Alex Bustos on day trading and removing emotion from markets

0:18i'd love for you to just kick it off first with your background and trading in the markets and what really got you interested in trading and producing content as well absolutely so i've been trading for about four years and i you know have the story long story short i ended up leaving my corporate job just to go for trading failed went back to work failed and then left failed again went

0:40back to work and then this is my third time and i can just tell you that training is not easy and that's what the show's about that's and that's hard to create content about sharing that it's not easy to be a you know a successful trader but it can be done as long as you consistently work at it and you focus on the process of the profits so i've been doing that and

1:01then and then i became consistent and because i think the show really helped me do that because i'm sharing my journey but also interviewing other successful traders and then hearing them has helped me become consistent as well for sure yeah and that's it's great that you're letting people know that you know you have failed and you failed again and traders often do that and if it was easy

1:21then everyone would be a trader and everyone would quit their job and just be a full-time trader and they'd win all of their trades that they made but it really isn't that easy and so i'm glad that you know you have that story and the fact that you've also turned it into a podcast to share with others i think is really valuable as well because you learn a lot more from

1:40failures than you do from successes and i think that's what helps push you forward right absolutely man absolutely i can't couldn't agree more with that now i was reading into your blog and one of the topics that you'd mentioned was part of your approach was trading like a scientist and i'd love for you to elaborate on what you mean by that absolutely so trading like a scientist

2:02is really getting away from the idea of money right when we're trading anyone who's interested in trading whatever it is crypto in your case they want to make money right they're either chasing it because they want to leave something they hate and that's typically what drives people to the equities market and so because of that we are already attacking

2:22the market in the wrong way right we're already looking about every and we're watching every tick because every tick means we're winning or we're losing or giving back or not taking as much profits and every trade ends up making us frustrated even when we win like because if you win you left too much on the table if you win you know you should have held longer or

2:42if you lose i knew i should have cut it sooner and to get rid of all that emotion but still trade real money it's more of a experimentation like when you come into the and come to trading with the idea of i'm going to experiment i'm going to explore and sometimes you need a downside like when you go into experimentation you should probably you know some people

3:02should paper trade some people should trade real small where they're just risking 20 bucks 30 bucks something like it doesn't matter right it doesn't matter if you win it doesn't matter if you lose okay so that way you're open to just all types of scenarios and you can actually look at the market with more of a unbiased opinion and then with that experimentation you

3:21can say you know what you can be more you can accept the experimentation where there's probably ideas someone's probably listening to this and they're like man there's certain setups i want to try but i don't because i'm scared to lose right i'm scared to do it but if you go with the scientists approach of like okay here's my theory every time i see this setup this

3:39typically happens so i want to set up my risk at this level and here is my plan here's where i want to exit here's my trigger when this happens i'm entering and then you let it pan out and if it doesn't work your theory was wrong what do scientists do they just scrap up that theory throw it away and make a new theory and they keep going like they don't get

3:57bogged down they don't get upset they just they keep pushing forward so that's what it's all about it's just like separating that emotion from the money which is so hard to do especially with twitter nowadays and people just sharing their p l that's all they do is just flexing all day it's it's just it's nonsense so like to get away from that focus on the process over

4:17you know profits yeah i like that alex and i think that it definitely plays a role because a lot of people they i find that they first get interested in the markets either through fomo or you know through fud and they see that the prices are going up of something and they feel like they're missing out and that's why they initially jump in but of course you know the entry point

4:36is the beginning of your theory and if you're jumping in at the top then it's not you know you're not going to have a great risk to reward and i just want to dive in a little bit more on your trading to bring some more context you know i know you're trading in the equities markets and you're mainly trading day trading which is going to be different than a

4:55lot of people that are investing but personally i've been interested in bitcoin markets you know hedged assets as well have you dove into other markets or have you stuck within equity markets and why or why not i've just stuck with equity markets and the reason i've stuck with that is to be honest man it's because it's been taking me so long to find what

5:14works for me and now that i've found what works for me i want to just improve it every day and get better at it because the once you find your niche let's say for you it might be crypto whatever it is once you find your niche then you focus in on it and then you'll start to discover new niches within that niche which is so crazy like you'll think you've discovered you know

5:35what works but then when you start to really hone in on it and take it apart you'll get better entries you'll get better size you'll get you'll get more confident higher rewards higher win percentages and you'll really become like the best at that one setup and so equities i mean for me i finally found what works for me i like a short sale that's my that's my

5:54bread and butter and so when i see my setup i'm going at it and now that i've found that i'm just slowly like growing it and getting bigger and bigger and bigger and right now i don't want to break that i don't i don't want to break that so i try to stay in my right stay in your lane for a little while and then maybe when i have like a decade of experience maybe

6:14maybe i'll start to jump jump into another market because there's something to be said like trading's not easy right trading to think you could just jump into a new market and then take it over and be like i'm gonna get this quickly is naive right and i was like that i was naive and i was very just ignorant to the markets where i just thought hey i have a lot of money

