The Trader Who Never Used A Stop Loss, Yet Ranked #1 In A Global Trading Team - Mike Agne

This guy is one of the best professional prop desk traders in the world, ranking number one in his globally recognized trading team for both performance and volume.

Back in the day, we knew who we traded with. So like when I was buying the futures, I would know, oh, I'm trading with 350, that's Goldman Sachs or 660 JP Morgan. So you knew they were prop shops, you knew they were banks, you knew they were hedge funds. Those edges are all gone. Now we're primarily price fix. So technicals matter a lot more today than they did prior.

Introducing Mike Agony. From the trading pits of Chicago to now a seasoned futures trader and an expert trading coach with nearly three decades of market experience. In this episode, Mike breaks down his exact process for building an edge from scratch. He explains how the professional trading firms think about liquidity grabs and stop-loss hunts compared to what we're taught online and the exact risk systems he uses so one bad session doesn't wipe out months of gains.

I never traded with stops ever in my career, ever. But people trade with stops and I'm like, you're guaranteeing yourself a loss. But they ensure a controlled limited loss in a increased volatile moment. You are now exposing yourself to more. How would you control an environment in this case?

Well, taking risk and trading is not inherent to most people. It's like this thing of control that we all want to hold on to that we think we have control and you just don't. It's like Murphy's law. You're going to go into something that's going to go against you right away. Now, do you bail or do you cannonball? That's what really differentiates good traders from bad traders.

Earlier on, you mentioned you have to understand yourself in terms of psychology. And I was pondering upon it as you were speaking. Some people's personality type is more suited for scalping versus swing trading. Risk aversion. Maybe your childhood traumas. Of course, there's a long list of things that it could be. But how do I understand what affects me? What questions should I ask myself?

You want to know yourself?

Ladies and gents, welcome back to another episode. Mike, it's good to have you. Thank you for driving down 4 hours to be here and it's an honor to have you. There's there's a whole journey to explore and a little bit of things that we've been discussing getting into the history of money, what is fiat, what is crypto and all of these kind of more juicy topics. I want I want to save that for later.

For now, I want to establish uh a foundation and establish terms. My audience will often be forex traders.

Uh and maybe some of them now with the US regulations more pivoting into futures. For someone that is a forex trader, why should they consider or what should they be aware of from fixed income which you're in or derivatives? let's say futures.

I think well, it's a good transition from forex to any of the futures markets or options markets in general because it's all about risk management right so you really need to understand the products and kind of break it down to and I think for your audience coming from forex I wouldn't jump into a full global macro spectrum I would focus in on a couple markets maybe or just even one and and try to really understand the components of what and who are involved you know Because ultimately we need to know why the markets are moving. Everyone looks at price action, but really what you want to know is why that price action is occurring.

So if your traders are coming from Forex, I think it'd be, you know, it's not that difficult of a transition. I if you focus on a singular market or just one or two, but I wouldn't come into it thinking you're going to trade fixed income or equities or metals.

implied in that statement is it that fundamentals and gibital factors are are more uh they have a greater influence in the derivatives markets or in fixed income?

fun um well I think it's all tied are you talking about like fundamental like anything like geopolitical like things?

or probably also just general macro um?

yeah I I think um we were talking about this earlier about like focusing on central banking and the money supply is key to all the markets and realistic basically kind of where we're at now. We're starting to see the central banks panic a little bit because they're kind of losing control of the inflation narrative, but in doing so, this is the system that they've created through monetary policy and everything that's gone on over the last three decades. So, you do have to be cognizant of those fundamental factors. So, yeah, whether it be geopolitical, economic, monetary policy, you have to be a good study of all of them. And it's I would urge the listeners to really try to understand the global marketplace and the interconnectedness of every market.

So of course I agree and I'm aligned but it I feel like it's very hard to grab on to what that means because understanding global macro it's it's uh like a language. It's not an exact science and maybe even analogous to an art.

Would there be certain things that you could hold on to and say okay these would be the 8020. These things are most worth learning.

Sure. Well, if you look at it that yeah, 8020 or you know that's like a pareto distribution, right? So I I think for traders looking to make that transition, I like the research aspect more so than the trading of it. Trading of it you can do on a small scale, but once you actually kind of get to know where you want to like really truly focus on like I said, I don't think you want to transition to fixed income or your you know entirely because there's a whole duration of fixed income. Are you going to target five-year, 10-year, 30-year, uh, sulfur? Uh, and then same thing with equities. Are you going to target NASDAQ, E- mini, Russell, Nikkei, like what, you know, there's so many different things. Um, I think you can get overwhelmed. So, for your audience, I would say let's try to like keep it more simple and go to a little bit more targeted.

Do your research and then start to slowly integrate into the trading and price action. Let's begin in that case our first principles where no matter what you're trading the how you trade it and the and the building of a trader as an individual is probably a common theme starting off with edge.

u sure we start very surface level what is edge to you?

edge to me is is having something that either you've you've honed and picked up from a mentor perhaps which was more so in my day like that's how I learned and how I picked up on different market cues in the markets that I was trading especially fixed income um.

this be your mentors on the trading floor.

Yeah. Like I I worked for two when I first started out, I worked for two very good uh cash traders in in the in the bond market.

And I was doing their futures here in Chicago. Uh, they'd be on the phone with guys in New York back in that day. It was just all phone. There was no electronic screen at that point.

So they would do their cash trades on the screen or the box is what we called it. And that would hedge their their trades with the futures market because we're always doing what was called basis. So treasury basis, 30-year, 10 year, fiveyear basis. It's buying and selling the actual cash versus selling or buying the futures.

So it's a hedged um hedged uh position.

Sure. And and from there, would you allow yourself to express deviations in your personality type, your temperament, maybe your own refinements, or was it kind of onetoone what your mentor was teaching?

Because of the environments of a trading floor.

Yeah, I mean it was I mean it was busy from the minute I got in till the minute I got out. So I was learning all day. what not to do, what to do, maybe things that you can improve on possibly. Um, but they were very flexible with my learning. So, you know, they weren't just jerks. You know, if I did something wrong, you'd get yelled at, but you'd also be corrected like look at it this way or try to, you know, really understand like this is why we're getting into these positions.

And so, for me, it just I had a passion for it. So, I loved learning and I loved and I didn't care if I if I made a mistake, I knew I was going to get yelled at, but it's okay. like I knew that you know that's how I that's how you learn right and so they were very good about kind of teaching me everything that I needed to know.

going along and the whole day was a learning lesson.

so being that you were passionate and curious about uh the pursuit of learning trading.

when you're in an environment where you have it's their money and they're your mentors and there is a hierarchy it's not only mentor it's a mentor student relationship it's also boss employee potential relationship.

were you therefore maybe restricted in your learning Because I can imagine this environment encourages do what we say and the the beauty of learning is sometimes understanding the wise and what's behind it and and and going down the rabbit hole of the mechanics of it. Did did that restrict your training or maybe even benefit you in some ways of just following what works and don't worry about the why.

No, I I think it's like the old axiom that the greasy was it the greasy wheel the what is it the it's like the the squeaky wheel gets the grease. So that was kind of like me.

Like I I would ask questions even probably when I shouldn't have like if we're doing something like why do we do it that way.

you know kind of like borderline annoying but I knew I was as time was going on I was getting better so my questions were getting more targeted so you because I had a passion and because.

we were busy all day long you know every day like you you're going to pick it up regardless now whether or not you're suited for it is another thing so like I said I had the passion for it I understood myself and I understood risk you know maybe not so early on you kind of have to grow into things and you kind of mature. But I really think if you don't have that passion, it's going to be very difficult because you're going to be fighting against your own self and that's trading is hard enough. So if you're battling yourself, that's also going to be a problem. So you got to be prepared.

Would you would you agree in saying that uh information is not as not as important as implementation and in in this environment in your I guess first six months you had a lot of information thrown at you. you didn't understand the nuance of it, but then the real transformation becomes in the implementation.

How would you explore that implementation on the trading floor back in the day?

Yeah, I I think you know there's no other way to learn other than just immersing yourself and getting put into those positions. And I don't think it's inherent for most people to want to take risk. It's like it kind of works against your intuition a little bit because it's it's not a good feeling. It's a great feeling when you're right and things are going your way, but when they go wrong, that's really when you're tested.

And I think um and when in regards to implementation, I I think you have to go through those processes. It's not like something you can just pick up like that. It's it's really not.

It's you have to go through and take the hits and take the punches and get back up and then figure out, you know, what could I do better?

And you mentioned bosses earlier, like I you know, Trans Market was where I spent most of my career, almost 12 years in total. And Ray Commonmen, the owner boss was right there on the trading desk with us, right there on the trading floor with us, you know, and everyone was always kind of afraid of him.

And because he was kind of like a legend, you know, but I like me like I didn't really look at him that way. Like he was very, you know, esoteric in his demeanor and like he, you know, he's very, you know, like a savant almost.

But I really attached to that because I would ask him questions and people like, "You're going to ask Ray that?" I go, "Yeah, why? Why? Why are you guys everyone seemed kind of afraid of him?"

I'm sure he took a liking to this idea of of someone taking him as approachable.

