Full Transcripts
Dr James: 0:41
Fans of the Dentists who Invest podcast. If you feel like there was one particular episode in the back catalog in the anthology of Dentists who Invest podcast episodes that really, really really was massively valuable to you, feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life. Also, as well as that, if you could take two seconds to rate and review this podcast, it would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome, welcome to the Dentists who Invest podcast. What is up everybody? Welcome back to another episode of the Dentists who Invest podcast. We welcome a beg-a-part in, zaid Ismali. Zaid is a returning guest, so a familiar face on the Dentists who Invest podcast, and Zaid is here today to talk about something that we touched upon last time, but we’re going to flesh out in more detail tonight, and that is day trading. How are you tonight, zaid?
Zaid: 1:48
Yeah, very well. Thanks, james, Glad to be back on. Thank you for having me back on again.
Dr James: 1:52
Dude, my pleasure. Your last few episodes got a lot of love and I’m sure this episode will be no different. So, zaid, day trading is something that people talk about and it looks like something incredibly lucrative, particularly for those who are new to trading, because they believe that that is where the money’s at the quick trading, the fast trading, the sexy gains, all of that stuff. Can you tell us what day trading is, how it works, and whether or not it fits, or it can fit, in us dentist lifestyle? Let’s start off with what it is, first of all.
Zaid: 2:26
Yeah, so essentially day trading is you are in and out of stocks within a day, so you don’t hold anything overnight. So since we last spoke, I was doing more swing trades. At that point then and I think because of the market decisions weren’t great, it was quite hard to find actual swing trades. And my personality, my own point of view I’m quite impatient, so I was either getting into early or out to early with some of the swing trades and that’s when I started to look at day trading. And actually from my own point of view, it suits me more of my own personality because I’m not patient enough to wait for the things to happen. And I think that’s quite important with trading it’s finding something that fits your own personality. So for me, what I quite liked about day trading was that there was nothing to worry about overnight so you’re not going to get big gap ups or gap downs. You don’t have to worry about timing your trades around earnings and dividends and other news that can happen. And the other thing from saying that, the sexy kind of low hanging fruit, I think cumulative gains are quite good. So if you think any index fund, you’ll get 10% a year If you break that down to actually per day. You only really need to be making 1% a day if that’s on average and you’re going to smash that 10% a year. So I think, if you kind of see it from that point of view, yes, it’s lucrative because you’re accumulating on a daily basis. I think seeing it as a get rich quick scheme, I think, is where a lot of people get into trouble from it. So I kind of got into it by doing a lot of reading, a lot of research, and I kind of try and show you my kind of journey of how I’m actually get through and how I try and incorporate it into our still being a sort of a full time orthodontist. So, firstly, what the things that you kind of need for it? You need a decent broker. You need a broker with live data. That’s the key thing. That’s where some you know you can’t do it on hungry’s landstone. You need to have, you have to be able to get in and out of trades really quickly, and the type of broker that you need is partly dependent on the type of strategy you’re going to have. We’ll touch up a little bit on strategy later on, but you’ve got different brokers with different fees. If you’re going to be doing lots, of, lots of trades in a day and one method of strategy might be something called scalping, where you take lots of little gains. You know you take $50 there, $50 here, $50 there, and you know tens or hundreds of trades throughout the day. You’re going to want a broker with no fees. For example, if you’re doing a lot of shorting, then you’re going to want a broker that has that can locate those shorts for you and preferably has low locate fees as well. So the kind of broker you know I’m sure you’re going to do lots of. You’re going to say, oh, what broker do you use? What do you use? I think it really comes down to the strategy that you’re going to incorporate. The other thing you’re going to need is you’re going to need a screener. You’re going to need to find something that you’re going to be able to find the stocks that are going to be in play for you and again, that the type of screener that you’re going to be looking for is depending on the type of strategy that you’re going to kind of entail and in a decent charting software and somewhere that, again, you can get down to kind of one minute or five minute candles to kind of see what’s actually happening with the price action. The other thing that suits me from day trading to quite like doing it. I was never a fundamental kind of analysis type of guy that I all those things kind of went over my heads, but I do like looking at patterns, do like looking at charts and day training. A lot of it is really related to the actual price action. So it’s more of kind of the technical analysis part of me which I enjoy. And then when it kind of comes on to strategy, really it almost doesn’t matter what type of strategy you have and we briefly touched upon this on the last podcast. It’s really down to managing what type of strategy you’re going to have and what your risk and reward is going to be for that strategy. Now, if you’re going to be someone who does a lot of trades throughout the day, your risk and reward ratio might be much lower. Your risk and reward ratio might be two to one, but you’ve got a 70% win rate because you’re doing lots of little trades. Well, if you’re someone who’s only doing one or two trades today, looking for that breakout that might happen or a short squeeze that might happen, your risk reward might be something like seven or eight to one, but you’re going to get a 25 or 20% win rate or that trade doesn’t come about that often. So again, trying to work out what suits you, what suits your personality and there’s loads of different strategies out there. There’s kind of a me and reversion strategies, looking for breakouts, following trends. You can even just trade within a range. If the stock throughout the day is always traded the lowest at 20, the highest at 30, you can almost kind of bounce off those resistance lines and there’s money to be made that way. So it’s kind of finding what suits you and then the biggest thing we’ve done to it is of this pattern recognition. It’s reading a lot of books on technical analysis, charting, reading the candles and then doing whatever you can to try and find your reg and to find your way. That kind of suits you and a lot of it may just be hours and hours of just looking on charting software, different charts throughout the day or charting play. So actually the