absolute minimum to do everything. You know, 10, 20 minutes. But if you've got the extra time, then sure you can scale up. If you, instead of doing one trade a day, maybe you want to find five or six a day. That's okay, there's nothing wrong with that. You can scale up or reduce it down, depending on your personal situation and your personal requirements. That's what I heard you say, Sean, that you can scale it up.
Sean Donahoe: Yeah, absolutely. Yeah, and again, I do scale, I do a lot of different things. And again, I've got the opportunity to do that, and I dedicate X amount of time, but I don't need to do more than that. Which means, if you see about this, we're not talking about anything more than 30 minutes here. Okay, can you dedicate 30 minutes to your trading rather than 8 hours, or 12 hours or 24 hour market ...
Phil Newton: 3 hours of procrastinating involved with what we're doing. It's like, you do this, you do this, you do this.
If you want to do extra, you can do, but you can stop right there after 20 minutes if you want to.
Sean Donahoe: Yeah. Absolutely. So as we wrap up this segment, guys, you see how all these tenets roll together. So I'm gonna do the one after the other.
Trading is a business. Trading should be efficient, streamlined, and consistent. Trading should not be stressful. Trading should capture the advantages of aggressive strategies without the risk. And trading facilitates a lifestyle, it shouldn't be a lifestyle.
So if you've put all those together, that is the art of Rebel Trading.
So with that being said, we're gonna jump into a brand new segment. That is "Trade, Fade, or Evade." Now, we don't have a fancy jingle for this part yet. We will, for next week's show, 'cause we just literally made this up seconds before the ...
Phil Newton: We actually made it up.
Sean Donahoe: Okay, full confession and transparency here in the markets, in the Rebel Trader camp. But we actually came up with this just as a random idea, and Phil said -- you know, I was actually thinking about ...
We were thinking about it as a future show, but Phil says, "You know, that would be great as a segment." So, well, here we are.
Phil Newton: Well, now what it was, was Sean said, "Have you heard of that game called Snog, Marry, Kill?" I was like, "I'm not sure I wanna play this with you, Sean." You got the idea of foisting the idea on, you know, "Trade it ..."
Sean Donahoe: "Trade It, Fade It, Invest It."
Phil Newton: Just kind of came out, rolled off the tongue. And then we played around with it a little bit and, you know, this is what we end up with.
So what are we gonna do, Sean? I think we decided to have a look at a few stocks and just ...
Sean Donahoe: Yeah. Let's ...
Phil Newton: "Trade It, Fade It, or Evade It." And we just want that kind of immediate reaction, what's our first reaction.
Sean Donahoe: Let's have a look at the FANG stock.
Phil Newton: Exactly, 'cause my style of trading is, if you can't tell what you should be doing straight away -- and this is why we're doing this -- you can't tell what you should be doing straight away. You don't need to spend 20 minutes looking at the chart to figure out what the hell you should be doing.
Sean Donahoe: Okay, so we're looking, let's start with Facebook here. And we're gonna go with the FANGs. Okay, so, Phil, trade, fade, or evade?
Phil Newton: Evade.
Sean Donahoe: Uh huh. Why?
Phil Newton: I knew you were gonna ask me that.
Sean Donahoe:
Phil Newton: To be fair, it's at post-earnings, it's at a big gap now. So that's a first . And normally, after earnings and a big gap, price normally meanders sideways. And that's why I'm gonna evade it for the moment. It's not really at any levels that could be considered interesting.
I suppose if you were to twist my arm and say, "You've got to put a trade on," the evade, well maybe I could sell some puts or sell some calls, maybe an iron condor, where you expect the stock to not go anywhere and you collect the premium. So that might be a way to trade ... this is where option trading comes good. You get to trade the evade.
Sean Donahoe: Yeah, exactly.
Phil Newton: I think the point is, I don't think it's going anywhere, Facebook. It's going sideways. It's not really at levels that really get me excited, post-earnings. It's probably gonna meander sideways. That's my usual expectation after such a situation happens.
Sean Donahoe: Yeah. Now actually, posters think about this in the Rebel Traders Facebook group. Actually, guys, if you wanna join the Rebel Traders Facebook group, we've got a private community there. You can come and hang out with other traders just like us and you.
Phil Newton: Not that type of hangout. I know what you're gonna say there, Sean.
Sean Donahoe: No, no, no. We won't go there.
But if you're looking at Facebook ...
Phil Newton: It's not that type of hangout.
Sean Donahoe: No, but if you look back to March, I mean, that's when the Cambridge Analytica stuff came out. You saw the big drop down, and then a big rally as a recovery from that, and a big PR campaign they put out. "We're sorry, we screwed up, we violated your data and everything else."