Yeah, I don't know if he did a lot. Yeah, cuz we we would battle it out too once I I started, you know, obviously into the firm for a long time and we had our our battles for sure. And um, but I I learned probably kind of a lot more about myself from him and teaching me how to be more humble.

In a way like like you look you're a good kid, but you're not that good. you kind of is what I kind of learned over time from him and I thought.

do you think a new trader's natural frame is more likely to be higher ego and then the market humbles or do you come in as a student I don't know what's going on so naturally your ego grows over time?

that's a tough question um I've seen a lot of traders I've mentored a lot of traders and it I can't say for certain that one aspect is better than the other I think it you know egotist statistical is going to get humbled very quickly because you you the markets are not going to do what you think they're going to do all the time.

And if you're an egotist, you're going to not want to take that loss and that's the worst thing you can do.

Is there a place for an ego in the market?

Oh, for sure. You have to be arrogant. You're not going to take risk unless you're arrogant. Yes, of course there is.

I mean, there's that.

There's nothing wrong with that either. There's nothing wrong with being having that because it's like any good sports player like Michael Jordan, you're going to have an ego, you know, like you have to you're going to excel at things and you have to be able to take what people are going to dish at you, right?

Ego is an interesting spouses. It's an interesting word because ego usually comes with a negative connotation of like arrogant and and narcissist and it can be portrayed like this. But ego is also self-preservation, selfworth and and why is someone going to get up and be disciplined? It's cuz they value themselves.

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I want to explore what cuz it seems like in these days even though the others your peers were not taking action in the same way, you were very curious. I mean you were very willing to learn and going asking for help and asking the questions that were not uh normal to ask maybe. So this makes it look like you are very eager to learn and very hungry students which is a wonderful philosophy I think.

but then when you and I guess in the schooling system or in general in life when you have this hunger to learn and a pursuit to succeed.

uh loss is usually a feedback loop. What I mean by this is that you study really hard for an exam, you failed the exam, now you know I got to study more or I had I didn't learn enough or I didn't do enough. So therefore it becomes an activation energy to then go and fix that problem.

Whereas in trading loss is is baked in. You got to understand that loss is there for the taking and you cannot change it. You cannot get rid of it.

How was your relationship to losses in your early days?

I I think I was because the way the trans market and the prop groups of old is what I call them because I differentiate them today to what's out there. Although trans market's still around obviously, but the way we were taught and the way we were mentored and the way transmarkets model was was you knew you were going to go through the ringer. If you want to be successful, you're going to kind of do what we say, how we do it, follow along, and you're going to work your butt off and you're going to work maybe all day. Um, like there were times where I'd have to clerk for my guys during the day and I got to trade night bonds. So, I'd be there from 6 am to 10 o'clock at night.

but that's expected. Some guys slept there. Some guys actually slept there. But we all knew if we wanted to succeed, you're going to have to put in the time.

So, I would encourage, and that's not to deviate from what we're talking about, but younger guys need to know that that taking risk is never going to get any easier as you get older. You're going to have more responsibility. Things are going to change. Life's going to come at you. You have to do it early on when you can afford to take risk because if you don't, it's going to become that much harder as time goes on.

Yeah. You I've seen that picture online where it's a guy's dream house and it's just a mattress on the floor and maybe maybe some dumbbells and a PlayStation and they'll live happily, but the moment you have that. Yeah. Yeah. You may for a while, but then.

the youth thing you said youth in youth you are more resilient than than people can maybe imagine.

Well, you'll meet a significant other and they're not going to want to live like that.

and therefore now responsibilities change. I understand your point getting back to the the prelim preliminary point of.

first principles of building an edge. So seems like a major pillar is curiosity to learn and ask the questions that maybe are not normal to ask but ask it anyway and have a mentorship around you.

thereafter let's say you've got good guidance around you, you've got good information. How do you take information to now practical outcomes?

Well, I think you need to um kind of and this is this is where it kind of comes back to knowing yourself. Like everyone learns differently. Not everyone can just read a book and understand technical, you know, items. Some people are better visual learners. Some people look at charts and be like, "Okay, I'm looking at it this way."

That's where everyone's inherently different. And you did mention like it's more like akin to like being an artist. And I I agree with you. Trading is an art form because it's not baked in science. You can't replicate it. There's no holy grail. And you can't just have someone sit next to you and do what you do because they're not going to look at it the same way. We have different upbringings. We've got different uh influences throughout our lives that kind of shape and mold us. And that's what everyone makes everyone unique. So, you need to figure out what you are all about, what drives you, motivates you. And to gain that edge, you like I said, you have to have a passion for it. If you're going to come into this thinking like, "Oh, I'm going to make a lot of money." That's never going to happen. It's never going to happen. Even if you come from money and you have and you you know I guarantee your ego will get toasted and you will get cut down and you will not be able to take it because you've never had to take that kind of negative feedback. So you're not, you know, going to absorb it very well.

When someone goes through a a mountain that they want to climb and at the top of the mountain is the goal that they have. Think of it like a north star. So let's say someone wants to lose weight. That end image of the six-pack is going to keep them going in the hard moments when they they want to eat the donuts.

Here traders would have their northstar as the outcome being being rich probably and attaching that a lot to lifestyle, probably ego, external validation. Probably a very primitive northstar and probably a very detrimental northstar to have. What would be a better northstar to have?

I I think focus less on on money and focus more on flexibility and freedom because that's ultimately what you're driving for. If you're a trader and you want to get into this business and and you're you're really ultimately in it for the flexibility and the freedom, I think, because you don't want to sit behind a desk. You don't want to take orders and be stuck there all day long, 9 to5 just in the grind. Like, you don't want to do that. But trading is a grind. You might be stuck even longer, maybe 20 hours a day. But if you love it and you like what you're doing, then that's all that's going to matter. You're not, you know, stuck working for the man is what they like to say in and just in this everyday grind because every day is different.

And that's what makes it more difficult, too. So when you talk about your edge, you really need to focus in when I talk about like singular markets, like try to just go in on singular market, focus in on what what the who, why, and what drives that thing and really build your edge on knowing why it's going to move that way. It could be an economic number. It could be some exogenous other event, but you got to be prepared for it.

You know, I never traded like with stops ever in my career, ever traded. But people trade with stops and I'm like, what? You're just you're guaranteeing yourself a loss. you might as well just put your buy or sell at your stop because I guarantee you're going to get hit.

to bounce off this because you've you've made a bold claim that I want to I want to press on.

Someone that puts a stop guarantees a loss if it arrives to that point but but they ensure a controlled limited loss whereas someone without a stop or a mental stop which I've I've actually spoken to a lot of traders who do so in a in a increased volatile moment or an unexpected event you are now exposing yourself to more.

How would you control an environment in this case?

Well, you cannot control against like a oneoff like large move.

that I guess that's the con. What's the pro that is is outweighing this?

Well, I I think that you should be watching it. Now, a lot of algorithmic traders aren't watching it. Their programs are watching it. So, they're going to inherently have that in in built in and baked in and embedded now. And do do I think that that's an ad an an advantageous way to trade to have that already baked in? I don't know. I can't say for certain. I don't I don't think so. I would rather know my ins and outs and and you know try not to focus on stops because I think it's tough. I know. But you should know in your stomach if you're not an AGO trader. Now, not everybody's an ago. Some people are discretionary. Like I said, Ago guys will have it already built in. Their ins and outs are built in. So that's inherent to that system.

Are we using algo uh interchangeably with like.

like algorithmic systematics?

Even if it's uh not a code but yourself, but you're trying to be systematic.

Well, no more codebased blackbox models. Most I would think they're already going to have those built in inherently. So you got to differentiate. Are you going to be that style of trader or not? Are you going to be discretionary, somewhat systematic? You have to have these things kind of already built in.

Let's define first of all, what is a stop-loss? Is it there as a protection simply? Is it there as invalidation? Or is it there as a it's not going my way? So this one is preemptive. It's like before I get into the trade, what do I think would make it go wrong versus I'm in the trade but it's not going momentum maybe or it's just chopping around. Therefore, it's an invalidation. Or is there another category I'm not seeing? How would you define the stop?

Well, th that's pretty good to look at it in those three different aspects. Um, the way that I traditionally look at a stop-loss is that I'm into this position and I'm either going to I know my max risk, so I'm going to put that stop loss there. Like I said, I'm generally never put them out there in in the system to be taken out. So, I I I'm just speaking kind of like to your audience that may be wondering like what a stop loss is. Um, it's there to protect your downside. It's also could be there to protect your upside. Like you you you've got profits in a trade and you don't want it to to drop like.

and move that along. Those that's a little bit different. So there are nuances to stop losses. So when I say that I never trade with a stop loss, I guess mentally it was always there. I just never systematically put it in there every single time.

because I felt like that that would, you know, invalidate kind of my theory that I'm my objective in this trade.

isn't for that to get hit. Why would I even put that there? I have my target. If it doesn't get there within usually it was like a time frame with me like if it's not getting there for whatever reason, then I'm wrong. So, I was always quick to just get out and get back in. I could take quick losses. I don't care. I mean, there was this one trade I did in the bond. It was it was a probably one of my bigger trades. But back in the day, we also knew who we traded with. This is the big thing that most traders, new traders today don't know about. We knew every everybody on the other side. Even electronically, we knew back when uh electronic trading was first starting out, we still had the the um.

the trade log of who we traded with. they would have the house number and the acronym.

of like the the trader or trader ID.

instantaneous like in real time.

