Patrick Walker — Quit day trading! Focus on price, volume, & daily charts

Episode 1 April 23, 2021 00:55:07
Patrick Walker — Quit day trading! Focus on price, volume, & daily charts
Smarter Trading
Patrick Walker — Quit day trading! Focus on price, volume, & daily charts

Apr 23 2021 | 00:55:07


Show Notes

Patrick Walker joins us in Episode 1 of Smarter Trading to share his 30+ years of insights as a technical trader in the stock market.

Key learning points

Learn more & connect with Patrick

Learn more & connect with Evan & the Trade Risk

Show Notes
0:00 Introduction
4:10 How Patrick got started in markets
7:40 How Patrick sidestepped the 1987 crash
10:00 Trading under pressure
11:15 Take care of yourself mentally, physically
13:20 Limit risk to be successful
13:50 Focus on a stocks price and volume
17:05 Don’t get wrapped up in day trading
18:05 Combine simple technicals with fundamentals
19:25 Winning stock criteria
21:00 Focus on the longer term
21:50 Sell partial profits into strength
26:45 Max list stocks
29:40 ETFs Patrick likes to trade
31:50 How to let winning stocks run
37:00 Don't impose your will on stocks
41:10 What does successful trading look like
46:50 Limit your losses
50:00 Final advice and words
52:40 Where to find Patrick

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Please keep in mind, all opinions expressed by guests are solely their own opinions and do not reflect the opinion of Evan or the Trade Risk. This podcast is for informational purposes only. Please review our complete disclaimer which applies to the contents of this podcast.

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Episode Transcript

Speaker 0 00:00:03 Welcome to the smarter trading podcast. If you want to sharpen your trading skills or become a more savvy investor, then you're in the right place. Every week, we sit down with professional traders who are ready to share practical insights on what it takes to succeed in modern day markets, smarter trading the show to watch to trade smarter. Evan Modaris is the founder and CEO of the trade risk. All opinions expressed by guests are solely their own opinions and do not reflect the opinion of heaven or the trade risk. This podcast is for informational purposes only and should not be relied upon as the basis for investment decisions. Evan and guests may maintain positions in securities discussed in this podcast. Speaker 1 00:00:48 Hello everyone. Thanks for tuning into another episode of smarter trading. I'm your host, Evan Maderis. And today I am joined by Pat Walker. Patrick has been trading for over 30 years. He has had the privilege of meeting and learning from legendary traders like Martins, wag, bill O'Neill and EDS Dakota. He was an IBD co-leader and most importantly, he's a family man, happily married with four kids. He loves to learn, teach and inspire Pat, welcome to the show. Oh Evan. Thank you for having me. I really appreciate it. I, uh, I was excited and enthused when you reached out to me, I don't follow a ton of people on Twitter, but it was just really nice. Um, I, I admire your work and, and I admire your persona also. You're not brash or anything. You just lay this stuff out there in a way that's really just kinda kind of easy going, which I think is important in the areas of, um, from a psychological perspective, for me in the area of investing is if a person's really amped up and everything, it's not conducive to good decision-making and you know, like I said, I listened to your videos and I follow you on Twitter, you know, endorse it is it's just, Hey, look at this, let's talk about this, which is, I think it's something really important. Speaker 1 00:02:09 You know, I I'm grateful that I've learned from, from some good people, you know, people that really, I I've said this on videos, and I'll say, I'll say it on yours. Bill O'Neill changed my life. Honest to goodness. He really did. But before him, the guy who saved me was Martin Zweig because of him, my managed accounts were completely out of the market before the crash of 87 and missed the whole thing. So I I'm grateful to have met him. What a kind, what a kind gentle man he was. And, um, got to talk, meet him a couple of times one-on-one to talk with him. So anyway, it's good. It's good. I enjoy, I enjoy for those of you who don't know. Um, I didn't even, I followed Evan for several years, but the idea of, of like Evan does teaching, Speaker 2 00:03:00 Just teaching. I taught on the university level years ago and I taught advanced level classes, strategic planning, periodically advanced statistics in my mantra is always this. And it kind of ties in with what you do to know that two plus two weeks before is knowledge. But to know why two plus two week before is knowledge that you possess, that you can transfer into other situations, which makes you in charge. It puts you in charge, not an ego thing, but it helps you. And so that, that is a big part of me is not just giving ideas. A lot of people give great ideas, but then I was sit there and think what, if something happens to them and I don't want anything to happen to anybody, but what if something does and they go away, where are you? You're no better off than when you started. So to me, the foundation's got gotta be education explaining why, and then you own the concept and you can apply it to your stocks. And, um, I know that's what you do. And that's what I strive to do. Also, just trying to help people while we can. That's, that's kind of who I am. Speaker 3 00:04:07 Yeah. That's that's awesome. And so you, you mentioned a few things there first. I mean, you've been trading since, uh, the eighties, uh, which is something, um, to, to, to still be in your position still smiling, still got, still get hair on your head, right. Maybe not as much as, uh, the college days, you're still there. That's right. You're still there. And, and, and that's, that's a huge Testament. I mean, you've, you've been, you've been in the game for all this time. So I'd be curious though. So you mentioned Martins, Y you mentioned kind of sidestepping the crash back in those early days. Um, you know, what were you thinking back then? How did, how did you get right involved in the markets and how did you meet Martin Martin's wife? Speaker 2 00:04:50 Great question. Um, a couple of great questions. It's really kind of unique. Even when I was younger, I'm talking about like, when I was under 10 years old, I was fascinated by stocks. I wasn't money hungry. It was just like, what's going on here? You know? And I still remember watching wall