Here is the transcript page for episode #18.
For complete show information, please visit the full episode page #18 – Will Maz Part 2 – Trader Interview.
Transcripts may contain a few typos, and can be difficult to catch minor errors sometimes.
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Will: Yeah. Okay. So do you have an ideal market environment for your trading methodology?
Rick Mazur: For stocks, no ideal market environment for futures because I’m day trading them. To make money day trading, you need movement. Okay. You don’t want too much movement. Too much movement causes more volatility. And again, I’m separating this because you also asked me about volatility. So with futures, if you’re day trading futures and you’re flat, you want some volatility at the end of the day.
Rick Mazur: You don’t want crazy volatility. Now, some people will disagree with me. Some people will say I want the volatility because I can make 50, a hundred points on a trade. The reality is that most people are not holding a trade that long and would be out anyway. And even if you were to hold the trade that long, it’s jittery if there’s too much volatility.
Rick Mazur: It is going up and down with huge candles or bars or whatever you’re looking at on your chart. The problem with that is that again, just like with not using the stops on options. If I get into a trade in futures, I can only risk so much. So if there’s too much volatility, I get shaken out of the trade and potentially lose on it.
Rick Mazur: But yet it still does exactly what I thought. So you want enough volatility to move enough so that you can make your money, but you don’t want too much volatility in futures. So I want the market to move. I don’t want it to be dead in futures, but I don’t want it to be crazy either in a perfect world for my perfect scenario intra day.
Rick Mazur: Now with options, I want more volatility typically because I want to put my trades on when there’s volitile times, because I can collect more money when I’m selling the time premium, which we’re going to get into when we teach you the setups in the trades. And I want to take them off when volatility goes down because it’s cheaper and I can sell them back for a cheaper price, meaning I can make more of a profit quicker. So in a perfect world, I would put a trade on, volatility would be high, and then volatility would come in a little bit, maybe two or three or four days later. And then the market just sits there and does nothing.
Rick Mazur: That’s in a perfect world. And you can make your profit that might take you 10 or 15 or 20 days, you can make it three days, sometimes. That doesn’t happen all the time and that’s not realistic, and it’s not the reality of trading. Could there be weeks and months that happens? Yes. I had that last year where certain times I would put a trade on and make my profit in a day or two.
Rick Mazur: Is that a holding it for 10, 20 days? Sometimes you have to hold it longer than your 10 or 20 days if you have time available on it. There’s different ideal markets, depending on somebody’s methodology. And again, that’s where you have to have a system, and you have to have a method, and it goes back to your question about rules. Everybody’s got different rules. So there might be somebody you might ask that question to other than me, who might give you a completely different answer and they might be right, for their own system and their own method, I’ve looked at it every which way, but Tuesday, and the way I’m more comfortable with trading is that way.
Rick Mazur: But again, there’s other people that do different things and there’s people who trade the news. For example, they only enter during news trades because they think they could pick a direction. On that point, they want volatility for futures, because let’s say crude oil news comes out and they think the crude oil is going up and the news comes.
Rick Mazur: They’re long, they’re buying the futures and they want that volatility. They don’t care. They’ll ride it out through the bumps, and then once that thing takes off, it might go up dollar $2, $3, $4 in a matter of a few minutes. And they love that. To me, it’s just too erratic. It’s not controllable.
Rick Mazur: You have to have too big of a stop during news like that. So that’s why for futures, I don’t like that crazy volatility. And again, some of this might not make sense to you. People who are listening to this maybe who have been trading a little bit longer, it might make a little more sense too, but it will make sense to you once I start showing you the options positions, and you start seeing how the money’s made, you’ll see what I’m talking about. And if You’re selling or buying a butterfly position, you don’t want to do that in a low volatility and then to have volatility spike up.
Rick Mazur: So you have to choose when you put your trades on, based on certain criteria. I do want to sell it during high volatility and then have a volatility come in after I’m in it. And if it doesn’t happen quick enough, then you have to just stay in the trade longer and manage it. So that’s the way I do it. But again, somebody else might have a system that does it completely differently, and that might work as well.
Rick Mazur: Trading is very how do I say this? Either you make money or you don’t, and I’m not saying every trader every day, I’m saying over the course of time, either your system or your methods make money or they don’t, it’s very binary. You can’t say I’m a great trader and you go for five years and you’re losing money every year.
Rick Mazur: Either you have a system that works over time. Does it mean you can’t lose on a trade? Doesn’t mean you can’t lose in a given week or even a given month, but over the course of every, I would say of a quarter or a year, you certainly should be making money relatively consistently. Now there are traders, they’ll lose there’s traders.