So like when I was buying or selling the futures I would know, oh I'm trading with 350 that's Goldman Sachs or 660 JP Morgan and I'm buying a 100 bonds and it's JP Morgan. So I'm like well I'm probably not going to buy anymore because they probably got 2,000 more to do. So I know I'm not going to be doing that.

So could this act as a form of edge?

sure. That's what's missing and I I I I don't think it's emphasized enough how the exchanges have created this an anonymity.

in and I think it's done on purpose but I can't quantify quantify that or say that you know but I don't see why it would be done on purpose because we should know who's on the other sides of our trades. It would be when you talk about statistical edge, that's a big edge.

But at the same time, you wouldn't know why they are entering. And it could be that you think they're buying up because they wanted to go up, but they could be buying as a hedge to something else.

Depends. Back in the floor days, you kind of knew everybody's customers. So you knew they were prop shops, you knew they were banks, you knew they were hedge funds. Like you knew what desk were their customers. So those edges are all gone. Now we're primarily price fixed. Like, oh, we're just focusing on price. So technicals matter a lot more I think today than they did prior because there was more information to be had back you know post or pre2010 than there is now you know imagine if you knew who you were trading with all the time like you know it was just another prop guy like oh I know knew that guy I know that guy you know it's that's information so when you talk about edge that's huge having data we don't have that anymore it's all kind of anonymous who you're trading with and I think that's done by design.

because that's the system we have built now this monetary system behemoth.

that focuses on balance sheet more so than just kind of um targeted more finite individual traders.

With that being said, there is still forms of like you can see the order flow, you can see volume. Are you looking at price or are you considering these other things? And then there's also positioning let's say the coot report. Sure. There's actually layers that we can uncover behind price.

Which ones are you using?

Uh you mean currently? Sure. Well, I think volume is is huge, you know, right now since we don't have the data of like other side of our trades. So, volume, price and volume like VWAP is a very big, you know, for me I think for momentum purposes.

Uh, and I think that's all that we generally can go on to be honest is the tech. Like I said, we've turned into more technical price fixed.

You're trying to break that price down to these other levels whereas I'm trying to simplify. I'm like, I don't I don't generally care necessarily like what fundamental news came out to drive that because I always think it's already embedded in the marketplace. Somebody already knew that. Anyways.

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It's very interesting for me cuz I'm down. I'm an intraday trader, so I'm down on the lower time frames. And sometimes I won't even know there's a news event. I see price building up to show me a buy happening and then it pops. I'm like, maybe I didn't even get in, but like, oh, what happened? And then I check the economic calendar. Oh, there's news. But why do they show me a digital signature prior and then self-fulfill on the news event when I've seen.

you've seen that before?

Bunch of times. You've noticed sometimes you see a bit of indecision and then news whips around. She makes sense.

So, what do you pertain that to? Why why do you think that that happened?

Well, without getting into too conspiratorial stuff, uh, I believe there is information advantages and I think the retail participant is probably the last to know.

Yes. So that makes our job that much harder, right? And so you have to kind of what you should know what numbers are coming out, right? Like I mean that's that's kind of key. And I try to, you know, focus to make sure even with Fed speakers because who knows what they're going to say.

You have to know like when minutes are coming out, when releases are coming out, CPI, PBI, all those you you should know because especially you've got positions on at that time.

The big ones for sure.

Yeah. And the key I think now is going to be that non-farm payroll report is going to go that used to be really big back.

Not so much anymore. It will be now because they've been lying through their teeth about the jobs for years.

And and why do you forecast that something should change?

Well, well, we just got one of the largest revisions ever out of the BLS, right? 911 million jobs they just wiped out that they said were gains. They're not. So, ever since post-COVID, we've had this thing of like, oh, the economy's this jobs are plentiful. And they even came out after CO like, oh, there's 12 million available jobs. And where the the anomaly I saw was like, this thing never went above four or five million. Why how are we at 12? I know CO shut everything down, but no, it didn't shut that like these jobs are not real. They're fabricated and now we're coming back down to like 6 million. I'm like, well, see, that's just.

I'm glad you're saying this and not me, but I I want to explain.

It's not conspiracy. The data is there. the data.

but also like when I when I look at what happened around COVID and how much printing happened.

and then I look at inflation numbers.

I'm like, and then I also just look at things the prices of things that and and then I look into it a bit and I'm not the most well-versed but there's like the basket of goods that defines inflation they can move things in and out of as they and so it's like what you choose to be in the basket will define what inflation would be and if they have a political narrative or some accountability they can they can pull the.

interoperability Yeah. So you switch from core to super core to standard CPI. But to your point, the only thing I generally focus on is the Federal Reserve and their annualized increase in their asset base. That's the source of the inflation. Nobody talks about it. I mean, and I mean nobody. I'm on all the time talking about I've got this data based chart I put out there all the time. The last 30 years annualized, they've increased at 9.7%. That's the real inflation rate.

What do you mean by increasing assets?

Like the Okay, so in two pre-200 the FOMC's asset base, the amount of assets they have on their balance sheet was 800 billion. Post-COVID, it got up almost to 9 trillion.

Is that through acquisition or inflation?

Well, that's through buying assets. Yeah, they're buying assets and they even still hold two trillion of MBS on their books. Why are they doing that? They're distorting the housing market for one. They no business doing that.

and they still do it. Um, one good thing I am seeing out of the Federal Reserve is that Powell did say they're going to continue to shrink their balance sheet, which is what they should do. Pre-COVID, it was 3.8 trillion and it's still sitting at 6.7. Why?

The increase in the Fed's uh balance sheet. What effect does that have on the economy?

Oh, well, it's straight up nominal asset price increase one to one times leverage, whatever base leverage amount you want to factor into that two times, three times, four times.

because they can control supply.

They control the supply of money. But here's the thing, but people don't realize, and this is another thing nobody talks about. I don't know why. Inflation is being generated via higher rates.

Okay. Higher rates are generating inflation. We need to lower rates. We need to bring down the equilibrium. Or was like Mirren was just talking yesterday, the new appointee on the FOMC just last week was talking about bringing down the RSTAR down to like 2%. So, we're way above what rates should be because there's too much money being created. The US government's giving away trillion dollars in interest. Who's that trillion dollars going to? Who do you think it's going to? I can tell you who it's going to. It's going to the top 5%.

The top 10% control 50% of the GDP spending. That's a distortion that uh no republic or democracy should ever be happy about.

When when you lower interest rates, would you not encourage borrowing and spending and therefore inflation? No, you wouldn't lower if that did that work in Japan. Decades of zero negative inflation even though their rates were negative. No, the inflation follows the interest rate. Higher inflation, higher rates. Lower inflation, lower rates. You're assuming that the borrowing can increase. You're assuming households have the capacity or banks have the capacity to loan more money and that the viability of the consumer is there to increase. And that's that's a false premise.

That's a false premise. Now, the law of large numbers, it's eating into the Federal Reserve's monetary policy. Monetization is not.

it's not it's good like decades ago, but as time goes on, that nut keeps getting bigger and bigger and bigger until eventuality you have like just a giant sieve of money going to a very few people. Yeah. The stimulus for the regular general uh plebeian is what I like to call them. And those patricians are all the elites. And if you give the plebeians all this money, COVID stimulus, whatever, $10,000, I'll tell everybody over checks and whatever, that money is going to be spent to the system and it's going to be close to the top.

It's going to be transitory and go right to the top into what? Hoarding. They're going to be hoarding.

So that's the reflection of the stock market. People think the stock market's a reflection of the economy. It's not there. It's has nothing to do with the economy. Has to do with the the top 10%'s bank account. Period.

That's it. That's the only reflection the stock market is. It's not the economy at all. In fact, it's 10 stocks.

I I remember just learning about I did economics in high school.

yeah, the first question that came to my head and I asked actually it was like 2% inflation is healthy. That's what they aim for. I was like.

why?

Yeah.

And then the answer was, well, if you get too close, you need a buffer. You'll get into hyper uh you don't want to enter the deflation. Sorry. Uh, okay. Interesting answer, but it never sat right with me because I knew that the more inflation that exists, it benefits the elites as you're saying or the top 10%. Because their debts are eroded because the buying power goes down, therefore the debt value goes down and you get asset appreciation cuz it trickles to the top. So like apart from serving them, what benefit does a small amount of inflation have in an economy?

Wait, are you asking why would it what.

as in why is this 2%?

Oh, are you? Yeah. Did you get your answer? Because the answer that.

the answer was we don't want to hit deflation. So let's have a buffer of safety net.

But shouldn't deflation be a reflection of productivity growth.

right? Like as our economies improve and we improve efficiencies, things should go lower in price. Like why are cars 120? Why are we getting more cars with all these gadgets made out of plastic? They should be much cheaper.

right? Like but they don't want that. That's not good for a small subset of the economy. Yeah, it's not good for that.

But at some point we're going to have to decide. Do we want a legitimate democracy republic or do we want a technocratic pletocracy? Because that's what we have now.

We do not have a republic democracy. It is run and controlled by a very small group of elites that were just at the White House.