real thing that you really need no matter what is you want something that has a lot of volume happening that day. You want something that has a lot of liquidity for you to be able to get in and out of the trades that you need and if you are going to look into it and are going to kind of try and find the different strategies. There’s lots of different information out there on following different people on Twitter following. There are some YouTube kind of videos on there, but I would kind of take some of them with a pinch of salt. But it’s kind of finding something that interests you and then, kind of before you have any money in an account or start with a very small account, is Trying to find it. Okay, you know Right, what would I do today? You can look at the chart and go, okay, I think it’s gonna go up here, is gonna go down, and and a lot of practices I think we throw has another part of it that this whole concept of 10,000 hours trading is absolutely, no, no different, and while means I’m not there yet, for me, my, my kind of trading sort of careers only just really starting and and what I’m hoping to get out of it, the minute is in the first kind of year is actually not to gain money, but not to lose money, but to gain experience. I’m putting my 10,000 hours that way and and then, once I’ve been, I’ve got the point where I’m not just profitable but consistently profitable and Having your losses, not blowing out your accounts and chasing trades, then I can think I could like and put more money into it and then potentially have it as a, as a second income stream or as an alternative to To dentistry. Is you know, you never know what will happen in life. I’ll say that you did podcast on kind of Second careers in that. So yeah, and so I think the key thing is really is Finding a strategy, finding an edge. Whenever you talk about trading the oil supply, an edge and it doesn’t have to be a big edge is you know there’s an absolute no reason why you can’t trade the smallest of things day in, day out and Go forward, and it’s just giving you that and it’s not being greedy with it. It’s not expecting to get you know, doubling your money every day, it’s. If you’ve got a $10,000 account and you make, you know, even a hundred dollars a day, that’s still gonna be more than 10% throughout the year. But so it’s kind of really important just to kind of find your edge and your strategy and kind of try and stick to it and and even if you can kind of find a strategy where you might be kind of long in one strategy and then you For a really good bull run and having a backup strategy where you might be doing a bit more shorting for when you’re in the bear markets and trying to kind of Work out what is that you? You like to do. So from my point, you want things that I quite like to do. There’s two things I kind of look at Really. I look at stocks that have very overly inflated, that have kind of gone parabolic within a space of you know, 10, 50 minutes, half an hour, and they’re really stretched from from the mean and there’s usually a pullback that happens after that. And I look at kind of shorting the pullback and potentially fading. These stocks enter kind of fade throughout the day and holding once without short and kind of making money on the way down. And then, when I’m looking at stocks that are going long, I’m looking at stocks that are Breaking out of their their patterns, a lot of stocks that are Going up throughout the day. If you look at the chart, they never just go straight up, it’s almost like a stepping stone. They kind of go for a bit, they go sideways for a bit and then they go for the next bit and so on and and it’s trying to work out. Okay, well, when will that next step and happen? And so those are two things that I like to look at and and even though you know, doesn’t have to be done throughout the whole day, yes, it’s good, stay training, but it doesn’t. You can. You can do it for an hour, you can do it for two hours. A lot of times I’m trying to kind of find my trades in the first hour, two hours of the market opening, and that’s when I’ve got patients into the. The New York Stock Exchange opens up half to GMT time and I spend usually the first hour trying to find what stocks are in play and what, which are the ones that have made that parabolic move, and then Trying get on the air On the top side of that and and short it go going down and, and that can quite easy be done in between patients, and so that’s one way of kind of fitting it in. But the stock market doesn’t close till half nine and Sorry, nine o’clock GMT times. You’ve got time to kind of an evening in the last hour and about now, actually between eight and nine is the power out which a lot of again, lot of volatility, a lot of price changes and Moveings happen. So again, choosing your time and choosing you know your edge may only work at a certain point during the day. So it’s kind of finding out what it is you, the edge that you have, and find something that you kind of believe in To get you there.
Dr James: 13:09
Yeah, absolutely. This is horses for courses, you know, and when I when I said earlier, when I referred to the fact that day trading is the exciting thing that people tend to lunge at whenever they think they have to get into the Investing or trading world, I actually think is massively helpful to learn the principles, the fundamentals of money, understand how that works, understand how to be an investor before you understand how to be a trader. And for anybody who is Is curious what that distinction is. An investor is someone who buys and they hold Indefinitely and they withdraw, they take profit out Whenever they reach the age where they want to retire or they become financially free a trader. If anybody takes profit before that point, you’re a trader. Now, granted, there’s a spectrum. Some people will trade very quickly, some people will trade over the course of a few days or a few weeks. Some people will trade over the course of a month or a few years, but you’re still under that bracket the trader you know. And for anybody who wants to get into this route, go down this path of trading. It helped me so so much in my understanding, my patience and my mental state being a trader when I began to understand the principles of money in the first place, and there’s no quick path to success. Just like what you were saying. There’s a it’s about putting the hours in. It’s like anything in life. It’s like dentistry. The best dentists spend hours, they have a passion for it, they study, he studied, they study. Anything like that in life Is the key. Anything that you know that there is a huge scope to become good out in life. That’s the case, and trading is no, is no exception, just like dentistry, and that’s the best way I can put it. And it’s best to not try to run before you can walk Real quick. Guys. I put together a special report for dentists entitled the seven costly and potentially disastrous mistakes the dentist may come whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdentistuneinvestcom forward slash podcast report or Alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them. Really looking forwards to hearing your thoughts.
