For so many traders, they're always asking, "I'm starting to become profitable," or "I'm starting to lose less money. What is the fastest way for me to accelerate that progress?" And what I would always say to these people is, the traders that can make that leap from unprofitable to consistently profitable, nine out of ten times, that is coming from them really focusing on those easy trades and sizing those up.

But if you don't put that Lamborghini worth of risk, you're never going to make a million-dollar trade. Even when I was at the top of my game, it still wasn't easy. Not a single day of my career has ever been easy. It was some absurd start of the year where I ended up having like a $12 million month or something. Wow.

And what separates the traders who are failing versus the ones who are succeeding and making a lot more progress? Seen so many classes over time, and I think the short answer to that is, if 95% of all traders lose money, then what really separates a winning trader from the rest of the losing crowd? Today, you and I are going to learn from a prop trader and an advisor who transforms good traders into some amazing traders. Lance Brett Stein was a verified eight-figure trader at one of the largest prop firms. Besides trading at a firm, his career has expanded into coaching, hedge fund management, and empowering women and minorities in trading.

In this episode of The Humble Traders Podcast with Lance, you're going to learn how to find your edge in trading, trades that a trader needs to develop in order to become successful, strategies to minimize losses and maximize profits, and the importance of finding a mentor and a trading pod. If you're serious about trading, then pay attention because this episode will help you understand the most realistic steps you need to take to become profitable. Let's learn together from a trading mentor and make sure to hit the like button and share this podcast with your trading partners.

All right, Lance, welcome to The Humble Traders Podcast. What an honor to have you here in Vancouver.

Thank you so much for having me. After, uh, our wonderful prior, uh, meetup in Vegas and a couple of wonderful dinners out there. So, Lance, you are no stranger to me and a lot of the people on Twitter, um, but I bet there's still a lot of developing traders and new traders who don't know who you are and what you've accomplished. So, if you could tell our audience, uh, who you are, what you've done in the trading scene, and, uh, what are you working on right now as a trader?

Sure. So, I think a lot of what makes me so special is I have a very formal institutional background, unlike a lot of the so-called internet gurus out there that are always trying to, uh, teach stuff that I think is tends to be a lot of BS. I think what's so different about me is I came from the prop side. And so I was working for Trillium for my whole trading career. Uh, I traded 11, 12 years, and in a firm of over a hundred traders, I ended up becoming the top trader in the firm. I had multiple back-to-back eight-figure years. And I think most important for your audience is a lot of what makes me special is during my time at Trillium, I was also running their Chicago office. And so I was training years upon years upon years of different classes of students that were trying to learn trading. And so I've seen it all, from how do you take a beginner that is learning from total scratch, or how do you take a good trader and help make them really elite? And a lot of that experience is how I can make these topics really approachable for the average person out there.

Yeah, and, and I bet that's what makes you as a mentor so, um, attractive to a lot of traders because they know you've gone through the trenches yourself. Like, you're obviously not naturally born, uh, a really good trader. I remember from, uh, one of your videos, you said that you started at the bottom of the class and you eventually worked your way up, uh, to making over eight figures profit, like you said. So, what was the process like, you know, for you now seeing, let's say, a beginner trader who's, you know, losing money every single month, like a lot of, uh, new traders tend to do, and that's totally normal. But what's a process for them and for you to mentor them from, you know, very at the bottom and going all the way to the top and becoming profitable over time?

Yeah. And so I think that's the other cool part. Is unlike some people in, in, in different industries, I was by no means a natural. This wasn't something about, "Oh, Lance has this natural gift or natural talent," where it's not as if I was a basketball player and I was 7'5" and, "Oh, it's just so easy once you're that tall or something." And so I think what is also so cool is I have not forgotten the ridiculous amount of pain, frustration, blood, sweat, and tears that goes into this job. And so for so much of your audience, I know that struggle as a beginner. I remember the really long hours. I remember the losing streaks. And I remember how every single trade would just happen so fast in real time, and you would just make the same mistake again and again and again. And so I think what's really powerful is it role models the fact that, guess what? I'm not a natural. But what I did do was figure out a really good, repeatable process for beginners to get up on that learning curve and improve and take it all step by step. And I think for a lot of people, what that comes down to is building out what I would call a playbook. And what that is is really systemizing exactly what your trades look like. And you don't want to be trading based on emotion. You don't want to be based trading based on intuition that you really haven't built up yet. So it's a matter of, what is your strategy? Can you put the entries down on paper? Can you put down the variables that you're looking for? What does the volume need to be? What does the intraday chart need to look like? What does the daily chart need to look like? Um, what time of day does it need to be? And it's really going deep on those variables and building out a different couple of strategies and plays that you can then repeat and refine over time.

Mhm. So, would you say most new traders, when they first start, the reason they kind of fail in the beginning is because, obviously, as a new trader, you don't know what is in a playbook. It takes time to build that up, right? And obviously, like you said, you cannot rely on intuition because that's something that takes screen time to eventually gather, as any trader needs to do.

Yeah. And I think a lot of what makes it so hard is, I think a great analogy is kind of like dieting, right? A lot of people have lost weight on all sorts of different diets, right? You could be on a vegetarian diet, a keto diet, uh, high protein diet. It's not that there's any right one, but you do need to stick with it and refine it and figure out what works right for you before you're actually going to see progress. And if you're changing diets or trading strategies every month or every two months, you're never going to get far enough down, kind of, the rabbit hole to actually see whether it, it works for you. And, or especially in the trading world, to make all those different refinements to those variables. And, um, so, like, I'd also say that's where a lot of mentorship ends up being super crucial. Is you need to know, am I going in the right direction to at least stick with it? And then once you are, a lot of that just becomes repetition and figuring things out over time. So for the people that are just starting out, the best thing I can recommend is, um, I used to use Evernote. Some people use Notion. And just start building these massive, massive databases of what these different charts look like. So you could start building a category for breaking news. You could build a category for, um, intraday breakouts. You could build a category for capitulations, where a stock really, really panics. And even if you don't know what you're doing, if you start to build out a huge database of these, and a lot of developing that edge from there is having a hypothesis. And you might say, "I think that the bigger the panic, the better the play is going to be." And you might not be able to tell that from three or five charts, but once you have a hundred charts and your little capitulation database, that's when you can start to see what are the variables that matter the most. Okay, the bigger the panic, the better it tends to bounce. The more boring the ticker is, the better it tends to bounce. If there's news, fresh news on the ticker, I'd assume in general, it's probably going to bounce worse. And so you can start to test all these variables. But a lot of it is kind of like being a scientist in collecting all this data, having hypotheses that hopefully make logical sense, and then just finding that in, in the real world.