Rick Mazur: They’ll lose a little bit of money, 10 months out of the year. And they make all their money in two months. To me, I can’t live like that because to me then I got to go to sleep and I’m down every day. And and then it’s not consistent. It’s not consistent. And that’s what I try to tell people.
Rick Mazur: If you’re supporting a family and you have bills to pay and you have a mortgage to pay and you have a car payments to pay and school, to pay for maybe for your kids, you don’t want to be going to sleep every night that 80% of the time being down, even if with relative certainty you knew that you’re going to have four or five huge days now some people could weather that some people can handle that I would submit to you that most traders cannot.
Rick Mazur: In fact, I know for a fact, most traders can not, they would quit by them. Or they just keep going and just continue to lose a bunch of money. But most people can’t do that. You want to have a methodology that will let you sleep at night.
Will: You want to go to bed knowing that you made money and you’re not down and then going out for six months?
Rick Mazur: Yeah. And again, not every day, there was going to be days, especially with options. If you’re selling time premium, and guys out there that sell time premium know how it goes, you put your trade on but you’re not collecting a lot of money in the beginning. You start collecting your money as the trade goes on. The only way you can collect money quicker is the volatility goes in your favor right away which again, it doesn’t always happen. So you’re collecting more money as the trade goes further, it’s called theta decay, time decay. You’re getting paid for time decay and the time decay gets bigger and bigger the longer you’re in the trade. So in the beginning, you may have a day where you get in and yeah, the market just continues to not do what you want it to do.
Rick Mazur: And you may be down. You may be down for 2, 3, 4 days on that trade. If it doesn’t go perfectly. But it usually will then come back. But again, you have to understand that because you have to understand that’s part of your system and that’s just part of collecting timeframe. You, but yeah, you don’t want to be going to bed every night and your flat at the end of the day, meaning, you don’t have any positions on.
Rick Mazur: And every day it’s I lost $300. The next day I lost $500. The next day I lost a hundred dollars. The next day I lost $50. Now I’m down $800. And then on Friday I make 1500., there are systems like that. There are, but for me,
Will: even at that point, you’re not even
Rick Mazur: making money. Yeah, the numbers I meant to give you were you’d be down a total over the four days of maybe a grand and then you make 1500 on Friday.
Rick Mazur: So yeah, you make 500, you average a hundred dollars a day, even with your four losing. But to me, that’s a stomach ache. To me, could you lose a couple of days in a row? Sure. Could you lose, win, lose, win at a real choppy situation for three or four days? Sure. But your methodology overall should be that, you’re collecting money given the time period that you’re trading.
Rick Mazur: And again, with futures, it’s more smaller because you’re always flat at the end of the day. You don’t have any positions I’m going overnight with options. That window is a little bit wider. Meaning you could be down 3, 4, 5 days, six days in options, but then you might make all your money back, which is different than futures.
Rick Mazur: You might make a lot of money in three or four days of volatility goes your way. And that’s more common in options and you have to weather that more because you’re sitting in the trade longer. There’s people who buy stocks and they’ll sit for two years and there’ll be down money. And they’ll just say I didn’t lose until i sell.
Rick Mazur: You know what? I got news for people who were in it, Netflix who bought it 600. It’s not coming back. I don’t think, and not so much. We’d have to look at the turn and Disney’s got different issues, but Disney is even today they’re starting to correct some of the issues that, caused the problems.
Will: Because Disney stock right now is at 118. And just and just a month ago, it hasn’t been done a lot, but just it’s down like $70 and it hasn’t even gone up in the past. I’m looking at it right now. Like it, in the last six months it’s been down 30%.
Rick Mazur: lot of them are like that. There, there are several companies, especially that are like that.
Rick Mazur: And I believe Disney’s got somewhat of a floor. Disney went down, I think to 70, some dollars during COVID. I actually bought some, at the low of Watsonville, like $79 or whatever, but I sold it. I didn’t hold it. It went all the way up to one, whatever you said, the high was 1 70, 180, whatever. It was 180.
Rick Mazur: I got out at one 20 or something like that or whatever. And it gives, it was a good profit. It was like, 40, 50% in a couple of months. Could I have held on for longer? Of course. Should I have held half my position? I just didn’t play it. Did I make money? Yeah. But with Disney though, Disney has a lot of properties. They have a lot of assets. They have a lot of people like Disney, when you have children, you want your kids to go to Disney. They’re doing some funky stuff, that, there’s been in the news lately and everything, but they’re already trying to correct that because they’re seeing the backlash.