And there's no denying this. Okay, I've run all the numbers.

Uh, it's the the insane amount of wealth that these guys have. It almost is is to me makes money worthless.

Like Larry Ellison could and I I have this chart too could give away $100,000 for like 80 years straight. for 1% of his net worth.

1% of his net worth and he can control the rest of 90. He can give away 100 grand for 80 years straight every single day.

How do you even quantify that to the general person?

It's also not perceivable with these large numbers. The brain cannot comprehend the level these things are at in general though, because it seems like we're questioning the core belief of fiat and the and the monetary system which I've been down that rabbit hole and it's I'm not fully well-versed but I'm aware. But when I do go down the rabbit hole, apart from just entertainment and curiosity, I reach a point where I'm like.

does this serve me? Is knowing this going to help me or because I can't I'm one man. I can't change the system. So rather than trying to get angry or frustrated.

I don't think so.

I guess I guess it's a limiting belief. But the idea here being that instead of me knowing uh what can I do about it or this is unfair rather I try to not have a victim approach rather okay, how can I harness this? And now I know the rules of the game. So time for money is now is is is literally a diminishing uh thing to do. So now you got to think in leverage means and so forth. So I tried to navigate my life arming myself with this knowledge. Is there is there something that we can do in the markets or maybe outside the markets to arm ourselves knowing this is the environment.

Yeah, you're seeing it now and this is when I talk about the law of large numbers eating away the central bank's power now and they know it too. So they're actually caught. Um, so it's going to be difficult to navigate but reality you see the price of metals they're heavily suppressed. They should be much higher in price. heavily suppressed metals. I like gold specifically.

through supply restriction or.

through all of it. It's through central bank short selling whatever they can do, paper shortselling, whatever they can do to restrict that price. Now, eventually they're going to have to revalue it because.

why why are they what do they achieve by doing that? It's the delta of fiat versus gold or metals that they don't want to want to widen.

It's competitive of real money. What what what do people perceive as real money? Tangible money. They'll look at cash. The general public doesn't deal with gold, but in reality, that's all you need to own. You don't really even need stocks. In fact, I think gold has outpaced the S&P 500 over the last 30 years.

For 30 years. Okay.

Yeah, for sure. On an annualized basis. And even with adding in the Someone's going to fact check me, but that's fine because I think I already have the data. Even with added in the dividends, it's beat the S&P 500.

How interesting.

And it's even more suppressed. I think now it should be twice the amount that it is now. So we have this system where money doesn't exist how people think it exists. You know there there are no more reserve requirements. So who knows what the leverage really is embedded. People don't realize there's only 2.3 trillion in cash yet we have 22 trillion in bank deposits.

Okay. So that's a 10 to1 levered position. Okay. And that's.

just the the United States. They're not talking about China. We're not talking about Europe. Like, even the the Bundes Bank is that that Target Two imbalance is also problematic. That they've shifted and hidden these risks by printing more and more money. But as you do that, you start to create a system where you're bifurcating a very small subset and a very large general public that's not very happy. And like I said, it's not good for democracy. I'll tell you that right now because you're going to get calls for socialism. And we see it now. And do I blame the general public for wanting socialism? No. Because it's it's what it's it's inherent to the monetary system and how we've built capitalism.

At some point, society is going to have to go back to the social contract and say, what's good for us as a general public and not good for profiteering. You know, because we've there is a precipice at some point, and it's happened throughout history. And you know, it's are we there yet? I don't know. Maybe this can go on for many more years. You know, people, I I don't know. But I I think it's a very dangerous time that we live in, to be honest.

For sure. And and we can see the tensions rising and and eventually you reach a tipping point where people have had enough, and it can be the smallest of triggers. But we we are entering these interesting times of control, divide and conquer, all of these narratives.

Yeah, we've sidetracked a bit. I want I want to end the conversation in this in this arena of history of money because it does tie back to crypto, which is an area of interest for you. Yeah.

But I want to just bring it back a little bit to practical trading. Earlier on, you mentioned an idea of you have to understand yourself in terms of psychology. And I was pondering upon it as you were speaking, this idea of why is temperament, because this is that nature versus nurture, number one, and why does that affect your behavior? Although it totally does, where a domain may be better, some people's personality type is is more suited for scalping versus swing trading.

Uh, risk aversion, maybe your childhood traumas, maybe you a lot of things that mix into it. So, of course, there's a long list of things that it could be. But how do I understand what affects me? What questions should I ask myself?

I think Jordan Peterson puts it best. Um, you want to know yourself? Wake up, sit on the edge of your bed and just sit there and contemplate. Ask yourself, you know, like, who am I? What am I supposed to be doing? Where am I at? What what thing can I avoid doing today that's not going to make my day go the way that I want it to go? I think if we're honest with ourselves, you're going to if you spend time and meditate and and kind of just spend time with yourself, and I think you're going to get those answers. And taking risk in trading is not inherent to most people because it's not. You just it's it's like this thing of control that we all want to hold on to that we think we have control, and you just don't. No matter what, it's life's going to transpire and go the way that it wants to go, whether you make make decision A or B. But can you live with decision A or B is the question, you know? And that's that's different for everybody. And you said it, you know, perfectly. I think we all it's we come from different things happen in our lives, and that's going to change our temperament. So at at this given point of time of your life, if you're like going into trading and you're kind of thinking about, you know, how can I really get in immersed into this? And you need to know yourself. Know what kind of risk you can take. Know how much you can handle, and know how much you can risk, and what you can tolerate. It'll make things easier for you because I can tell you right now, it's it's like Murphy's Law. You're going to go into something, it's going to go against you right away.

Now, do you bail or do you cannonball, you know? And that's that's what really differentiates good traders from bad traders.

So, here is actually is a truth that people have this uninformed optimism. Trading is easy. They get hit with a few losses and then slowly end up in the valley of despair. This is way harder than I thought. Should I change and do something else? This state, I think traders chronically spend their career in, and the emotions that the amplifying emotions is probably just fight or flight. This is a and then this brings me to this idea of the animalistic portion of our brain, which is just hardwired in us, and it's primal, and it's going to be like, okay, do I perceive a threat? What do I do about this threat? But it's not a lion in in the bushes. It's it's it's a loss that maybe is coming or a mistrade that you you maybe wanted to be part of.

Yeah. So this interaction of the primal brain with what the marketing bring out of us, how how can we seek to harness or control it?

I I I I think you should let go of it. You Yeah. You let go of it and realize like, there's other days, okay? Not every day is going to go good, you know? And you just got to chalk that up. And if you're having a bad string of trades, especially, you have to step away. The worst thing you can do is have a set of string of trades and then come back and think like, "Oh God, well, this one's going to go my way. I'm going to maybe double up on this one." Don't ever do that. It's just it's just not for whatever reason, either your analysis is wrong, or you're looking at something not correctly, and you need to take a step back because it's it is very difficult, and it's not inherent for humans to like take loss lightly. We're going to beat ourselves up, and we everyone does it. But those are things that you're going to remember, like, oh, I'm not going to do that again because I know how I felt.

So exploring this where someone's had a painful day, they just had they went on tilt and they had a bunch of losses, and now you're sitting and let's say halfway through the day, halfway through the the market session. Uh, I spoke to a couple of traders who then end up paralyzed, including one floor trader from Chicago also. Um, and he he he was saying he was paralyzed for months to the point where his his boss said, "Just place any trade, the smallest lot size you can, build your confidence." Because for months he was sitting on the sidelines. So that's in a fight or flight. That was a flight response. I was paralyzed by the the trauma of it. I on the other hand, I think of a fight where, even though despite what you've said, which I'm aware of, I need to walk away. I I it's been a while since happened, but I remember entering this mirage where I for the life of me, I don't know what's going on, and it's like I'm in a flow state, but in in the worst way possible. And then I break myself out of it a few hours later. I'm like, what have I done? So I clearly enter the fight. Others maybe enter the flight. And despite knowing the rules and having it written down on your wall and whatever, the the hard part is not knowing. It's the doing.

How can we make that easier for ourselves?

Yeah. I it's it's I think the repetition, right? You're going to as And that's why I said this is going to take time. And you cannot think you're going to walk into this and be successful. It's going to take it could take years to get good. I mean, it just like you said, it's either fight or flight. And you went into battle mode there at that point. And that may work for you. You're like, I'm gonna fight through this one. I'm gonna get this one. That may that may do it. That may flip the switch. Uh, but that's inherent to you. You know, others, like you said, the other guy took a few months off and then his boss said, "Come back and just put some small trade on. See you see incrementally grow." And that's where I think you have to recognize the mindset you're in. If you've got other externalities going on, like at home or your family or something else is going on, and you don't have a clear head, like you need a clear head to really get into like I think you said the flow state when you're really doing well, things are going, and you're not concerned about the money. You know, as a good trader, you're going to get to that point. That is going to be there. And like I said, I never focused on the money, it just came because I was I was good at what I did. But I never thought of the money as the money. Like and and so when people's focus, they need to kind of understand that too. Like it seems like if you get into a bad string of things, well, how much did that string cost you? Everyone's going to focus on that. Am I 10% of my capital, 20%? Am I a prop trader now? I'm not going to get paid out at the end of like these are all worries, and it makes it that much more difficult. So I think through time and repetition is really the only way. It's the only way you can ever kind of train yourself like with anything. It's like training for a marathon. You got to do it.