Zaid: 15:39
Yeah, definitely, and and these kind of concepts of you know, any training book will give you that and and it can be applied to anything. It could be applied to ETFs. It could be applied to to equities. It could be applied to options training. It could be applied to crypto. It could be applied to anything, and it’s kind of having the same, the same concepts and being repeatable and almost being like a robot, and I think one of the things that helped Me when I was in my trading is the money that I put into. It was actually quite lucky with some crypto games this year and I liquidated some of my crypto games and use that money. So for me it wasn’t money I kind of earned from working hard. Essentially, it was that money is, and it’s not money. To me it’s it’s points in the game. I think when you become emotionally attached to the money, when you start trading for, for money that you need to live on, your emotions get the better of you and then you can’t make those decisions. You, you know, if you think you have lost a thousand dollars today and you think, what could I spend that thousand dollars on, yeah, you’ve got to just go actually, no, it’s not a thousand dollars, it’s a thousand points, you know. Yeah, I think just kind of just see it as as points on the game, a high score sort of thing, as opposed to and kind of emotionally attaching yourself to that money that you could have spent on something else. I think we’re lucky in a position that We’ve got a good job. You know we’re doing it to solely rely on earnings. It’s not like I’ve got to make money today because I’m going to pay my bills and through day trading I think that gives us a bit of an edge from from that point of view. But I think that’s quite important. When you start doing it for money that you need to live on, I think it becomes different. And that’s why when you talk to a lot of traders at the start they say, oh, if you’re going to learn, do paper trading and Because that’s the best way to kind of learn what happens. But with paper trading it’s because it’s not money, it’s just numbers on a on a computer. It you don’t have that same emotional attachment to it and therefore people always make money on paper trading. But as soon as they have real money on the line they end up not being that successful. So it’s kind of trying to kind of bring yourself away from that. And every Great trader they ever hear talking about, they all went through a phase when they first started of blowing up their accounts. You know once, or even twice sometimes. So, yeah, have done that, so Using that as a kind of a learning tool and realizing it, but you almost can’t be a good trader and until you’ve done that, until you’ve had that big loss and yeah, that happened to me at the start as well. Yeah, yeah, and it happened. Well, it happens me at the start, but I I kind of broke the rules and I got very, very lucky and so I was on a the trade that I was shorting and so it went higher the day and I shorted it but I kind of, looking back, it was actually consolidating to a breakout for me, kind of reached higher the day and it failed to get that second time around. So I I shorted it and then it just took off and it went parabolic and and I was started to make a bit money from shorting. And then I started, I increased my, my position size and so I could start making some more money now and and I did it and it just went absolutely the wrong way that I wanted it to and I did, I broke all the rules, I doubled down and then it and then I left it overnight and thankfully this was this is just before thanks Everything before Thanksgiving was going up. Thanksgiving, obviously, the market was shut and on Friday I kind of held on to it and it just absolutely tanked and it just went straight back down. So making my money back and everything that’s been up taught me a lesson. So I’ve got very lucky from it, but it taught me a lesson of actually, I, you can’t get that lucky every time, and but if it hadn’t, it kept on going the other way and you, you kind of just leave it in. They think you see that number as a, you know, a minus red figure of whatever it is down and you put up one. If I close that trade now, that money’s definitely gone. There’s always a chance it can come back and it can come back and a lot of times when you’re tracing that that never happens. So Anyone can make money trading. I think the key thing is managing your losses. I think is is a big, big factor. Um, so, um, um, mark Minna, minna Verna had a really good tweet about what his trading strategy was over the day and it was heads I gained two dollars, tails I lose two, I lose one dollar. That was his trading strategy. If you can find that trading strategy, then you’re going to make money, no matter what. If you’ve got a three to one risk to ward ratio, you can be, you still could be Right at the time and you’re still be profitable. Um, one of the traders I was listening to talking. This guy had, um, had started about 10 years ago, uh, and I think he’s made almost Seven figures. So I think he’s 20, 30 million dollars up and his win rate is only 26 percent. Yeah, but when he’s right he’s right. He’s right Exactly, yeah. So if you’re gonna and then you’ve got to try and find out what kind of Strass you you’re gonna go for, but you’re not gonna have an eight to one risk to ward ratio if you’re gonna be trading, you know 30, 40 trades in a day, and so it’s finding out what one of it is that you actually Are happy to do. And there are so many different things out of them. And all these things that you see on youtube, all these um twitter feeds and something some traders are even kind of streaming on twitch as well, now that they, they’ve all got their own um technique and it’s pointless. It messes me up. Oh, what does it do? What’s pointless? Copying them? You’ve got to find something that suits you and something that you um, that you believe in, um, uh, and kind of make you know, find your own little edge. And that’s what really comes down to. It’s just having that little thing that you do, that you Believe in, and then it’s because, if you don’t believe in it. As soon as it’s not going your way, you’re gonna break the rules and you’re gonna think, actually you know, that’s not for me, and then you kind of get the scarf in by it. So that doesn’t work and all this stuff so Um, so yeah, that’s really important.
