FINRA has eliminated the $25,000 Pattern Day Trader (PDT) Rule, one of the biggest changes to day trading regulations in years. What does it mean for investors, active traders, and beginners?
In this episode of The Money Signal: From Main Street to Wall Street, veteran New York Stock Exchange (NYSE) floor broker Peter Tuchman, known worldwide as the Einstein of Wall Street, explains why FINRA eliminated the $25,000 Pattern Day Trader Rule, who benefits from the change, the risks it creates, and why most day traders still lose money.
Peter also explains the difference between a NYSE floor broker, a traditional broker, proprietary traders, and retail day traders. He shares his journey from teletypist to becoming one of the most recognizable faces on Wall Street and discusses what it once cost to own a seat on the New York Stock Exchange.
We also discuss:
- Why only a small percentage of day traders are consistently profitable
- How the GameStop and meme stock era changed investing
- What Reddit investing taught Wall Street
- Will AI tools like ChatGPT and Claude will replace traders
- What today's investors should know before day trading
If you're interested in day trading, investing, the stock market, FINRA regulations, Wall Street, the NYSE, GameStop, meme stocks, AI investing, or personal finance, this episode is for you.
Subscribe for weekly conversations with Wall Street professionals, entrepreneurs, investors, and industry leaders.
🎙 Hosts:
Peter Tuchman -- NYSE Floor Trader, Einstein of Wall Street
Tsvetta Kaleynska — Consumer Data & Social Listening Expert
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Content sponsored by VCX. VCX is the public ticker for private tech, allowing investors of all sizes to now invest in venture capital. Learn more at getvcx.com.
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🎙 Host:
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Peter Tuchman -- NYSE Floor Broker, "Einstein of Wall Street"
📡 About The Money Signal: From Main Street to Wall Street — founders, CEOs, investors, and Wall Street veterans on money, business, and what success actually costs.
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Disclaimer
The content presented on The Money Signal: From Main Street to Wall Street is for informational and entertainment purposes only and does not constitute financial, investment, legal, tax, or other professional advice.
The views expressed by hosts and guests are their own and do not necessarily reflect the views of GLORION Media or its affiliates. Any discussion of companies, securities, markets, or investment strategies is intended solely as commentary and should not be interpreted as a recommendation to buy, sell, or hold any financial instrument.
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SPEAKER_02 (00:00):
The amount of day traders who actually are
successful in making money isliterally no more than 15% on a
good day.
I mean, I've spent 41 years as abroker.
I'm pretty good at it.
Yeah.
I was able to get my seat on thestock exchange in three years.
Wow.
I was in the right place at theright time.
What made a good broker?
Somebody who'd go into thatcrowd and knew everybody and
(00:22):
could read the room.
It's like a good poker player.
You've got to read the room andsee because people didn't tell
you what they had.
If I have three aces, I don'ttell the guy with two aces I've
got three aces.
So if I'm buying stock, I don'ttell someone I have a million to
buy because the landscape wouldchange.
There's no use for humansanymore.
And I say we are more relevantthan ever in a market that where
(00:45):
there's where tweets are comingout, where there are robots that
are reading social media contentand affecting, actually engaging
the stock market.
Day trader uses technicalanalysis, which is a little bit
different.
It's the art of charts, but Istill think that the human
element is way more relevant andpowerful in this marketplace
than AI.
SPEAKER_00 (01:26):
So good to see you.
Yes.
We've been interviewing manyexciting guests.
I've learned so much aboutentrepreneurship and I learned
so much about money signals andhow to be successful.
And in the comments of ourpodcast, a lot of our audience
is actually very interested andintrigued in your life and you.
(01:47):
And uh today I really wanted totalk about what it means to be a
trader.
So literally, like, what does itmean to be a trader?
How do you even become a trader?
Like when you wake up, whathappens?
You come here and what do youdo?
SPEAKER_02 (02:01):
So, okay, great question.
It's a very broad question.
And I think what it means to bea trader has changed over the
years, and as has my job and myrelationship to this building.
And uh, and and and thedifference between being a
trader and being an investor andall of those.
There's just so many differentcomponents to it.
So let's let's break it down,and it should be broken down by
(02:23):
definition.
SPEAKER_01 (02:24):
Yeah.
SPEAKER_02 (02:24):
Okay, so you know, you'll see uh there's and oh,
there's also the word a broker,right?
Because people think, you know,so I'm a floor broker.
What does that mean?
That means I have a seat on theNew York Stock Exchange that
gives me the right to tradestock on the floor of the
exchange.
Not for myself, but forcustomers, right?
Back in 1903, in this incrediblebuilding, they issued 1,300 some
(02:46):
odd seats, right, which gave youthe right to trade stock here on
the New York Stock Exchange.
An incredibly exclusive uh uhopportunity because there was a
limited number of them issuedback in the early part of the
century when they built thisbuilding.
So basically, in order to get aseat, you had to be sponsored by
a firm, first of all, but italso took many, many years.
(03:08):
There was no training for thejob to become a broker, right?
You couldn't go to school tobecome a broker.
You did have to pass a course.
However, right, in order tobecome a broker, the the way the
stock market, the new the thefloor of the New York Stock
Exchange worked was we had amassive support staff to run
this place, right?
And so how did someone become astock broker?
(03:29):
Well, they started at thebottom.
They started like I did as ateletypist, or they started as a
squad, which was a runner, andthey wore a little blue jacket
and they made$47 a week, andthey basically ran back and
forth from the open outcry crowdwith a piece of paper that
probably had the purchase of ahundred thousand shares of uh of
US steel or Xerox or whatever,taking it to the booth because
(03:50):
when you were in an activecrowd, you couldn't leave the
booth.
You had to get the informationthat you had or the purchase of
stock, which showed how manyshares, the price, the time,
what broker you bought it from,all that information, right,
which was ledgered by someone inthe crowd who was a called a
reporter, and he would put allthat information down on a
little computer card and stickit in a machine and create the
(04:13):
ticker tape.
Then that piece of paper wouldgo into the booth, and that
booth, the report was set,called up to the customer,
handed to a teletypist like me,my first job, input into a
teletype machine, and then thatpiece of paper was then handed
to a tube guy.
And the tube guy would take allthe orders that came to him in a
15, 20 minute period of time,roll it up into a little plastic
(04:36):
tube, and send it in a mnemonicair tube up to the 17th floor in
this building, where there werelines of women, the only women
that were in the industry at thetime, and they were inputting
these trades.
I bought, you know, you bought100,000 shares of IBM at$232.
Broker 588 bought from broker uhbroker 588 representing Cowan
(04:59):
and Company bought from broker627 representing Goldman Sachs,
how many shares, the price, thetime, all of that stuff would go
on, right?