Yes. So, I totally agree with you, but I feel like we're in the minority where I refer it to as exposure therapy. The more you expose yourself to the stimuli, the more desensitized you get, and therefore the reaction is controlled over time. But you can't cheat that. Whereas most people would be in the arena of morning routine, meditation, and cold shower, and all of these things which maybe help you reframe. But I don't think that's going to help you react in a smaller way to to something that is triggering you. Where does these kind of habits, which there are many, affirmations, XYZ, where do these typical habits have a place for a trader?

Well, I it's tough that you mentioned that, 'cause I kind of forgot about that. That linearity of things is something that I think works against a lot of people. They do think there's structure involved.

What do you mean by that?

Like structure, like when you're saying like you were saying like, okay, so they have this routine of trying to get back into meditation, do that, like that's a structure. Yes. And you think like, okay, if I just do that and keep doing that when I have a bad string, that then I'm going to come back. But no, that's might not be how it's going to work out. So being too linear in your thought process is going to work against you. Okay? You have to have a routine. I get it. And you kind of have to figure out your own self of how you're going to get to that point. But don't expect it to work. I think if you become too linear, you you negate the natural process of chaos. And that's something you cannot do because, like, because you just can't. You don't know what's like I said, humans, human nature, they want control. And in our markets, and the way things flow generally, when you're in high-risk environments, you don't have that control. You have a semblance of control, but you don't.

This control, this word of control is super interesting. I I read this book a while ago, I forgot which one, but it was talking about how as a kid, what is it, what is a child's mind? It's very curious. Like you were when you were learning, you're very open to ideas, you like to test, you will fall down on your face. And how how does the child interact with the world? It bites things, it touches things that are hot, and it's interacting. And he referred to it in the book as the playful, flexible mind. And he said, as you get older, you get rigid. Because like a kid will stand up on this table and start screaming, but the adult won't. Why? Because you got told off at some point, and you're like, I can't do that. And we just have these social norms of how do we queue in a line? How do we how do we behave in an airplane? And this is all conditioning. And and this conditioning is control, but it's also changing your mindset and the ability to learn. So in this book, he argued, connecting it to also mastery, which is one of my favorite books from Robert Greene, this [clears throat] idea of flow states, which which we've both referred to, is that you want to build subconscious competence so that you can enter a flow state so that you can pursue mastery, which is never linked to an outcome. It's it's in the process. In the process, you get the mastery. So then what I've kind of concluded in my head is you need to have a flexible, curious, playful mind with alongside a curious but also um subconscious competence and trying to build that. When I look at these things that people say online of, you know, morning routines and XYZ, this doesn't help either of these categories. What it serves, however, is this externality. You said, if I got troubles at home or or issues with my wife or whatever it may be, this can now be a cue to be like, okay, let me put that at the door and enter this zone. Enter the zone, I guess. That's all I see it serves as, but anything beyond that, I'm not really sure. And it's for me, it's been desensitization to stimuli over the years.

Would you argue yours was a similar case?

Yeah, for sure. I mean, I I agree with everything you're saying there. And that's why I talk about like nonlinearity is is key because we cannot we cannot think that everything is so static that it's just going to fall into those buckets, you know? And it makes sense to do, like I said, if you're having a hard time and you need to refocus. But that's part of the thing, like where if you're not in the right mind, you better get in that right mind. And certainly don't trade if you're not in that right mind because it will go against you no matter what. You might get lucky, but odds are you're not going to.

Um, but do [clears throat] you do anything? Because I i've had people that do the full-on Instagram morning routine, and then you have the others that are like, I just listen to the same song before I get into my train charts, and it's just cues. Someone goes for a walk. What is it?

Yeah. Yeah. I I can't say specifically that I have like a specific song or something that I'll put on. Um, because I just have too much in my life going on where I can't really like, you know, separated into one specific thing to kind of take me out of it. There's always something going on. So I I think to answer this question, I I think it's more being being prepared. I do a lot of research, a ton of reading, ton of data analytics on all sorts of markets. Like I mean, if for those that are going to see this or maybe go to my blog and start reading like how I write and you'll see my work there, and it takes a lot. But that's part of my passion. So don't kid yourself. Like like I said, I I never focused on the money because I never really thought that's why I was in it. I think I was in it because I really loved the markets for what they they kind of were and the chaos that they were. And I never thought that I'd want to be stuck behind a desk and just I'd rather be something different every single day because that's how my mind works. My mind is always searching for more input. Maybe too much. It kind of makes me kind of jaded a little bit because I can't really relaxing is is kind of like reading more data, [laughter] you know? It's weird. It's weird. But I don't think there's like, you know, I've got a big family, so I have a lot of things I have to take care of, too. So there's a lot of thing, you know, my my time is spent in a lot of different areas, but it's for those younger traders out there. I think I said it earlier, if you're getting involved, the keys are knowing yourself, knowing what kind of person you are and how much you can tolerate, and being in the right mindset and taking risk now when you can, because take it from me, if I could tell my younger self 30 years ago, I would have done more things, you know, even taken more risk than what I did. Even though I took a ton of risk and got beat up for it though, you know.

I I want to explore this word confidence now because we spoke about ego and and maybe a positive remnant can be confidence. I think a lot of people tie their confidence to the outcome in terms of my confidence curve is like my P&L curve. So I go through a bad period, my confidence is beat up, which is probably a dangerous way to be in dangerous. But how can we build confidence the right way in trading?

I I I like keeping a journal of your successes. Um, maybe not of your losses, just kind of keep them in your mindset. But as you're as you build kind of like your trades up and you're trading and you know maybe maybe it is every day, maybe you say like, oh, maybe do you know, keep track of the money and see like, or just do a percentage based, however you feel comfortable. I think if you repetition wise in that regard is good because you kind of will will gain traction of the things that worked and the things that didn't, and they'll kind of be in your head like, oh, what did I do that day? Oh, what number came out? I missed that. Why did I miss that? Well, I just got lazy, you know? And you can't ever let your guard down because it's and keeping a journal will will kind of keep that that process honed for you. So, I think that would be one of the things I would recommend for sure. Like keep a journal of like your your trades and kind of, you know, write down like I had many years of journals, and it was very hard. Even though like back when I was trading, you know, fixed income arb every day, I would we'd have, you know, everything was kind of like on a paper trail. So, we had to write it down anyway. So I knew all of our my trades and you know down to the you know penny and everything. And you know, but I tried not to focus on the money, just more of the trades.

And is the benefit in journaling in the art of doing or in the art of reflecting on your journal at the end of the month or something?

Yeah, you exactly. It's reflective. Daily. Daily. Yeah, because you're going to know, like every, you know, the market something happens today, and you know it's going to affect you or your trade, and you may maybe you didn't get out because of something. Maybe you got a phone call and you were going to get out and you didn't get out because of that phone call, and it's going to piss you off, and you're going to be like, "Oh, I should have done that." There's many times where I've done that, like had to do certain things, and like I missed out, or I just wanted to get one more, I wanted to eek out a couple more ticks. Those those couple more ticks cost me thousands of dollars because I was being stupid. You know, don't do that. Set a day, set your goals, be mindful of your goals. And some days you're going to attain them, some sometimes you're not, you know, but you need to have that structure. So, when I talk about like nonlinearity, that doesn't mean you're just going willy-nilly all crazy. I'm going to do whatever. No, you have to have structure in your game plan. Okay? There's no doubt about that. But don't think for one minute you're going to have control of how that game plan may transpire. You may have a basis and an outline, but things are going to transpire during the day that might change, and you have to be like dynamic. I've spoken to a variety of guests on the show, and a unanimous common denominator between all of them is the emphasis they put on data and actually knowing the inner workings and the insight of your edge and your performance. That's why I'm proud to bring a partner of the show, Tradzella, the number one journaling, back testing, and all-in-one insight experience [music] created by traders for traders. What Tradezella really gives you is deep insights about your trading that would ordinarily not be visible. Whether it's through understanding your trade types and playbooks, or even insights powered by artificial intelligence through Zela AI. Whether you trade forex, futures, cryptos, the stock market, it all seamlessly connects to Tradzella. So there is no additional work. You've seen me reference it dozens of times and all of the benefits I've had in my trading from the insights I found from my Tradzilla. So join myself and thousands of other viewers of the show. You'll get the best discount using the link in the description or code toot for titans of tomorrow.

You know, would you say that because we're talking about here of building confidence, and you're saying that you build confidence through doing and over time, and especially if you're actively absorbing your emotions and journaling over time, you build the confidence. Can we harness confidence and improve it through a back testing environment where you go through years of price action over an extended period of time? Will that translate to confidence?

No. I think he's going to overfit. I don't think so. If somebody if that was the case, somebody would have done it by now. But what I've seen out of overfitting and algorithmic teams that have tried to do that is the confirmation bias will kill you because you start adding too many attributes to your system, just try and fit that mold, and I just don't think the past isn't really necessarily like predictive.