street week, a long time ago with Lou Kaiser. Okay. And I, I knew some of the people through that show also. Um, I'm not gonna mention names, but I did anyway. It was quite interesting. Just why do stocks do what they do? And I thought, well, it's simple. I'm just going to, I'm just going to go in there and study some charts and, you know, buy socks, but here's the kicker. All right. And now I'm going to really date myself. When I started back in the eighties, there was no internet, there were no real chart services I had to dig. Speaker 2 00:05:44 And I finally found one, it was called trend line. And I used to get the trend line charts. And most of you probably never heard of it. It's cause they're gone. I think, but that was my first, my first dip into it. But something really important to me. I was in, I was a broker and an investment advisor. All right. And I was, I was starting to invest people's money, but then a really tragic thing happened. And this was, this changed my life. My dad died. And my dad who I dearly loved owned a hardware store. And it was just your mom and pop hardware store. It was him and my grandfather. And he died and my mom owned the business, but she wasn't the business person. And that's not a reflection on her, but that's just how she was. And, um, it finally got to the point where she said, I think I'm going to sell the business. Speaker 2 00:06:36 And you know, we talked about it, we prayed about it. And she sold the business and she gave me the proceeds from that to invest in. You got to put this in context, I'm investing my mom's money. My dad's dead. This is it. She's got to live off this. And so, and she wasn't that old by the way, either. Okay. She was in her fifties, early fifties. So what did I have to do? Our mid fifties? I had to get really, really serious with this. I put, put yourself in my shoes. I can't mess up. And so I was on a quest and I was, I started reading a lot more books about it, investing in stuff of brokers. They just tell you to sell stuff. Well, I said, no, morally that's wrong. I can't do that to anybody, any of my clients. So I read Martins White's book source book winning on wall street, and it really opened my eyes up. Speaker 2 00:07:36 And I started, started subscribing to his newsletter. And I give credit where credit's due. Martin's wife was talking about in 1987. There's things happening here that don't look so good. And what I noticed is I was getting in charts, involved in charts, and I would have cell stops in an, all my managed accounts on stocks. And every day weeks before the crash, I get spilled on sell stop orders, GTC sell, okay. Being the broker. They're good till cancel, sell, stop orders. I'm going, gosh, I don't remember putting an order in. I was like, Oh yeah, I forgot about there's a, there's an analyzer Bush there's general electric. I was constantly getting stopped out of stocks for, for gains, but I was getting out. So picture this, and this is for everybody, let's suppose you're managing money and you're managing and you own a hundred different stocks. Speaker 2 00:08:26 And every day you're getting stopped out of certain stocks, not junk stocks either by the way, quality companies you're constantly getting stopped out. Well, you say, well, I guess I'll keep buying. No, the market's telling you something. So basically about two weeks before the crash of 87, my managed accounts and I had some accounts with doctors and things like big doctors, we were stopped out of everything. And just applying the simple rules of, Hey, things are falling, don't buy. We were out and I'm grateful. I'm grateful. So, I mean, I'm really grateful. My manager counts from ourselves. We completely missed the crash of 87. We were out well before then. And we just stayed out and you guessed it. Well then Pat, what'd you go in the crash happened. Did you buy right away? No, no. C did. It becomes an ego game. What was I waiting for? I was waiting for things to settle down, Speaker 3 00:09:22 Amount of responsibility that dropped on your shoulders back in the tough start. After hearing the news, having, you know, your mom give you this money. I mean, that is an incredible weight, um, for anyone to burden, you know, let alone someone that's, um, you know, fairly new to, to trading. So that I think, um, I guess I'd be curious, it's a motivator I'm sure. But I mean, you know, I think back to how I started, I had a full-time job. I was, uh, I was making pretty good income as a software developer, so I had discretionary money to, to lose and, and you know, that's good and bad because sometimes you don't take it seriously enough, but, um, I guess I'd be curious, any thoughts in terms of that, that pressure, that motivation, what was going through your head when you, you know, kind of back in those early days? Just cause I think that's a pretty significant Speaker 2 00:10:20 Point. Yeah. Well, you, it hits a real nerve with me. Um, I was really close to my dad and it was the worst day of my life. And um, and I love that man dearly and, um, and true confession. I'm closer to my dad than I am my mom. And so there was a lot of tough dynamics there, but I knew that I had to really get serious about it to tell her. And so, um, like I said, that's when I really went on the vision quest and realized I need to, I have to do a good job. You know, it's like in the movie, failure's not an option here. I couldn't, I could, but I want to, I want to dovetail off on that a little bit, because I think this is really important and I'm not trying to, you know, preach here or anything like that. Speaker 2 00:11:14 But just something I encourage you all to do is you can say where the heck are you going? Take care of yourself? And you can say, what kind of lane stuff is at? No, I'm really serious. One of my advanced, I have one of my degrees is in psychology. And so I'll just share this with you. It's an, this is advanced stuff. But the, the, the people I had, the doctors I had really, really challenged me and I had a doctor and he took me aside and he said, I want you to do something. He goes, I want you to look at your hand and I'd like, you all to look at it. And this was him and I one-on-one. And this guy was a renowned psychiatrist. I can't tell you his specialty, but it was pretty bizarre. And he said, I just want you to look at your hand and move it. Speaker 2 00:11:57 Note, note the joints, note, the tendons, the muscles twist it. And then he paused. And he said, I have to tell you something that hand you're looking at, you're going to be buried with it. It has