I understand in the beginning, you struggle. So how long did it take for you to actually realize, "Okay, I need to build a playbook for myself that's unique to myself?" And how long did it take for you to kind of build that up for you to become comfortable at, "Okay, every single day, I will see at least one or two, hopefully, plays from my playbook, and I can actually execute, um, effectively on them?"

Yep. So it took me a really long time to do that. And so I was negative every single month for my first year. And so during that time, it, it really was like drinking from a fire hose, where it was just, it was all happening so fast, and there was so much information. And even though I had a trainer, it was still hard to learn all these different plays at once. And so if I had to take a guess, maybe around the, the year, year and a half mark, that's when I had a couple really simple plays that I would have started to kind of get it. I would have had enough reps in where I was starting to know, like, "Okay, when this happens, this reminds me of this." And a lot of it is, you just build in your head all, all this recollection so that when it's happening in real time, you're able to process it faster. And so what would happen is, sometimes off the open, especially if it was like a, um, a witching day or like a quad witching, um, every couple of months, sometimes tech stocks would make a little bit of a move up or down off the open and have, have a downtrend. Um, the market overall would be flat. And so if I felt like a tech stock was a little overextended one way or the other, I would wait for that downtrend to break. I would buy and put my stop at the lows. And this was an example of a very simple play that I then would refine over time. And it would just be, again, going back to those prior variables: how big is the move? How fast was the move? What's the overall market doing? How good is and strong is this daily chart? And you then start to refine. And once you do it once, and it works, it's then this super powerful feedback loop where it's like, "Okay, I know I can do this. I've seen this before. I know the last five times I was able to make money on four of those." So then the next time it comes around, you're more confident, you're more aware of when you need to enter, you hesitate less. And, um, all that over time comes together to to really start to improve with repetitions and find positive expected value.

Yeah, because so much of trading is just doing the same set of things over and over again. It may not work all the time, but as long as it works, I'd say more than 80% of the time, or even 70% of the time, then there's an edge there.

Yeah. And so one thing to the point you're making is, especially for new traders, I think some of the easiest plays to develop tend to be some of the higher probability win rate ones because the issue is, if you're a developing trader and a play might just have like a 10% win rate, if you're losing 10 out of 11 times, or nine out of 10 times, or 13 out of 14 times, you're not really going to stick with it and know with the data whether that might be good or not. And so, like, what I really, really recommend are what I've come to call the "easy money trades." And figuring out what trade setup for you is the very easy free throw. And for so many traders, they, they're always asking, like, "Okay, I'm, I'm starting to become profitable," or "I'm starting to lose less money. What is the fastest way for me to accelerate that progress?" And what I would always say to these people is, the traders that can make that leap from unprofitable to consistently profitable, nine out of ten times, that is coming from them really focusing on those easy trades and sizing those up. So it's not that they're not losing or doing dumb things elsewhere, like that always, we, we all know that always happens. And I think especially as, as people might think experienced people or elite traders don't make dumb mistakes, we're human. Everybody always makes dumb mistakes. But the better you get, the more you're the things you do right and do well outweigh that. And so what happens for new people is they still make all the old mistakes, but now when they see that, that that simple play, like for example, maybe it's AMD selling off the open when the market's staying flat, and I know once this breaks that downtrend, I want to buy it. Before, if I was making a hundred bucks, now I might try to make $200 in that trade. And that's what really separates the people that are staying negative and unable to gain traction. It's those people that ride that little feedback loop on those easy layup trades, essentially, to size the same for all the other trades, and only take double or a little bit more size for the one or two that the trader knows that they have a higher win rate on.

Y. And so that's something I've, I've really kind of taken a stand on Twitter about is, is this concept that I call exponential bet sizing. And this is always somewhat controversial because there's a lot of traders out there that believe, uh, every trade should be sized the same and stuff like that, and it's like this huge debate. And so here's ultimately, there can only be one truth, right? It's, and the truth is, if you're able to differentiate whether one play might be better than another. And the example I, I tend to love these poker examples, but if you're able to tell whether you might have pocket aces or pocket kings as opposed to an average hand, of course, you want to bet better on those hands, right? And so there are some traders out there where they, they're not able to differentiate whether their play or that trade might be better than any of the other options. If so, you have no choice but to kind of assume the same bet. But if you know your variables for what makes a good trade very, very well, and you know, "Oh wow, this time the stock is down 4, 5%, it happened super, super quick, there's no news, the market is, is staying flat, this was actually a really strong stock before this move," you might find all these variables have a lot of predictive ability. And so that play might be way better than average for you. And when that happens, that's when you want to bet more. And once you're able to do that, the effect that has on your consistency and your profitability is enormous.

Yeah, and to add on that, I think given all the variables you mentioned, it would be, it would be valid and be logical that these kind of setups that work so well for that particular trader, you don't see that every day, right? Probably a setup you see every couple weeks or once a month. For those out, for those potential plays, I can give you outside returns.