Yeah. It's not. Yeah. Because even now, even now, it's the markets are not the same as they were a year or two ago. So, how are you going to run data over? And I've got data going back 15 15 20 years almost of most of the markets that I've traded, and I could tell you right now, I wouldn't trust it. Like I I can use AI to to go back and take my data and say, okay, what trade work best here? What do you think? And put it on, and it's not going to this won't fit the same now because these the same factors of what drove the markets then are not driving it now.

Yes. You know what I mean? So we cannot overfit, and that's what I think back testing does a lot. Yeah, it's going to give you some sort of baseline, I think, to kind of like, oh, this trade will work well, I've back tested it. But you're going to start to tweak it as things don't go the as time is proving that the trade didn't work as well as it may have done.

I think it also brings out it brings out biases. For example, you're meant to be encouraged to be a pattern trader because you're looking for that pattern, but you're not regarding the fact that who are the buyers back then and why were they buying compared to now? They're not the same people. It's not for the same reason. The pattern may look the same optically, but behind that is completely different purpose.

Um, interesting perspective. How do you therefore keep in touch with the market and evolve your strategy with the evolution of the market?

Well, you have to kind of know, like you said, who's driving it now, like what's really driving the market. And for me, I've come to the conclusion since May of 2023 that the only thing that matters is how the central bank is reacting to any external problems that are arising. Are they going to start cutting rates, which they they started to do, then they paused, and then now they're starting to cut rates again. So that's telling me, okay, the leverage is being purged to the point where now real money is starting to be at risk. Most people don't talk about it, but leverage works both ways. Okay, you can you can print and buy assets and lever that up, but once you start having write-downs, that same leverage is going to start to come off in reverse. So when you got commercial real estate buildings that were sold in 2020 for 300 million, now selling for 30 million, that's a major problem. So you're talking about massive amount of leverage being wiped out on the pension fund level, the private equity level. All these guys that own this uh, you know, all this stuff that they inherently think is worth X amount, well, now it's written down to what, one-tenth the value? Now you got to write down everything else that's tied to that, you know? So that chain is, I think what's going on now is making the Federal Reserve nervous. They're not going to talk about that, but I think that's really what's going on. Um, it it takes a lot more money now to keep things status quo, but the money you need to create is going to be inherently problematic for mainstream America because the cost of living is going to explode, and we've already seen it. So, what do you do now? And that's why you're getting the calls of socialism, UBI. Why? Because it's inherent to what we've created. What? Yeah, we can keep pretending that, you know, uh, we can we can keep issuing credit and keep kicking the can down the road, but you're going to have a destabilized society for that if that's what we're going to keep trying to do.

So, that's really the flip side of all this money printing is a destabilized society.

I forgot the famous saying, maybe you're familiar. I'm going to paraphrase, but it's the idea of um, you don't want to trade your bias because the market will be right longer than your bias.

Yeah. And then something about insolvency.

Yeah. No, the market you the market can stay irrational longer than you can stay solvent.

Thank you. Yes. Exactly. That was Ray Dalio. Oh, yeah. That was the motto. Transmarket's motto.

And I I had I had a guest the other day, he was like, um, he's like, he hates Tesla. And he has his reasons for it.

Oh, he hates what?

Tesla. Oh, Tesla. He just said it's a garbage company, overvalued, XYZ. And he's like, but if I had acted on that idea, I would be down and probably wouldn't be a trader anymore. So with this idea in mind, when we look at uh, how things could be a bubble, which is basically what we're alluding to here, does it serve us in any way to believe it? Because historically speaking, it's been bubbles many times, but it's it's kept going up. And therefore, should we just ride that wave and ride the trend, or should we look for these opportunities to see a breakdown and look to capitalize on it?

Well, I think you got to have um, that in mind that, you know, when you when people say it's a bubble, or when they say, when you're a guy that didn't like Tesla, like, well, what do you mean? What what don't you like about it? The fundamentals don't work, like the old fundamentals, ratios, you know, French and Farmer, that stuff doesn't work any longer. It doesn't exist. What exists is we live in an AI-driven financial world and system. So it's binary. It's either on or off, zero and one. Your company's either going to get money, or it's going to be taken away from from it's going to be sold. So, it doesn't matter if the stock is performing. The AI is going to continue to want to buy it. Nvidia, all the I call them the mega nines. That's what I call them because that's I don't care what somebody might say about a bubble. It doesn't matter. The money is here, and it's going to be put to work in those companies. It's like the old, I think it's a is it a parable or Bible phrase that to those who have everything, everything will be given. To those who have nothing, everything will be taken away. This is the system we have. And this is the system that nobody seems to want to talk about because they just like, look, oh, the stock market's doing great. Trump talks about it all the time. Stock market's doing great. Well, that's great, but that doesn't serve 90% of the, you know, public. Okay, that's sorry, that's not a reflection of the economy. It's a reflection of monetary policy and a system designed to separate the top of that pyramid from everyone else. And I get it because that's what the system is. Now, I'm not saying that that's a bad thing. I'm not saying it's because it's, you know, capitalism is being driven by nefarious forces. It's simply an inherent problem of monetarism. And when you think you can print to infinity and not have issues, we have the issues that we have now because of that. But nobody wants to talk about it because, oh, stock market's doing well. That means the economy is doing well. Nothing's further from the truth. It's not a reflection of the economy.

I'm going to open the black box in just a moment, but I want to start off uh, before we get there, just with a little bit on technicals.

Sure. So we're building, we've kind of built an idea of, okay, where's the correct frameworks from mental space, psychology? We've spoken about, okay, how do we view the markets? But how do we execute an idea? Because one thing is trade ideation, you generate a bias, you generate the timeline, and then you're mentioning, okay, you're you're interested in timing the market, I gather, because you said a bad a trade that's not going in the direction quickly, momentum is not kicking in, you'll probably get out. I guess you're looking to time the market as well as not just direction. Are you timing the market through technicals?

Well, yeah. I mean, it's you'll see if you read my blog, I put like kind of the I have the CTA market sentiment up there that I that is basically, you know, the culmination of my data and my program of the 24 markets that we cover. Okay. So, with that, there's a sentiment towards it's either I I break it down either long, short, or neutral because I I want things as simple as possible. And it's a lot of it is kind of trend-based, momentum-based, but there are other little nuances involved too that if one was trading them, I don't look at as as a I look at it as a portfolio of global macro. I don't look at one individual market. So it's to answer your question, it's it's trend-based and momentum-based. But if you were actively trading these things, I'd like to look at it as a basket and not an individual market. So I'm looking at equities, fixed income, metals, energies, you know, AC and currencies across the board, FX, like what's going on there? How is how is the interaction between all of these market segments to as if you're looking at as one full portfolio? I think that's benefited me in my mind of saying like, look, we can't look although I'm not talking about saying like to the individual guys that are just starting out, how I said focus on one market. You can focus on one market if that's your goal when you're first starting trading on, because that's how you're going to learn. But you should look at how all these different market segments affect one another correlation-wise, because you can maybe take an aspect of a short equity position in something else, like maybe a long Swiss Frank, something like that, like like you can kind of start to see relationships and build things that way. So in in regards to, you know, I don't want your listeners to get confused of how I said focus on Walmart, where I don't need to do that. Like I'm I've already gone through the gauntlet and figured out like this is how I best view if somebody's going to trade alternative assets. I would rather them trade it as a basket and understand the interrelationships between every market segment.

It makes sense because the institutions are not trading individually. They're trading as a portfolio, and and yeah, it's a holistic approach. When you've kind of gathered the sentiment, what is your execution criteria? This is what I was trying to allude to in terms of technicals. Do do you have let's say break retest kind of things, using support resistance? What kind of execution?

Always, always. So I've got like three different levels. I've got um, like a bull bear pivot, and I have a support and resistance. So, and I I put those up there too.

What is a bull bear pivot?

Like I would view the the sentiment like at what point I'm estimating the systematics to step in either long or short. So, where you going to get market momentum to turn in, what is that direct in individual market?

Um, mostly like VWAP, let's say, like levels like that. Um, how I've seen the trend over the last like a duration period, whether it be uh weekly or bi-weekly, like depend there's multiple little things in there. Um, where I think the the level that would be necessary to tilt in one way or the other the favor. So like right now, most markets are in like a bull market, but there's I'll keep mo the bull pivot will keep moving up and up and up, and to follow that. But if we get below it, like in the tenure, right now, I think I have it at 4.09%. That's a huge level, but we're kind of sitting right there. And I I expect like I I know what they're doing. I know what they're up to. I know I know the Treasury market is trying to absorb what the Fed's going to try to do, whether or not we're how far behind, how quickly are we going to cut. But the tenure is it's a different animal because it's the long end of the short end, you know? So, it's where, and this is the other thing that complicates the crap out of everything, is like what kind of bond trader are you? Are you, you know, are you long duration, short duration? Are you flattening? Are you steepening curve trader? Like there's so many different things that a new trader could focus on. Um, but I try to kind of put them all into encompassing one big, you know, kind of programmed and try to break each component down so people can understand it. Because bonds are inherently hard to understand. You know, you throw yields at people, they're like, "What the heck are you talking about?" You know, you throw yields and yields, you know, and price into relationships or like, can't figure it out. But I try to to to simplify everything because I think we live in this system where you should be able to use AI to your favor to start simplifying things that you want to do and target yourself um to get to to better hone your game plan.

So are you using AI at the moment to assist you in your trading?