to last a lifetime, yours. So by default, and I'm not trying to be a downer here or anything like that. I challenge each of you take care of yourselves. I am I've outlived. My dad I've outlived him. And again, you can say, this is a downer. No, this is an upper I'm challenging. You take care of yourselves, go out and grab it. It's there for you. All right. And you can say, what did we do? We're talking stocks. Folks are going to share something. If you're sick, it ain't going to cut it. So we take care of ourselves and it's something important. Speaker 3 00:12:49 Um, taking care of yourself is great advice. So you made it through that tough period. You survived the crash of 87. You continue to trade and learn. Talk to me about how you approach markets nowadays. And some of the key factors that you learned. Speaker 2 00:13:06 This is a fun game folks. All right. And yes, it's a business. All right. I'm going to be serious. Okay. I don't, I don't mean a game. Like let's play monopoly. All right. But approach it seriously, but don't let it kill you. All right. And one of the things you have to do, what we all have to do me limit risk, limit risk. Here's a quote for you. I believe in what I see and not in what I believe. I had that quote tape to my monitor for over 20 years. Who said it? Dave Landry. All right. He's got another great book. I've never met him, but he's great guy. Humble guy, Dave Landry. Oh, by the way, please. I've never met him. Okay. I don't get anything. Don't nothing like that. I'm just playing on Pat Walker talking, but focus on what's happening. Not what you think should happen. Speaker 2 00:13:53 Completely lose bias are right. Opinions. Don't pay. I say this all the time. Opinions. Don't pay forecasts. Don't pay analysts. Don't pay brokerage houses. Don't pay your broker. Doesn't pay your financial plan or does it pay your partner? Doesn't pay. None of it pays. All right. One thing pays price. That's it. So what do we have to do though? Combine two variables together and actually three price and volume. I can't stress that enough. I see this a lot. And I'll say it again. People talk with their mouths and vote with their pocketbooks, go where they're voting. All right. I'll never forget. I had a buddy of mine. I traded without in California, he worked on a trade desk. He goes, Pat, his name was Robert Pat, me and I found a, I found a pattern. It's awesome. I said, well, buddy told me about it. He tells me that he said, this, we're going to kick butt with this. He goes, and the best part, Speaker 1 00:14:52 Nobody knows about it. It'll just be yeah. Speaker 2 00:14:54 Hours. I said, well, gosh, if nobody knows about it, um, they won't act on it. Will they? He says, no. I said, well, if they're not acting on it, ain't nobody else going to buy it. We want everybody to see what we see. True folks. Speaker 1 00:15:14 Short's reflection of human emotions. As I said, fear, greed, paint a complacency. Speaker 2 00:15:19 Look for chart patterns that everybody can see clean and simple basing patterns. All right. And this is the important part. When you see that pattern, Speaker 1 00:15:32 It should be very easy. It should be so easy. A fifth grader could see it and dry when you see that pattern and refine it. And there's only a few of them. You need. There's one other variable. That's important when it's pushing through that pivot price. Speaker 2 00:15:45 Look for volume. Look for volume on the hourly, the 30 minute and the daily chart find today Speaker 1 00:15:53 Down to the 30 minute in the hourly, right? When it's approaching the pivot price, this, this is the real world. By the way, this is a textbook. Okay. This is a guy who's been in the trenches and had to do it. I'm supporting a family of six and help my mom. I had, Speaker 2 00:16:04 I have to do it. Look for those. Look for those. And look for that volume Speaker 1 00:16:08 Search. When you see that volume surge, Speaker 2 00:16:11 You know what it tells you, Hey, other people Speaker 1 00:16:13 Saw what I saw me in and they're hitting it. Speaker 2 00:16:16 Is that sweet. Speaker 1 00:16:18 You don't know that, that sweet potato pie. There you go. I had to say it and smile go for that. Speaker 2 00:16:25 You liked that. And if it's not there, if it's not there, it tells you, Hm, maybe something's wrong. I'm the lone Marine on the beach. That ain't a good place to be. All right. So look for that volume. No volume, no by and another point I'll make here. Just tidbits of, I guess, wisdom through years of doing this, never led never let a good profit turn into a loss. Never Cardinal sin. Don't do that. Okay. And then I'm also going to say this, and I'm going to tell you what to do, but I encourage you. Uh, if you can, don't get wrapped up in day trading. You know, here we are in March. I'll tell you honest to goodness. I'm a looked at a five minute chart this year. Okay. Speaker 1 00:17:18 And you can see, he's probably looking at four minute charts. No, I'm not. No none of that stuff. Okay. Okay. Three minutes. Let's know. Speaker 2 00:17:25 No, none of that look for bigger picture patterns that everybody can see. And then you look for that volume confirmation focus on volume coming in there. Like I said, it means other people see what you see and they're acting on it. That's huge. Focus on clean and simple with fine, but I want to bring up another constraint for you that will really help you. And this is straight from bill O'Neil's research. And I will tell you this. Speaker 1 00:17:53 Yeah. I've had lunch with the man twice and sat down with him. That man changed my life. I'm telling you right now, Speaker 2 00:17:58 Now credit where credit's due. He changed my life. His combine of simple technical patterns combined with fundamentals. And here's their research. And I'll share this with you. In fact, I got it right here. Look at this. You're going to love this. Here we go. There's a break here from, um, August. This is very short by the way, August. Yeah, Speaker 1 00:18:19 2007 through October, 2007, the market was in a confirmed rally. Investors. Daily identified identify 39 breakouts. Okay. I'm going back to 2007 39, Speaker 2 00:18:28 Nine breakouts, 39, clean and simple breakouts. Let's rock and roll with this. You ready? The top performing tendons. Speaker 1 00:18:36 The stocks did four to 10 times better than what the market Speaker 2 00:18:39 Did. He thought what you want. I'll tell you what I'm looking for. I just want to do as good as the market. What? Yeah. If Speaker 1 00:18:47 The market's up 10 and if I'm up 