And so to become a broker andthe price of a seat, the right
to trade stock, yeah, went upand down based on the economy,
based on the market, based onhow many.
So there was the price of a seatin 1912 was$30,000.
(05:21):
It was$80,000 in 25, 1925, itdropped severely after the crash
of 29.
SPEAKER_01 (05:27):
Yeah.
SPEAKER_02 (05:27):
And when the company went public in the late 90s, it
was worth eight and a halfmillion.
What?
Now, yes.
And so in order to get a seat,you started as a squad and you
worked your way up.
You became, if you were noticedby people who had jobs above
you, they gave you a shot.
So I started as a teletypist,then I became an option clerk, a
(05:48):
retail clerk, an institutionalclerk, and then I got a seat.
It normally took 12 to 15 yearsto get a seat if you were good
because somebody had to die,quit, retire, or get fired in
order for you to get that seatbecause there was a limited
number of seats.
It's kind of like a taximedallion here in the America.
They issued a certain number ofmedallions of how many people
(06:11):
could drive taxis in New Yorkand they limited it so that the
people who were doing it wouldbe able to maintain a certain
price on what it was worth toown a medallion.
It wasn't just unlimited.
Uber came along and changed allthat.
But as a seat on the stockexchange, that also was traded
on a daily basis, right?
The price went up and down everyday based on that.
(06:32):
So that was a floor broker.
Then there was a brokerupstairs, those were the people
on desks that your grandparentsmay call if you had a 401k or
you wanted to invest in thecompany, you would call your
broker at Merrill Lynch orLehman Brothers, and they would
buy stock.
That's a broker.
Now a trader is somethingdifferent.
A trader, floor brokers could bereferred to as traders.
(06:55):
In today's world, since theaccessibility of the market has
changed so much that there's awhole nother tranche of people
who are traders now.
You can become a day trader.
Before COVID, you know, it wasrare to have day traders, right?
Because it was you needed to uhto make an investment, you had
to prove that if I wanted to buystock uh for me or my family or
(07:19):
whatever, I had to prove that uhI was an accredited investor.
What did that mean?
That meant that if I lost allthe money I invested in the
stock market, in order for thecompany that you invested with,
yeah, protected themselves foragainst rules about taking money
from people who couldn't affordit, which caused the crash of
08-09, right, which was apredatory lending crash, that
(07:41):
you had to prove that you werean accredited investor.
What's an accredited investor isif you lost all the money, it
would have no effect on yourstandard of living for five
years.
And only the 1% of the 1% couldever say that.
So that kept investing in thestock market a very exclusive,
not inclusive thing, right?
Only wealthy, wealthy peoplecould invest in the stock
(08:03):
market.
SPEAKER_01 (08:03):
Yeah.
SPEAKER_02 (08:03):
A trader is somebody different.
A trader is somebody who is, bydefinition, is somebody who is
either here on the floor, veryspecially uh with certain
credentials, could day trade themarket on for themselves, but
that was very limited.
But a day trader is someone whosits up on a desk, whether it's
at a prop firm or on his own,and he day traded, you have to
(08:25):
have$25,000 up until recently,they just changed the law, uh uh
in order to day trade the stockmarket.
That's somebody who is buyingand selling stock on a
15-minute, one-hour, two-hour,over-the-day basis, and you're
trying to hit singles anddoubles, trying to make a little
bit of money every day, everyweek, every month, and that
you're profitable at the end ofthe day, the week, the month.
(08:47):
That's a trader.
That changed the landscapedrastically.
What ended up happening was itcreated a bit of a perfect storm
because it happened duringCOVID.
Everybody was sheltered in placeand out of work.
Everybody was getting a stimuluscheck, at least here in America.
And then Reddit opened up, andthen the internet blew up with
all the meme stocks.
(09:08):
It was a perfect storm.
Home with no work, stimuluscheck, Reddit, meme stocks, and
all eyes are on the stockmarket, and everybody is trading
like cowboys and Indians, nodisrespect to cowboys and
Indians, and it was a wild andcrazy time.
I mean, you can go back and seethat GameStop went from bankrupt
to$2 to$20 to$483 and back to$3.
(09:31):
That was what ended uphappening.
Those were traders, people whoare risking their own capital,
kind of in a wild and woollyway, not understanding the
rules.
$25,000 was to prevent a patternday trading, PDT rules, which
meant that you could only, ifyou had$25,000 in your account,
you could day trade.
(09:52):
If you didn't, you could only doone or two trades a week.
After 60 years of that, right,that rule was just changed two
weeks ago, which made it muchmore accessible.
SPEAKER_00 (10:02):
That rule was changed two weeks ago.
SPEAKER_02 (10:04):
Two weeks ago, after 60 years on the books, that you
had to have 25,000 to avoid thepattern day trading rule law.
Wow.
Now anybody can do it.
However, the problem was thatnone of these, it's like as if I
I threw a party and you were notinvited, right?
And then suddenly I invited youto the party, but I didn't tell
you the rules of the party.
(10:24):
Like, you know, you don't have12 shots of tequila, or you
don't do these certain things.
They made the market accessiblewith everyone who had an iPhone
and$100, but there was noeducational component to any of
these free trading apps.
So it was like free reign.
People came in with the conceptof a get rich quick scheme.
(10:46):
Everybody thought that hype andhope and FOMO and all that was a
reason to trade the market.
Yeah.
And 80 or 90% of them, bydefinition, today do not
succeed.
SPEAKER_01 (10:57):
Right?
SPEAKER_02 (10:58):
So it does the the amount of day traders who
actually are successful inmaking money is literally no
more than 15% on a good day.
Wow.
And by definition, a trader issomebody who puts$1,$10, a
million dollars into the marketon a short-term basis, buying
and selling, hoping to hitsingles and doubles to make some
money.
SPEAKER_00 (11:18):
Oh wow.
This is such a that's a lot.
Unlike that.
SPEAKER_02 (11:21):
But that's that's that's the story, and I must say
I told it well.
You did, thank you.
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SPEAKER_02 (12:46):
If I am a customer man and I am paid a commission
for every share I trade, then Iam a broker.
That is the differentiatorbetween a trader and a broker.
A trader trades the market andmakes money for himself.
A broker is a commission broker.
He makes money on how manyshares he trades while making
money for the customer and notfor himself.
(13:07):
I do not share as a broker inthe PL, the profit and loss of
my customers.
I am paid per share on how manyshares I trade for them, but I
do not share in their profit andloss.
So I think that's a good way.
A trader is somebody who tradesfor their own benefit, making
money.
A broker is a commission brokerwho trades for a customer and
(13:29):
not their own money.
SPEAKER_00 (13:31):
Wow.
This is very interesting.