Y. And I think what's, what's so amazing too, is at least in the prop trading world, there's no question about that debate whatsoever. Every good trader I've ever seen on their best plays, they are betting 10 times, a hundred times, or more, this more money on those really, really special events where there's some trades where a good trader just knows, "This is it. This is the best trade of the month, or even the year." And they are betting huge on those. And a lot of traders, if they weren't varying that bet size, they would never even have a career. Like, if you told me I had to bet the same on every single trade, I'm not sure I would even make money. But that's, that's how important it is. And so for a lot of people, especially when you're starting out, yeah, you don't, you can't have the same skew when you're beginning. But nevertheless, like, if you're trying to bet the same on every trade, it's going to be way, way tougher for you to start to gain traction because some, some hands, once you've studied enough patterns and you've enough charts, some just are better. And there are just some extreme examples of that in the trading world. And I would argue that this remains true for all types of investors. Um, there's a reason why Warren Buffett, during, during 2008, when the world was falling, there was a reason why he bet as much as he did on the banks back then, and that accounted for so much outperformance, uh, there after. And I think a lot of, even if you hear the stories about, uh, Soros and Druckenmiller with with the British pound, they knew that, "Okay, this is something special." And even though Druckenmiller thought he was having a really big bet, that's when Soros said, "What, what are you crazy? This trade's way too good for that. You need to be betting even more." And that, that made their whole career, really.

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I know nowadays you work a lot with developing traders at SMB. What's your experience like mentoring traders and, you know, what's your most memorable, uh, moment working with these traders?

Sure. So, I've been doing SMB Capital now for probably about a year and a half. And what's so great about doing the advisory work for them is I get to kind of take a break from being in the trenches and really help other people grow. And there's some, something so, so special about seeing someone struggle, and you can see that they're right on the cusp of breaking out, and they might not yet be able to see it themselves. And it's, it's so funny because Mike B. Fury, who's one of the founders of, of SMB, the amount of times where at the end of a meeting, we talk to each other and we're like, "Oh man, they're, they're getting, they're getting really close. Like, next, next month is going to be special. It's all starting to click." And then when that actually happens, and the trader that hasn't yet believed himself starts to make it happen, there's no better feeling than that. And because I know how much I struggled back in the day, I know what it means to these people. And it's, it's so much easier to be the teacher and lose sight of just how hard it is when you're, it's, it's, it's a matter of your career and it's a matter of your pride and your identity. You don't want to be that person that failed at trading. And I know the struggle that these guys are feeling. And so when you see that start to click for them, that's, that's really the best. And so often, uh, they just blow away all their prior limiting beliefs. And what they thought was a good month, if they could just have $10,000 in P&L, next thing you know, they're putting up $20,000, $30,000 in P&L. And that's, uh, not that it doesn't come without steps back and some regression sometimes, but that's, that's the best feeling.

Yeah, I guess a lot of developing traders, almost like when they're reaching that point of, uh, making it, it's almost like a, they're like a stock consolidating for a long time on a daily chart and eventually break out.

Yeah. And you want to know what was really funny? Is, uh, this one trader came to me earlier in the year, and he had missed this, this huge opportunity. And he was really beating himself up over it. And he's like, "Oh, Lance, I don't know if I'm ever going to see an opportunity like that again. Like, that could have changed the trajectory of my whole career." And so he had a younger brother. And so I related it back to, and I, I won't use his name, but I said, "Okay, trader, like, if your younger brother just went through a bad breakup or something, and his younger brother was was in high school, what would you tell your younger brother?" And what that trader said is, "I would have told him like, don't, don't worry about it. There's always going to be new opportunities. And like, don't, don't, don't worry. Just think about the long term. And think about, like, you know, I, I guarantee you it's all going to work out over, over 5, 10, 15 years and everything." And I think we all know with, with with age and maturity that, yeah, those high school relationships, even though the breakup feels awful and you don't, it seems like the end of the world, it's really probably not going to be. And so what I told this trader is, even though this feels so bad in the moment, guess what? I've seen a lot of traders go through this. In the long, long run, it's all going to work out. You just need to have a little faith in yourself. You need to really trust the process. And so a lot of what we do with the traders is just have them forget about the P&L, forget about putting so much pressure on yourself, and just think about, are you doing better than you were the prior day? Not, not in terms of P&L, but are you making a better decision? How can you be a little bit more on top of that trade? How can you have a little bit better entry or a little bit better exit? How can you spot more of the opportunities that are working so well for you? And once you focus more on that process and that long-term thinking of the trader, you could become five years down the road, 10 years down the road, you're able to step away and be like, "Okay, I'm being a little bit silly, just 'cause I'm the person going through this. I, I need to trust Lance and recognize, okay, there's probably going to be another great opportunity around the corner." And, uh, that's, that's when traders can really, uh, absolve themselves of all the pressure and just focus on performing.

For you, it's very special because you got through the same thing, right? I bet it's even clearer now for you now that you get to take a step back and kind of viewing the entire progress as a mentor and not as an active trader. So it's probably very special for you.