Dr James: 21:49
Absolutely. I love the term edge as well and for anybody who doesn’t know, that’s a bit of trader Jorgen or lingo. Edge just means your advantage. So if you can, here’s it, here’s it. Here’s a thought experiment I really like. If you go to the casino, you’re playing blackjack, all right, you bet the same amount every single time and you keep playing that game. Guess what the house is going to win? Because the house makes the rules. The house knows that, no matter how many times you win in a row, if you keep playing that game and enough people keep playing that game it’s going to make money, because the odds of it winning are six out of ten versus the odds of the punter winning or four out of ten. Are you with me? If you make the rules, you become the house because the house makes the rules. So if you can make the rules, you can structure your trades. You know when to get in, you know when to get out, rather than just letting the markets dictate what’s going to happen next and having no plan whatsoever. Then, if you can find a set of rules that allow you to be consistently profitable and just apply it over and over and over and over again, yes, some rules will be more profitable than others, but eventually you’ll attain financial freedom if you just place enough trades and you keep using the same rules. Really interesting way of thinking about it. I don’t know if you’ve heard that one for yeah. Okay, oh, oh, you have, okay, have you. Is that what you just said? Yeah, yeah, you can tell me what buckets from then as well, can’t you Nah trading in the zone, trading in the zone, yeah and but yeah, that that is.
Zaid: 23:15
That is very true. And and like we’re saying early, you know win rates on some of these tough guys at 25, 30 percent. So it’s not even being right 50 percent of the time, but it is when you’re wrong. You’ve just got to be emotionally out of that trade. Right, I’m wrong, I’ve only lost this much. It doesn’t matter Because. And then, if you manage your trades, you can be wrong 10 times in a row, but you’re not going to blow your account up. You’ll blow your account up by being wrong once and then letting it ride and chasing it and doing all sorts so and so that’s what kind of nailing down your kind of risk and reward is is really important.
Dr James: 23:55
Totally, you manage your risk correctly. If you manage your risk correctly, you should lose no more than 2 percent of your entire portfolio yeah, any one trade. If you can do that and if you can put your stop loss in the correct place and also manage something called your position size, which is something that we won’t get into too much tonight because it’s a little technical. But basically, the basic concept is that you don’t put too much, you don’t allocate too much of your money to any one trade. That’s the basic concept. But how you do that, the nitty gritty, the ins and outs that is something that will park for an eye because it’s a little more complex than what we’ve got time for. But you can do those two things for every single trade. For every single trade, then what that means is that you can only lose 2 percent of your total capital, your total investable capital, the total capital that you have in that account at any one time. That means you can be wrong 35 times and still have half your money. Some people are wrong once on one trade and have half their money. Okay, that’s what happens when you don’t have correct risk management. But that sounds so crazy from the outside looking in and that, to me, before I started trading, I would have been like how the heck can you do that? It’s about being selective with your trades and also understanding that you shouldn’t allocate too much of your capital to any one trade, and also practicing the art of stop losses which, by the way, is an art form, and it takes time, and it all comes back to what we were saying earlier. Zade, you touched upon something that I want to talk about at the very start of this podcast, and you said that you’re practicing orthodontist, yet you still managed to trade around your job. How does that look for you? How does that work? How does that fit into your routine?
Zaid: 25:36
Yeah. So Again, we’re quite lucky here because there’s actually pre-market trading as well. So the pre-market opens 4am New York time, which is 9 o’clock R time, and then that’s open all the way up until half two when the New York Stock Exchange opens again R time, and then that’s open all the way to 9 o’clock in the evening, r time. So the two most profitable times or the most volatility that occurs, is the first two hours of trading and the last hour of trading. So actually the last hour of trading 8-9,. We’re not at work, we’re still working today and still have that For me. I like to see what’s going to be in place. I look at what’s kind of gapped up pre-market during my lunchtime so it’s been kind of one and two. I look at what’s gapped up pre-market, I look at the stocks that might have been played I might be interested in, and then I’ve got patients from 2 till 5, sometimes 6 in the evening and with my job not my adjustment if I’m in a longer appointment there’s usually about 45 minutes an hour. Most adjustments, or brace adjustments, usually about 15 minutes long, it’s normally done within 10 minutes, always got a few minutes in between and that’s when I’m kind of looking at what it is and when I put my trade in I put my stop loss there and then and I put it as a range, so I know what my risk reward is going to be, so I know I can put it in there and then my stop loss is already in and then if it hits my target, it will get me out of it as well. So sometimes I’ll be doing if I’m especially with long appointments coming in, I can hear the ding on my computer and if I’m like, have I made money or have I lost money? And I kind of don’t know until I’ve gone in and have I been stopped out or has it reached my price target. So there’s that way of doing it. And then what I’m trying to kind of, I’m still trying to kind of finalize how I want to, kind of what my exact age is, and kind of toying around with a couple of things. But you know the other ones, just because it’s a day trade, there’s different day trades you can do. There’s the ones that the scalp is saying earlier. You’re in and out within seconds. You know you’re taking lots of little gains and accumulating them, or that’s kind of the all day favors the stocks have kind of reached the high of the day and a lot of them tend to kind of fade over the next sort of couple of hours and sometimes they kind of bounce back again later on. So those kind of trades and the ones that I do with them, I’m usually kind of in and out of them a bit too kind of hard to run one up between kind of quarter, three, quarter past three, and then I’m kind of just watching them have a stop loss in place and treating my patients, and then I’ve got what I’ve got for 45 minute drive home. So depending on where it is, I might just take my profit and run with it, or it looks like it’s going my way, I might lower my stop loss. So if I, even if I get stopped out like