October 31, 2024 • 15 mins
If you come across a rattlesnake in the woods, don’t pick it up. Sounds obvious, right? But many traders fail to understand how that principle applies to their “buys” and “sells.” So says John Carter – founder of Simpler Trading, long-time market educator, and author of Mastering the Trade – in this week’s MoneyShow MoneyMasters Podcast.
We begin by discussing John’s quarter-century in the business, including how he got started trading, what important lesson he learned about asymmetrical risk early on, and why you can’t get trapped by “your own emotions or dopamine addictions” if you want to achieve long-term success. He then explains why having a “human AI-based community” behind you can help you “protect yourself from yourself” – not to mention stay focused on the most important trade, which is always the NEXT one. The conversation next pivots to a key mistake John sees traders making today and how to avoid it...why options trade “structuring” is so important...and what “final piece of the puzzle” you should learn to appreciate. Plus, he covers why and how you should stay away from those charting “rattlesnakes”!
In the remainder of our conversation, John elaborates on his favorite trading tactic, the “Squeeze”...the impact 0DTE options are having on markets and how retail traders can adapt...and what he thinks about the stock market, interest rates, the bull run in gold, and the trading environment heading into the new year. Finally, John previews what he’ll talk about at the 2024 MoneyShow Masters Symposium Sarasota, scheduled for Dec. 5-7 at the Hyatt Regency Sarasota. Click here to register: https://sarasotamms.com/?scode=061246
We begin by discussing John’s quarter-century in the business, including how he got started trading, what important lesson he learned about asymmetrical risk early on, and why you can’t get trapped by “your own emotions or dopamine addictions” if you want to achieve long-term success. He then explains why having a “human AI-based community” behind you can help you “protect yourself from yourself” – not to mention stay focused on the most important trade, which is always the NEXT one. The conversation next pivots to a key mistake John sees traders making today and how to avoid it...why options trade “structuring” is so important...and what “final piece of the puzzle” you should learn to appreciate. Plus, he covers why and how you should stay away from those charting “rattlesnakes”!
In the remainder of our conversation, John elaborates on his favorite trading tactic, the “Squeeze”...the impact 0DTE options are having on markets and how retail traders can adapt...and what he thinks about the stock market, interest rates, the bull run in gold, and the trading environment heading into the new year. Finally, John previews what he’ll talk about at the 2024 MoneyShow Masters Symposium Sarasota, scheduled for Dec. 5-7 at the Hyatt Regency Sarasota. Click here to register: https://sarasotamms.com/?scode=061246
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
The Squeeze, Unbalanced Butterflies, zero dte options, anchored v web.
These are just some of the trading concepts, strategies, tactics
and vehicles who come across and Slimpler Trading's website and
x sping. But what are they? How can you use
them to maximize your own returns? Why are so many
of today's traders turning to community based help and mentorship,
(00:25):
and what are key indicators saying about the health and
future direction of this market. That's what we'll cover in
this week's money Show Money Master's podcast. It features one
of the sharpest traders in the business, John Carter, founder
of Simpler Trading.
Speaker 2 (00:37):
Welcome to the show, John.
Speaker 3 (00:39):
Thanks for having me. Good to be here.
Speaker 2 (00:40):
Yeah, glad you could do this.
Speaker 1 (00:41):
I want to, you know, just forge We might not
be familiar with your background or Simple Trading. Why don't
you talk a little bit about how you got into
this business and what it is that Simpler Trading does.
Speaker 3 (00:50):
Yeah, I mean I got interested in this my father
was a stockbroker, and so I kind of hung around it,
as you know, growing up as a teenager. And then
at some point I got into the world world and
started doing the math like, Wow, I'm you know, making
X amount of salary per year, but in trading, you know,
I might make a thousand or two thousand dollars you know,
here and there, and it just made a lot more sense.
(01:12):
And so that really got me onto this path. And
it took about eight years of ups and downs, great ups,
horrible downs to kind of get into this thing of Okay,
let's look at things like asymmetrical risk i e. Butterflies,
Let's look at things like just kind of how do
you do this in a way where you know, you
don't get kind of trapped by you know, your own
emotions and dopamine addictions and things like that. And so
(01:32):
the idea was simpler trading is I kind of call
it a human AI based community where you have a
lot of traders from different backgrounds with different perspectives on
the market, and all of us are kind of offering
our current picture of the market. Uh, the opinions we're
expressing based on the trades that we're taking, on what
we think the market's going to do, and then just
using our experience over the years. You know, we'll see
(01:54):
somebody come in and you know, they'll get really excited
about something and they're you know, you can tell that
they're doing the wrong trade, and you know, and we
just try to save them that heartache of you know,
the biggest thing I'll see is somebody gets on a
good streak and instead of attributing it to just probabilities
and where they are, you know, suddenly they're a genius
(02:15):
and then all this money they made goes goes away,
and that's always heartbreaking. And so there's things like that
that we see and try to prevent and just make
it a community. You know, trading is always about, you know,
it's all about the next trade. The previous trades don't matter,
it's the next trade. Are you present? You know, are
you in alignment with what's happening? And can you execute
in a non emotional way?