Yeah. And what's so funny too, with a lot of these things is, we're, we're all human and we all have human biases. And one of the paradoxes of biases is, even if you're aware of a bias, doesn't mean that you're not going to fall for it. And so what always happens with, with, with all these traders, just 'cause it's human nature, is everybody wants to focus on the home run. And everybody wants to focus on, "How can I make as much P&L as quick as possible?" But much like many things in life, sometimes the fastest way to grow and progress is the slow and steady path. But slow and steady isn't so appealing. And so what happens is, a lot of these traders try and increase their size too much too quickly, then they end up taking a big step back. And, uh, it's a hard lesson to learn. But for so many people, it's like, "Okay, if you just stay on the steady progress path, focus on getting that 1% better, and then just stay in it for the long run without any whammies, without any blow-ups, that's how real progress is made." And, um, it's, it's one thing to recognize that, but it's just so important to have, have that internalized into your daily process. And so a lot of what we do at SMB in these monthly meetings and stuff, we actually don't care at all about someone's P&L, right? It's, it's not that important to us. The most important thing to us is, how did you trade versus the prior month? Did you improve upon the different things you were working on? And if, if not, why is that? And what can you do to fix that? And if so, what's the next best thing you can improve on now? And so one thing we always have traders do, and I think this is also important if you're retail at home, is to figure out, like, what is, what are the one or two things you're going to be focusing on this month? If you're, if you're a trader at home and you can't tell me exactly what parts of your game you're working on and what you're trying to do to improve on them, then you're just, you're just working haphazardly, right? And it's like, I guess the best analogy is, imagine trying to be getting better at golf, and you go to the driving range and you just hit 100 balls, you don't even think about your shot, and then you go home, right? Yeah, that's practice, but are you really getting better at an optimal rate? No way. And, um, it's, it's the same as traders, right? It's, it's so much better, rather than hitting a hundred balls, to hit 10 balls, but to really dissect what you're working on. And maybe it's really getting your backswing, or whatever the, the case might be. As a trader, every month, you need to be conscious and intentional with what you're trying to improve on. Like, do not allow yourself to waste a single day at this job. And like, that's something I really ranted a lot about at, at SMB and even on, on Twitter and everywhere else, is at this job, it's a hard learning curve. You do not want to waste days of that learning curve without trading with intention. You need to know, "Okay, this month of September, when we're currently recording this, I want to work on having very precise entries." Okay? Then each day, you're going to judge yourself solely on the fact, "Did I have good entries? Did I have my alerts in? Did I have my, my, my limit orders to enter exactly where I want to be?" And that's how you're going to judge yourself. Then at the end of the month, you're going to say, "Was this a success? If so, I'm going to move on to the next most important thing. If not, why not? And what can I do?" And like, that's how you really make intentional progress.

Once again, we just have another guest trader on the podcast who emphasizes the importance of backtesting your strategies. Remember, don't just jump into any random place that you got from TikTok and start clicking the buy and sell buttons right away. If you really need to treat your itchy fingers, you can just tap the like button at the bottom of this video.

Based on your experience mentoring so many traders, what separates the traders who are failing versus the ones who are succeeding and making a lot more progress and getting to the point of profitability way sooner than others?

Yeah, that's, that's a really, really important question. And I think one of the cool things about the seats that I've been in is I've seen so many classes over time. And I think the short answer to that is, everything. The difference between, I'd say, if you take a, a class of maybe 15 to 20, there's usually one star, maybe one or two stars in each class, okay? And what separates them is literally everything. They do. These are the traders that are working the hardest. These are the traders that are asking the most detailed questions. These are the traders that are doing write-ups with the most detail. These are the traders that are reflecting and coming up with solutions that are so much better and more thought out than everyone else's. And it's, it's not just one thing, but it's when you have that level of work, and your standard for yourself is that high, and in every category, you're outworking and outcompeting the rest of the class. When that compounds over so many days, potentially a year, two years, or more of the learning curve, the difference in progress that's made is ridiculous. And to use an example from one of the SMB Capital classes, there was one trader there who from the very first day I met him, this was a trader that was emailing me questions. This was a trader that when I was pushing him for solutions, he was coming up with more and more detail than everyone else. And I think it's like, it's so, it's such a perfect example where last week, I tweeted something on Twitter asking my followers to provide some of the details for what would have made, uh, MJ's, the weed ETF, and like ACB, another pot stock, an interesting short. And from the retail side, and for the average trader, some of these traders, I were able to identify a couple details. But I want to find the trader that, when posed that question, he comes back to me with a two-page write-up, and he analyzes all the nuances of the daily chart. And so, so many of the people gave their three or four-word answer and were like, "Oh, did I cover everything?" And what I would have said is, "Okay, in this example, what happened is, uh, five days ago, there was fresh news, but now we've been up five days since then. Now, on that sixth day, we gapped up a huge amount. The, uh, the move is now a total of over 100% higher. We had the highest volume. Um, the rest of the sector is is overbought based on these indicators. And then you failed off the open." And the level of detail it would have been, you can do pages of analysis, right? And that difference, when applied to every single trade you're studying, when applied to every single problem you're facing, it is enormous compounded over time. And so it's not just one thing, it's just like how they approach everything day to day. And, um, and just compete. It's almost like, you know, how in, how in grade school, there would be that one, uh, that one pet, you know, teacher's pet of a class where, like, you, I, I just remember, I was kind of like a little bit of a class clown in, in, in grade school and stuff, okay? Where I would submit my paper and it would be like, I don't know, 10, 15 sentences. Then, like, the teacher's pet would submit like an 8 to 10-page document. And you're just like, "Oh my God, they've got the cover page, they've got the supporting figures, they've got an appendix." I don't even know that people were doing that these days. And while I used to probably mock that student back in the day, that is actually the student that ends up succeeding because they're just going so far above and beyond. And, um, that's the type of thing that that really differentiates themselves. And it seems like the extra amount of work is the work that's done outside of the actual trading executions, like outside of regular trading hours, like the studying, reviewing charts, emailing mentors questions. Like those are the stuff that really stand out, allow a trader to stand out.

Y. And it's, it's so true where what I would, what I would always say is, the trading day and trading, that's almost the equivalent of, of playing the basketball game. That's not where progress is made, right? No matter what your sport is, the progress is not really made playing the game. The progress is all made when you're hitting the gym, when you're doing the dribbling drills, when you're watching tape of the game, when you're doing all the practices to really intentionally refine. And what you so often see is the people that aren't making progress, they're, they're just there haphazardly, you know, trading all day, they're not trying to improve on anything in particular. Then after hours, guess what? They already, in their mind, did their day. In my mentality, your, your day doesn't even start until after hours, right? And if we want to talk about hours, and it's not just about hours, but effective, intentional review and practice. And so when I was learning, my day, in my head, it started at 4:15 or 4:30 p.m. That's when it started because I was doing the review. And so when most people were thinking, "Oh man, that was a hard day. I put in all the hours," I'm thinking, "Okay, I need to do an hour of write-ups. I need to do an hour of watching tape of my trading. I need to do an hour of reading news catalysts." And I would have all these tasks that I would do every single day.