For sure. 100%. Even on the programming too, just setting up, you know, just data, structuring data.

Okay. Oh, it's extremely helpful because I'm not I'm not like a Python programmer, but I can run through AI with it and have it program something for me and run analysis and try to figure out things when it's breaking down and not working. It's very good at figuring out like why like why am I not seeing this? Like what what is missing? It's not kind of migrating right, you know? So, I use it in that regard. I don't rely on it strictly, but it's definitely improved my data analytics for the markets. I'll tell you that.

I guess does this assist you in because you you were mentioning how the market evolves over time and what used to work maybe doesn't work anymore.

Sure. Yeah.

But this opens up a problem saying if I'm going through a losing period, is it my performance? Is it my edges eroded? Is it just a losing period and it's a draw down? Don't change anything. Uh, does the AI assist you in analyzing? Okay. In that regard?

Yeah. Um, it may depending on what kind of input you're giving it to analyze. It may say, "Oh, you know, especially if it if you have kind of a structure that you're used to and it knows that structure, like if you can convey your game plan and your structure of how you're trading, it can you can definitely use it to say, well, what improvements could I make? There's no doubt about that. New traders should be doing that, whether they're using, you know, whatever their preferred AI vendor is."

Would you say there's a baked-in issue in the sense of if I was to ask ChatGPT or whatever AI?

Yeah.

Improve my edge based on what I see? I wouldn't ask that one, but?

Okay, 'cause then I would say the the the the resources it's it's referencing, it's it's probably outdated or old books.

Sure.

Therefore the advice would be not relevant.

Sure.

How would you make sure the AI is assisting you in a relevant one?

Well, you got to have the right prompts, like you can you kind of like I mean, I think you have to ask very targeted questions and make it very specific on what it can use and what it can't. Um, like I said, I like it as an assisting tool. I don't like it as a tell-all. Like there is no there are no like holy grails of these things. Like you have to, and they're not always right. Like they'll get things wrong, and you got to be careful. But that's where you kind of know you you should know enough about what you're trying to explain to it to know that either the output is is valid or invalid. So don't think it's going to just rely on tell you like, you know, confirmation things. It's it's just not it's not that sophisticated. In fact, I don't think it's as sophisticated as many believe it to be, to be honest.

Okay, let's now get into the black box. Let's start off with the function of money and fiat, and what it was, and maybe what it is now.

Wow, that is a broad-based question. Uh, yeah, well, we're running into the problem here with fiat, like we talked about the monetary system, the printing has become problematic. So now we've got a system to where we've become accepting from Wall Street. Right now, they're big on the the MicroStrategy or Strategy Inc. now is is now, you know, mainstream. We've got Bitcoin ETFs, Ethereum ETFs, Bitcoin futures, Ethereum futures. So it's becoming more widely accepted and adopted. But we've also accepted the fact that decentralized systems are not inherently supposed to intermingle with centralized ones. So the core concept of cryptocurrency are to separate the centralized control into the people's peer-to-peer, immutable system, ledger-based uh system of transfer of utility uh or or money or whatever you want to call it, uh, to where we're eliminating the fiat centralized control. So, I don't think the Wall Street adoption of it is a good thing. Like, I don't I don't think that's what it was meant for at all. I I think it's a a Pandora's box that's being opened, specifically with stablecoins.

Would you not say it's a requirement for mass adoption and mass utility?

No, I don't. I really don't. I think what's required is an ecosystem developed outside of fiat, purely on a decentralized system platform. No centralized control at all. And you know, it's it's going to be tough, but the alternative is not good. The alternative is a fully surveiled, centralized command authoritarian system where we've already given up our rights to our data. We're already giving up our rights to being, you know, fully infiltrated by outside authority, and cashless, which is which, cash. Yeah, that works great if you're part of the system. But the minute you deviate from that, then what? You can get turned off, and you don't you maybe your political bias doesn't match what what the agenda the agenda is, and you can be turned off. It's a very dangerous thing. Um, but I think the adoption from even from the US Treasury's perspective on these stablecoins is very dangerous because we can't really, where's where like I'm creating a digital twin in the in regards to Tether or Circle, right? I'm creating a digital twin of a US dollar. Who's auditing me to decide whether or not I actually have that physical US dollar or not?

Yeah.

I don't think the US Treasury is going to mind, right? Because they're going to issue Tether and then buy T-bills, you know, right? So they're getting inherent new supply of buyers.

Oh.

So why am I going to complain? And you know, now that I see that Cantor Fitzgerald and, you know, our what what is our com secretary, um, you know, is involved with this as well. I mean, I'm starting to see the writing on the wall, and I don't want to go too far into conspiracy, but it's like I don't see the need for these things to be intertwined between our fiat system, to be honest.

Do you think the system is utilizing let's say USDT or Tether to assist them in a way?

Well, sure. It's it's an unaudited outlet for purchasing assets, like what's to me, it's counterfeiting. It's counterfeiting the US dollar. How do I know that you actually have it? So yeah, you may have T-bills in or you may have Bitcoin, or you may have these assets on board, or you may not. You know, when I see a billion dollars worth of Tether minted, is there a billion dollars worth of demand that's just came out of nowhere that I don't know about that they're buying crypto with? And if crypto as in general falls, why does Tether's market cap keep rising?

Is are people selling crypto but not redeeming Tether for fiat?

Is that what I'm supposed to believe?

Probably not.

Well, that's weird, you know, but it's happened before. Or like in November of 2022, when when Bitcoin started moving lower, the Tether's market cap kept rising. Well, how is that? Are they just creating Tether and buying assets? Be real easy to do if I'm not really that audited tightly.

At the same time, right now, crypto is very heavily linked to fiat in the sense of people make the money in in the crypto way, and whatever whatever speculations they do, and then they'll convert it back to fiat and actually use it and spend it. Do you think the breakaway is needed for it to really have the mass adoption? Because then it boils down to, let's say, I'm living in Dubai. So people can buy a house and a car, everything with crypto.

Sure.

But everywhere else in the world, pretty much, you can't. So then you are your crypto is there reliance on fiat for actual utility in the end.

Yeah.

Does that culturally need to change?

That culture does need to change here. Yes, for sure. It takes time. But you need a legitimate ecosystem being built. But also needs therefore acceptance from the system to say, we are going to allow this shift because it's going to be down to the Starbucks. Are we going to allow it in Starbucks? Are we going to allow it in retail stores?

Yeah. Well, why? So, who would be against that?

The system.

Of course they would, because it's it's it's subpar. Fiat is a subpar monetary system compared to what a decentralized pure P2P network can do. But the crux of the subpar would be the inferior money. It's inferior money. It's inherently based on debt. It's a

debt system. In order for that dollar to be created, I need to create $1 worth of debt.

Mhm.

That's when I said higher interest rates create inflation because the US government is transferring one trillion of newly freshly printed money to the private sector.

See, that's inflationary. Why would I want that? No. And Mirren is right. Take rates back down to one or two percent because then the US government will be paying 500 billion of interest, not one trillion. That's inflationary. And why do people asset prices keep going up? Well, because interest rates are too high. Asset prices should start to turn once interest rates start to fall.

It's crazy how now that you explain it, totally the opposite of the textbooks, but it makes sense. But the textbooks work, the textbook definition of inflation would work if the monetary system wasn't as large as it is now because it's grown so large. It's outpaced the utility of the money that's actually in the system.

Like I said, when Elon Musk and Larry Ellison can give away 1% of their net worth every day for 80 years and still have 99% of their net worth, like $100,000 a day, that's a lot of money.

Yeah.

And that's just one billionaire or two billionaires. They all could do it. And so the money's become worthless to me. It's like becoming worthless.

Yeah. Little tricks that I hear all the time is like they we need to now, you know, whether it's a salary or we sell our company, whatever we do, we now have to go through the tax system and then we can spend it, whereas they can borrow against it, which is tax-free and then with, I don't know, trust and life insurance against it.

It's just monopoly money.

So then you realize that when people talk about, oh, it's overpriced or it's in a bubble. Well, why do you think that? I don't think that, like I don't think equities are in a bubble, to be honest. It's, it's just a reflection of the 9.7% annualized growth of the FOMC's assets. It's not in a bubble. We just have 10% inflation.

You know what I mean? And gold is trying to discount that. That's why I think gold is going to start to catch. Although gold's not too far behind, like on an annualized basis, I think it's up there at 9%. Because gold is trying to discount the fiat money printers. So they're going to kind of increase at the same rate because they have to because gold is really the base money out of everything, you know.

But it's also gold is bought with fiat money and therefore its appreciation is naturally baked in. Same way with the S&P.

Sure. Sure. Yeah. Exactly. Because S&P is bought with fiat money too. Yeah. So it's they're tied together.

Yeah.

You were mentioning a little bit off camera this this idea of you are trying to bring cryptocurrency into your professional trading and money management, let's say. Let's start off with the taboo around it and is this something you're struggling with or is capital coming your way?

Yeah. No, I am struggling with the migration of the risk of it, even though it's becoming more mainstream.

Especially the risk of what I'm focused on, which is more of the privacy coin.

And the only one that I think is actually worth anything. Um, because it is a battle against centralized fiat control and that's a battle that's like kind of very difficult to fight against because they're not going to give that up very easily.