Speaker 2 (02:35):
Got it?
Speaker 1 (02:36):
I'm definitely gonna talk about the big picture for the
markets in a minute, but I do want to kind
of zero on the point you're making there. I mean,
what are some of the mistakes that you see traders
consistently making in this market in particular, and what is
it that you're trying to do to help them break
break them out.
Speaker 2 (02:47):
Of that pattern?
Speaker 3 (02:49):
Probably the biggest thing is that somebody will read an
article about something that was bad news, you know, about
the economy, and then all of a sudden they're like,
you know what, this market's going to crash, and then
they put all their you know, their entire count on
puts on spy that expire in four days, and then
they just don't understand why the market keeps going up.
And so that's probably the biggest thing, is you get somebody,
you know, you read something, you get an idea of
(03:11):
what the market should do, and then you try to
impose your will on the market. Of course, the market
doesn't care, right, and so that's probably the biggest thing.
And then from there it's just kind of understanding like, hey,
you know, if you're bullsh on tesla, and especially if
you're doing options, you know, there's different ways to kind
of structure the trade so that a you have a
better probability of success, you know, something like you know,
(03:32):
buying a delta ten call works. When it works, it
works great, but it's a very rare time that it's
gonna work. You know, it's gonna work great, and so
it's just kind of getting into the idea of creating
a consistent income from trading instead of always chasing you know,
like you know, the big hit and things like that too.
Speaker 2 (03:50):
Yeah, what's interesting.
Speaker 1 (03:50):
I know Jonathan McKeever couldn't be with us, but one
of the things I saw him post on Twitter the
other day a couple of weeks ago was he wasn't
seeing a lot of good steps and market wasn't doing
much and he's like this, this reminds me I just
need to be patient.
Speaker 2 (04:00):
It seems like that's a good bit of advice too.
Speaker 3 (04:02):
Yeah, and Jonathan's really good about that. He's very He's
brought in, you know, his his experience in the Air Force,
he has brought in a lot of discipline and he's
kind of like, look, if it gets to this level,
I'm going to take action. And if it gets to
this level, I'm gonna take action. And if not, I ain't,
I ain't doing nothing. I don't think he just says
the word ain't, but but it's but that's a really
good discipline approach, and that's probably you know, the final
(04:22):
piece of the puzzle for a lot of traders is
just to learn to be patient, you know, wait for
that fat pitch, because if you're not, it's easy to
get distracted, and you can be you know, distracted on
some trade that you really shouldn't be in you're trying
to work your way out of it. Meanwhile, you're going
to completely be distracted and miss the fat pitch that's
setting up at nine to thirty, and you're just gonna
miss that because you're you know, you know, pilling around
(04:42):
with this little thing. And that's a very common thing
I see as well.
Speaker 1 (04:45):
I want to talk a little bit about the idea
of using kind of this community based feedback and coaching
for traders. I mean, I've had other speakers I've talked to,
and people would run apps where you can bounce ideas
off each other and use social media and so on.
Speaker 2 (04:57):
That seems a lot more popular these days.
Speaker 1 (04:58):
And it's kind of curious that to, you know, why
that is and what's more effective about learning that way
versus some of the other things you can do to
teach yourself trade and read a book or whatever.
Speaker 3 (05:06):
Yeah, and I think it's good to have a little
bit of both. I think the community aspect of trading,
it's really to kind of protect yourself from yourself. And
because it's easy, you know, when you're you can get
kind of get into this closed loop, and if you're
just by yourself and trading, you can convince yourselves of
things that just aren't happening. And you know, it's just
you're just gonna get this feedback loop that just makes
you know everything you do doesn't work. And it's like, okay,
(05:29):
well what am I you know, why what am I seeing?
Speaker 2 (05:31):
You know?
Speaker 3 (05:31):
What am I doing here? What am I not seeing? Well,
if you've got a group at least, and it's not
about you know, a herd mentality, it's you know, it's like, hey,
I think I'm gonna you know, you know, Tesla gapped
up this morning after earnings. It's up thirty points and
someone in a room is like, I think I'm gonna
sell call credit spreads here, and we're all like, you're insane,
Like this stuff has had a two times expected move
for a reason. It's being revalued. Why would you want
(05:52):
to step in front of that? And you know, I
was say, trading is a lot like you know, if
you're walking in the woods and you see a rattlesnake,
just because you see the else snake doesn't mean you
need to bend over and pick it up and it's
probably not a good idea. And it's in trading. You know,
you can look at a chart and you can always
find a reason to trade, but the reality of it
is you want to just hone in and identify what
(06:13):
are the high probability set ups, and a lot of
times that means patients specific things to wait for. Instead
it is willy nilly like, oh, you know the stocks up,
I'm gonna I'm gonna short it.