a trading stop loss, I’m still made some money but then give it a chance to kind of go further down if it needs to, and then when I get home I’ll have a lot of what’s happened with it. So so there’s that way of doing it and eventually. I think part of me thinks, actually, if I can get to the point where it’s not just like it’s profitable for me, it’s just something I enjoy doing as well, there’s no reason why I can’t work in morning and then have the afternoon to sit in front of the computer and do it. But I’m not going to be doing that yet until I’ve got to the point where I’ve done my 10,000 hours of trading. I’ve done that and it just gives you something else. It’s me even and don’t get me wrong, I love my job. I think the difficulty from what I feel is what really appeals to me is the freedom of flexibility. I like the idea of spending four months of the winter somewhere warm. Can’t do that with the athletics, fortunately, but maybe with a training 10, 15 years time that you know you only need to do laptop and you go and spend four months somewhere, something, and so it just kind of giving you a different arm and different kind of feather on your back, on your cap, if you like, and but the journey, the minute, you know they say all the, all the trainers. You start off, you lose money, then you lose less money, then you lose a little bit less money, then you break even and then you start making money. So the losing money bit the start really is is, you know, being at uni. If you think about it, so you’re in it. You’re losing money. You’re not earning your, you’re spending money on living, but you’re learning your trade and it’s not something you pick up overnight and it’s and like I was saying earlier, it’s you know. You’re putting your 10,000 hours in, 10,000 hours in looking at charts, reading books, doing trades, doing paper trades, trading on a small account. That’s two to three years worth before you get to that point where you actually feel like you can actually go out and do it and then and then, yeah, and then see what happens after that. But for me, I’m enjoying. I’m enjoying doing it. I’m only doing it with a small account at the minute. Whether I kind of increase my size depends instead of I’ve done it wrong. I still hedge my bets. So I still got my investing. I’ve still got my long term strategy. I still do a bit of swing trading. But I’m just kind of trying to find, because the thing is, the market is never going to be perfect for for the swing trades, the markets never going to be perfect for for the, for the long term investing. So it’s having something else that you can do. So my swing trades are breakouts. Look at stocks that are kind of in that consolidation period and then they break out on it and they they go on to the journey. They’re the long based, while my generally my day trading is more kind of short biased, so people that don’t know. Shorting is when you’re kind of making money on the stock going down. So the way it works is you you borrow the stock, you sell it at that price. As the price comes down, you buy it again and you pocket the difference.
Dr James: 31:33
Basically, For anyone who didn’t understand that, it took me six months to understand shorting, so you’re not alone, okay. But long story short, it’s betting that the stock will go down in price rather than up, easiest way you can think of it.
Zaid: 31:48
Yeah, and for me, the reason I kind of got into the shorting because I thought, well, whenever I’ve tried to make money on the stock market before when, when you hear all the, when you talk to all these, everyone’s talking about stock markets I always lose money on the stock market I was thinking, okay, well, everyone loses money because they go long. So surely if I just went short, I’m then the opposite of that and make money. So that was kind of my my theory. The other thing is, again, it suits my personality because stocks can take a while to go up but they tend to go down very quickly. So again, for the for the impatient side of me, I think that that suits my personality from that point of view. But then, but it is riskier because if a stock, for example, if the stock is trading at $7 and you go long and you buy that stock at $7, the most you can lose. Well, that stock can go down to zero. So the most you can lose is whatever you’ve put into that account, into that, into that stock. Now the problems are shorting it. That stock can go from $7 to 10 to 15 to 20. There is no limit of where it can go, so you can blow up your account quite, quite quickly, which is why you’ve got to be really on it with your stock losses. So so, yeah, it’s not for everyone and that’s why it’s like you’ve got to find your own kind of niche. But for me it makes sense because I’m going long in my swing trades and I’m shorting in my day trades, so if my day trades aren’t working, generally, my swing trades might be working, kind of hedging hedging my positions really. So for me so fitting it in, during the morning between patients, I’ll look at charts and look at what my, what my swing business may be. If there’s anything that looks like it’s taking my fancy, the, and I might see what stocks I want to play that afternoon. But yeah, there are times, though, when I’m kind of in the trades and Seeing a patient it’s making money. I finally see that patient go back on security to write I know it’s looking at it and go. I’ve missed my point, and so that can be a bit frustrating sometimes. But and actually then, but it’s, it’s a learning curve like. So I’m doing this to learn because, okay, at least I know well, that’s what I would have done then. I was right at that point may have not made money I wanted to, but I can go take that going forward. I say as a kind of like okay, well, it was a win. They may not as much as winners it should have been and and but. But that can also work to an advantage, because the biggest problem that some day traders do is you over trade. You sit in the idle, nothing happening, so you kind of just going to try just for the hell of going into a trade. So actually being busy with patience sometimes helps you out because you’re not over-training or over overthinking. And and there means a couple times when I’ve gone into trades and it seemed like I was hit my target, I thought I’ll take, I’ll take my money now and how to quite got doing, got round to it and my nurse brings a patient in, it starts in the patient and the patient leaves and then go back onto and go oh brilliant, it’s actually gone down further than I wanted. You know, sorry, I was shorting it, so went down for so I made more money. It’s a good job that she bought that patient at that time. So it kind of helps you just having an idle hands to just sit in there going right, I should be doing something now. So again, fitting it in for me works, works quite well and so, yeah, so I think it’s, and especially as blessive less finish, you know, but I think when it’s had all these fellow times and stuff about those as a chance to try and do something in between. But yeah, for me that’s kind of managing fit in making it work.