So, what do you recommend traders, whether on the retail side or the institutional side, what kind of routine should they try to aim for every single day, uh, when they're trading?

Yep. So, and I think that's so important because how you use your time and whether you use it effectively is, is everything because that defines the rate of improvement you're going to make each day. And so some of the practices that I think are essential, no matter what skill level you're at, assuming you know all the basics about order entry and all that other stuff, um, I think every single day you need to be reviewing whatever the easiest opportunity was. And so what might that look like? That might mean you take the chart, you put it in your database, and then I would be doing a page or two write-up for whatever those easiest plays were. Each week, I would be studying what does that daily chart look like and trying to reverse engineer why these moves are occurring. What does the daily chart look like? What does the intraday chart look like? What is the volume during all this stuff? What does the level two box look like? And getting a huge database of those easiest opportunities and having that cataloged over time is incredible. So that's one use of time. Another use of time is I'd be going over, um, how to find these specific opportunities. So it's always such a big question that we push the traders at SMB to ask themselves is, if you're making money in a play, how can you find more of them? So that's a question of, do you have scanners and technology that can help you spot these? Are you putting limit alerts to help you, um, not miss the entries and the exits? Then another thing that's really important is, if you're trading with a team or a pod, are you educating those around you on what your easy opportunity looks like so they can help you spot more of them? So that's another key thing. And then another essential practice is watching tape of your trading to spot all those small things you might be doing. Are you effective with the keystrokes? Are you effective with the entries? And just get the reps in real time.

You heard Lance knowing how to find the right kind of stocks to trade is actually a very crucial skill for any successful traders. If you guys want to learn the details on how to find those profitable stocks to trade, then you can comment "stocks criteria" down below and I'll send you a full tutorial.

I do want to touch upon something you just mentioned, which is working at a trading pod. I know you talked about, you know, as traders, we should find traders who are at our similar level and trade similar things, similar strategies. What's the, what's the benefits of working in a trading pod and how would you, how is that something you do regularly for your traders when you're trading at these firms?

Yeah, so I think that is a big epiphany for most people on the retail side. Is on the prop side, you always have a trainer and you always have people to collaborate with. And part of what's so powerful about being on the prop side is that environment that you get, right? Where you're just surrounded by people trading similar strategies. So you can talk about different trades, you can compare, um, how people got into the trade, how they got out of it, what size they traded. And a lot of that collaboration ends up leading to all these little micro interactions that make you so much better. So one thing I've always been posing to the retail side is, if this is such a powerful best practice of the prop side, why is it that most of retail are trading on their own? Not only is trading on your own much less fun, but I'd argue you miss out on so many of these interactions. Now, some people say, "Look, Lance, I don't enjoy trading with others, or I end up, um, feeling FOMO if other people are trading other things that I'm not." And what I would say is, there's many different ways to model this out, right? You don't need to be on a Discord channel trading with others every single day. Maybe the right process for you is at the end of each day, you're doing a daily review with them. Or maybe you're doing a pre-market call to see what they're looking at. Or maybe it's just at the end of the month, you're exchanging your easiest money trades for their easiest money trades, and you're studying what, what each person's best setups are. And so I think finding these pods, first of all, it makes it less lonely and more fun. You're able to learn their best practices and their best trades. And I think it really accelerates the learning you can do because of that. And it's, it's so funny where, like, trading is just like any other skill. And as both of us doing social content, I think we can appreciate Mr. Beast as, as most people can out there. And when Mr. Beast was on a Joe Rogan podcast, he discussed how he attributes so much of his success to the fact that when, when he was first starting, he had three or four best friends, and they were all obsessed with cracking the YouTube code, were each other, and sharing each other's insights. He would have never ever gotten to the place he did. And so for so many retail traders, I, I urge them to find a practice that works for them because it allows you to see more opportunities. It allows you to learn more styles. It learns, like another huge thing is just taking other people's solutions and applying that because, guess what? No problem in trading is ever so new. And so when I do advisory work at SMB or with, with some of the groups I mentor, what's so funny is, some trader might be struggling with sizing. And then you say, "Oh, well, guess what? John, Sam, and Luke were also struggling with these, and they just got past it. Why don't you speak to them to learn what worked so well for them and what best practices make sense to you to apply to your own trading?" It's just a really powerful way to compound your, your learning process and have more fun and celebrate each other's wins, commiserate with each other's losses. And like, imagine how, how isolating it would be if you didn't have that. And I know even for you, Shay, um, having a little trading pod was was hugely valuable to you and, and your growth.

Yeah. Uh, just really quickly, going over my experience, I was trading alone for the longest time. And then I was in another community, this is probably like five, six years ago, where there were a couple people that I think trade similarly as I do. Then we kind of formed our own little Discord, and every single day, and in the evenings, we'll post our charts and we'll share with each other. Nothing formal, but we will write like what we think did well and didn't. And that's kind of where everything kind of started from. That's how it all begins.

Can, can I ask how you found those people?

It was a mix of, I found this, this person from like a community like a, when was forums, and we just kind of branched off into our own little group. I think social media is the best way. And some of the friends I found from Twitter, so that was great. Um, yeah, I think Twitter and, and also Reddit.

Nice. Yeah, I was one of the OGs on Reddit. I'm not on there anymore, but I used to be very active on on on Reddit, this is before the whole Wall Street Bets thing, years ago.