Rick Mazur: Hopefully they’ll get it right. But ultimately they’ve got billions and billions of dollars invested in their properties and things and families, I think, want to go. They don’t want to cut disney off or do whatever but they need a reason to stay and they will probably, so will Disney go back down to 80, $70?
Rick Mazur: I don’t think so. could it go down a little bit more another. 10, 20 bucks maybe. Yeah. But I think ultimately that stock probably at some point does make it back up. Maybe, I think over time it does make it over 180 again, but that might be years coming, but if you buy it a hundred, and, you’re trying to get 10, 15% or 8% a year on the stock, you don’t need it to go up.
Rick Mazur: $70 is like a 70% return if you buy it, if you can pick it up at a hundred. So even if you had to hold it for five years to make seventy percent, that’s not horrible. If you had your money to your question about the ETF. If you had your money in a S&P index ETF, those have returned about eight and a half percent.
Rick Mazur: You also get dividends that are reinvested in there. Those have returned about eight and a half percent historically over time. Over the last several decades, so eight and a half percent. So if you can get 15 on Disney over seven years or whatever, know that’s not bad, but again, that goes to picking the right stocks and being able to do that and having the wherewithal to hold them and stuff like that.
Will: Okay. So do you prefer, trading commodities using futures, contracts or options?
Rick Mazur: I prefer to trade futures contracts with commodities because with options. Typically commodities will move in big increments. They’re more of, they’re more of trending instruments. In other words, if you’re trading the S and P that’s a us United States index based off of, the S and P 500 is based off of 500 stocks.
Rick Mazur: It trades worldwide. There are people around the world that will trade it, but it’s not a worldwide thing like gold, which is a commodity or crude oil, which is a commodity. Those tend to trend in big gaps based on news and based on what’s going on around the world. So if I’m putting on an options position, and again, I’m saying this again, just to clarify to people because I don’t buy options typically .
Rick Mazur: I typically sell time premium. I’m not playing them directionally. I don’t want big gaps or big moves. Like you can come in and gold will be up by the time you wake up in the morning, gold will be up $30 or $20 sometimes. And by that time that’s before the market opens. So if you have an options position on, in crude oil, for example, goes up $5 overnight.
Rick Mazur: You’re limited to what you can do. There are advanced things, but there are some things you can do. If you have an options, position nine, you could hedge with futures or you can, you buy options on futures and things like that overnight. But then that means you’ve got to stay up all night or you gotta be able to get alerts and be woken up in the middle of the night.
Rick Mazur: And especially if we have a big position on, and I don’t want to do that. So for commodities, I prefer to trade like gold futures, which I do. I prefer to trade crude oil futures. I don’t trade some of the other commodities because there’s a lot of futures contracts that are just not very liquid, meaning they’re not traded a lot of contracts and that can pose problems if you’re in trade.
Rick Mazur: There’s things like lumber futures, there’s things like soybean futures. There’s a lot of different things, but they’re not really traded a lot. And you want to be in futures positions where there’s somewhat of volume. So personally, for me, as far as the commodity side, it’s primarily gold and crude oil.
Rick Mazur: I’ve done some silver but even silver is very thinly traded, meaning it’s not very liquid. And again, that can cause big issues for day traders sometimes. Commodities would be the answer and futures for commodities would be the answer to that question for me.
Will: All right.
Will: Yeah. So now I’ve heard about this thing. It’s called a algo trading. I think it’s called. Can you explain that to me? Because to be honest, like it just doesn’t make any sense, like what does algo stand for and stuff like that.
Rick Mazur: Algo trading can also be called it’s really short for automated trading or algorithmic trading.
Rick Mazur: Some people call it black box trading, or they just use the short-term algo trading. Basically all these things mean the same thing, black box trading, black boxes, basically a computer automated trading is automated by a computer. So it basically uses a computer program that will follow a defined set of instructions, which is called an algorithm to place a trade.
Rick Mazur: The trades in theory, and these are mostly used by high frequency traders. They call them HFT’s the trades in theory, can generate profits at a speed, or a frequency that’s impossible for a human trader to replicate, or very hard for a human trader to replicate. Now, the thing to remember about algo trading is, like in the definition of that I described, it uses a computer program that follows a defined set of instructions.
Rick Mazur: What does that mean? That means a human has to program, through code those defined set of instructions. So the algo is only as good as the methodology. In other words, the human is programming that code based off of setup criteria, which we talked about earlier based off of some sort of methodology that they believe based on certain triggers, they’re gonna make money.
Rick Mazur: There’s also bots. Okay. But there’s algo tradings that use bots to pick up the news. So they’ll scan like Twitter, for example, and they’ll scan Twitter for something like, just for example, Elon Musk, buys Twitter and they’ll put multiple keywords in and if any one of those keywords are triggered, they automatically will buy the stock.