6:33and let me just throw money in the market and i should be fine but no that's the worst thing you could ever do and so i just know now that i've been humbled enough that you know i just know that it's not for me yet but maybe one day so i just like to stay in my lane yeah no that's great advice alex and that sort of reminds me of you know dave portnoy he's been

6:53trading in the stock market and all the people on twitter have been trying to convince him to jump into bitcoin as well and when he finally did you know the next day it went down and his mentality throughout his this summer trading stocks was you know stocks are only going up and when bitcoin goes down one day that's it i'm out right and it continued to go down after he

7:13got out which was good but today it's above where he sold so you know it's about that time frame as well as the entry point so that's super interesting and you know speaking of 2020 you mentioned that you've been a trader for about four years but this year there seems to be a lot more hype around the stock market with the pandemic there's been a lot more

7:34time for people to be following charts and you know some people have been working from home or they have more time to look at the charts so have you been influenced positively or negatively by the pandemic and trading and has it affected your trading it definitely has affected my trading because i the reason i say that is because the market has gotten a huge

7:53influx of traders just tons of new traders and we call them the robin hooders and in the small cap land and i trade big caps now too but just everyone says hey you know with the robin hooders now we have way more volume than we've had in the past and i'm talking where we just had a ticker i think it was hertz hurts htz yesterday you look it up it had a billion

8:16shares traded yesterday i was just like this is this is madness and every day it's a norm now if you're just coming to trading you probably think this is normal which it is for you where you see stocks going up two three four hundred percent every day whereas a year ago we might get one of those once a week maybe once every three weeks and we're like yeah this is great so it

8:39has affected your trading where you need to be aware of hey the volume's different now so if you still trade the same way you did then back a year ago then you're going to take a lot of losses or at least a lot of paper cuts or higher you know however you manage your risk until you learn and i actually went through a period of two months where i just broke even

8:59and i and i actually lost like a hundred bucks maybe that's break even to me just small loss or like a small win is breaking to me so like it's it was frustrating right and it's those those happen whenever i didn't recognize like hey man like maybe i should take a step back and see that maybe the setup still works but with the new influx of traders and

9:19the more volume that means there's more market makers or algos we're seeing a lot of algos out there where they're just squeezing so many traders and when they squeeze all these traders it's great it's just making the pattern evolve where now it still works but you have to wait for certain key areas to actually trigger before you take your execution

9:38because they understand for some reason i guess these computers are smart where they understand where we all are at the beginning like how the pattern used to work and now it's evolved and so they just squeeze all the newbies which they even squeeze it the people who've been on it for a while like i know a lot of traders who have been squeezed a lot in patterns

9:55that work like 99 like they just work often right and now they're not working as often so we just got to adapt so definitely yeah that's really interesting that you say that alex because i understand there is irrationality in the markets there's dumb money jumping in there's people shoot buying off fomo and selling off you know fear and the mark

10:17so what i find interesting as as a day trader you know you're in the weeds you're looking at low time frame charts and you can see the liquidity is different there's more volume but when you step back you know you look at the forest from an aerial view you can see that the stock market's in a very different place than it was last year and when you so

10:37my question to you is as a day trader it potentially macro economic changes in the in the stock market could make big volatile swings or you know trends could be shifting towards the downtrend and if you're in the weeds it may be hard to pay attention to notice where the stock market might be heading you know in the coming months and so as a day trader are you less

11:00exposed because you're in and out of the market often you know as whereas an investor that sort of puts their stocks in doesn't look at the market and if there happens to be an impending retracement or crash then maybe you have less exposure to that how do you see that moving forward so i personally think so i swing trade too and my swing trades are

11:20sometimes they could be two weeks but it's not investing right investing you put something in you're in for years right that's your goal so i can tell you from day trading and swing training from day trading i don't have any concern and the reason i don't have any concerns because i'm literally like the way i decide if i'm gonna trade something i look at the big picture

11:39first the yearly maybe two three years then i look at the daily the weekly and the monthly to kind of give an idea of what the stock is telling me what is how does it act right every stock to me has its own kind of personality right they all trade a little differently right and so i kind of get that big picture then i zoom in slower over time like four hour one hour 60

11:59minutes 30 minutes 15 10 5 1. and after i do all that i kind of have a plan in mind because i start to see things i'm seeing where the big money is i'm seeing where the dumb money is it is i'm seeing what is the obvious triggers and then i make my plan so and i'm usually in and i think my average is about an hour an hour is my average like where

12:21i'll be in and out the market within an hour the first first hour to two hours of the market and then i'm done now with swing trading so therefore i don't really have a concern with the with what the overall market is doing per se now but swing trading though i all i can say is i have a plan right that's what's important i have a plan when i enter my swing trade like when i