You're not, uh, what's, what's that person, the, uh, something Kitty, that the person that did the all GameStop, the roaring, roaring Kitty? Yeah, yeah. No, he's the, he's the, yeah. No, I, I was not a part of that. I, I wish I did. Diamond handed wasn't, wasn't my speed either. So that's, yeah.

One thing that I always get from from people is I ask, "How can I find my own pod?" And so often, what I do is, typical to having me as a mentor, as a trainer, is I don't give them the answer. And instead, I say, "You tell me." That's probably my favorite response. I think online or with, with whenever training anyone is, they'll ask me a question, and I say, "You tell me." Because it's so important to help. It's like, as the saying goes, "I don't, I don't want to give you the answer. I want to teach you how to find your own answer and how to think critically to find that." And so often, people ask me these questions on Twitter, and if I give you the answer, like, it's going to help you in the short term, but that's not going to help you figure out other issues in the long run. And it's, that's where going back to the previous question, what separates the really great stars is the stars are always figuring out their own answers. And when you push them on questions like that, they're coming up with the most detailed solutions. And so I challenge the audience to really ask, like, and an answer doesn't need to come up in 30 seconds or a minute later. I want people thinking about these things for days or weeks, and really putting the, the effort in, the thought. And like, yeah, there's obvious answers like social media. There's obvious answers like going to trader meetups where we first met, in, in, in Vegas. And then I would also ask people to think, "Okay, like, the best way I would argue is to find ways to give other people value very selflessly so that they want to help you and be a part of that aura." And, and then where the rubber really meets the road is, who are the people on Twitter sharing a daily report card every single day? Not just for a week, not just for a month. Who are the people that do that year after year and build up a following? Who are the people that are building scanners and sharing them with the community? Who are the people that are making watch lists? Or who are the people doing, uh, YouTube videos dissecting the top trades? Uh, there's one guy, Egor Appleboom, that did an amazing AMC AP write-up dissecting all the events, dissecting the trading opportunities. And that's a great way to differentiate yourself. And once you start giving value to others, then it's very easy because you start attracting other people that want to to learn and share and be a part of that. And so, so many people say, "Oh, it's, it's hard to find a pod. And I tried, but it didn't work."

What I would say is, guess what? It's not supposed to be easy. It's, it's nothing. Nothing worthwhile in life is ever easy. And especially trading, right? If, if you're getting, if you're getting frustrated and disheartened because you put in 30 minutes, or two, two hours, or five hours, or ten hours to find a good pod that's going to give you benefits into perpetuity forever, and it didn't work, so you're just giving up. Well, guess what? Trading is going to, is, is no easier, and it's not going to work out. I'm sorry. And like, I don't want to be the bad person that says that, but guess what? It's hard. And if you're going to give up easy, this is not the right job. I am sorry to say that. But this is for the people that will persevere, that will give blood, sweat, and tears to succeed at this job because there's nothing more they want. They want it more than, uh, comfort and convenience and emotional feel-goodness. They're willing to go through that pain, um, because this is a psychologically difficult job. The, the losing streaks, uh, the setbacks. No matter how good you get, even when I was at the top of my game, it still wasn't easy. Not a single day of my career has ever been easy. And so if, guess what? You tried for a week, and the pod didn't magically assemble, and people didn't come running from all over the world to give you all, all their value and their secrets. Well, guess what? That's not how life works.

Yeah, I couldn't agree more. Because I think especially in trading, so many people want to take, but not a lot of people want to give. But in, especially in this industry, to make it, you get more when you give. So I think whether it's on YouTube, on tweet, on the, the really detailed write-up you do, I think that's your way. I'm sure that's your way of giving back to a trading community. And yes, you get a lot of people who reply you, who ask you questions, and asking you to give more. But I think you probably enjoy talking to the traders who provide some value first.

Well, and that's, I wouldn't even say that's a trading thing. I'd say that's become one of my main life philosophies. Is, is what I've learned is just overall in life, the best things happen when you truly give value without looking for anything in return. And in my view, society functions best when people are doing what's best for everyone around them, which also in turn ends up benefiting yourself. And whether it's people like Mike Bella-fury, or, um, a lot of the people that attend Traders for a Cause, it's all people that are looking to network and to give selflessly. And I think like, what makes a good networker is they're not thinking about themselves. They're thinking about, how can I meet this, this other person and help this other person, um, achieve what they want? And so many people say, oh, but I, I, I tried. I tried giving selflessly, and it didn't work, and it sucked, and I got nothing in return. So I gave up. And that's when I say, well, guess what? You weren't really giving selflessly. You were, you were doing it with your own motives. And it's, it doesn't happen all at once. And I think most of the rewards in life, they really come from having a long-term view and and doing what, what really just adds value to, to the world around you.

And now, like, people, so many people will say, hey Lance, how can I join your trading pod? And what I'll say is, to earn my trading pod, what, what value have you given? You know? And it's, uh, it's, it's hard for people to recognize that. But I think it, it all ends up better when you're trying to help others, and you end up getting more in return than, than what you give. And I believe in that trading-wise. I believe in that with my nonprofit. And I believe in that just as a life philosophy. And I think in the end, it also just helps you be happy and, and just happy with yourself and who you are.

Yeah, and I think, um, a lot of people talk about even just finding the right balance with all this stuff. And, and, and Lance, you're talking about working hard and going all in. But like, when, when is that too much versus when is that, um, leaving room for family? When is that leaving room for, uh, sleep that I like to talk and preach about? And it's a very fine line, right? Between overwork and burning yourself out. And, and we were over lunch talking about how easy it was to burn out over 2020 and 2021. And that's, that's where I think so much comes down to, how can you make your daily routine fun? And I think part of things being fun for a lot of people is, is trading with others, um, doing different contests, or different collaborations, or, um, recording content that, that is, is fun to record. And, and make fun. Doing these interviews is, is fun for me. So it's why I do it. And I know I can sustain this. And I think like, it's, it's finding that balance where you're going to be healthy, happy, well-slept, and recognizing that when you do all those things, you're going to be more productive and more effective. And like, yes, 22-year-old Lance probably worked way too many hours. And in retrospect, I could have been more balanced in everything else. But I think sometimes it's like, you need to, only through, through age and experience, do you learn that like, oh, wait, you know, that wasn't so effective. I really can find more balance. And, and life is just the big refining process.