Rick Mazur: Or they’ll buy an option on the stock or whatever. And that’s what you’re seeing now. You’re seeing the speed of the market changing because of the HFT’s and the algos. But ultimately if it’s not a bot based off of some sort of news or social media feed, it’s programmed off of somebody’s methodology, such as mine, that you would then program into a computer to do the same thing.
Rick Mazur: The problem I have with that, first of all, most algos don’t work over time. Most of them fail and the ones that do work they’ll work in the moment they’ll even work for up to three, six months, even a year. If you look at most algo returns, over five or 10 years, most of them are down. Some of them will make money.
Rick Mazur: A decent portion will make money, but if you average their returns They might outperform the stock market, even, but 25% returns for the year, which in futures is not great. Now you could say yeah, but it’s a computer doing it. You’re not sitting there spending your time manually trading fine, but those are only the best ones.
Rick Mazur: And there’s tens of thousands of them and investor would have to know which ones to pick that actually work. For me personally. I used to be a programmer and I know how to program it. I’ve I have programmed them unless you’re gonna modify, and that’s what these big companies do.
Rick Mazur: A lot of these big algo companies. Again, they will program based off of the defined set of instructions, but those instructions can change based on what they think the market is doing. So you’ll have literally a team of coders in these big, these huge companies, these hedge funds, these big banks and everything.
Rick Mazur: You’ll have these guys changing the code sometimes daily. So yes, intraday because they have to do it so quickly within milliseconds. They’ll let the computer place the trade, but they’re constantly tweaking their code, which a normal person can’t do because they don’t have the resources to do that.
Rick Mazur: Number one, number two, you got know how to do it or what to do when most people will try to do on the smaller scale is they’ll try to say I got a system here that works for me. I day trade it myself and it works for me. Why do I need to sit here all day? I’ll just program it and then I’ll just go sit on the beach or whatever you like to do golf for game gaming, whatever you’d like to do.
Rick Mazur: That was what the computer take. The trades. Doesn’t work out for most people, most of the time, that way. Unfortunately for me, like I said, I’m mostly trading futures, couple of hours a day, two, three hours a day. If you can’t sit in front of the computer for two or three hours a day. And I know some people can’t because they have jobs and things like that.
Rick Mazur: And it’s for people who have jobs I have a trading community and there’s a lot of different things that people can do. You can actually trade options the way I trade them with a job. So in other words, if you’re going to become a trader and you have a job, you have to pick the methodology and the type of instrument that you’re going to trade based on the amount of time you have.
Rick Mazur: If you don’t have time to trade to sit there and look at the screen, I don’t think you should be going to work and setting an algo based off of your theoretical methodology for futures and just come back and hope you made money. Typically it doesn’t work out for most people good and they’re not happy.
Rick Mazur: Will it work for some people? Of course. There are some people, very small percentage of people, it’ll work for, but most people trying to do that. that is not the path you need to monitor the stuff. And and you need to keep tabs on it better because an algo unless it’s again, programmed and monitored by multiple coders is not going to outperform what a manual trader can do assuming they know what they’re doing. A manual trader can do in a three or four hour time window. It’s not going to happen now at the high-frequency level, if you’re talking about trading thousands of contracts, they’re only making pennies for trade, but they’re doing it so many times in and out.
Rick Mazur: That’s what the high frequency traders are doing. They can do that, but you got to have a lot of money to do that. First of all, you have to have servers that are close to the exchange, meaning you can rent space in the exchanges. And a lot of people think that’s unfair and a lot of people think that should be not, legal and stuff like that, but anybody could do it.
Rick Mazur: What people don’t understand is anybody can do it. You’re not being prohibited because somebody has a secret that you don’t have, what you do need is. In other words, you would have to be able to, first of all, pay for the coding, know the methodology, pay tens of thousands of dollars to lease servers in the exchange.
Rick Mazur: Okay. So you got to have a lot of money to do that. And then some people have a problem with that because they think it gives them an unfair advantage. Again, could you create your own electric car company and compete with Tesla? You personally me? No. Why? Because I don’t have billions of dollars. So does Elon Musk, have an unfair advantage because he was able to do that.
Rick Mazur: And other people are not? Some people unfortunately would think that he does. I would say no, because people don’t look at the big picture. They don’t look at the picture that the guy started with not a whole lot. He had a company,
Will: the guy started with PayPal, and then he made his money from that.
Rick Mazur: Yeah. And then he parlayed that money and he reinvested it and he did the stuff.