10, I'm happy. Speaker 2 00:18:49 I'll come on. Let's go for it. Right. I'm going to say it again. Top performing stocks. Speaker 1 00:18:55 Stocks did four to 10 times better than the NASDAQ's 11 and a half percent gain. The NASDAQ was up 11 and a half percent and 10 stocks did it. Speaker 2 00:19:03 He's 45, right? Two, 110% more than what the market did. Ain't that what you want? This is the sweet potato pie part, all ahead of composite rating of at least 96. Is that great? You'll like this part to eight dwellings, Speaker 1 00:19:21 Top 30 groups out of 197. So we quantify things again. That's the statistic of the statistics. Speaker 2 00:19:26 You see me put an edge in your favor. Here's some facts for you. Focus on stocks and the top 30 to 40 groups. Okay. There's 197 industry groups look for the best of the best. Don't buy any low price stocks, $10 and higher. Okay. Buy stocks that trade at least 200,000 shares a day, buy stocks with a composite rating of 90 or higher preferably higher focusing. Speaker 1 00:19:50 So it starts with a relative strength of 88 or higher 85 or higher focus on stocks with an accumulation distribution of a or B Speaker 2 00:20:00 Focus Speaker 1 00:20:00 On stocks. As I said, within 20% of 52 week highs, and they're in the top 40 or 50 industry groups. If you take that, Speaker 2 00:20:07 I call that that's a recipe for a good cake. If you take that and put it to use, you will find winners guaranteed. But here's the last point I have to make. And I can't stress this enough, you will be wrong. You will have losses. There's only one, Speaker 1 00:20:29 A person who never had two people that never have losses. One is the person who never invest and the other one's a liar, Speaker 2 00:20:37 Right? You're going to have losses, but if you focus on a clean and simple base breakout, guess what? It's good above the line. And it's bad below which losses much smaller. Another point I want to make here. I know I'm rambling, but I need to share this. I encourage you please. I'm not telling you what to do. Stay away from day trading. Okay? The five minute charts and stuff can just chew you up. You know, what's maddening. And I know this because it happened to me. I'll buy a stuff. Speaker 1 00:21:10 This is years ago, uh, by a, you know, a $25 stock. And it goes up to 27, 28 bucks a minute, I'm up 10% kickback. Let's go. I'm selling. Speaker 2 00:21:19 And I sell. And the stock goes up to 29 and 30 and 31 and 35 and 40. And I can never find a way to get back in. And I bet my life on it. As I sit here, talking people listen to go. Yeah, that's happened to me too, man. That sucks that ain't no good. Yeah, don't do that to yourself. Don't sabotage yourself. So how can we do this? Because a huge part of this game of psychology, how can we help minimize and not sabotage ourselves? You can see what I want to sell some, go ahead. Don't sell all of it. Just sell 20%. If you have to picture this, Speaker 1 00:22:00 Buy a stock and it goes up and you sell 20% for a good profit, okay? And I'm not talking 50 cents. Don't get wrapped up in that game. You sell it for a good profit. Maybe it Speaker 2 00:22:09 High points. What can you do? Those last 80% of shares that you own? You can say to yourself, if it comes back to my price, I'm selling picture this. If you do that, do you know what that means? The worst case scenario, the absolute worst case scenario, you made money, right? Do the math, you made money. Do that. The other side of the coin. And this is the psychology part by selling just a little bit. You can relax because as I stated, you know, you've made money. If you know, you've made money, can you not Speaker 1 00:22:52 Let those other shares work a lot longer for you? Speaker 2 00:22:55 And that's where trend following comes in. Let it trend on the 50 day or the 21 exponential moving average. Or I use the eight period exponential moving average, which I'll just share this with you. Why the eight, a good part Speaker 1 00:23:11 Or of mine. I'm not going to mention names. He's a very, very good trait. Speaker 2 00:23:15 Very, very good. And um, one of the best I know we did a lot of work. Um, after meeting, after I met ed Dakota, does everybody know what ed Dakota uses at secure Speaker 1 00:23:29 As Takota uses the five period exponential moving average, I'll be honest. One of the biggest mistakes I ever made in my life, him and I were talking one-on-one and he leans back with his bifocals. He goes, Oh, that's very interesting. You know, would you like to do some more Speaker 2 00:23:41 Work on that? And me being the idiot, I follow up, Speaker 1 00:23:47 Hence the hair loss. Huh? So anyway, but he and used the five period, exponential moving average, but one thing, a lot of people don't know, ed Sakoda traded commodities and here's something you may find shocking. I did. I found that by and large, most of the stocks are more valuable than a lot of the commodities I was using the five EMA. I was constantly getting stopped out. So then I switched to the 10 EMA and it was a little too loose for me and my partner and I, and this was two years of data, by the way, folks, this isn't like, Oh, they reached a decision in a couple of weeks. No, this is two years of hard study, six to seven hours every fricking day. And what did we find out? The moving average that worked the best one. And by the way, you can say, well, when was this? Was this last year when everybody else talks about the eight, no folks, I'm going back to the turn of the century. I'm going back to 1999. And 2000 was when we were doing the work. And what did we find out? This is what we found for us. The eight period, exponential moving average for trend following on a shorter term basis is wonderful. So that's what I use. And it's on my charts. When we look at the charts, I'll show them to you Speaker 3 00:24:56 So much information there that I hope people rewind and listen to. I mean, the goal that Patrick shared on just curating the stock lists in general, top 30 to 40 industry groups, comp rating of 90 or higher RS rating like that, it sounds so simple. It is simple. Um, but I think, you know, especially as a new trader, you're looking for something super sophisticated or it's gotta be more than that. And those are the things, um, that yeah. Has, has kept, uh, you know, has kept Pat in the game for all these years and, and they work and the data supports it, uh, to sh to, to look at strength stocks that are leading. That is, um, one of the big secrets and I love, and it's funny cause we, we didn't talk about this