Mhm. Yeah. And always pushing isn't always sustainable either, in trading and in general. Yeah. Yeah. And it's, I think it's just a matter of doing, doing the best you can with the constraints. And people will say, hey Lance, how am I supposed to get good sleep with, with kids? Or how am I supposed to, um, put all that time in if I have to support a family? Or if I'm trading part-time? And the answer is always, do the best you can with the constraints you have. And I'm not saying you're going to get perfect sleep if, if you have kids. I'm just saying, do the best you can for you and your situation. And what I would also say is, what people, uh, don't believe is that there's always someone out there in your situation that's making it work. So maybe you're, you've got a full-time job and you're trying to learn part-time. Maybe you've got two young kids and not the best sleep. There's somebody out there that's found some solution to make it happen. And it's so important to recognize, if someone else can do it, so can you.

So moving away from the mentor lens now, back to the trader lens, could you share with the audience what's probably your favorite strategy that that's worked for you in the past when you were trading consistently?

Sure. I think probably what I'm most known for, uh, due to Chat With Traders and and Aaron Fielde, is is some of the capitulations and the panics. And, uh, I think part of what makes those so fun is just the adrenaline and the speed. Uh, it's, it's scary and and heart-pounding sometimes. And I think that that's also what kind of makes it great in a way.

So breaking down that capitulation play, what, what should you look for on the daily chart? So audience can kind of look at it. What do you look for on the daily chart, and what do you look for intraday for your entries and your, um, executions and exit?

Yep. Yep. And so I think for a lot of this, you can almost separate it into two buckets. I want to find the stocks that were really, really, really steady, strong, or, or even ex-exorbitantly strong that are then panicking. Or I want to find the stocks that are really, really weak and then are panicking and having their last flush out. And so one thing intellectually that's really, really important for traders to recognize is the stocks that you trade are so, so, so important. If you gave me a random list of tickers from the whole universe of stocks, I would never, ever be able to make money. I don't think any trader would be able to make money. You're only able to find edge in very specific tickers in very specific situations. Some of those tickers with edge are what we call "in-play" stocks. That might be because of a fresh news catalyst. That might be because of they're a new ticker IPO. It might be because of a technical pattern. It might be because of, um, different order flows due to imbalances and quad witching or something. And so we're really only trying to touch and trade tickers that are doing something exceptional. And so with these capitulation trades, I want to find like the top 5% of the strongest stocks that then out of nowhere tend to panic. Or I want to find like the bottom 5% of the weakest stocks that are left for dead and no one wants to own anymore, and they're just being, uh, thrown out as as unable. And, like, one of the analogies I would, I would give is last, last year, I think it was, um, yeah, mid, maybe like spring '22, Chinese stocks were getting wrecked. Alibaba was getting wrecked, uh, Pinduoduo was getting wrecked. And I think it was the JP Morgan analyst that essentially created the bottom by coming out with the research report saying that Chinese stocks are uninvestable. And the second you start to hear that rhetoric, so these were companies that, I think Alibaba touched 300 something at, at the highs less than a year earlier, and now it was being puked out at around $80 a share and under a year. And that is a mega, mega-cap company. And so what happens is that pendulum of, of say, bullishness to bearishness, it was going so far bearish. Like, again, for an analyst to come out and say these stocks are uninvestable, it's literally your job as an analyst to figure out what the value is and advise people on investing them, not just say, throw them all out. That's garbage. So that just speaks, speaks to how crazy bad that sentiment is at the time. And so if you read between the lines of what I just said, there's, we can start to suss out some of those variables, right? So first of all, there's sentiment. And I would say sentiment on those stocks was approaching -10. Then I also touched on the scale of the move, right? So these were super strong and popular, and Alibaba was at 300 or something. Now that was cut to, I think it, I think it was around 80 bucks when this happened. So that's a massive move in a couple of months. And then if you were to take that specific move over the prior days, I think the stock went from like 100 to 70 bucks or so in a matter of like a couple days or a week. So these are all really important variables to justify just how quick and extreme that move was. Now, another variable that I like to consider in these capitulations is volume. The volume on this was enormous. And so what's happening with volume is you get all these people that might have been long these shares since 300 bucks, 200, 150, and they're finally throwing in the towel. And you get this massive share turnover. So the average price, all the people that were ever going to sell, they're puking. And it's people now buying it at a way lower average price. And all the people that were going to hold on forever, they're still holding. So now you have new people in this vacuum where everybody that was ever going to sell just panicked and sold, and you've got new money in. And that average price of the holder goes way, way down. And that's so often that dynamic that creates a bottom. And guess what? When you're at peak bearishness and the stocks are uninvestable, there's only so much further you can go, right? Essentially, everything bad is being discounted. And so that's the concept. But then the question is, how do you actually trade that and execute? And so what a lot of people will notice is some of my systems when you have in-play tickers can be very, very simple. So if you're doing a swing trade in an in-play play ticker, if something's selling off day by day by day, what I'll look for is a break of that trend. How do I define that break of trend? It might be as something as just getting above prior day highs. And because all of a sudden, if you're going down, down, down, down, down, you have that first up bar, a lot of people are going to start to pile that on. And right when they do their end-of-day scans, and they look over charts, people are going to say, oh my God, like Alibaba has been down five days in a row. We just had a huge puke-out, enormous volume, now we close strong. And a lot of that is what creates that new feedback loop where it's people now saying, hey, maybe we, we put a turn in. And you're buying before all the confirmation and everything else. And so a lot of what I do is that concept on different time frames. So even if this was intraday, if some stock pukes out intraday, I'm going to be looking for that break of prior bar highs. Then I do a very simple stop, which is just a trailing stop of break of prior bar lows. Yeah. So that means, uh, as the stock breaks out higher, you're moving your stops out up, uh, up along the way, always in the money. Yep. And so, okay, and this is a day trade. Yep. And it can be on any time frame, really. And so often what happens is when you have an in-play ticker, you tend to get stocks that really, really just melt lower in a trend. So that will really kind of waterfall over. And when something's trading down very cleanly, if it's a really clean down move, the cleanest down moves, once they reverse, tend to have the cleanest up moves. And that's not a hindsight bias thing, right? You can see in real time how cleanly something is selling off. It's way different if something is zigzagging all over the place versus it's just this smooth waterfall. And so finding those smooth waterfalls that really, really panic, those are the ones that are going to be way more likely to have a clean bounce. And that's where if you're sticking to those tickers that are trading very cleanly, the probability of you being able to catch a bounce with a simple trailing stop like that is way, way, way higher. And so what I think surprises a lot of people is when I post my my monthly top ops on on Twitter each month, so many of these plays by nature of them being an in-play ticker with a fresh news catalyst or making a really huge move, so often they respect that very simple rule of using prior bar lows or prior bar highs because these are stocks that are very cleanly trending.