Speaker 1 (06:22):
Yeah, yeah, Well, let's talk about a couple of the techics.
I mean, you briefly touched on butterflies earlier. You mentioned
obviously the squeeze is something you're known for. Me how
do some of those those processes work and what's the
you know, the benefit of getting involved as a trader well.
Speaker 3 (06:35):
And something like the squeeze, which is nice. And this
is something I noticed a long time ago, is that
about eighty percent of the time the market actually doesn't
do very much, you know, it's kind of stuck in
a range, and twenty percent of the time it'll have
these fantastic moves. And the challenge is is that if
you get you get into this period with these fantastic moves,
and then you keep applying those strategies to a time
when the market is quiet, you're gonna get killed. And
(06:56):
so what the squeeze is is simply an indication of, hey,
the market has gone through a period of nothing. It's
now gotten to the point where the volatility is compressed
that it's gonna have to release energy. So what it's
doing is it's pinpointing for you the moments in time
where you're more much more likely to have these bigger moves.
And so that's what I like to wait for. And
so you know, I'm certainly looking for that on the indexes.
(07:17):
But if there isn't one on the index, then yeah,
I'm gonna go look at Nvidia, you know, or is
it a one on Tesla? But the best kind of
trades are when the indexes are in a squeeze, and
then kind of the strongest stocks and the strongest sectors
are in a squeeze. And if you can be patient
for those, you know, you can make more on those trades.
You know that that can make your month through your
quarter versus you know, just trying to like, you know,
(07:38):
scalp here and there for for for nickels.
Speaker 1 (07:41):
Yeah, yeah, I want to ask another question about investment vehicles.
I mean, obviously we've gone from quarterlies to monthlies to
weeklies too. Daily options. We you know, we used to
have ETFs that one x, two x, three x, and
now there's levered individual stock ETFs is kind of eliminate
the whole diversification. What are your thoughts on all these developments?
Are they positives? Are there new risks involved people need
to be aware of when trading this stuff?
Speaker 3 (08:02):
Well, you know, the biggest thing that's happening that I've
noticed is that, especially with the zero dt SPX, is
that it allows a lot more hedging capability. And so
what will happen now is that if someone say mostly funds,
so if they've got a big long position, instead of
having to sell in and out of it or buy
longer dated puts, they'll just buy puts for today. They're
(08:25):
going to hedge their risks for today because it's so
cheap to do it day by day. And so that
absolutely controls the market. And you know, I think it's
one of those things where we just got to realize
that from a day to day basis, we're really just
kind of in this. We're as retail traders, we're in
the middle of this goliath amount of hedging that's going on,
and so you know, once in a while, yeah, you're
gonna get some kind of a nice move. But like
(08:46):
you know, today there's a lot of hedging around fifty
eight hundred. What do we do? We hung around fifty
eight hundred on the SPX even though you know, Tesla's
up fifty points on the day. So that's the biggest
thing is that this market isn't about buying and selling.
It's much much, much more activity about hedging and protecting large,
large portfolios.
Speaker 2 (09:04):
Let's let's pivot a little bit to the broad markets then.
Speaker 1 (09:06):
I mean, you know, I have everybody from the comments strategist,
fund manager, sector analysts on the podcast. Obviously you're a
technically driven trader, and so you're gonna look at things differently.
Speaker 2 (09:15):
What are you seeing.
Speaker 1 (09:16):
Out there in terms of kind of valuating this market
and it's health or lack thereof.
Speaker 3 (09:20):
Well, I think it's one of those things where there's
certainly a lot of divergences happening in the market right
now all over the place. We've had a great run,
you know, the markets. I do think we're kind of
at a point where you know, it's it's it's time
for the markets to catch its breath. I mean, as
we're talking right now, the smps are about fifty eight hundred.
I think we're kind of near the upside for the
(09:41):
near term, and there's more risk to the downside. Especially,
you know, there's going to be certainly that hurry up
and wait for the election, which is only now three
weeks away, you know, a little bit of hurry up
and wait for that. So, you know, I think we're
going to kind of be a little quiet into the election.
We'll see some volatility after it, and then from there
it just kind of goes back to how's the business
this environment? You know, are we you know, are we hiring?
(10:02):
Are we lowering rates? You know, all those different things.