But my goal is to create the ecosystem where you do not have to convert to fiat ever because there should be no reason to convert to fiat. You should have the P2P decentralized system. You should be able to buy goods and services with it. You should be able to go get your gas with it. You should be able to buy clothes, get healthcare, buy have a mortgage or buy a home. Not even have a mortgage, buy a home with it, whatever.

Would a coin of this nature fit all the categories of what money should be in terms of divisible, store of value, and XYZ?

Sure. Yeah, it fits all those and is fully fungible and anonymous, which is why they hate it because they cannot control it and therefore it's like anything else they want. It's like human nature. They just want control of it because if you control their wealth, then you control their system of debt.

Does this also have a consideration for, I mean, crypto probably is largely held up the value of crypto is probably largely held up by dirty money, money laundering, crime, anonymous?

I don't think so.

You don't?

No. No. Because Monero is by far the largest currency used, I would guess, in the black market, but its value is minimal. It's 400 times less than Bitcoin.

Interesting.

So how would that be? It should be 400 times more expensive than where it is now, then.

So, so the market cap of the larger coins, that is largely from speculators, you would say?

It's largely from, uh, Wall Street. Yeah.

Oh, yeah, true. Which are speculators, I guess, in the end.

Yeah. Well, ultimately though, people can't answer the question of, in Bitcoin's terms, of what, I don't care what the price of Bitcoin is. It could be $100,000 or it could be 100. I can still transfer $10 million from here to Dubai.

Mhm.

Whether Bitcoin is $100 or $100,000.

Yeah.

Doesn't matter.

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Really the last, um, part of a definition of what money can be is this idea of store of wealth. And that can be through controlling supply, but there's also this idea of intrinsic value where gold has an intrinsic value and people get into the medical utility, the jewelry. I don't know, there is a limited supply, I guess there's a finite amount in the universe and then there's also an inherent value. Whereas a Bitcoin, yes, there is finite supply.

But there is no inherent value and in fact, across crypto, there's no inherent value.

How would you overcome that argument?

For Bitcoin, I wouldn't actually. I think Bitcoin is compared to where it should be, it's overvalued. Back in 2015, I kind of tied Bitcoin more to the percent of overall adoption of global GDP. So, for Bitcoin to be $150K, let's just say, I think it would have to be almost 4% of global GDP. And I don't see us using Bitcoin at 4% global GDP.

Um, so I think it's overvalued in that regard, um, because the ecosystem has not been created and so Bitcoin's kind of been co-opted in in that way, um, because it's fully traceable and it's not fully fungible anymore. Uh, and what I mean by that is you can tag Bitcoin if it was used in some illicit activity, then centralized exchanges could disavow it.

So it's not fully fungible in that regard. So that's a problem for an immutable decentralized system. Um, but no, I will not make that argument with Bitcoin because I don't think the ecosystem is developed the way it should have. It's been co-opted by Wall Street and used as a levered tool.

Now, I don't agree with that. That's not that's not why any of these things were created. They were created so we can remove ourselves from a fiat debt-based system, you know, and that's really the progression. The progression will be in the future, 10, 20, 30 years from now, is everything will be tokenized and you will own the shares of the stock. State Street, Vanguard, and those guys will not own the shares of stock. You will actually own them tokenized via a blockchain.

And that's where this is going. They can deny it all they want that that's kind of their stronghold is going to be as the ecosystem develops, their stronghold on that is going to be over. Apart from personal beliefs and personal conviction and where you think the world is going and the monetary system that could also be in the hobby arena or interest arena. Why have you now connected it to your professional trading arena?

Because it's the only pure market I think that isn't inherently run by balance sheet players. And what I mean by that is there's no checks and balances in the financial markets. Somebody can corner the market all they want. There's no more, there's not even antitrust laws anymore. I mean, like Google kind of proved that. So for me, and that's why I think we have a technocratic plutocracy because they make the rules. So how does the system evolve to a more legitimate system? We create a system to where the accountability and the kind of responsibilities put back into the people's hands.

Back in the day of like, let's say our grandmas or grandpas, they had shares of AT&T. They actually had the shares, right?

That's where it's going to go to again. You're going to actually own those. They're going to be in a smart contract on a blockchain.

In your name, not in a third-party holding centralized exchange.

When the when the gatekeepers of this, the system, and this idealistic view is probably going against what their objectives are.

Sure.

And they are the gatekeepers in the end. They are.

How do someone, how do we break through that? Would you start by creating the ecosystem, breaking down the barriers of understanding of what really kind of where things will be 15, 20 years from now? It's very hard to understand because even back when Bitcoin was starting to somewhat evolve, I told so many people about it in 2013, 2014 after Cypress, you know, at that point where I figured out like, oh, this is kind of not a novelty, there's more to it than this. And it was like, you know, $30 at the But so many people discounted be like, no, that's not worth anything, you know. But what's weird about human psychology is there were so many people that like, even when it got to $200, didn't buy it. Bitcoin back in like 2013. But when it got to like $2,000, people were asking me like, should I get in now? Like, to me, that's so strange. Like, no, I would tell them no, like you shouldn't get in now. Like, even though the price kept going at, at that point, I think it got up to $17,000 or something. But why would you ask me now when I told you about it at $200? If now at two, would you get validation from the from the from the public? Like now it's good? Like, are the taxi drivers now talking about it? That's the wrong time to buy into something. Okay. So that's what we're fighting. We're fighting against a system that will only validate it post full validation by a centralized authority.

But I think the monetary system is going to take care of that because I think the writing's on the wall. We've kind of moved from this system of, it's kind of oppressive to be honest. A debt-based system is inherently oppressive because it makes it very difficult for mainstream America to get ahead when there's 10% inflation.

For sure.

Because you're going to have to take out more debt. You're going to have to do more things to kind of pay for just general expenses.

Especially when salaries don't follow that inflation.

No, they don't.

So it's, you're you're getting poorer in real time, right?

Which people don't. It's a hidden tax. People don't realize.

No, it is a hidden tax. And yeah, that's why I try to like write as clear as possible and as simple as possible so people can understand these kind of concepts a little bit more in their own understanding in their own lives, like, okay, how's this affecting me? Everyone knows like grocery prices are affecting them, gas prices are affecting them, you know what I mean? Now you've got utility prices affecting affecting everybody because the price of electricity is skyrocketing and then everyone's wondering why is it skyrocketing? Well, you think AI is free? You don't think those data centers need to be cooled? You think you're not paying for that? You're paying for that.

Meanwhile, they're signing hundred billion dollar partnerships, Nvidia and OpenAI, like just passing around the big circle of money.

They're not stupid. They're just doing what the system's designed for them to do.

I usually end off the conversation with a word of advice for trading. But I actually want to give you a different opportunity, which is a word of advice to not fall or not blindly believe what is put in front of us. Rather, try and have a holistic view on the world. Doesn't mean conspiracy, only. It just means like holistic. How can someone encourage themselves to do so?

Well, I, I don't watch any mainstream anything. For one, I think you have to remove your own personal bias, which is very difficult, and kind of break things down in what are they really trying to say or do? Like I always kind of look at things like, what are they trying to get me to do? What's the system trying to get me to do? I should maybe go the other way.

Like, you know, so it's tough. It's tough because we've we've got an ingrained mentality in a lot of people. They've been conditioned to believe a lot of things. But I think post-COVID, you see a lot of people changing and you're either going to accept that we don't live in the world that you thought we lived in or you're going to just remain in the dark because the world's not what you think it is. And unless you want to bury your head in the sand and believe all this, then fine, you can do that. It might make your life a little easier. You can be blinded and not jaded.

Ignorance is bliss.

Yeah, ignorance is bliss, but it's also dangerous because the real world things are happening and they are going to affect you. So, you need to get involved and you need to have an open mind. And as a trader, like I said, it's, it's, it's not easy. You need to be passionate about it. And nothing's going to change that more than getting involved, understanding what markets you want to trade, breaking them down, getting a game plan, and developing a system that works for you. Because what I do and what you do might not work for this guy.

I've had many traders sit behind me and try to emulate what I do and I'm like, like, I'll just, I can't tell you I got out of that right now, but I got out of it. You might not want to, you know, but I did. Or you'll look at a chart and say, I think it's going up. I'll think it's going down because of the inherent biases that are baked into individuals.

But I, to your original question, don't listen to any mainstream media. Dig for yourself. Find the answers for yourself and and try to have an open mind of looking at the world a little bit differently because, um, I grew up kind of in in a time where I like always thought, you know, the world was a certain way. And then as you grow and you realize as through all your responsibilities and growing up and what you've been through in life, you realize like, look, nobody's coming to save you. You're in it for yourself and your family and you better do all you can to make that work. And so it's, it's not, it's now. And what's, what's, is the Buddhist saying, all life is suffering, something like that? I don't look at it in that regard, but it does open your mind to say like, look, you have to be your own advocate.

You know.

Well, I hope we didn't alienate the audience, rather planted a seed or curiosity, but I'm glad we did.

Yeah, because it's important and paradigm shifts begin with conversations like this. Um, but yeah, thank you very much for your time and the opportunity. This was a wicked conversation.

Yeah, I appreciate it. Thank you so much.

Beautiful.

Boom.