I actually never had someunderstanding to of it, but not
in such depth.
SPEAKER_02 (13:39):
I think that that's a really good breakdown of it.
SPEAKER_00 (13:41):
Now here's another question.
Since you are one of the mostfamous people on the floor of
the New York stuff, doesn't thatput the rest of the brokers and
brokerage firms in anunfavorable position?
Meaning everyone who like allthe companies would want to have
you to go and trade there.
Well, you know.
SPEAKER_02 (14:02):
Being a trader and being a broker doesn't guarantee
that I'm great at it, right?
I mean, I've spent 41 years as abroker.
I'm pretty good at it.
Yeah.
I was able to get my seat on thestock exchange in three years.
Wow.
I was in the right place at theright time.
One guy quit, one guy got fired,one guy retired, and I moved up
(14:24):
the ranks because I was good atwhat I did.
I was quit.
Now, what are the qualities thatmake someone a good broker?
Right?
I was I was quick on my feet.
I was able to pivot.
I was great with numbers, goodwith people, right?
And I had a real focus on themarket.
And I could also thrive in achaotic atmosphere.
Like not as some people need towake up, have a cigarette and a
(14:46):
cup of coffee and read the NewYork Times and get going slowly
before they get to their job.
SPEAKER_01 (14:50):
Yeah.
SPEAKER_02 (14:51):
I hear a bell ring and I'm out of the gate as if I
was, you know, riding in theKentucky Derby, right?
I mean, that's how that's how Ithrive.
I thrive on adrenaline and a bitof chaos, and you know, that's
where I do my best thinking, iswhen it's really noisy and
chattery around me.
But I'm able to, I mean, I couldwalk into an active trading
(15:11):
crowd and millions of shareswere being traded all over the
place.
What made a good broker?
Somebody who'd go into thatcrowd and knew everybody and
could read the room.
It's like a good poker player.
You've got to read the room andsee because people didn't tell
you what they had.
If I I'm representing mycustomer, I don't want other
people who are trying to buy uhbuy stock for this for their
(15:33):
person when I'm trying to buy itfor my person, I don't tell them
what I have.
Or if I have three aces, I don'ttell the guy with two aces I've
got three aces.
So if I'm buying stock, I don'ttell someone I have a million to
buy because the the landscapewould change, right?
So you've got to be quick onyour feet, really good with
numbers, good customer man, andyou've got to be able to read
(15:54):
the room.
SPEAKER_00 (15:54):
Yeah, reading the room.
You mentioned that actually afew times.
And it's interesting that inbrokering, meaning in trading
and investing and working withmoney, you mentioned the
importance of being able to readthe room and actually work with
people.
SPEAKER_01 (16:09):
Yeah.
SPEAKER_00 (16:10):
But I still am unclear like how do you work
with people?
Because what I see, for example,on the floor of the New York
Stock Exchange, like people workwith computers, then they
execute the orders.
Where does that human componentand element come to play?
SPEAKER_02 (16:22):
So before there was all this technology here, we
were just people, right?
And we're still just people.
Yeah, I know we are, but it wasa little bit different because
things were done on paper, youknow, writing things down, and
we interacted more human beings.
Right now it's a human using amachine to go to another
machine.
SPEAKER_01 (16:41):
Okay.
SPEAKER_02 (16:42):
Now I may choose to go, so there are market makers.
That's another person on theother end of the of the highway,
of the information highway.
Uh, okay, but what whatdifferentiates it in a way is
that um so a well go say whatyou asked me again.
SPEAKER_00 (17:00):
What is the human element and the importance of
it?
SPEAKER_02 (17:02):
Okay, fine.
So back in the old days, whatwhat there there was nothing but
humans, there was no electroniccomponent to it.
So I you asked about what did itwhat did I mean by reading the
room?
So I would walk into a crowd.
Now, what made me a good brokerwas that I was I could chat with
Joe about his son playingbaseball, and we may be on the
(17:24):
same side of a trade or we maybe adversaries.
I may talk to Mikey, who's themarket maker, right?
And I may have a relationshipwith Mike, and Mike may
basically will beep me.
If I was in a stock two weeksago and he remembered that I was
a buyer of you know of ShakeShack, and uh he'll call me in
if there's a seller of ShakeShack, I would come in.
It was all about relationships.
(17:44):
I see when the human element wasa lot more prominent on the
stock exchange before anytechnology, the relationships
between the brokers was veryimportant.
Like the market maker would putme up if he knew that I had a
buy order two weeks ago and hejust catches a seller.
Uh, you know, when I wasactively trading in a crowd,
(18:05):
right?
I may, you know, my best friendmay be a seller, and I'm a
buyer.
I'm not telling him what I'vegot.
SPEAKER_01 (18:11):
Yeah.
SPEAKER_02 (18:11):
Right?
I'm gonna work my order becauseit's my fiduciary responsibility
to my customer to get him thebest price.
Now, there's ways around that.
I may sort of, you know, hey,Joey, look, I'm a buyer, you're
a seller, why don't we work outsome kind of a negotiation?
Right now, do we want to justsell 1,000, 2,000 shares or do
we want to put on a biggerprint?
SPEAKER_01 (18:32):
Okay.
Right?
SPEAKER_02 (18:33):
So based on my relationship with the other side
of the trade, you know, eventhough we're on opposite sides,
we may take advantage of ourfriendship and our negotiating
tools to put on a bigger print.
Like, you know, I can say toJoe, so what do you really have?
You know, because I'm biddingfor a thousand shares, but I may
have a million behind it.
And he'll go, you know what?
(18:54):
My guy's interested in puttingon a bigger print.
I'll sell you a hundred thousandshares at 53.
And I'll go back to my guy andI'll say, I can get 100,000, 53.
What do you want to do?
And he'll say, Well, bid him 52and a half for 100,000.
So the on the nonstopnegotiation between buyers and
sellers was fascinating.
(19:15):
Now in an electronic market,it's a lot different.
There's no one to talk to.
So I have to play a little bitof a different game.
I have to show up, bid, and pullit away, right?
Or I may take an offer and pullaway.
I mean, I've got to play adifferent game.
It's harder to read a room whenthe room is filled with
machines, right?
When I had a human being on theother side of it, I'd just say,
(19:36):
hey, well, you know, what areyou doing?
Yeah.
You know, by the way, how's yourwife?
Right?
Or, you know, how the kidsplaying, you know, you would
have that relationship in aroom.
It's like a farmer's market, thesame thing.
Yeah.
Or any kind of a marketplacewhere people are with other
people and your your friendship,your relationship, your negoti
would affect the negotiation.
SPEAKER_00 (19:55):
And now that you mentioned, you know, you pull a
bid out, you put it in, pull itout.