But I do think that the magnificent up moves that
we've seen are certainly going to take a breather.
Speaker 1 (10:10):
Yeah, yeah, because that was gonna be My next question
is obviously, you know, every he talks about seasonal Santa
claus rally whatever, But I mean I was kind of
curious if you thought we sort of used that gas
up already or not.
Speaker 3 (10:20):
You know, I lean towards that. I'm always willing to
say I stand corrected, and especially if the market's making
new highs. But I do think that, you know, the
markets are smart. They front run things, you know, the
idea that I think like rate cuts and things like
that that have already been priced into the market. And
you know, there are times when the market get reaches
a certain point, it just needs to cruise and catch
(10:42):
up for a while. And that's that's kind of where
I think we are.
Speaker 2 (10:45):
Yeah, let we shift to a couple other things.
Speaker 1 (10:46):
I mean, you've talked about gold, and obviously when we've
had you at a couple of previous events, you did
identify that as being a positive pattern and a positive outlook,
and clearly that's paid off. What are your thoughts on
things like gold, which has run quite a bit this
year obviously, Yeah, Well.
Speaker 3 (10:59):
I think is front running the next the next move
by the Fed, which I do believe in about a
year or so they're gonna have to start back into
heavy quantitative easing, and so gold is really good at
front running that. And you know, we're sitting here getting close.
We're probably gonna kiss three thousand. For a long time,
we saw gold kind of sitting between you know, sixteen
hundred and eighteen hundred dollars an ounce that has stare
(11:21):
stepped up, and I think the new kind of normal
is going to be, you know, twenty four hundred to
twenty seven twenty seven hundred dollars an ounce is kind
of a base and then it just keeps working higher
from there. It's it's something, you know, it's one of
those I personally am not a fan of trading the miners,
and I know a lot of people are. I like,
I will trade gold, whether it's GLD or gold futures,
and then I collect coins like where it coins pre
(11:43):
nineteen thirty two gold, So I do like you know,
stacking the metal. But I think it's one of those
where the biggest thing that's gonna be coming forward is
a kind of a loosening of liquidity that's a currency
debasement for the dollar, and you know, things like gold
go up in that situation.
Speaker 2 (11:58):
The time we have left.
Speaker 1 (11:58):
I mean, anything else that I I haven't mentioned that
looks particularly either promising or dangerous to you given kind
of you know when you look at the markets overall.
Speaker 3 (12:05):
Yeah, that's interesting. I mean I like the term promising
and dangerous, and I think that you know, in looking
at this, I think the biggest thing we just have
to look at is interest rates. And I think there's
maybe an assumption right now that there's gonna be all
these rate cuts and everything's going to be all rosy again.
But what's interesting is after the last rate cut, you know,
interust rates have come right back up again, and so
(12:26):
there's this underlying you know, the market. The economy is strong,
there are you know, inflation is still is still kind
of out there. Although I think it's over. We're not
going to see a nineteen seventies repeat. But I think
the danger here is just assuming that with rate cuts
the market's going to go straight up. I think the
market's already priced a lot of that in and this
becomes a trading market, literally, And I'm always a fan
(12:48):
of you know, long term yeah, dollar cost average, throw
money in an index fund, but for trading, we're we're
entering an environment where you just want to be flexible.
You know, it's not always buying the dips. Sometimes it's
going to be shorting the rally. Is making sure that
you're kind of fluid in that environment.
Speaker 1 (13:03):
Last question, then, I mean, obviously you're gonna be joining
US for the twenty four Money Show Masters Symposium.
Speaker 2 (13:08):
It's going to be in SARASOTAUS December.
Speaker 1 (13:10):
You give viewers who are watching this maybe a sneak
peak at what they're gonna learn when they attend your
session or what you might be talking about.
Speaker 3 (13:15):
Sure, there's well, there's two things I always like to cover,
and one is kind of what's setting up right now, Like, Okay,
these are trades I'm gonna be taking, you know, like
I think, you know, probably talking on Thursday or Friday,
I'm going to talk about trades that are setting up
for the next week and then then next month and
exactly kind of what I'm looking at there. But I
also like to talk about kind of the bigger picture,
because there are things like the real estate cycle that's
(13:35):
actually you know, the next eighteen and a half. Your
real estate cycle is coming to an end in the
next year or two. The last time that happened was
in two thousand and eight. So what is that setting
up for now? What opportunities could that create? And so
a combination of kind of macro kind of where we
are and the bigger turn opportunities that's going to create,
and then just kind of coming down to what are
some good trades over the next couple of weeks, what sectors,
what specific stocks? And I think that's it's a good
(13:58):
way just to kind of look at the overall market,
learn about a specific strategy, and then see how it's
applied to specific stocks.