Rick Mazur: So , for example, he’s trying to buy Twitter now. There’s a handful of people in the world that can without months and months of trying to go to banks and getting financing and everything like that. And even that would be a very small amount of people. But more than a handful, obviously it would be a decent amount of people could probably do that over months of time of trying to plan that.
Rick Mazur: But there’s a handful of people in the world that could go and raise the amount of money to spend $40 billion on Twitter. You’re talking about a Bezos or an Elon Musk, or maybe the Google guys, there’s a handful of people that could do that and that could raise that kind of money.
Rick Mazur: Now, is that unfair? In my opinion, if you’re asking me, it’s not the way the world works. The way the world works is that there are people that have a lot of money, they also risked a lot to get that money. And in my opinion, they should be compensated for it. Like I would never have risked what Elon Musk risked.
Rick Mazur: I never would’ve done it. Now, so am I going to be mad? Because he has the money. I’m just not that type of a risk taker. So I would not have done that, but he did, he could have lost everything, but it worked out. So should he be rewarded? Why not? The same thing with the high-frequency trading in the algo trading that you mentioned. If there’s people or big companies that have the money to put servers somewhere and they’re going to manage programmers and they’re going to hire 10 or 20 or 30 coders or more, some of them have hundreds of coders and they’re going to pay hundreds of thousands of dollars a month to try to make, I don’t know, 10, 20,000, a hundred thousand a day or whatever.
Rick Mazur: And they’re going to spend that and they can pull it off. Why should it be illegal? The reason why people think it should be illegal is this because they don’t feel they have the same advantage. But what I want to tell people is that they do have the advantage. They’re just not trading the right way.
Rick Mazur: There’s people who think that because of algos, somehow trading has changed and now they don’t have an advantage like they had before and they’re being cheated. And that’s just not, it’s just not reality. And I would argue that point with anybody who wants to come on the show, have comments in the comments section, do whatever. I’d love to have you on the show and we can talk about it, but it’s just not the case. So further, as far as Going to the point of, should it be legal and why people feel that the markets have changed? I believe that again, people are not trading the right way. In other words, what’s happening with the high-frequency traders now, intraday is you’re seeing bigger moves quicker.
Rick Mazur: Those moves are being done by the high frequency traders and they’re stopping people out of their trades. But the point of the matter is if, let’s say for example, the market flies up because of a high frequency trader. It was going up anyway, 10 years ago, five years ago, 15 years ago, it was going up anyway.
Rick Mazur: Was it going up slower? Yes. But would the trader had been stopped out of the trade anyway, yes. So the point is, if you’re short and you get stopped out by an HFT, you should have been long. At the bottom line, you should have been trading in the other direction. And you certainly can. I know that you can, because that’s the way I trade.
Rick Mazur: You need to understand the way the markets work and you need to understand that there’s fake support and resistance that’s created intraday. There’s games that are played during the day. And when I say games, does that mean it’s unfair? No, it’s just, you have to understand how to read a chart and you have to understand how to trade.
Rick Mazur: So if you’re getting stopped out what will happen is people would get into trade years ago. And because there was no HFT’s, it would take, let’s say maybe five minutes to stop them out. 10 minutes to stop them out before it hit their hard stop. In that time, a trader would start getting uncomfortable.
Rick Mazur: And then the trader would eventually cut their losses and maybe not take a full stop-out. They would maybe lose a quarter of their stop or half of their stock and get out. And they wouldn’t feel that bad about it. With the HFCs what’s happening is they’re getting stuck out so quick. They don’t have a time to change their mind.
Rick Mazur: However, I would say that typically, when you put a trade on, you have a stop for a reason, your stop is that you think that the market could wiggle around a certain amount without stopping you out.. Okay. So you can’t just jump out in the middle unless you see some sort of a reversal signal go on or anything like that, which is possible.
Rick Mazur: But in most cases, that’s not the case. In most cases, people just get scared and they’re underwater on the trade, meaning they’re down intra trade PNL. And then if it gets back to even they just get out and then it still goes their way and they didn’t make any money, but they were happy that they didn’t take a loss because they were feeling unhappy with the position HFT
Rick Mazur: doesn’t give you that chance because you’ve just stopped out. People get mad by that. But you weren’t going to make any money. Anyway, most of the time, at the best case scenario, you were going to go on that break even cause that’s the human emotion of what happens and anybody who’s been trading and not making money knows what’s happened to them, especially if you’re new and the other traders are going to lose a little bit and most people are going to take a full stop anyway, it’s just going to take them longer to get there. So it’s just a matter of understanding how to trade in the current environment the right way. And honestly, with the HFT’s, you can make profits quicker. In other words, if you’re trading the same way they are, but you’re a human, which you can absolutely do.