Obviously, this is almost likepoker game in a way, because
you're trying to trick thevirtual room of machines and
other people who are behind thecomputers.
Uh, but that just brings me to areal question, which is well, so
you we're playing poker againsteach other behind the screens.
(20:17):
Yep.
Um, but doesn't that createsomewhat of a rigged uh
environment where it's hard forme to actually understand like
how the stock's gonna go?
SPEAKER_02 (20:28):
Not really, because it's not rigged because we're
all playing that same game.
Everyone who's in in thediscourse of a of a of a stock,
right?
Like, I mean, whether when wewere humans there, we would tell
each other what we were doing,or we would sort of be my guy
says, I don't want anyone toknow what I'm doing.
And so then I would play theroom a little bit differently.
(20:50):
When you're it when it's allelectronic, every the the the
playing field is is levelbecause we're all electronic.
So the only way we cancommunicate is with uh uh make a
bid, pull it back, you know, getaggressive, become passive, all
that kind of stuff.
It's a pull and tug situation.
And the bottom line is it's Ihave no advantage more than
(21:11):
anyone else except how I play mycards, right?
And so uh, you know, and we allhave the same landscape to play
with.
It's how good are you at playingthat game?
SPEAKER_00 (21:21):
Yeah, this is uh great to segue.
SPEAKER_02 (21:23):
You're good poker players and they're bad poker
players.
Why does somebody who's beingdealt a card, no one knows what
that card is, but how couldsomeone can be dealt the same
five cards and win the matchthan the person who doesn't?
There's chance, there's skill,there's all kinds of things that
make someone a good pokerplayer, a good trader, a good uh
(21:44):
broker, right?
All of those things aredifferent.
SPEAKER_00 (21:47):
Are you afraid uh of AI and how AI is coming?
I'll give you an example beforeyou answer the question.
There are multiple apps,hundreds of them at this point,
and also So multiple largelanguage models like say Claude
or ChatGPT that offer for you togo in and create your own mini
(22:08):
computer, which you connect toyour trading account, for
example, and then you cananalyze your stocks, and then
the large language model, likeChatGPT or Claude or whatever
you're using, can tell you, hey,hold this seems like a fake
signal, all stocks going down,fake signal because this news
came up, right?
Because the large languagemodels are reading the news
(22:29):
every second.
Um, or it could say, oh, this isa signal possible, like consider
buying.
Are you afraid that the humanelement and the same poker game
that's humans are technicallyplaying, even though they're on
the other side of the computer,is gonna go away because there
will be the chat GPTs of theworld are gonna be trading
(22:49):
instead of humans?
SPEAKER_02 (22:50):
So obviously there's a concern about it.
I don't think we've seen enoughof the way it's going to affect
us in a way, but at the end ofthe day, I know that there is
this school of thought that, ohmy God, you know, the the Chat
GPTs of the world are gonna comein and be able to analyze
movement in a stock by readingall the information and the
language model and all that kindof stuff.
(23:11):
And it's gonna, you know, it'sgoing to uh outsource human
beings in the game and whatnot.
To be perfectly honest, it mayhave some effect based on
different people's approaches totrading, right?
Some people are gonna be sittingup on a desk and analyzing a
stock in a different way, but inmy opinion, there's still
nothing like the human humanelement that still will exist,
(23:34):
that still exists.
It's not, even though our thevenue may be electronic, uh, the
bottom line is a human beingreading what's going on around
them, right?
Seeing the the tweets and seeingthe way the the price action and
seeing the volume, I think isway more significant.
Like everybody says, you know,right, it must be hard trading
in an electronic market.
(23:55):
Why why don't they just closethat place down?
There's no use for humansanymore.
And I say we are more relevantthan ever in a market that where
there's where tweets are comingout, that where there are robots
that are reading social mediacontent and affecting, actually
engaging the stock market,right?
We as human beings who and andexecuting stock for our
(24:16):
customers, right, um, are waymore relevant than ever before
because the volatility and allof the all of the information
highway that's going into in theold days, you used to have a guy
who would stand at thecourthouse waiting for Pfizer,
uh the court case about Pfizergetting FDA approval on a drug
to wait until the the courtdecided it, and then he would
(24:37):
get on the phone and call hisbroker to say, we just got FDA
approval on that drug by Pfizer,right?
Now the the information goesfrom there to boom to boom in a
in a quarter millisecond, right?
So the whole information highwayhas changed and all that, but I
still think that the human partof this game is still way more
powerful than the AI game,right?
(24:59):
I would imagine that maybethere'll be a mixture of the two
where you have a human being whoavails himself of some of that
Chat GBT information, right?
But a day trader does not basehis things on fundamental
analysis.
ChatGBT may be helpful infundamental analysis, which is
looking at earnings and lookingat guidance and looking at the
new product line on the agenda,stuff like that, right?
(25:22):
Yeah, a human being, though, aday trader uses technical
analysis, which is a little bitdifferent.
It's the art of charts.
Now, can AI read a chart andanalyze it?
Very possibly, but I still thinkthat the human element is way
more relevant and powerful inthis marketplace than AI.
SPEAKER_00 (25:44):
I have a follow-up question to that, which actually
I received because they're gonnabe at 11:30.
Okay, last question then tothat.
Um, technical analysis,fundamental analysis.
A lot of the readers and peoplewho comment on our podcast are
asking, I want to become a daytrader.
SPEAKER_02 (26:00):
Right.
SPEAKER_00 (26:00):
Which one should I be doing?
Technical, fundamental, both.
SPEAKER_02 (26:04):
Yep, there's a simple answer.
Investing when one someone wantsto get into a stock on a for a
long-term investment, you usefundamental analysis.
If I want to allow a fundamentalanalysis is based on the
earnings, the products, people,profitability, uh, the four P's,
right?
People, people, process,profitability, and and and
(26:26):
product, right?
And uh, and that's that's how Imake my long-term decisions for
an investment.
Day trading, you use technicalanalysis, it's totally
different.
All that long-term stuff is notgoing to tell me how that
stock's gonna trade from 8:30 to930, 930 to 1030.
Charts will tell me that.
Exponential moving averages willtell me that, right?
(26:48):
So that short-term movement in achart, right, based on pivot
points and relative strengthindex, identifying support and
resistance, that's technicalanalysis.
That's that's the lifeblood of aday trader.
Fundamental analysis is thelifeblood of an investor.
SPEAKER_00 (27:05):
Got it.
And last question if I wanted tobecome a trader on the floor of
the New York Stock Exchange, howdoes that happen?
Do I send my resume somewhere?
SPEAKER_02 (27:12):
It doesn't happen.
I don't think it really happens.
It's very rare now that somebodyactually uh does that because uh
the whole process is no longerthe way it used to be.