12:42buy southwest when i think i bought it like twenty dollars like when i bought southwest i just said you know what here's my buy price i know where i'm gonna get out at and i know where i want to take profits depending on the chart and then in this case for the swing trade i'm looking at the daily the monthly and the weekly right i really want to see where this thing can go in

13:00the next week or two and then from there i determine my profit target based off resistance right some heavy consolidation area that had a lot of sellers back in the day i just don't want to assume it's going to break and go higher so that's where i want to at least sell some so i'll have targets and then i'll have a trailing stop so that way if the market does just crap the bed

13:20right if it just craps the bed out of nowhere and i'm in some swing positions which i won't even watch my swings like i'll put my swing in and then i'll grant i'll watch it like once a day like i'll just look at it at the end of the day really at the end of the day because you're not really supposed to touch them so and as a day trader you're always touching stocks so like

13:39it's really hard if you watch it so you just want to make sure you avoid it so i avoid watching it and there therefore i have stop losses right that's important because if it does all of a sudden you have a hard pull and it affects the other the other stocks that i'm in well at least i'm protected at least i probably hopefully have taken profits along the

13:57way up if i haven't well i've already accounted for the loss before i entered so therefore it should be okay but i can't give you an answer in terms of investors because i don't really invest in terms of that kind of way definitely and i think a lot of people that are just jumping into robin hood you know they're either thinking that they're investing or

14:16they're doing swing trading but not as often they're in and out every day right so i guess my question to you as you produce a lot of content you know you've been advising people that are doing this sort of thing for a while now is to those robin hood traders that are doing swing trading and you know quasi investing with what extra funds they have what advice

14:38do you have for them is it just you know be a scientist have a plan i would say the chart is your friend right you need to like if you're if you're someone who's just getting into trading then i highly suggest you at least learn like watch the market like watch the market every day and if you're swinging just watch the end of the day every day if you're busy at work

15:02just literally pull up the chart and you have to watch it the whole day just watch it once and then watch it again the next day and do that every day and you'll start to pick up patterns you'll start to see what happens when hit certain areas and develop little theories especially when you're new learn with support and learn what resistance is if you can learn those two things and

15:22get good at them eventually that's all you really need to make a plan actually it's that's the majority of what you need to actually make a plan because you want to buy near a support level and you want to sell your resistance level and if you're short seller you know you want to sell high buy low vice versa so that's what i would sell everyone like

15:42check out there's so many books out there's some great authors who create who write books on you know volume price analysis because volume is that's another book it's a really good book it's it's a really huge factor in terms of is it a right signal like something might be bouncing off support but if it has no volume then it could just be it could be fake

16:01bounce it could be a fake support but if there's massive volume following a move well then there's good indication that there's big money there that you know wall street or someone who knows something we don't know right or there's some news coming so people are getting prepared like that's important and if you're swinging find out when earnings comes

16:19out like don't just don't just swing and then not know what's coming right like you would at least have an idea because you don't want to put a position on and then the earnest comes out the next day and you have no clue right and yeah because if you make money on that you learn the wrong lesson and if you lose money on that you know you learn the right lesson

16:41because you want to at least know before you get in and so there's there's a plan of buying before earnings because typically not all the time it depends on the chart you know look at the chart the chart's your friend but typically you know you'll see stocks rising into earnings and then they sell when earnings comes out because we're human beings we're disappointed

17:01all the time we i don't care if when every time apple comes up with news we have people who are like oh that wasn't as good as i thought it was going to be or people are like man that's nothing that's crap why do they do that and then no one's really truly happy so there's always some kind of not always i can't say always but there's typically there's a saying of

17:19rise into earnings and sell once they release but then yes it could bounce and so forth it's a quick move but just know your charts your friend support resistance make sure you understand volume and then start to be a scientist create your own plans see if they work if they don't no big deal trading is free now for everyone it's it's it's so dumb it's trading so it's free

17:39which is great and so trade small just trade one share till you get consistency and then slowly grow that yeah all great points alex amazing and we're running out of time but i know you have a podcast and you have training tutorials and sessions what's the best way for the viewers to follow along with your work thanks man so it's be the trader i'm

18:03on all podcast platforms as well as youtube just be the trader or be the story and it's just letter b and it's it's all free like i literally don't ever plan to do a service like i don't do any service i don't charge anything it's all like just stuff i want to give back because the long story short so i can wrap this up for you guys the reason i created this truly and

18:23hartley is to share with my future you know generations so they can see whether i fail 10 years from now or make it you just keep working hard you keep pushing and you never know where you can go like you just never know so i wish everyone out there luck on your own trading and you can find me on all platforms twitter as well and social medias be the trader or be the

18:42story sorry about that be the story 87. awesome alex i will leave the links in the description box below as well for the viewers thanks so much for the time it's been a pleasure speaking with you and all the best in the markets moving forward thanks man you too man