Rick Mazur: If you know where the volume is going to come in and beforehand, if you understand the market, you conversely make your money quicker and then we’ll go further. Your trades will go further because of the HFT’s. So some traders will say that HFT’s are the greatest thing in the world. The problem is which you hear online mostly is aw
Rick Mazur: They should be illegal. you know why because 95% of traders lose. So 95% of the people writing those articles are going to have an opinion that they should be able to. But again, 90% of people who start businesses lose, it’s not just trading. 80, 90% of people who are going to open a restaurant in five years, they’re out of business.
Rick Mazur: So it’s not just trading is what I’m saying. And those people will complain. They’ll complain. COVID happened or this happened, and I didn’t have a chance. And if I had more money, I could make more, you know what there’s people who own restaurants and yeah, they took a big hit during COVID they’re still in business.
Rick Mazur: Why they’re managing their business properly. They kept reserves in the bank. They did different things that caused them to make the money. Yeah, I, do not believe that it should be illegal currently the way the market is right now. I don’t care about penny moves. I’m not sitting there scalping for ticks.
Rick Mazur: So I don’t care if a, if an HFC makes money a few ticks there, as long as I’m making my money, it doesn’t matter. So like I said, other people might have different opinions, but I personally do not think the way the current HFT environment is it should be illegal. People will disagree with me and that’s okay.
Rick Mazur: But hopefully that answered your question.
Will: Yeah. How do you find a trade and like what timeframe do you use for finding them?
Rick Mazur: Futures I trade off a very small timeframe. It’s a three minute chart. You could do a five minute chart to in my opinion, your timeframe depends on your skill knowledge.
Rick Mazur: Okay. What does that mean? You can have a trader that kind of knows the markets decently, they can make money, but they can’t be quite as accurate as another trader. The lower you go in timeframe, the more noise you get, meaning there’s more ups and downs that don’t mean anything before an actual real move is made, like where you can actually make a decent amount of money off of it.
Rick Mazur: There are people that trade when I say a three minute or a five minute chart, what that means is every bar that closes is a three or five minute bar. So whatever price moves in three minutes, that creates a bar and then the next bar forms. Now those are called minute bars. You can do 15 minute bars.
Rick Mazur: You’re can do 30 minute bars. You can do one minute bars. When you get lower than a minute, you start getting into things like tick charts and range charts. And what that is it’s essentially a bar within a bar it’s a bar that closes multiple times within a minute and you can go even smaller than that.
Rick Mazur: There are people that trade those. I have no idea why, but more power to them if it works for them, that’s fine. I don’t think it works for a lot of people only because it requires you to be able to navigate through the noise in the market and the little price movements in the market that don’t mean anything. Conversely, if you go to a larger timeframe, when you have a bar that closes every 15 or 30 minutes, what you’re going to have is you’re going to have support and resistance at further away points.
Rick Mazur: What does that mean? That means that in order for you to be wrong, you’re going to have to give it more of a move. What does that mean? That means you’re going to have to trade with a bigger stop and risk more money per trade. The reason that doesn’t work very well for day traders is because
Rick Mazur: let’s say for example, I’m trading crude oil, and I’m trading one contract I’m risking $200 on a trade. Okay. on a three-minute chart. If I take that same trade based on the technicals on a 15 or a 30 minute chart. Cause by the way, this is another misconception.
Rick Mazur: If you know how to trade, you can trade. It doesn’t matter what timeframe you’re trading at. People will say three minute chart works better for me. Or 15 minute chart works better for me. The only reason why it’s different is because of the amount of money you have to risk. But as far as your methodology and your entry rules, the same thing should work on a daily chart.
Rick Mazur: Theoretically, that works on a three-minute chart. However, if you’re going to trade on a 15 or 30 minute chart, you’re going to have to risk more. You’re going to have to risk on that same crude oil entry with one contract, you’re going to have to risk 600 or 800 or a thousand dollars before, you’re wrong.
Rick Mazur: And that’s where people fail to, they try to trade on larger timeframes, but they use too small of stops.
Rick Mazur: So I don’t recommend trading a large timeframe for an intraday day trader for that time. Now, if you’re talking about options where I am trading and holding overnight and sometimes holding trades for days and weeks I trade off of a daily chart. That’s the timeframe I use. I basically will look at intraday, but I’m not really trading Based on exact entry, because with options, it can move a decent amount.