Dr James: 35:14
Making it work being Using, using your time as most, as effectively as possible got follow time Maybe. This is something that, and the thing about trading is you can just pick it up and you can do it anytime you like. Yeah, you’re not in trades, you’re looking at charts and it’s all All contributing towards those 10,000 hours that you spoke about earlier. Zed, I am absolutely loving Listening to you talk so many gems in there for everybody who’s listening. I am super, super, super conscious that we want to keep this podcast tangible to about 40 minutes ish, and we had so many burning questions on the group when you posted earlier about this podcast, so let’s go ahead and jump straight into those and these. These responses are Zed’s pearls of wisdom, which Zed has actually come prepared. He’s wielding a piece of paper in front of himself there which I am.
Zaid: 36:05
I wrote the question.
Dr James: 36:08
And you know what, what a travesty it would be if we, if we weren’t able to cover all that that we weren’t able to, all that effort was wasted. I suppose is the best way I can put it Awesome. Let me just jump on to the questions here on the group so so, so, so, so, so, so, so. So I am, I am looking for the post as we speak here. We are okay cool. So we’ve got a Question here about bots pros and, yeah, any bots. Yes, I’m so yeah.
Zaid: 36:38
For bots. I think the pros of the bots, I think If you, boss, will stick to your stop losses. You know, I think, the way to think about this. We have to trade like a bot that and, and we’ll do exactly what it’s programmed to do. It’s always going to follow that risk and reward and, as humans, we get emotional With with the money on the screen. However, I think the biggest issue with the bots is that you are competing against these hedge funds that have these high-frequency trading algorithms and and these guys are pump millions of pounds into it and, unless you’re very, very technically minded, it’s I don’t think it’s something for the retail trader and and you’ve got a factor in Every eventuality that happens into your, into your program. If this happens, this happens, you’re gonna do this and you’re gonna do that and and and not only if you’ve got to be a good trader, you’ve got to be a good programmer, so you’ve got to be able to do both things and factor that in. So for me, I I think it’s far too much effort to make profitable, and actually I was listening to another podcast that was talking about a guy who did he program these bots and had this algorithm that was kind of set in play and within seven seconds because it’s slightly malfunctioned of something he didn’t account for, in seven seconds it burned through his account because of doing all these Frequent trades and then he was kind of watching it happening in front of us and then the only way he can stop it happening, he pulled the plug on his, on his computer, and if he hadn’t pulled it in time, you know His account living fully wiped out. So you’ve got and even though it’s there doing a job, you still got a monitor it You’ve still got to factor. I think one way that may be beneficial is especially like machine learning, for example. So if you can get a bot that kind of learns the mistakes of the middle, learns from that side of it. But that is completely beyond and over my head and regarding that. But I think my biggest view is You’re competing against the other bots that are there a lot. These bots are Programmed by these big algorithms and these firms are doing such quick trades that are happening. It’s just not Worth competing with on that level. But I think the way to what to take from that is Trained like a bot yourself, stick to your stop losses, stick to your risk of rewards, and that’s one of the best way forward we’re going in that.
Dr James: 38:58
I think if it sounds too good to be true, it probably is. Just like these magic indicators that you see Advertisements for where there’s some supposed Gift from heaven, unbelievable indicator that someone has created that’s cracked single market. No one. Tomorrow they can make you unlimited money. It sounds too good to be true and that’s because it is and everybody was using that indicator. But was that simple? Everyone be using it? In my awesome Next question, it’s successful day trading a skill or purely luck?
Zaid: 39:31
Yeah, it’s quite an interesting question and, as we kind of touched on earlier, it’s it’s a skill in the sense that you need your 10,000 hours. It’s it’s putting like anything else and if, if anything, going to the casino, good, do all that stuff. That’s kind of luck based, but it’s it’s managing your luck. So if you’re, if you’re lucky in your trade, then you’re making money and if you’re unlucky, you’re just losing that little bit of money. I think that’s kind of the thing to take away from from that. And you know you’re going into a trade. There’s gonna be one of two things that’s gonna happen. It’s either gonna go up or it’s gonna go down and it’s just finding a way that okay, well, if it goes against me, I’m only going to lose such a small amount and it goes for me, I’m gonna make more than what it is. It’s gonna go against me. So, and I think there’s definitely a skill, you wouldn’t have professional traders, you wouldn’t have these hedge funds. You have all these Big companies making money from it if it was purely luck. But I think getting the right edge for you Tips the balance in your favor and makes it, you know, maybe a bit of luck in a sense of get finding what that edges. But there’s definitely definitely skill involved in that.
Dr James: 40:44
It’s like poker there’s always gonna be chance, but the better you are poker, the better you are poker Then, the more likely you are to win and the more that that chance is reduced. I love that. Is it Tiger Woods who said I love people who call me lucky? I’ve always noticed the more I practice, the luckier I get.
Zaid: 41:03
Yeah yeah, love that quote love that quote. Yeah, does I know what?
Dr James: 41:08
you’re saying, or would you like to chuck some more on?