prior. Um, uh, I am so on the same page as you Pat on the, uh, day trading, uh, I day traded a lot when I started, that's how I came into the game and it just aged me so quickly and fast and it pretty much drained my account at the same time. Speaker 3 00:25:56 And you know, I learned a lot. I really did. I learned a lot about, um, the risks in the market, uh, and, uh, price action in general. But every year that goes by, I just want to increase my timeframe. So, um, but anyway, I w I want to get to, we're going to look at some charts here in just a second. Um, but I am curious because you brought up a lot of that good criteria and you use this term of a Mac's list. Uh, you, you are, um, sharing that often on Twitter and in your videos, what is a max list? And what is a max list stock Speaker 1 00:26:31 Through years of study? I mean, decades, there are core groups of stocks that institutions have to own. Think about this folks, you a growth mutual Speaker 2 00:26:44 Fund, and you go through the prospectus and you look and you go, they don't own Speaker 1 00:26:48 Apple. And they don't mean to sound and they don't own Google. Speaker 2 00:26:51 Are you kidding me? Really? These are the big name, institutional stocks franchises. This is what I say all the time. Nobody does what Apple does as good as the Apple does it. Nobody does what Google does as good as Google does it. Folks. Speaker 1 00:27:07 I asked you a question. You're going to do an internet search. Well, let's go on. Speaker 2 00:27:11 Are you kidding me? No. You go to the franchise. You go to Netflix, you automotives in the automotive sector, Tesla, Tesla, matchless, stock, Google, Facebook. Nobody does what face Speaker 1 00:27:24 Does as good as Facebook does it. Nobody does what Twitter does. And I'm not endorsing you by them right now. And I'm not getting political with all this stuff going on. That's not the issue. I put all that aside. Speaker 2 00:27:33 Okay. All right. Big names that big money can move into Invidia. Big money can move into that stock. All right. Or Goldman Sachs and not cause a ripple and big trends develop there. And they trend beautifully on the moving averages and you just let them work and work and work. Just let him just let him go. This is the beautiful thing. You can buy one of those things and they don't trend. You don't even have it on your front page. I don't even look at it. I have a limit alert, set a price alert, but I just let it go. Maybe I'll look at it once or twice a day. And now I'm going to back up here and say this that's the max list. Okay. Apple, Amazon. Well, here, Speaker 1 00:28:19 Hold on a second. I'll go to the other one. I'm going to read it to you about that. The joys of modern technology. Speaker 2 00:28:24 Here we go. Apple, Amazon, Alibaba, BA BA Badu, Facebook, Google, Goldman Sachs, Netflix, Nvidia square, Tesla, Twitter visa, MasterCard, and I'll stick Microsoft in there too. Big names, big names. Now I have to pause here and share this with you. Please. Don't take that Speaker 1 00:28:48 As that's an endorsement to go out and buy them all. No, I'm not saying that at all. Speaker 2 00:28:53 But at certain times they provide it Speaker 1 00:28:55 A great setup on the daily and weekly charts and sometimes more Speaker 2 00:28:59 Totally where huge money can be made huge. We had a client and he didn't have that big of an account, but Tesla had had a great pattern and I'm going back over a year ago. Okay. And this account wasn't that big and no day trading. He wrote that. So he made a million bucks on Tesla letting it work late in trend on the moving averages that I cited. So that's the max list. Now I'll take it a step further is in that same realm, there were a couple of ETFs that I really like, all right. I like the spiders and I like SSO. I like SSO better. Cause it's two for one leveraged and you own the entire S and P 500 with leverage, but you're also diversify. I love QQQ and I love QLD love it. Only entire NASDAQ. When are, you know, all those stocks I just mentioned. Speaker 2 00:29:59 I think all those are in the NASDAQ. 100. Most of them are for sure. You only entire NASDAQ, 100, the power stocks, the maxslist stocks with two, for one leverage. But you also have diversification. I'm going to pause and share this though. I'm not telling you to buy them now. No, I'm not saying that at all, but just do your homework, do your homework. You can find great partners. We had Ali-Baba last year. What a move, what a move. Um, as I said, Tesla, Tesla was more than a triple. Okay. And it just trended it just trended nicely. I think Speaker 3 00:30:35 What I love about your process. And I think we both share this is, um, it's something that we can easily understand and you are, you know, if I had to sort of summarize here, you want, you know, these, these high growth, you know, very reputable leading status type stocks. And you're looking for quality patterns through supply demand, price, action, and volume to emerge. It's good quality stock, good quality pattern. And that's your jam. And I love that. Now I do want to actually, and I want to tie one thing that's um, that you said earlier is you talk about letting it ride and you, and I can say and talk about letting it ride and that Tesla move the Alibaba move. That's a hard thing for a trader to do. I know personally, I mean, now I'm going to sit on, sit down, lay down on the couch and you can be my therapist here because letting it ride is a really tough thing to do in the moment. And I think this is why earlier, you said, you need to take care of yourself and you need to get sleep and treat your body well, because this ties into that realm is what I'm guessing. So how do you let these things ride? How do you actually make this look so easy by sitting in these stocks? Speaker 2 00:31:53 Good question. It's a great, that is a profound question. And is it is the, it is the struggle that we all face. Our, we have all faced and true confession. God knows I have to. I have to. And what really hit me hard folks. I'll tell you this true confession. Again, I was a sole support of a family of six and helping my mom too, who was widowed. And it used to drive me nuts. I would lose sleep over this. And this is, this is the honest to goodness truth. I would have a stock and it would go up and I'd make, you know, 10 or 20%. And I'm going, man, this is great. I'm locking that sucker in and lock in a great game and it would keep going and it would keep going. And I could never ever find a spot to get back in it. Speaker 2 00:32:51 And you're