You used to get a job at a firm,you started at the bottom as I
described to you, and you workedyour way up, right?
There's not a lot of new new newseats?
Well, the seats are available.
It's a little bit different now.
(27:32):
You know, you buy the rights totrade the seat.
It's kind of a lease situation.
Uh-huh.
Um, but it's a little bitdifferent.
And so it's not the same way.
So that it's not really going tohappen.
I don't think, unfortunately,that's going to change the way
it's go it was.
In the old days, there was aprocess.
Started at the bottom, workedyour way to the top, became a
broker, like that.
Now the process is different,and there are not that many
(27:54):
opportunities.
If you show up and you have acustomer and you uh can get
sponsored by a firm, you couldprobably get a lease and become
a broker.
But it's a much harder game.
SPEAKER_00 (28:03):
Dream of becoming a broker on the floor of the New
York Stock Exchange may nothappen, but I'll just continue
running the businesses and alsohelping our audience on the
money signal with understandingmoney and nothing.
Thank you guys so much for beingwith us.
Check out our website, moneysignal podcast.com, and stay
tuned for more excitingepisodes.
SPEAKER_02 (28:22):
There you go.
And that's all I gotta say aboutthe
The amount of day traders who actually are
successful in making money isliterally no more than 15% on a
good day.
I mean, I've spent 41 years as abroker.
I'm pretty good at it.
Yeah.
I was able to get my seat on thestock exchange in three years.
Wow.
I was in the right place at theright time.
What made a good broker?
Somebody who'd go into thatcrowd and knew everybody and
(00:22):
could read the room.
It's like a good poker player.
You've got to read the room andsee because people didn't tell
you what they had.
If I have three aces, I don'ttell the guy with two aces I've
got three aces.
So if I'm buying stock, I don'ttell someone I have a million to
buy because the landscape wouldchange.
There's no use for humansanymore.
And I say we are more relevantthan ever in a market that where
(00:45):
there's where tweets are comingout, where there are robots that
are reading social media contentand affecting, actually engaging
the stock market.
Day trader uses technicalanalysis, which is a little bit
different.
It's the art of charts, but Istill think that the human
element is way more relevant andpowerful in this marketplace
than AI.
SPEAKER_00 (01:26):
So good to see you.
Yes.
We've been interviewing manyexciting guests.
I've learned so much aboutentrepreneurship and I learned
so much about money signals andhow to be successful.
And in the comments of ourpodcast, a lot of our audience
is actually very interested andintrigued in your life and you.
(01:47):
And uh today I really wanted totalk about what it means to be a
trader.
So literally, like, what does itmean to be a trader?
How do you even become a trader?
Like when you wake up, whathappens?
You come here and what do youdo?
SPEAKER_02 (02:01):
So, okay, great question.
It's a very broad question.
And I think what it means to bea trader has changed over the
years, and as has my job and myrelationship to this building.
And uh, and and and thedifference between being a
trader and being an investor andall of those.
There's just so many differentcomponents to it.
So let's let's break it down,and it should be broken down by
(02:23):
definition.
SPEAKER_01 (02:24):
Yeah.
SPEAKER_02 (02:24):
Okay, so you know, you'll see uh there's and oh,
there's also the word a broker,right?
Because people think, you know,so I'm a floor broker.
What does that mean?
That means I have a seat on theNew York Stock Exchange that
gives me the right to tradestock on the floor of the
exchange.
Not for myself, but forcustomers, right?
Back in 1903, in this incrediblebuilding, they issued 1,300 some
(02:46):
odd seats, right, which gave youthe right to trade stock here on
the New York Stock Exchange.
An incredibly exclusive uh uhopportunity because there was a
limited number of them issuedback in the early part of the
century when they built thisbuilding.
So basically, in order to get aseat, you had to be sponsored by
a firm, first of all, but italso took many, many years.
(03:08):
There was no training for thejob to become a broker, right?
You couldn't go to school tobecome a broker.
You did have to pass a course.
However, right, in order tobecome a broker, the the way the
stock market, the new the thefloor of the New York Stock
Exchange worked was we had amassive support staff to run
this place, right?
And so how did someone become astock broker?
(03:29):
Well, they started at thebottom.
They started like I did as ateletypist, or they started as a
squad, which was a runner, andthey wore a little blue jacket
and they made$47 a week, andthey basically ran back and
forth from the open outcry crowdwith a piece of paper that
probably had the purchase of ahundred thousand shares of uh of
US steel or Xerox or whatever,taking it to the booth because
(03:50):
when you were in an activecrowd, you couldn't leave the
booth.
You had to get the informationthat you had or the purchase of
stock, which showed how manyshares, the price, the time,
what broker you bought it from,all that information, right,
which was ledgered by someone inthe crowd who was a called a
reporter, and he would put allthat information down on a
little computer card and stickit in a machine and create the
(04:13):
ticker tape.
Then that piece of paper wouldgo into the booth, and that
booth, the report was set,called up to the customer,
handed to a teletypist like me,my first job, input into a
teletype machine, and then thatpiece of paper was then handed
to a tube guy.
And the tube guy would take allthe orders that came to him in a
15, 20 minute period of time,roll it up into a little plastic
(04:36):
tube, and send it in a mnemonicair tube up to the 17th floor in
this building, where there werelines of women, the only women
that were in the industry at thetime, and they were inputting
these trades.
I bought, you know, you bought100,000 shares of IBM at$232.
Broker 588 bought from broker uhbroker 588 representing Cowan
(04:59):
and Company bought from broker627 representing Goldman Sachs,
how many shares, the price, thetime, all of that stuff would go
on, right?
And so to become a broker andthe price of a seat, the right
to trade stock, yeah, went upand down based on the economy,
based on the market, based onhow many.
So there was the price of a seatin 1912 was$30,000.
(05:21):
It was$80,000 in 25, 1925, itdropped severely after the crash
of 29.
SPEAKER_01 (05:27):
Yeah.
SPEAKER_02 (05:27):
And when the company went public in the late 90s, it
was worth eight and a halfmillion.
What?
Now, yes.
And so in order to get a seat,you started as a squad and you
worked your way up.
You became, if you were noticedby people who had jobs above
you, they gave you a shot.
So I started as a teletypist,then I became an option clerk, a
(05:48):
retail clerk, an institutionalclerk, and then I got a seat.
It normally took 12 to 15 yearsto get a seat if you were good
because somebody had to die,quit, retire, or get fired in
order for you to get that seatbecause there was a limited
number of seats.
It's kind of like a taximedallion here in the America.
They issued a certain number ofmedallions of how many people
(06:11):
could drive taxis in New Yorkand they limited it so that the
people who were doing it wouldbe able to maintain a certain
price on what it was worth toown a medallion.
It wasn't just unlimited.