Zaid: 41:09
top. Yeah, no Community really. I think the other skill you need from that is is the psychology. I mean a lot of training books, any bit. Any big training book you pick up has a big section on psychology and so much of it is psychological based. So it’s really, yeah, definitely a skill which I’d love to master one day.
Dr James: 41:32
I’m sure you’ll get there, my friend. And the second part of that question was and if it is a skill, how do we develop this, educate ourselves about Becoming successful at this kind of? Half covered this, but maybe you just like to summarize some pointers that people can look for.
Zaid: 41:49
Yeah, something you’re gonna start anyway. I think books is a good place to start. First of all, you just need to have a general kind of and guide into the stock market in general what, and and. Then, once you’ve kind of got that side of it, a lot of those books training books will talk about risk and reward, will talk about psychology we talk about, we take you about, position sizing, and these are all kind of giving you the basics of foundations of what you need. And then then it kind of goes up. The next level up is looking at kind of technical analysis, books on looking at these patterns and and. So that’s a best next step up. And to you, to be fair, you only really need kind of one or two things that you look at. You don’t have to learn all of them. You find something that you think actually I’m gonna nail this and this is the one I’m only gonna be looking at a certain Technic analysis, whether it’s a double top or double bottom or and it kind of pivot points or breakout and from traction patterns, and you just got to kind of nail one or two of them and kind of just become an expert in those, in those, the ones that make the most sense to you, the one that feel like it’s most natural to you, and and that then becomes your edge of what you’re looking for. And then, and once you’ve done that, then kind of look, just looking at charts and and backdating it, so you know a lot of charts now you can kind of go back so you’re not seeing what happens later on. And then you can go step by step. Okay, what would I’ve done here? I think it had gone up and he’s doing the next side long. Oh yeah, it did go up one of this much. And then you can kind of almost test yourself on that and see how you’re getting, and then go into kind of paper trading, because then becomes Bit more real and getting and getting used to Kind of buying, selling, where to put your position size, and and then I think then starting an account with a small account, see, if you’ve got I did a 10,000 pounds to put into it I don’t even open account with 5,000 pounds because you know you’re gonna blow up at some point. At least you’ve got another 5,000 to kind of go. You’d learn that lesson from then. You’ve got another 5,000 pounds to put into it, but Position size really small. And then it gets you used to kind of find iniquity in certain things, so you may not be able to hit your stop and you’ll stop loss every time or hit your edge point every time, because some stocks move very, very quickly and and then you can kind of once you kind of master that. Then you got all these kind of hot keys that you can do where you’re buying. It’s in that trace really quickly and again, depending on you, the type of trader that you want to be, but it’s kind of finding your, your edge. But you can’t do any of that If you don’t know. You know you can have the best edge in the world, but if you’ve got a sloppy risk risk award, you’ve got a stoppy, stop loss, you’re not going to make money, and so that’s kind of you know, it’s put. It’s a little how do you do this? Or watching and that’s why you’re watching on YouTube videos and all this stuff. Yes, it’s good as an idea or as a bit of research, and but you’ve got to find out then. Okay, well, what would I do in that place? And not become emotional about it and sticking to your own rules and is is the key thing. So I think that is the most important thing, first of all, and nailing that. And then it doesn’t matter what what edge you have, because every edge has the opposite edge, if that makes sense. So if you’re looking at someone that goes, okay, well, I’m gonna, I’m gonna trade off, bouncing off some support level. So this stock has never reached more than $15 in the last I don’t know three months. So every time it’s $15. When I’m gonna bank that, it’s gonna bounce off that and I’m gonna short it and it’s gonna come down and I’ll make money. But at some point that stock is going to break $15. And when it does, there is no limit to where it’s gonna go to because it hasn’t hit that mark before. So then the simple way you manage your stop loss okay, well, it hits, it’s coming up to $15. It’s never broken above $15. I’m gonna put my stop loss at $15.50, because if it hits $15.50, there’s nothing stopping it hitting 16 or 17 or 18, because it’s never done that before. So that’s kind of one way of how you manage your, your stop loss, and and and then there’ll be other traders that go okay, well, this is hitting it’s, it’s it’s peak, it’s contracting, and, and I think you know, once it breaks $15, I’m gonna go long and it’s gonna make loads of money. But then if it drops back down to $14, then I know it’s not gonna do it on that time and I’ve only lost that $1 per share. So you’ve got two traders looking for two opposite things and yet both can still make money depending on the outcome of it. So there is no edge. That is correct. That works every time. It’s how you manage. Whether you’ve got it right or not is the key thing.
Dr James: 46:34
Totally. And was it? What was that famous investor called Jesse, jesse, jesse, jesse, jesse, jesse. You’re gonna have to have more Jesse liveable. Yeah, jesse liveable, jesse, liveable, jesse, liveable? He has a quote that goes along the lines of I’ve never met anybody who got rich off trading other people’s suggestions or other people’s calls. The reason that he says that is you can have a brilliant call, you can trade it terribly and make no money. That’s the crazy thing. That’s the crazy paradox. Everybody thinks it’s about picking the right stocks. It’s actually about managing your risk, getting stocks that somewhat do well, then executing your trades extremely well and managing your portfolio. There you go, knowledge bomb, right there, exactly.
Zaid: 47:18
And what that means.
Dr James: 47:18
That takes all of those little components to what I just said are actually a lot of research to flesh out and understand and they’re all concepts in itself and that’s when the work comes in.