Speaker 2 (14:05):
Aarb it. Well, that's a great place to wrap up. John,
Thank you so much for insights.
Speaker 1 (14:08):
Viewers, If you're watching this you want to learn more
from John, learn more about simpler trading, definitely join us
at the Money show Masters symposiums since Sarasota December fifth
to seventh, Higatt Regency Downtown, which made it through Hurricane Milton.
Speaker 3 (14:20):
Just fine.
Speaker 1 (14:20):
If you're wondering, we've gotten that question a few times,
so it's going to be a great, great time, great environment.
Speaker 2 (14:25):
We look forward to seeing you there, John, thanks again
for joining me.
Speaker 3 (14:28):
For sure and looking forward to It'll be my first
visit to Sarasota, so looking forward to that as well.
Speaker 2 (14:32):
Excellent, we'll see you soon, all right.
Speaker 1 (14:34):
We'll have more interviews for you every week, so I
encourage you to subscribe to the Money Masters podcast so
you can stay up to date with the insights from
top money experts.
Speaker 3 (14:43):
You can follow me on Twitter at real Mike Larson.
Speaker 1 (14:45):
And follow Money Show for more investing and trading content
on Twitter, Instagram, and YouTube at money Show.
Speaker 2 (14:51):
Thanks for listening, See you next time.
The Squeeze, Unbalanced Butterflies, zero dte options, anchored v web.
These are just some of the trading concepts, strategies, tactics
and vehicles who come across and Slimpler Trading's website and
x sping. But what are they? How can you use
them to maximize your own returns? Why are so many
of today's traders turning to community based help and mentorship,
(00:25):
and what are key indicators saying about the health and
future direction of this market. That's what we'll cover in
this week's money Show Money Master's podcast. It features one
of the sharpest traders in the business, John Carter, founder
of Simpler Trading.
Speaker 2 (00:37):
Welcome to the show, John.
Speaker 3 (00:39):
Thanks for having me. Good to be here.
Speaker 2 (00:40):
Yeah, glad you could do this.
Speaker 1 (00:41):
I want to, you know, just forge We might not
be familiar with your background or Simple Trading. Why don't
you talk a little bit about how you got into
this business and what it is that Simpler Trading does.
Speaker 3 (00:50):
Yeah, I mean I got interested in this my father
was a stockbroker, and so I kind of hung around it,
as you know, growing up as a teenager. And then
at some point I got into the world world and
started doing the math like, Wow, I'm you know, making
X amount of salary per year, but in trading, you know,
I might make a thousand or two thousand dollars you know,
here and there, and it just made a lot more sense.
(01:12):
And so that really got me onto this path. And
it took about eight years of ups and downs, great ups,
horrible downs to kind of get into this thing of Okay,
let's look at things like asymmetrical risk i e. Butterflies,
Let's look at things like just kind of how do
you do this in a way where you know, you
don't get kind of trapped by you know, your own
emotions and dopamine addictions and things like that. And so
(01:32):
the idea was simpler trading is I kind of call
it a human AI based community where you have a
lot of traders from different backgrounds with different perspectives on
the market, and all of us are kind of offering
our current picture of the market. Uh, the opinions we're
expressing based on the trades that we're taking, on what
we think the market's going to do, and then just
using our experience over the years. You know, we'll see
(01:54):
somebody come in and you know, they'll get really excited
about something and they're you know, you can tell that
they're doing the wrong trade, and you know, and we
just try to save them that heartache of you know,
the biggest thing I'll see is somebody gets on a
good streak and instead of attributing it to just probabilities
and where they are, you know, suddenly they're a genius
(02:15):
and then all this money they made goes goes away,
and that's always heartbreaking. And so there's things like that
that we see and try to prevent and just make
it a community. You know, trading is always about, you know,
it's all about the next trade. The previous trades don't matter,
it's the next trade. Are you present? You know, are
you in alignment with what's happening? And can you execute
in a non emotional way?
Speaker 2 (02:35):
Got it?
Speaker 1 (02:36):
I'm definitely gonna talk about the big picture for the
markets in a minute, but I do want to kind
of zero on the point you're making there. I mean,
what are some of the mistakes that you see traders
consistently making in this market in particular, and what is
it that you're trying to do to help them break
break them out.
Speaker 2 (02:47):
Of that pattern?
Speaker 3 (02:49):
Probably the biggest thing is that somebody will read an
article about something that was bad news, you know, about
the economy, and then all of a sudden they're like,
you know what, this market's going to crash, and then
they put all their you know, their entire count on
puts on spy that expire in four days, and then
they just don't understand why the market keeps going up.
And so that's probably the biggest thing, is you get somebody,
you know, you read something, you get an idea of
(03:11):
what the market should do, and then you try to
impose your will on the market. Of course, the market
doesn't care, right, and so that's probably the biggest thing.