Uber came along and changed allthat.
But as a seat on the stockexchange, that also was traded
on a daily basis, right?
The price went up and down everyday based on that.
(06:32):
So that was a floor broker.
Then there was a brokerupstairs, those were the people
on desks that your grandparentsmay call if you had a 401k or
you wanted to invest in thecompany, you would call your
broker at Merrill Lynch orLehman Brothers, and they would
buy stock.
That's a broker.
Now a trader is somethingdifferent.
A trader, floor brokers could bereferred to as traders.
(06:55):
In today's world, since theaccessibility of the market has
changed so much that there's awhole nother tranche of people
who are traders now.
You can become a day trader.
Before COVID, you know, it wasrare to have day traders, right?
Because it was you needed to uhto make an investment, you had
to prove that if I wanted to buystock uh for me or my family or
(07:19):
whatever, I had to prove that uhI was an accredited investor.
What did that mean?
That meant that if I lost allthe money I invested in the
stock market, in order for thecompany that you invested with,
yeah, protected themselves foragainst rules about taking money
from people who couldn't affordit, which caused the crash of
08-09, right, which was apredatory lending crash, that
(07:41):
you had to prove that you werean accredited investor.
What's an accredited investor isif you lost all the money, it
would have no effect on yourstandard of living for five
years.
And only the 1% of the 1% couldever say that.
So that kept investing in thestock market a very exclusive,
not inclusive thing, right?
Only wealthy, wealthy peoplecould invest in the stock
(08:03):
market.
SPEAKER_01 (08:03):
Yeah.
SPEAKER_02 (08:03):
A trader is somebody different.
A trader is somebody who is, bydefinition, is somebody who is
either here on the floor, veryspecially uh with certain
credentials, could day trade themarket on for themselves, but
that was very limited.
But a day trader is someone whosits up on a desk, whether it's
at a prop firm or on his own,and he day traded, you have to
(08:25):
have$25,000 up until recently,they just changed the law, uh uh
in order to day trade the stockmarket.
That's somebody who is buyingand selling stock on a
15-minute, one-hour, two-hour,over-the-day basis, and you're
trying to hit singles anddoubles, trying to make a little
bit of money every day, everyweek, every month, and that
you're profitable at the end ofthe day, the week, the month.
(08:47):
That's a trader.
That changed the landscapedrastically.
What ended up happening was itcreated a bit of a perfect storm
because it happened duringCOVID.
Everybody was sheltered in placeand out of work.
Everybody was getting a stimuluscheck, at least here in America.
And then Reddit opened up, andthen the internet blew up with
all the meme stocks.
(09:08):
It was a perfect storm.
Home with no work, stimuluscheck, Reddit, meme stocks, and
all eyes are on the stockmarket, and everybody is trading
like cowboys and Indians, nodisrespect to cowboys and
Indians, and it was a wild andcrazy time.
I mean, you can go back and seethat GameStop went from bankrupt
to$2 to$20 to$483 and back to$3.
(09:31):
That was what ended uphappening.
Those were traders, people whoare risking their own capital,
kind of in a wild and woollyway, not understanding the
rules.
$25,000 was to prevent a patternday trading, PDT rules, which
meant that you could only, ifyou had$25,000 in your account,
you could day trade.
(09:52):
If you didn't, you could only doone or two trades a week.
After 60 years of that, right,that rule was just changed two
weeks ago, which made it muchmore accessible.
SPEAKER_00 (10:02):
That rule was changed two weeks ago.
SPEAKER_02 (10:04):
Two weeks ago, after 60 years on the books, that you
had to have 25,000 to avoid thepattern day trading rule law.
Wow.
Now anybody can do it.
However, the problem was thatnone of these, it's like as if I
I threw a party and you were notinvited, right?
And then suddenly I invited youto the party, but I didn't tell
you the rules of the party.
(10:24):
Like, you know, you don't have12 shots of tequila, or you
don't do these certain things.
They made the market accessiblewith everyone who had an iPhone
and$100, but there was noeducational component to any of
these free trading apps.
So it was like free reign.
People came in with the conceptof a get rich quick scheme.
(10:46):
Everybody thought that hype andhope and FOMO and all that was a
reason to trade the market.
Yeah.
And 80 or 90% of them, bydefinition, today do not
succeed.
SPEAKER_01 (10:57):
Right?
SPEAKER_02 (10:58):
So it does the the amount of day traders who
actually are successful inmaking money is literally no
more than 15% on a good day.
Wow.
And by definition, a trader issomebody who puts$1,$10, a
million dollars into the marketon a short-term basis, buying
and selling, hoping to hitsingles and doubles to make some
money.
SPEAKER_00 (11:18):
Oh wow.
This is such a that's a lot.
Unlike that.
SPEAKER_02 (11:21):
But that's that's that's the story, and I must say
I told it well.
You did, thank you.
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SPEAKER_02 (12:46):
If I am a customer man and I am paid a commission
for every share I trade, then Iam a broker.
That is the differentiatorbetween a trader and a broker.
A trader trades the market andmakes money for himself.
A broker is a commission broker.
He makes money on how manyshares he trades while making
money for the customer and notfor himself.
(13:07):
I do not share as a broker inthe PL, the profit and loss of
my customers.
I am paid per share on how manyshares I trade for them, but I
do not share in their profit andloss.
So I think that's a good way.
A trader is somebody who tradesfor their own benefit, making
money.
A broker is a commission brokerwho trades for a customer and
(13:29):
not their own money.
SPEAKER_00 (13:31):
Wow.
This is very interesting.
I actually never had someunderstanding to of it, but not
in such depth.
SPEAKER_02 (13:39):
I think that that's a really good breakdown of it.
SPEAKER_00 (13:41):
Now here's another question.
Since you are one of the mostfamous people on the floor of
the New York stuff, doesn't thatput the rest of the brokers and
brokerage firms in anunfavorable position?
Meaning everyone who like allthe companies would want to have
you to go and trade there.
Well, you know.
SPEAKER_02 (14:02):
Being a trader and being a broker doesn't guarantee
that I'm great at it, right?
I mean, I've spent 41 years as abroker.
I'm pretty good at it.
Yeah.
I was able to get my seat on thestock exchange in three years.
Wow.
I was in the right place at theright time.
One guy quit, one guy got fired,one guy retired, and I moved up
(14:24):
the ranks because I was good atwhat I did.
I was quit.
Now, what are the qualities thatmake someone a good broker?
Right?
I was I was quick on my feet.
I was able to pivot.
I was great with numbers, goodwith people, right?
And I had a real focus on themarket.
And I could also thrive in achaotic atmosphere.
Like not as some people need towake up, have a cigarette and a
(14:46):
cup of coffee and read the NewYork Times and get going slowly
before they get to their job.