Zaid: 47:31
Yeah, and I can even tell you, if I told you right, this stock is at $15, it’s going to go to $17. And you buy it at 15, it doesn’t go straight to 17. It might drop to 1450 and it might go up a little bit and then, as soon as it drops down to kind of 14, you think I don’t believe him. It’s not going to go up to 17. It’s dropped to 14. You sell at a loss and then it shoots up to 17. Because you didn’t have that conviction in your own, in your own view. So therefore you can’t be committed to it. So again, that’s why it’s really important to kind of have your own. You know nothing if you look. Nothing from today’s podcast is it’s find your own edge and be committed to your own edge. Cool, awesome, awesome, awesome. Do you know what I feel?
Dr James: 48:09
that we could just talk about trading all night. Zed Zed. I am looking for more questions on the post in the group. I can’t see any. Was it any more that you had written down?
Zaid: 48:21
Yeah, there was one on the post, there was one on options trading. I don’t do any options trading. The other thing I am looking at, though, is so, for options where people don’t know, is you kind of you go into a contract where you buy or sell a share at a strike price. So if it hits that price, you can then buy it or sell it and you make money. If it doesn’t hit that price, all you’ve lost is the premium to go into that contract. So one of the things that I’m kind of toying with and looking at and I think where options can work quite well is, for example, if you’ve got an account where you’re looking at investing and you’re looking at these top stocks, you think, okay, at some point I want to buy Apple shares. Apple shares at the minute I don’t know if there is a $180 share, I think. I can’t remember exactly roughly that mark, but you think, oh, this is kind of hitting a bit of a peak, I want to buy it at its dip. With options, you can put a put option to sell Apple shares at, say, $165. So you’d make premium on that, but if it doesn’t ever hit $165, you would have to then cover that and buy those Apple shares at $165. But if you’re planning on buying and keeping those Apple shares at $165 anyway, then you kind of made money both ways. Does that make sense? So options trading itself is quite niche and it’s difficult to get your head around sometimes, but for me I think it could be quite a great way to use it if you’re kind of planning to go and buy that share anyway. But you can make money along the way while you’re waiting for it to hit that target, by collecting the premiums of those potential failed strike points on the contract. But again, there’s loads of videos on options trading itself and also but it’s not something that I particularly delve into- I’m just boring steady eddy spot trader personally, and you know what.
Dr James: 50:34
That’s the thing I say boring, but you can be incredibly profitable by trading spot. Again, I feel like it’s one of those things that people associate the fact that it’s more elaborate with the fact that it’s consistently, consistently more profitable, or at least they begin to entwine those two, when it doesn’t necessarily have to be the case. And you know what? Straight up spot trading just buying crypto, buying straight up normal crypto or buying straight up stock or whatever that can be very profitable. If you know what you’re doing. You don’t even have to dabble in this more fancy stuff. But, it’s out there, not something I particularly do either. You’re going to say something else, sid.
Zaid: 51:10
I was just going to say. You know, you can talk to some of the best traders in the world and they would not have a clue what an options trade is, because that’s not their niche. Their niche is this one particular edge, this one particular setup, and they make thousands, if not millions of pounds from this. So they don’t need to know anything about options trading. You know, you don’t want to be a jack of all trades, where you do a bit of this and you do a bit of that and you do a bit of this. You kind of want to kind of focus on one thing and do that, do that well, whether it’s crypto, whether it’s forex, whether it’s equities or anything else. Really, yeah, I think when you try and spread yourself too thin, I think you can cause a lot to learn the more you master it, the more of an edge you have on everyone else.
Dr James: 51:55
Exactly, you understand about it, you know, and that comes through. Just focusing on one thing, and it is the depth to the depth to each asset, is insane. It’s like it’s like you being an orthodontist and saying, actually, I’ll have a crack at all on four. It’s not going to work. You know what I mean. You have to. It’s almost like you have some translatable skills, but you still have to start from the start and build your way up. Start doing single teeth, multiple teeth, bridges, then all on four, something like that. Yeah, I completely agree. Put it in dental terms. If we put it in dental terms, it’s super tangible. Then everyone gets it, you know.
Zaid: 52:27
Yeah, yeah, exactly that’s why I can explain it, Zay.
Dr James: 52:30
it has been brilliant tonight. So many knowledge bonds, so many gems. Anything that you’d like to say to wrap things up?
Zaid: 52:38
No, I think it would come to most things without you know, without over repeating certain points, but yeah, I think it’s, I enjoy it, I enjoy doing it, it works for me. It may not work for everyone, but it’s finding you know what your personality is and finding what it is you would find interesting to be committed to, to doing. And for me it just happens to be day trading and you know there’s loads of different options out there for different folks. So yeah, Cool man.
Dr James: 53:08
Thank you so so much to yourself, say, for giving up your free time. Very kind of you and it isn’t the first time either. We look forward to having you back on the podcast at some point, my friend, absolutely tremendous. We shall speak very, very soon. Thank you, james. Yeah, keep it the good work. Thank you, man. Bye-bye. If you enjoyed this podcast, please hit, follow or subscribe so you can stay up to date with information on new podcasts which are released weekly. Please also feel free to leave a positive review so others can learn about this podcast and benefit from it. I would also encourage any fans of the podcast to sign up to the free Facebook community from which the podcast originated. Please search Dentist who Invest on Facebook and hit join to become part of a community of thousands of other dentists interested in improving their finances, wellbeing and investing knowledge. Looking forward to seeing you on there.