looking at the chart every day. It ate me up alive. I said, again, my trading partner and I, um, back then, uh, we were, we were like, I'll say his first name. Cause there's no big names, Chris. I was like, what the heck? I'm I'm literally sabotaging myself. I am self-defeating myself. Think about it. I've limited. You know, we talk about limiting losses. I've limited profits. And I can't find a way to get back in. I found it. I won't say depressing, but I realized I've got to fix this. Or if not, this is not going to be good for me mentally. This is not going to be good for me emotionally. This is not going to be good for me financially, because I can't find a way to get back in. So then guess what happens folks? And I bet money. Many of you been through this, what the heck? Speaker 2 00:33:45 I don't know what I'll do. I'll find a spot and I'll buy it. I'll buy it. I'll capitulate and buy it. And yeah, I'm really good at that. You know what? I got that down to a science. I can always buy within 50 cents. You know what I'm going to say? I can always buy within 50 cents at the top. I got that down, man. What, what I need to have the word stupid tattooed on my forehead. You know, I was like, what are you doing? So I finally said, no, I'm not going to do that. And I credit where credit's due. Chris, Chris helped me a lot. And um, that's Dakota, ed Chakota really helped me try. You know, he challenged me. Whoa, did he challenge me on trying to determine a viable method for letting it work? And that's where it comes back to it. Speaker 2 00:34:33 Evan. And for everybody the 50 day, the 21 exponential moving average, the eight period exponential moving average. Let it go. Just let it go. Sell some industry rank, take 20% off, take 25% off. If it keeps going. And it starts to get a little choppy up there, sell another 20 or 25%. Keep the other 40 or 50% or 60%. Keep it, let it work. And this is something I do too. And you said really I'll have a limit alert, put not a stop. I'll have a lumen alert put, but I'll take the stock and take it off my front page. So I don't look at it. I don't even look at it during the day. Don't even look at it. Why I have a limit alert, set a price alert, not a stop of a price alert. Just let it go and see where it goes. Speaker 2 00:35:25 You will find honest to goodness. You will make more money with less stress, then looking at it every day. And I'll say it again. Please don't get wrapped up and looking at five and 10 minute charts. What looks like a disaster on a 10 minute chart is nothing on a daily or a weekly chart. It's nothing. If I had been looking at 10 minute charts, there's no way I would've written Tesla. The way I did, there was no way I would've written Neil. The way we did Neo Neo was a quadruple leading group, leading stock, simple base, 15 to 60. Just let it go. Let it go. And it works. So, and I'll be very honest. I know I get passionate about this. Honest to goodness folks. I wish there had been somebody that would have said that to me a long, long time ago, I'd probably still have hair, you know, but anyway, that's, that's, that's a different story. Speaker 3 00:36:17 I love, I love the little mental hack of put taking it off the homepage or the front page of your screen and just setting the alert. That's such a good, and it just, it speaks to someone that has been doing it, right? This isn't an academic talk or this isn't a high level like texts. You know, this is you can, these are the types of pieces of information, uh, that I think is just the real gold because it shows, uh, you know, how traders actually make this happen. Um, and sometimes you get a trick, the, uh, the lizard brain a little bit and just, um, you know, not let, not let you see the dollar signs on what you're up or down. So that's great. Thanks for, thanks so much for sharing that, you know, it reminds me, so you have a quote that you like to say often, which is don't impose your will on stocks. Can you actually take a second and kind of tell me what that means to you? Speaker 2 00:37:13 You bet. That is a great, that is a great question. See, this is one, I know I'm talking to a guy that does this and does this successfully with Evan is that, and I'm not saying that to play them up or anything like that. No, only somebody who's really done. This really sat in the chair and gone through it knows what we're talking about. So it's a great question. Yeah. Impose your will. Um, the stock, I'm going to get a little deeper here. The stock is not a living entity. It's not an animal. It doesn't know you exist. It's not even alive. It's literally a chart reflection, human emotions. As I stated, fear, greed, panic, and complacency. And what do we have to do? We have to accept that fact and let the chart, tell us what to do, not what we want it to do or what we think it should do, but what it is doing. Speaker 2 00:38:18 As I said, I love this quote. I'll believe in what I see and not in what I believe, banish this thought, please. It just has to go up. Why? Because it's a great stock with great numbers and a great group. And it has a great chart. No, it will go up if it goes up, not because you think things are good, let it tell you what to do. And by so doing you've lessened stress and emotions. You're letting the chart action guide you. And that helps us, helps us select just simplicity. And you know, the quote only the still pool reflects the stars. Think about that. Only the still pool reflects the stars. If we focus on simple, we breathe easier and we can ride trends a lot longer. And if we sell a little industry rank, we know we can ride them even longer. Speaker 2 00:39:16 So anyway, that's, that's what we got going on here. Am I ready for Google? You bet. I am. I don't know if it's going to go. I'll say it again. Let the chart action guide you. Don't don't again, impose your will. Wait till it shows that it's pushing through that spot before you buy. And again, you're looking at that chart three days. Now people thought when it hit that white line, man, this is it. And guess what? Three days they're getting hit a little bit. You can see, well today the stock rallied up and hit 2113 and it closed at 2083. You know, you know, that's not that bad to close that it's mid point. Yeah, that's right. I'm down 30 points. You know, God only knows what's going to happen tomorrow. Why do that to yourself? Wait for the trigger. Even if to pay up a little bit. Speaker 2 00:40:08 Oh, which leads to a good point here, folks. I encourage you use buy stops. You sell stocks. I always tell people and