Rick Mazur: Like I could be in an options trade and sell time premium and the S and P could move 50 points, which is a huge move in one day and I can still be fine on my trade, especially if it’s early in the trade. So it just depends. How do I find trades? The trades are based on a whole methodology. That again, we’re going to get into, if we, if I teach you the options, what you look for with options when you’re selling time premium, it doesn’t really matter so much when you get in, it matters what happens after you get in? So some level it does, you can give yourself a little bit better of a chance so that you can make your profit quicker, or you have a little bit less of a chance to lose if you can time it more perfectly, but with options, that’s the way I trade them. It’s not that crucial.
Rick Mazur: But in other words, I can put a trade on it nine in the morning, or I can put the same trade on at two in the afternoon, even if it moves big, it might not matter that much. I just might mean I have to adjust the trade quicker or something like that. With futures, directionally trading. You have to be deadly accurate because you’re talking about again, $200.
Rick Mazur: You’re talking about crude oil is $10 a penny. Every time crude oil is one penny it’s $10 you could lose per contract. So if it moves 20 pennies, which you could sneeze and crew can move 10 or 15 pennies, it’s that you’re risking $200 per contract. You have five contracts and it’s a thousand dollars.
Rick Mazur: You need to be deadly accurate with your intraday trades. And again, that’s all based on entry criteria off of specific rules like we talked about the rules and everything. And it’s something that for more of an audio type of podcast
Rick Mazur: I’m not gonna be able to show you that unless we can see the charts, which we can do another one if you want.
Rick Mazur: Eventually we’re going to put the video version of this on Spotify as well. But like I said, most people who listen to podcasts are listening while they’re doing like work or while they’re sleeping or while they’re jogging or driving in their car or whatever the case may be.
Rick Mazur: The bulk of people who listen to the podcasts listen that way and they can’t be looking at a screen and looking at charts. I don’t like to mix them that much. I prefer to do a specific video podcast if I want to show people something, on a chart. Because I hate listening to a podcast in my car and they start talking about a chart or something and it’s wait, I don’t even know what you’re talking about. I can’t see it. , and then it’s just frustrating. I don’t want to listen because I’m just like, so anytime you’re like, yeah, I don’t know what’s happening.
Rick Mazur: I get why people do that. They do it because, they don’t want to redo two different things because it takes too much time and you know what, that’s fine. I, again I’m no expert in the field, it’s just the way I prefer to do it.
Will: All right. So going into my last question here what are some charts or indicators that you look at first thing in the morning?
Will: Cause I know, like in the morning, the first thing is like the big deal,
Rick Mazur: And again, I’m going to break this in the futures and options cause it’s two totally different ways of trading. For futures, I’m looking at where the market is, what happened overnight.
Rick Mazur: So I’m looking at the same chart for whatever I’m going to trade, whether it be gold or crude oil or the NASDAQ or the S and P or whatever. And I’m not really looking in the indicators. Indicators are based off of things that happened in the past.
Rick Mazur: They’re not, forward-looking, they’re backward looking. So indicators to me don’t really indicate anything. I don’t use them. That’s not how I trade. There are people that do, they use things like moving average was in Ballinger bands and things like that. And again, I don’t care what anybody uses. If you make money with it and you’re green and you can prove that over the course of a month or a year or multiple years, you can use whatever you want, if it works for you.
Rick Mazur: But I will look at charts to determine where are we at? I employ the three w where are we at? How can we get where we need to go and what needs to happen for that to happen? So I’m looking at a chart overnight and I’m saying, okay, what happened overnight? The market went up 50 points and it came back down.
Rick Mazur: And now it’s only a 20, why? What happened? Usually you can find that out of the news of what happened. Why is that important? If the market went over overnight based off of some sort of news event, like earnings came out on seven major companies and everything was great. Most likely what that means overnight, if it sells off is that people took their profits overnight and that could be algorithms or bots or whatever it is, or, there’s not many real people that are trading overnight.
Rick Mazur: Because compared to the people who trade intraday when the actual cash market is open what does that mean? In that case, that would mean. I’m expecting when the market opens, it’s probably going to go back up. It might not go all the way up to the highs, but I’m expecting it to at least try to go up there.
Rick Mazur: What does that mean? It doesn’t mean I’m going to just buy it the open, because I think it’s going to go up because the reality is it can come down more first. still stop me out and still go my way. But my bias is going to be a little bit like, Hey, this market, shouldn’t go back up there. If I get an entry signal, maybe I’ll put on bigger size may mean I’ll buy more contracts.
Rick Mazur: Maybe I’ll hold the trade longer because I think that there’s more room that it can go as opposed to taking profits quicker. So I’ll look at things like that as far as options, I wanna see what happened if I come in and the market’s down. 20, 30, 40 points because of bad news or Russia invades, whatever, or some foreign country fires, a missile
Rick Mazur: and it’s going to be a bad day. I’m going to look to see in my options positions. Where am I at number one on the positions I have on, because I’m going to have to look to see if I’m going to need to adjust them or make moves. And number two, can I put more trades on, why would I want to put more trades on in that case?