SPEAKER_01 (14:50):
Yeah.
SPEAKER_02 (14:51):
I hear a bell ring and I'm out of the gate as if I
was, you know, riding in theKentucky Derby, right?
I mean, that's how that's how Ithrive.
I thrive on adrenaline and a bitof chaos, and you know, that's
where I do my best thinking, iswhen it's really noisy and
chattery around me.
But I'm able to, I mean, I couldwalk into an active trading
(15:11):
crowd and millions of shareswere being traded all over the
place.
What made a good broker?
Somebody who'd go into thatcrowd and knew everybody and
could read the room.
It's like a good poker player.
You've got to read the room andsee because people didn't tell
you what they had.
If I I'm representing mycustomer, I don't want other
people who are trying to buy uhbuy stock for this for their
(15:33):
person when I'm trying to buy itfor my person, I don't tell them
what I have.
Or if I have three aces, I don'ttell the guy with two aces I've
got three aces.
So if I'm buying stock, I don'ttell someone I have a million to
buy because the the landscapewould change, right?
So you've got to be quick onyour feet, really good with
numbers, good customer man, andyou've got to be able to read
(15:54):
the room.
SPEAKER_00 (15:54):
Yeah, reading the room.
You mentioned that actually afew times.
And it's interesting that inbrokering, meaning in trading
and investing and working withmoney, you mentioned the
importance of being able to readthe room and actually work with
people.
SPEAKER_01 (16:09):
Yeah.
SPEAKER_00 (16:10):
But I still am unclear like how do you work
with people?
Because what I see, for example,on the floor of the New York
Stock Exchange, like people workwith computers, then they
execute the orders.
Where does that human componentand element come to play?
SPEAKER_02 (16:22):
So before there was all this technology here, we
were just people, right?
And we're still just people.
Yeah, I know we are, but it wasa little bit different because
things were done on paper, youknow, writing things down, and
we interacted more human beings.
Right now it's a human using amachine to go to another
machine.
SPEAKER_01 (16:41):
Okay.
SPEAKER_02 (16:42):
Now I may choose to go, so there are market makers.
That's another person on theother end of the of the highway,
of the information highway.
Uh, okay, but what whatdifferentiates it in a way is
that um so a well go say whatyou asked me again.
SPEAKER_00 (17:00):
What is the human element and the importance of
it?
SPEAKER_02 (17:02):
Okay, fine.
So back in the old days, whatwhat there there was nothing but
humans, there was no electroniccomponent to it.
So I you asked about what did itwhat did I mean by reading the
room?
So I would walk into a crowd.
Now, what made me a good brokerwas that I was I could chat with
Joe about his son playingbaseball, and we may be on the
(17:24):
same side of a trade or we maybe adversaries.
I may talk to Mikey, who's themarket maker, right?
And I may have a relationshipwith Mike, and Mike may
basically will beep me.
If I was in a stock two weeksago and he remembered that I was
a buyer of you know of ShakeShack, and uh he'll call me in
if there's a seller of ShakeShack, I would come in.
It was all about relationships.
(17:44):
I see when the human element wasa lot more prominent on the
stock exchange before anytechnology, the relationships
between the brokers was veryimportant.
Like the market maker would putme up if he knew that I had a
buy order two weeks ago and hejust catches a seller.
Uh, you know, when I wasactively trading in a crowd,
(18:05):
right?
I may, you know, my best friendmay be a seller, and I'm a
buyer.
I'm not telling him what I'vegot.
SPEAKER_01 (18:11):
Yeah.
SPEAKER_02 (18:11):
Right?
I'm gonna work my order becauseit's my fiduciary responsibility
to my customer to get him thebest price.
Now, there's ways around that.
I may sort of, you know, hey,Joey, look, I'm a buyer, you're
a seller, why don't we work outsome kind of a negotiation?
Right now, do we want to justsell 1,000, 2,000 shares or do
we want to put on a biggerprint?
SPEAKER_01 (18:32):
Okay.
Right?
SPEAKER_02 (18:33):
So based on my relationship with the other side
of the trade, you know, eventhough we're on opposite sides,
we may take advantage of ourfriendship and our negotiating
tools to put on a bigger print.
Like, you know, I can say toJoe, so what do you really have?
You know, because I'm biddingfor a thousand shares, but I may
have a million behind it.
And he'll go, you know what?
(18:54):
My guy's interested in puttingon a bigger print.
I'll sell you a hundred thousandshares at 53.
And I'll go back to my guy andI'll say, I can get 100,000, 53.
What do you want to do?
And he'll say, Well, bid him 52and a half for 100,000.
So the on the nonstopnegotiation between buyers and
sellers was fascinating.
(19:15):
Now in an electronic market,it's a lot different.
There's no one to talk to.
So I have to play a little bitof a different game.
I have to show up, bid, and pullit away, right?
Or I may take an offer and pullaway.
I mean, I've got to play adifferent game.
It's harder to read a room whenthe room is filled with
machines, right?
When I had a human being on theother side of it, I'd just say,
(19:36):
hey, well, you know, what areyou doing?
Yeah.
You know, by the way, how's yourwife?
Right?
Or, you know, how the kidsplaying, you know, you would
have that relationship in aroom.
It's like a farmer's market, thesame thing.
Yeah.
Or any kind of a marketplacewhere people are with other
people and your your friendship,your relationship, your negoti
would affect the negotiation.
SPEAKER_00 (19:55):
And now that you mentioned, you know, you pull a
bid out, you put it in, pull itout.
Obviously, this is almost likepoker game in a way, because
you're trying to trick thevirtual room of machines and
other people who are behind thecomputers.
Uh, but that just brings me to areal question, which is well, so
you we're playing poker againsteach other behind the screens.
(20:17):
Yep.
Um, but doesn't that createsomewhat of a rigged uh
environment where it's hard forme to actually understand like
how the stock's gonna go?
SPEAKER_02 (20:28):
Not really, because it's not rigged because we're
all playing that same game.
Everyone who's in in thediscourse of a of a of a stock,
right?
Like, I mean, whether when wewere humans there, we would tell
each other what we were doing,or we would sort of be my guy
says, I don't want anyone toknow what I'm doing.
And so then I would play theroom a little bit differently.
(20:50):
When you're it when it's allelectronic, every the the the
playing field is is levelbecause we're all electronic.
So the only way we cancommunicate is with uh uh make a
bid, pull it back, you know, getaggressive, become passive, all
that kind of stuff.
It's a pull and tug situation.
And the bottom line is it's Ihave no advantage more than
(21:11):
anyone else except how I play mycards, right?
And so uh, you know, and we allhave the same landscape to play
with.
It's how good are you at playingthat game?