And then from there it's just kind of understanding like, hey,
you know, if you're bullsh on tesla, and especially if
you're doing options, you know, there's different ways to kind
of structure the trade so that a you have a
better probability of success, you know, something like you know,
(03:32):
buying a delta ten call works. When it works, it
works great, but it's a very rare time that it's
gonna work. You know, it's gonna work great, and so
it's just kind of getting into the idea of creating
a consistent income from trading instead of always chasing you know,
like you know, the big hit and things like that too.
Speaker 2 (03:50):
Yeah, what's interesting.
Speaker 1 (03:50):
I know Jonathan McKeever couldn't be with us, but one
of the things I saw him post on Twitter the
other day a couple of weeks ago was he wasn't
seeing a lot of good steps and market wasn't doing
much and he's like this, this reminds me I just
need to be patient.
Speaker 2 (04:00):
It seems like that's a good bit of advice too.
Speaker 3 (04:02):
Yeah, and Jonathan's really good about that. He's very He's
brought in, you know, his his experience in the Air Force,
he has brought in a lot of discipline and he's
kind of like, look, if it gets to this level,
I'm going to take action. And if it gets to
this level, I'm gonna take action. And if not, I ain't,
I ain't doing nothing. I don't think he just says
the word ain't, but but it's but that's a really
good discipline approach, and that's probably you know, the final
(04:22):
piece of the puzzle for a lot of traders is
just to learn to be patient, you know, wait for
that fat pitch, because if you're not, it's easy to
get distracted, and you can be you know, distracted on
some trade that you really shouldn't be in you're trying
to work your way out of it. Meanwhile, you're going
to completely be distracted and miss the fat pitch that's
setting up at nine to thirty, and you're just gonna
miss that because you're you know, you know, pilling around
(04:42):
with this little thing. And that's a very common thing
I see as well.
Speaker 1 (04:45):
I want to talk a little bit about the idea
of using kind of this community based feedback and coaching
for traders. I mean, I've had other speakers I've talked to,
and people would run apps where you can bounce ideas
off each other and use social media and so on.
Speaker 2 (04:57):
That seems a lot more popular these days.
Speaker 1 (04:58):
And it's kind of curious that to, you know, why
that is and what's more effective about learning that way
versus some of the other things you can do to
teach yourself trade and read a book or whatever.
Speaker 3 (05:06):
Yeah, and I think it's good to have a little
bit of both. I think the community aspect of trading,
it's really to kind of protect yourself from yourself. And
because it's easy, you know, when you're you can get
kind of get into this closed loop, and if you're
just by yourself and trading, you can convince yourselves of
things that just aren't happening. And you know, it's just
you're just gonna get this feedback loop that just makes
you know everything you do doesn't work. And it's like, okay,
(05:29):
well what am I you know, why what am I seeing?
Speaker 2 (05:31):
You know?
Speaker 3 (05:31):
What am I doing here? What am I not seeing? Well,
if you've got a group at least, and it's not
about you know, a herd mentality, it's you know, it's like, hey,
I think I'm gonna you know, you know, Tesla gapped
up this morning after earnings. It's up thirty points and
someone in a room is like, I think I'm gonna
sell call credit spreads here, and we're all like, you're insane,
Like this stuff has had a two times expected move
for a reason. It's being revalued. Why would you want
(05:52):
to step in front of that? And you know, I
was say, trading is a lot like you know, if
you're walking in the woods and you see a rattlesnake,
just because you see the else snake doesn't mean you
need to bend over and pick it up and it's
probably not a good idea. And it's in trading. You know,
you can look at a chart and you can always
find a reason to trade, but the reality of it
is you want to just hone in and identify what
(06:13):
are the high probability set ups, and a lot of
times that means patients specific things to wait for. Instead
it is willy nilly like, oh, you know the stocks up,
I'm gonna I'm gonna short it.
Speaker 1 (06:22):
Yeah, yeah, Well, let's talk about a couple of the techics.
I mean, you briefly touched on butterflies earlier. You mentioned
obviously the squeeze is something you're known for. Me how
do some of those those processes work and what's the
you know, the benefit of getting involved as a trader well.
Speaker 3 (06:35):
And something like the squeeze, which is nice. And this
is something I noticed a long time ago, is that
about eighty percent of the time the market actually doesn't
do very much, you know, it's kind of stuck in
a range, and twenty percent of the time it'll have
these fantastic moves. And the challenge is is that if
you get you get into this period with these fantastic moves,
and then you keep applying those strategies to a time
when the market is quiet, you're gonna get killed. And
(06:56):
so what the squeeze is is simply an indication of, hey,
the market has gone through a period of nothing. It's
now gotten to the point where the volatility is compressed
that it's gonna have to release energy. So what it's
doing is it's pinpointing for you the moments in time
where you're more much more likely to have these bigger moves.