Phil Newton: Come on Sean. Trade, fade, or evade?
Sean Donahoe: Yeah, well. The point is, I would evade this right now. Because it's range-bound back to where it was, funnily enough, in March, and then through the previous year before that. It's been range-bound. So it's back to where it was. I would evade it.
Phil Newton: Now that you know that. Perfect. What have we got next?
Sean Donahoe: Okay. Go, Apple.
Phil Newton: I had my FANG stocks in a different order, and it spelt something quite interesting.
Sean Donahoe: Yeah, I was actually saying, I didn't have that one in the right order. I'm like, "No, no, it's Google next. Oh, okay, no. Okay, so Apple. Okay."
Phil Newton: What do you reckon. You go first, Sean, trade, fade, or evade?
Sean Donahoe: Okay, I actually have to pull that one up so hold on one second. Okay, so ...
Phil Newton: I think that says it all. That exasperated ...
Sean Donahoe: I'm gonna evade this one. I don't see anything to do here right now. It's rallied, but it's not really doing much, I would say, right now. There's no clear indication ... I'd evade it.
Phil Newton: I think, I normally pick up on this with the students, you know, "What do you think?" type of things. You know, up, down, or sideways is what I normally ... you know, which way is it going? I think the fact that you went "*sigh* pfff" ... that tells me everything that I need to know.
I'm just kind of putting a quick tip of the week in. If you catch yourself doing that, then go look at something else. If you ...
Sean Donahoe: Exactly.
Phil Newton: If you can't see it. So for me, trade, fade, evade, I think I would fade that, actually. It's in an up trend. It's had a recent rally, and we're outside the three month Bollinger Band highs, touching around $220. I think I would be tempted -- if I was gonna put a trade on it, it would probably be a counter-trade trade. So I would fade this.
Sean Donahoe: Yeah. I would fade -- I mean, if I had to, I would say a fade. It's kind of just reached its limit, it's kind of had that little bit of a rollover. But no confirmation for me, so it would be ... yeah.
Phil Newton: It's not a common trade that I place, doing the counter-trade trade at the moment. But, you know, trade fade evade. I'd probably, if I was gonna do something, it'd probably be fade it.
Sean Donahoe: Yeah.
Okay, so let's go to Amazon. Okay. Trade, fade, evade there, my friend?
Phil Newton: Amazon or Netflix?
Sean Donahoe: Okay, we've got -- what, there's two A's. So Amazon.
Phil Newton: Oh, is there? Oh, it's okay.
Sean Donahoe:
Phil Newton: Fuck do I know.
What the fuck do I know? I don't care.
You can tell I don't pay any attention whatsoever to the FANG stocks. I just think it's a bullshit gimmick. A, N, said N, let me just get in there.
Sean Donahoe: Okay, so.
Phil Newton: Amazon. No, no, don't worry about , leave it in, I don't care.
Sean Donahoe: I love that. So, okay. So where would you go with ...
Phil Newton: Trade, fade, evade. I think I would trade it. Again, similarly it's in an uptrend, but it's just dipping in an up trend ever so shallowly. And it's just starting to push higher. I think I would trade it. I would be bullish on this.
Sean Donahoe: I'm bullish on this as well. I actually have this as an investment, have done for a long time. I've held by Amazon stock for quite a while, and thank you very much, it's done very, very well. If you look, even the last year, this November of last year ...
Phil Newton: Come on, Sean. Quickly! Fade, trade, evade it!
Sean Donahoe: I'll trade it! Trade it. Trade, fade, trade. But yeah. I've been in this one for a while and absolutely, I'm already up 85 -- well, just the load-in I did earlier or late last year, I'm already up 85%, so. In all three.
Phil Newton: Ding dong.
Sean Donahoe: Ding dong. It's actually done very well, and I think it'll continue to do so. So yeah. There you go.
Okay, next one! Netflix, which is the one you were just mentioning ...
Phil Newton: That was next on my list.
Sean Donahoe: Yeah. We're both dyslexic, so hey, we can't spell FANG. So okay: trade, fade, or evade?
Phil Newton: Trade it. Again, similar story. It's by the dip in an up-trend type situation. You've got a nice little five wave correction, if we were gonna just at a glance there with the retracement from July highs. It's at the three-month Bollinger Band lows, looking left, a nice logical stopping. It checks all the boxes for a trade. The actual trade probably would have been two or three days ago, just if we're gonna be picky, but if you wanted to hop on board, it would be a trade it. Looking for a retest of the recent highs, $425 the retest, and then whatever happens beyond this.
So yeah, for me it checks all the regular strategy things for me. So yeah. Trade it.