Rick Mazur: Because volatility is probably going to be higher and I can make more money when the volatility is higher, because I can collect more time premium. So if the market’s up big, because of some reason, most likely volatility is going to come in and I’m looking to potentially exit positions.
Rick Mazur: If I’ve been in a while and I was near my profit potential and you go from there. So I am looking for certain criteria or things on the chart, but they’re all based , off of my rules. I’m not just saying. Okay. News came out five big NASDAQ companies blew out the earnings and they blew them away and outperformed.
Rick Mazur: So when the market opens, I’m just going to hit the buy button and buy. No, I don’t do that. . In fact, I won’t buy right away sometimes because it could be very volatile right at the open. And if it’s a very volatile I can get shaken out of the trade and it can still go my way.
Rick Mazur: So unless I see an absolute picture, perfect trade, which happens sometimes I’ll just look at it to get an analysis to see where we’re at is how I use them. Other people. Again, they use them for different things, but that’s just me. I think I can show you examples of that on a chart as well.
Rick Mazur: If we do another another video one,
Will: all right. Like that pretty much that’s everything.
Rick Mazur: Yeah.
Will: Thanks for letting me come on. I appreciate it. I love learning new things and I love hearing about the market and stuff.
Rick Mazur: What we’re going to do if you want is we’ll we’ll obviously talk about an off the air, but what we’ll do is we’ll get you set up, I’ll explain to like here’s a position I’m putting on an options and this is what I want it to do. And this is what I expect it to do. And if it goes against us, why? And if it goes for us, why, and we’ll get to the point where we can open you up a small account and you can start putting the trades on. Futures will be hard, because it’s just a little bit more harder to learn to get started.
Rick Mazur: And also you have to be there. And like I said, it’s hard to do that if you have a job, but with options, you can set what’s called alerts. So in other words, if when you have to make adjustments to your positions, you can do that in the morning before school, even before the stock market’s open and you can just go to school.
Rick Mazur: And then if the market moves. there is things you can do in other words. And this goes for people who have jobs too, not just younger kids. Obviously I’m helping you with this, somebody else who’s younger listening to this obviously needs your parent involved because you can’t open up your own brokerage account.
Rick Mazur: But this goes is for older people who have jobs too, you’ll learn through what I’m showing will, because there are things that you can do to make it a lot easier for you during the day. Some people will just check their things like at lunch, they’ll bring their laptop or maybe their boss lets them go on the computer for personal websites at lunchtime or whatever it is.
Rick Mazur: There’s things that you can do. It doesn’t take very long. You’re talking about a couple of minutes. You can look and say, okay, all right, this looks good. I’m going to go and finish off the rest of the day or maybe you place one trade on for a hedge. Just if things are looking bad there’s different things you can do based on what type of position you have on.
Rick Mazur: So yeah, we’re we’ll do that if you want. We’ll have you on the regular podcast show and, we could go through your progress. We can say, here’s what he did. He was a traders, what he did, and here’s why he got out and stuff like that.
Rick Mazur: And everybody can learn, you can learn and everybody who’s watching can learn as well. So I look forward to that if you’re interested. All right, cool.
Will: Yeah. I’d love to do that.
Rick Mazur: Cool buddy. I really liked having you on and we’ll get going with the next thing and we’ll keep going with it.
Will: All right. Cool. Thanks for having me.
Rick Mazur: All right, I’ll talk to you.
Will: See you later.
Rick Mazur: So that’s it for today’s show. Let me know what you thought of it. I’d really appreciate it and it will help make these shows better for you. Feedback is a very valuable tool to get better at anything. You can hit me up at Twitter
Rick Mazur: @rickmaz1106, That’s @rickmaz1106 or on Instagram @rickmazur1
Rick Mazur: Use the contact form on the website, https://www.rickmazur.life, and we’ll also have everything in the comment section for each show page. I personally look at all the feedback on the site as often as I can. Finally, if you have anything to contribute or ask or would like to appear on the show through an interview or one of our other segments, you can leave a voicemail at 1-800-590-0174 or by contacting us on any of our socials or use the contact form on the site.
Rick Mazur: We’d love to hear from you. I consider us all a community, a group. Let’s remember in today’s more challenging world, we are people first. We are humans who just want to be treated as such and live in a place where we can all prosper and live well.
Rick Mazur: Bye for now. Until next time. See ya!