you'll see it on all my charts. I have white lines drawn is this is what I always tell the VIP's. It's good above the line and it's bad below price is good above the white line and it's bad below. That's it? That's it run it that way and you'll do better. You'll just do better. And I also will say it again. Please stay away from the five minute and 10 minute charts. Please focus on bigger picture stuff and ride them as long as possible. Anyway, I know I say that a lot, but like I said, I wish somebody had said that to me years ago, Patrick, what are you doing? You're you're sabotaging yourself. Here you go. Speaker 3 00:40:57 That's awesome. Um, so much wisdom. So Pat, we're going to start to wind down here and I'm curious, um, a little bit of a curve ball sort of question, uh, and take a moment if you need, but what does successful trading look like to you? What does it mean for you? Uh, to be a successful trader? Speaker 2 00:41:21 And that's a deep question. Um, it's, it goes far beyond the money if you're focused and just on the money and nothing else. Um, it's not as satisfying. It's great. I, you know, yeah, it's great. But there's tremendous satisfaction in good execution. I find successful being successful means I have a set of rules and tactics and discipline, and I'm going to stick with it. I know it works. I've lived with it for a long time and you can say, Patrick, I haven't okay. That's fine. But you're learning every day. You're learning and you're getting better. Okay. So what does successful mean? Yes. I know this and I can live on this and sleep on this. If I follow my rules and for you, if you have viable rules, okay. That's the first point. If you don't have viable rules, you're in trouble. That's why we're doing this together with Evan, because I know he has viable rules. Speaker 2 00:42:41 If you have viable rules and tactics and discipline and you stick with it, you stick with it through time, you will be successful. It will work, but you gotta have those constraints working for you folks. And it's like a three legged chair got to have all three of them supporting it. If one falls, all right, you can have the best rules, but folks, if you don't follow them, who won't work, there's something really satisfying in that though. And again, don't just focus on the money, focus on following the rules, the viable rules and tactics that will help you. And it's extremely satisfying to know, okay, I lost on this stock, but I followed my rules or I made money on this stock. And I followed my rules. It's wonderful. Which leads to a point and a good segue right here. There's a lot of great books out there for, this is a book that I've read. Speaker 2 00:43:50 I don't know how many times it's a book by Jack Schwager called market wizards and Evan. I see Evan nodding his head. I know you've read that book. You know, it is a great book. I agree. There's the new market wizards. They're stock market wizards. They're all good, but I encourage you if you want to get better read and study market wizards. But the most important chapter that I found in that book is the last chapter with Dr. Van Tharp, T H a R P. And he trains and coaches is either a psychologist or psychiatrist. I don't know which, and there is a difference. He trains or he trained and coached successful investors and traders, how to get better. He trained and coached unsuccessful traders and investors on how to get better. And that book really helped change my life. Because again, I was sabotaging myself. Speaker 2 00:44:55 He said, you can have two different people. One says, one group are two groups. One said, see the signal, feel good about it and do it. The other person, our group says, see the signal, feel bad about it and say, you might not. You might lose money. Don't do it. Both looking at the exact same chart. So by default, what should we do? There are opportunities out there all the time. When I was teaching on the university level, the department heads said to you one day and I'll never forget this. He was a doctorate. Also said to me, there are no problems. Only opportunities. There are no problems, only opportunities. I love that mindset. There's opportunities for us. If we have the discipline, if we know what to look for, and if we have the discipline to wait for it, and if we have the discipline to ride trends, and if we have the discipline to limit losses, we'll be in control and not the stocks and not the markets. Speaker 2 00:46:01 And not some analysts. You can run it that way. If you combine those components together, you'll be successful in. And then I also have to share this with you. And I'm sorry if I'm going a little long, please, all of you maintain your humility. All right. I have found that when I get cocky and arrogant and think that I'm hot stuff is when I've always suffered large losses. None of us are infallible. Okay. The only thing that's infallible is the market. Okay. Well, God, to put the market, it got first actually, but just get in line with what it is, write it for as long as possible and always limit losses. You can say, gosh, you've said that a lot. Yeah, because I know what it's like to be down six figures in a stock. Okay. I know what it's like to be down. Hundreds of points in a stock. Speaker 2 00:47:01 It's awful. So which leads to my, I'm going to wrap this one point up here, please always limit losses. Always find a clean entry. A clean entry gives you a clean exit. We just looked at some charts with white lines on them. Folks. It's good above the white line and it's bad below and something when you will find after looking at millions of charts, which I have, you will find, and I'm not exaggerating. You will find it's above the line and it's bad below and that'll help you anyway. Mindset, mindset, big part right up here. Good buddy. Anyway, I hope that helps Evan. Speaker 3 00:47:39 It was extremely helpful. Yeah, that was a, that was great. I love the, I mean, we just got so much today. We got strategy. Uh, we got the stock selection. We got a lot on psychology for traders to think about it all comes together and it's all needed right. To, to, to sort of survive and to thrive, uh, in the stock market. So I think, uh, you said it nicely, you've got some great quotes, great reminders. I'm sure people are going to be rewatching this and going back. Uh, at least I hope they are. Cause I came away with notes myself and uh, I thought this was great. So before we wrap up anything that is on your mind that we didn't get to talk about or just any other kind of closing thoughts here, um, to