Sean Donahoe: Yeah. I might actually, I would trade this as well. Probably sell some options, to be honest. I would actually be a seller of options on this one just for the fun of it. Because again, I'm not quite confident it's gonna retest those highs. But again, it would be a trade.
Phil Newton: This is the difference between mechanical trading, 'cause you do add the spice of discretion in there, I've got to admit. This is where I don't know what's gonna happen, I'm not gonna second-guess myself. Trade set, so trade goes on. That's my attitude to this.
It will retest the recent highs. Mark my words.
Sean Donahoe: Okay, fair enough. And again, this is kind of a discretionary little segment, here, because they're not perfect little checkboxes. We're just looking at it without those checkboxes in mind, just quick scan, but yeah, I like this.
Okay, so next one. Google. What would you do?
Phil Newton: Google.
Sean Donahoe: Google.
Phil Newton: I think it's -- so, trade, fade, evade -- I think I would trade it.
So we've got most this year, from the beginning of the year, consolidation, broke out last month, breakout, pullback, classic setup. Finding some exhaustion. We could argue an ABC correction, if you wanted to kind of put some names on it. But yeah. Stamp from me. Breakout, pullback, set upon Google. It's just setting up to trade it.
Again, surprise surprise, retest at the recent high will be the first time you get 1,275, 1,276 levels. And then whatever's beyond it. So high to the consolidation, usually, just eyeballing it from 1,000 up to 1,200, so there's maybe a $200 breakout target. So maybe ultimately a second target of $1,400?
Sean Donahoe: Possibly. I would agree with that. I think that's a very reasonable ...
Phil Newton: That's it. I like this one, I might actually go and put the trade on.
Sean Donahoe: I was actually ...
Phil Newton: 'Cause I wasn't looking.
Sean Donahoe: I was just looking at this as well. I was just thinking this very same thing. I would trade this one. I would trade this one.
Phil Newton: Out of everything I've looked at, if I could put any of the trades on ...
There's some way to evaluate for trades, actually. You know, when I'm doing the daily alerts for the newsletter. You know, if I can only trade one thing, if I've got three or four, 'cause there's two stocks that look kind of interesting today, out of the ones that we've looked at. If I could only do one trade today, I think it's gonna be Google. And I'm probably gonna do that, maybe a little bit longer, maybe I put an extra bit of time on there because we've got very large targets. So rather than the usual 45 days, maybe I give myself somewhere, you know, 90+ days to see if that trade idea works out. That would be what I'll be doing, if I'm gonna put a trade on.
Sean Donahoe: I'm gonna put a trade on that right now as well. So there you go.
Phil Newton: Put two on if you want!
Sean Donahoe: There you go. Okay.
No, I would say exactly the same thing, I was thinking the exact same points on that one.
Phil Newton: It's a classic breakout, so that's what signs I look for.
Sean Donahoe: Yep. Absolutely. So, yeah, love that. And just for reference, this show was recorded on the 22nd of August, just so you can see the timeframe of when we're talking about. Yeah, to timestamp it. And there you go.
So, as we said, much shorter show. That is it for this week, I hope you enjoyed it. The Five Tenets and the Art of Rebel Trading. And the new segment, "Trade, Fade, or Evade." And that's it! We're wrapping it up. But do remember, this show is not free. It'll cost you a five star review. Just go to, you can subscribe and review us on whichever platform you like. And always keep up with the lowest shows as they drop. And this is designed to help us reach as many traders and investors just like you as we can.
Phil Newton: And if you'd like to connect with us, you can still get to us on the social medias, the Facebooks and the Twitters and suchlike. At least before I get banned from being an idiot on social media. You can find the links at If you'd like to use the e-mail, you can get to me at [email protected]
And what have we got coming up in next week's show, Sean?
Sean Donahoe: Okay, well, we're gonna kick it up a notch. We're actually gonna do, basically do this and don't do that! We're gonna kind of look at different scenarios and situations where a lot of people approach and hit them wrong. We're gonna show you, "Hey, don't do that. Do this instead."
So, gonna be an interesting show. Hope you like the new format. Do let us know. Send us an e-mail, you can send one to phil.newton ...
Phil Newton: Or a postcard.
Sean Donahoe: Or a postcard. Carrier pigeon. Whatever is needed. Right? You can let us know what you think of the new, shorter format. More concise. More condense. And we'll rock it up from there.
So, with that being said, see you all next week. Take care.
Phil Newton: Bye for now.
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3 Key Takeaways From This Show

  • These 5 Core Tenants are the foundation of our trading
  • If you are not treating your trading like a business, your giving your money to the markets
  • Your trading should power your lifestyle not BE the lifestyle

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