And so that's what I like to wait for. And
so you know, I'm certainly looking for that on the indexes.
(07:17):
But if there isn't one on the index, then yeah,
I'm gonna go look at Nvidia, you know, or is
it a one on Tesla? But the best kind of
trades are when the indexes are in a squeeze, and
then kind of the strongest stocks and the strongest sectors
are in a squeeze. And if you can be patient
for those, you know, you can make more on those trades.
You know that that can make your month through your
quarter versus you know, just trying to like, you know,
(07:38):
scalp here and there for for for nickels.
Speaker 1 (07:41):
Yeah, yeah, I want to ask another question about investment vehicles.
I mean, obviously we've gone from quarterlies to monthlies to
weeklies too. Daily options. We you know, we used to
have ETFs that one x, two x, three x, and
now there's levered individual stock ETFs is kind of eliminate
the whole diversification. What are your thoughts on all these developments?
Are they positives? Are there new risks involved people need
to be aware of when trading this stuff?
Speaker 3 (08:02):
Well, you know, the biggest thing that's happening that I've
noticed is that, especially with the zero dt SPX, is
that it allows a lot more hedging capability. And so
what will happen now is that if someone say mostly funds,
so if they've got a big long position, instead of
having to sell in and out of it or buy
longer dated puts, they'll just buy puts for today. They're
(08:25):
going to hedge their risks for today because it's so
cheap to do it day by day. And so that
absolutely controls the market. And you know, I think it's
one of those things where we just got to realize
that from a day to day basis, we're really just
kind of in this. We're as retail traders, we're in
the middle of this goliath amount of hedging that's going on,
and so you know, once in a while, yeah, you're
gonna get some kind of a nice move. But like
(08:46):
you know, today there's a lot of hedging around fifty
eight hundred. What do we do? We hung around fifty
eight hundred on the SPX even though you know, Tesla's
up fifty points on the day. So that's the biggest
thing is that this market isn't about buying and selling.
It's much much, much more activity about hedging and protecting large,
large portfolios.
Speaker 2 (09:04):
Let's let's pivot a little bit to the broad markets then.
Speaker 1 (09:06):
I mean, you know, I have everybody from the comments strategist,
fund manager, sector analysts on the podcast. Obviously you're a
technically driven trader, and so you're gonna look at things differently.
Speaker 2 (09:15):
What are you seeing.
Speaker 1 (09:16):
Out there in terms of kind of valuating this market
and it's health or lack thereof.
Speaker 3 (09:20):
Well, I think it's one of those things where there's
certainly a lot of divergences happening in the market right
now all over the place. We've had a great run,
you know, the markets. I do think we're kind of
at a point where you know, it's it's it's time
for the markets to catch its breath. I mean, as
we're talking right now, the smps are about fifty eight hundred.
I think we're kind of near the upside for the
(09:41):
near term, and there's more risk to the downside. Especially,
you know, there's going to be certainly that hurry up
and wait for the election, which is only now three
weeks away, you know, a little bit of hurry up
and wait for that. So, you know, I think we're
going to kind of be a little quiet into the election.
We'll see some volatility after it, and then from there
it just kind of goes back to how's the business
this environment? You know, are we you know, are we hiring?
(10:02):
Are we lowering rates? You know, all those different things.
But I do think that the magnificent up moves that
we've seen are certainly going to take a breather.
Speaker 1 (10:10):
Yeah, yeah, because that was gonna be My next question
is obviously, you know, every he talks about seasonal Santa
claus rally whatever, But I mean I was kind of
curious if you thought we sort of used that gas
up already or not.
Speaker 3 (10:20):
You know, I lean towards that. I'm always willing to
say I stand corrected, and especially if the market's making
new highs. But I do think that, you know, the
markets are smart. They front run things, you know, the
idea that I think like rate cuts and things like
that that have already been priced into the market. And
you know, there are times when the market get reaches
a certain point, it just needs to cruise and catch
(10:42):
up for a while. And that's that's kind of where
I think we are.
Speaker 2 (10:45):
Yeah, let we shift to a couple other things.
Speaker 1 (10:46):
I mean, you've talked about gold, and obviously when we've
had you at a couple of previous events, you did
identify that as being a positive pattern and a positive outlook,
and clearly that's paid off. What are your thoughts on
things like gold, which has run quite a bit this
year obviously, Yeah, Well.
Speaker 3 (10:59):
I think is front running the next the next move
by the Fed, which I do believe in about a
year or so they're gonna have to start back into
heavy quantitative easing, and so gold is really good at
front running that. And you know, we're sitting here getting close.