kind of summarize this, uh, this power. Speaker 2 00:48:24 Yeah, sure. You got it, buddy. Thank you. First off, Evan. Um, thank you for having me. I was really honored when you asked me, I, for those of you that know me on Twitter, I don't find, I don't follow a ton of different people and there's great folks out there that I don't know about. I'm not criticizing anybody. I'm not going to get into Kate, but Evan's one of the few people I follow. And the reason why is, and I'm not, he's not paying me to say this stuff because I like his work. You know, I like his work because it's conceptually simple and make sense. Okay. It's not Hocus Pocus. All right. You can sit there and listen and go. Oh, okay. It's it's this does make sense. I understand. So does good work. I just wanted to share that. I appreciate what you do and I'll also tell you this. Speaker 2 00:49:08 Um, I'm pretty, I'm a pretty blunt guy. Okay. Is if I didn't like your work and I didn't like how you did things and I didn't like your persona, I wouldn't be talking with you today. Okay. It's just the color of X, but you're good. You're good. You've got good stuff. Good solid stuff. So I wanted to share that with you folks. I appreciate that. Oh, it's from the heart. I'll share this with all of you. This is a hard business. All right. It really is. And I'm not seeing that to push away, but it really is. But you know, it's an extremely satisfying business, not just financially, but also psychologically it's it's it's it's like nobody, you're your own boss. Think about that. That's huge. You are in charge. So focus on saying, I want to be the best version of myself that I can be. Speaker 2 00:49:59 I'm going to work really hard. I've picked up some more tools from Evan and from Pat that I can utilize, I, I will focus on clean and simple. I will always control risk. I will always ride trends as long as possible. And maybe this sounds corny, but I will be thankful and I will be humble. I will be thankful and humble. So just putting so many different facets of life together is because it's it's fleeting and it goes fast. I've seen it too many times in my lifetime with things of friends that are no longer here. So just balancing life balance in life. And, and maybe I'm harping here, but I'll tell you this please. And I say this to the VIP's all the time. Take care of yourself, take care of yourself, eat well, rest exercise. One of the best thing you can do, folks, you say, well, this is crazy. Speaker 2 00:50:59 This is about stocks. No, I'll tell you what if you're sick, you ain't going to be doing much with stocks. Are ya? So, um, you're not going be doing much with anything. So a great thing, go out there and walk, go out there and exercise, get away from it, do other things and be involved with other things where hopefully you're engaging with and you're helping other people. And it doesn't need to be in the realm of stocks, but just something, something, while you're here, we're here for a short time. Let's make our lives better. But if we can make other people's lives better, then, then we've done something that's really good. Oh, here's the last thing I'll share with us. This is one of the best parts about Twitter. You ready for this? Here's your quote, strangers or friends you haven't met yet. Think about that. Speaker 2 00:51:45 Strangers are friends you haven't met yet. You want to know something really cool. Three years ago. I didn't know. Evan. I didn't know him. Didn't even know existed, you know, but now I do. You're not great. So we can use social media to tear each other down, but we can also use it to build each other up, not in a false way, but in a real way. And isn't that a good thing. I'm going to use it. Life has choices. I'm going to choose to do that. And I hope you do to help other people. And it can be not in the realm of stocks just in life. So I got off on a tangent, but you know what, that's the real deal. And that makes life worth living. So anyway, but Evan, I thank you so much for your time and the opportunity. I appreciate it. This is great. This is great. And I had no caffeine this afternoon. How about that? Speaker 3 00:52:31 I said, Pat, man, I don't know if I want to see you with caffeine. I don't know what that looks like, but I'm sure it's fun, Pat. Where can people find you? If they want to learn more just about you, your work, what you're up to? Where should people go? Speaker 2 00:52:47 My name is Patrick Walker and I'm on it's mission. being, and say, what does that stand for? Okay. I'll share the short and sweet mission markets, industry sectors, stock, institutional support, outstanding management or outstanding product or outstanding service. And the last one and I credit my son never say never, never say never. And I like that mindset never say never. And he's the guy that's jumped out over the Yelps and gone. He went camping in the Sahara desert. I said, why do you want to do that? He said, because I don't know anybody else who has. So he went by himself and at the Sahara, Speaker 3 00:53:26 There you go. I don't know where he gets that from. But anyway, so that, that kind of wraps a lot of things up. Thanks so much Pat for being here and, uh, folks, all the notes and links from this episode can be found on the [email protected] forward slash blog. Thanks for tuning in and we'll see you in the next episode. Thank you, Evan folks, for all you listening to the audio version of this podcast, you're going to want to head on over to our YouTube channel for this episode to see our extended interview, where Patrick walks us through a few charts on screen, he breaks down exactly what he looks for in trade setups. And Patrick also shares some charts printed out from the 1980s. You can find this extended [email protected]m forward slash podcast. Just search for this episode. Speaker 0 00:54:19 So thank you for listening to smarter trading. I hope you enjoyed this week's episode for all of the show notes, links, and call-outs head on over to the trade forward slash podcast gut questions, or want to leave a comment. Visit this episode on our YouTube [email protected] forward slash the trade risk to join the conversation. If you enjoyed this episode, please leave us a rating and review on iTunes. It helps the show get discovered by more people. Smarter trading is hosted by me, Evan Madeiros and produced by Ashton Alexander. You can share your feedback with us by emailing [email protected] Thanks for tuning in. And we hope to see you in the next episode.

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