SPEAKER_00 (21:21):
Yeah, this is uh great to segue.
SPEAKER_02 (21:23):
You're good poker players and they're bad poker
players.
Why does somebody who's beingdealt a card, no one knows what
that card is, but how couldsomeone can be dealt the same
five cards and win the matchthan the person who doesn't?
There's chance, there's skill,there's all kinds of things that
make someone a good pokerplayer, a good trader, a good uh
(21:44):
broker, right?
All of those things aredifferent.
SPEAKER_00 (21:47):
Are you afraid uh of AI and how AI is coming?
I'll give you an example beforeyou answer the question.
There are multiple apps,hundreds of them at this point,
and also So multiple largelanguage models like say Claude
or ChatGPT that offer for you togo in and create your own mini
(22:08):
computer, which you connect toyour trading account, for
example, and then you cananalyze your stocks, and then
the large language model, likeChatGPT or Claude or whatever
you're using, can tell you, hey,hold this seems like a fake
signal, all stocks going down,fake signal because this news
came up, right?
Because the large languagemodels are reading the news
(22:29):
every second.
Um, or it could say, oh, this isa signal possible, like consider
buying.
Are you afraid that the humanelement and the same poker game
that's humans are technicallyplaying, even though they're on
the other side of the computer,is gonna go away because there
will be the chat GPTs of theworld are gonna be trading
(22:49):
instead of humans?
SPEAKER_02 (22:50):
So obviously there's a concern about it.
I don't think we've seen enoughof the way it's going to affect
us in a way, but at the end ofthe day, I know that there is
this school of thought that, ohmy God, you know, the the Chat
GPTs of the world are gonna comein and be able to analyze
movement in a stock by readingall the information and the
language model and all that kindof stuff.
(23:11):
And it's gonna, you know, it'sgoing to uh outsource human
beings in the game and whatnot.
To be perfectly honest, it mayhave some effect based on
different people's approaches totrading, right?
Some people are gonna be sittingup on a desk and analyzing a
stock in a different way, but inmy opinion, there's still
nothing like the human humanelement that still will exist,
(23:34):
that still exists.
It's not, even though our thevenue may be electronic, uh, the
bottom line is a human beingreading what's going on around
them, right?
Seeing the the tweets and seeingthe way the the price action and
seeing the volume, I think isway more significant.
Like everybody says, you know,right, it must be hard trading
in an electronic market.
(23:55):
Why why don't they just closethat place down?
There's no use for humansanymore.
And I say we are more relevantthan ever in a market that where
there's where tweets are comingout, that where there are robots
that are reading social mediacontent and affecting, actually
engaging the stock market,right?
We as human beings who and andexecuting stock for our
(24:16):
customers, right, um, are waymore relevant than ever before
because the volatility and allof the all of the information
highway that's going into in theold days, you used to have a guy
who would stand at thecourthouse waiting for Pfizer,
uh the court case about Pfizergetting FDA approval on a drug
to wait until the the courtdecided it, and then he would
(24:37):
get on the phone and call hisbroker to say, we just got FDA
approval on that drug by Pfizer,right?
Now the the information goesfrom there to boom to boom in a
in a quarter millisecond, right?
So the whole information highwayhas changed and all that, but I
still think that the human partof this game is still way more
powerful than the AI game,right?
(24:59):
I would imagine that maybethere'll be a mixture of the two
where you have a human being whoavails himself of some of that
Chat GBT information, right?
But a day trader does not basehis things on fundamental
analysis.
ChatGBT may be helpful infundamental analysis, which is
looking at earnings and lookingat guidance and looking at the
new product line on the agenda,stuff like that, right?
(25:22):
Yeah, a human being, though, aday trader uses technical
analysis, which is a little bitdifferent.
It's the art of charts.
Now, can AI read a chart andanalyze it?
Very possibly, but I still thinkthat the human element is way
more relevant and powerful inthis marketplace than AI.
SPEAKER_00 (25:44):
I have a follow-up question to that, which actually
I received because they're gonnabe at 11:30.
Okay, last question then tothat.
Um, technical analysis,fundamental analysis.
A lot of the readers and peoplewho comment on our podcast are
asking, I want to become a daytrader.
SPEAKER_02 (26:00):
Right.
SPEAKER_00 (26:00):
Which one should I be doing?
Technical, fundamental, both.
SPEAKER_02 (26:04):
Yep, there's a simple answer.
Investing when one someone wantsto get into a stock on a for a
long-term investment, you usefundamental analysis.
If I want to allow a fundamentalanalysis is based on the
earnings, the products, people,profitability, uh, the four P's,
right?
People, people, process,profitability, and and and
(26:26):
product, right?
And uh, and that's that's how Imake my long-term decisions for
an investment.
Day trading, you use technicalanalysis, it's totally
different.
All that long-term stuff is notgoing to tell me how that
stock's gonna trade from 8:30 to930, 930 to 1030.
Charts will tell me that.
Exponential moving averages willtell me that, right?
(26:48):
So that short-term movement in achart, right, based on pivot
points and relative strengthindex, identifying support and
resistance, that's technicalanalysis.
That's that's the lifeblood of aday trader.
Fundamental analysis is thelifeblood of an investor.
SPEAKER_00 (27:05):
Got it.
And last question if I wanted tobecome a trader on the floor of
the New York Stock Exchange, howdoes that happen?
Do I send my resume somewhere?
SPEAKER_02 (27:12):
It doesn't happen.
I don't think it really happens.
It's very rare now that somebodyactually uh does that because uh
the whole process is no longerthe way it used to be.
You used to get a job at a firm,you started at the bottom as I
described to you, and you workedyour way up, right?
There's not a lot of new new newseats?
Well, the seats are available.
It's a little bit different now.
(27:32):
You know, you buy the rights totrade the seat.
It's kind of a lease situation.
Uh-huh.
Um, but it's a little bitdifferent.
And so it's not the same way.
So that it's not really going tohappen.
I don't think, unfortunately,that's going to change the way
it's go it was.
In the old days, there was aprocess.
Started at the bottom, workedyour way to the top, became a
broker, like that.
Now the process is different,and there are not that many
(27:54):
opportunities.
If you show up and you have acustomer and you uh can get
sponsored by a firm, you couldprobably get a lease and become
a broker.
But it's a much harder game.
SPEAKER_00 (28:03):
Dream of becoming a broker on the floor of the New
York Stock Exchange may nothappen, but I'll just continue
running the businesses and alsohelping our audience on the
money signal with understandingmoney and nothing.
Thank you guys so much for beingwith us.
Check out our website, moneysignal podcast.com, and stay
tuned for more excitingepisodes.
SPEAKER_02 (28:22):
There you go.
And that's all I gotta say aboutthe
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