We're probably gonna kiss three thousand. For a long time,
we saw gold kind of sitting between you know, sixteen
hundred and eighteen hundred dollars an ounce that has stare
(11:21):
stepped up, and I think the new kind of normal
is going to be, you know, twenty four hundred to
twenty seven twenty seven hundred dollars an ounce is kind
of a base and then it just keeps working higher
from there. It's it's something, you know, it's one of
those I personally am not a fan of trading the miners,
and I know a lot of people are. I like,
I will trade gold, whether it's GLD or gold futures,
and then I collect coins like where it coins pre
(11:43):
nineteen thirty two gold, So I do like you know,
stacking the metal. But I think it's one of those
where the biggest thing that's gonna be coming forward is
a kind of a loosening of liquidity that's a currency
debasement for the dollar, and you know, things like gold
go up in that situation.
Speaker 2 (11:58):
The time we have left.
Speaker 1 (11:58):
I mean, anything else that I I haven't mentioned that
looks particularly either promising or dangerous to you given kind
of you know when you look at the markets overall.
Speaker 3 (12:05):
Yeah, that's interesting. I mean I like the term promising
and dangerous, and I think that you know, in looking
at this, I think the biggest thing we just have
to look at is interest rates. And I think there's
maybe an assumption right now that there's gonna be all
these rate cuts and everything's going to be all rosy again.
But what's interesting is after the last rate cut, you know,
interust rates have come right back up again, and so
(12:26):
there's this underlying you know, the market. The economy is strong,
there are you know, inflation is still is still kind
of out there. Although I think it's over. We're not
going to see a nineteen seventies repeat. But I think
the danger here is just assuming that with rate cuts
the market's going to go straight up. I think the
market's already priced a lot of that in and this
becomes a trading market, literally, And I'm always a fan
(12:48):
of you know, long term yeah, dollar cost average, throw
money in an index fund, but for trading, we're we're
entering an environment where you just want to be flexible.
You know, it's not always buying the dips. Sometimes it's
going to be shorting the rally. Is making sure that
you're kind of fluid in that environment.
Speaker 1 (13:03):
Last question, then, I mean, obviously you're gonna be joining
US for the twenty four Money Show Masters Symposium.
Speaker 2 (13:08):
It's going to be in SARASOTAUS December.
Speaker 1 (13:10):
You give viewers who are watching this maybe a sneak
peak at what they're gonna learn when they attend your
session or what you might be talking about.
Speaker 3 (13:15):
Sure, there's well, there's two things I always like to cover,
and one is kind of what's setting up right now, Like, Okay,
these are trades I'm gonna be taking, you know, like
I think, you know, probably talking on Thursday or Friday,
I'm going to talk about trades that are setting up
for the next week and then then next month and
exactly kind of what I'm looking at there. But I
also like to talk about kind of the bigger picture,
because there are things like the real estate cycle that's
(13:35):
actually you know, the next eighteen and a half. Your
real estate cycle is coming to an end in the
next year or two. The last time that happened was
in two thousand and eight. So what is that setting
up for now? What opportunities could that create? And so
a combination of kind of macro kind of where we
are and the bigger turn opportunities that's going to create,
and then just kind of coming down to what are
some good trades over the next couple of weeks, what sectors,
what specific stocks? And I think that's it's a good
(13:58):
way just to kind of look at the overall market,
learn about a specific strategy, and then see how it's
applied to specific stocks.
Speaker 2 (14:05):
Aarb it. Well, that's a great place to wrap up. John,
Thank you so much for insights.
Speaker 1 (14:08):
Viewers, If you're watching this you want to learn more
from John, learn more about simpler trading, definitely join us
at the Money show Masters symposiums since Sarasota December fifth
to seventh, Higatt Regency Downtown, which made it through Hurricane Milton.
Speaker 3 (14:20):
Just fine.
Speaker 1 (14:20):
If you're wondering, we've gotten that question a few times,
so it's going to be a great, great time, great environment.
Speaker 2 (14:25):
We look forward to seeing you there, John, thanks again
for joining me.
Speaker 3 (14:28):
For sure and looking forward to It'll be my first
visit to Sarasota, so looking forward to that as well.
Speaker 2 (14:32):
Excellent, we'll see you soon, all right.
Speaker 1 (14:34):
We'll have more interviews for you every week, so I
encourage you to subscribe to the Money Masters podcast so
you can stay up to date with the insights from
top money experts.
Speaker 3 (14:43):
You can follow me on Twitter at real Mike Larson.
Speaker 1 (14:45):
And follow Money Show for more investing and trading content
on Twitter, Instagram, and YouTube at money Show.
Speaker 2 (14:51):
Thanks for listening, See you next time.
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