Oh, and that's where you get the V-shape. Exactly. V-shape down and V-shape recovery. Yeah. And so a lot of what I became famous on Twitter for is talking about buying on the right-hand side of the V. And what that means is I don't want to fight that trend as it's going lower. But once you get that prior, that break of the prior bar highs, and then you've got a turn, and you're on the right side of the V, meaning we're now bouncing. That key difference is, you're now going with that counter-trend. And like, it sounds so cliché, but the simple saying, "the trend is your friend," is so, so, so, so true. So when a stock is selling off and waterfalling, I don't want to fight that trend. But the second I can identify a bounce based on some of those rules for for finding a turn, I'm then officially with that counter-trend. And when you're with that counter-trend, your probability goes up. You have a stop. And then so often trends go way further than you think. And that just means your reward is, is, is better, which is always way better than, than fighting the trend, which is the opposite of all those.

So theoretically speaking, if you had to restart your trading all over again with, let's say, a $30,000 account, what kind of strategies would you focus on? Would you still trade, um, the one we just talked about?

So I think this is such an important question that I'm actually going to give instructions for extra hard mode. Which is, let's say I had no knowledge whatsoever. Like, let's say you don't have the resources of a trading mentor, you don't have a firm, you don't have a pod. I think, of course, you're really stacking the odds against you if you don't. But just, just for, for the game, let's say that. So if I had no idea where to start, what I would do is I would try to find the crazy moves each day. What stocks made the biggest up move? What stock made the biggest down move? Where did the really big news occur that day? Or were there any big IPOs? Take, like the recent Arm IPO. And I would start databasing all of those charts that had the biggest moves. What stocks did the biggest volume versus their average daily volume? And just start to create a database and categorize them. Okay, this is my, my Evernote database for IPOs. This is my Evernote database for stocks that had breaking news and did some huge move. This is my database for, um, stocks that panicked, um, or these are even breakouts. And get enough charts over time, months and months of data. And then I try to find the patterns in those. And what you're going to do is, once you have those categories, if you have a hundred hot IPO charts, you can start to say, these are the themes. Okay, like, if, if the stock holds the pricing, maybe they tend to go up. If they break the pricing, maybe they tend to go down. If a stock has super clear resistance and then it breaks it later in the day, it can make a really clean move. I think one thing for those, it had been so long since we had a hot IPO like this Arm. Yeah. And I think a lot of traders forgot that a lot of hot IPOs kind of settle down in the middle of the day, but they can really ramp up at around 2 p.m., break out, and just go on a run. And it's been so long since we've seen that that a lot of people weren't on top of their game. But that's exactly what the Arm IPO did. And I think when you start to build these databases, you see these patterns and you see like, okay, this news headline came out, and therefore, a simple rule like, if good news, you know, or if the stock goes up, I can be long and have my stop at the unaffected price. So if, if I'm long the news and it starts to go down, I get out. And you can start to build very, very simple rules like that. And so you can have your rules for trading IPOs, you can have your rules for trading breaking news, you can have your rules for trading, uh, capitulations. And you start to refine them based on all these hypotheses, right? And so I can say, what happens if my stop is in a capitulation? I'm going to hold the trade for five minutes. Totally random. But what if I guess, five minutes? Minutes. And what you do is you start to go back and crunch the data. If I now have a hundred capitulation charts, what does happen if I buy on the first up bar and then hold for five minutes? Okay, um, maybe the data turns out, but now I'm going to say, what happens on the biggest, most capitulatory moves where it's three standard deviations and three average daily ranges and huge volume capitulation? What does that do to the data set? And you essentially start to be this little data scientist with all these hypotheses. And so I would do a lot of reverse engineering that way and find out like, what are the logical patterns that make sense? I would then start to pull on different variables. How does time of day matter? How does volume matter? How does whether there's a news catalyst matter? And then I would just keep on refining, refining, refining. Um, but yeah, I think the other thing I would advise is finding what trades are the easiest for you. I tend to think some of the easiest trades are the slower ones. It gives you more time to think, it gives you more time to game plan. Um, there's some, there's some breaking news where you know it's coming, right? You might know about the AMC appeal court decision, you might know about the Grayscale ETF, Bitcoin ETF decision. And so then you might start specializing in, what's the stuff, the headlines that I know is coming that I can really game plan? And those are slow. I can, uh, you know, game plan for them. So that's going to be really, really powerful in the, the beginning. Much like I told you about like the, the little reversal trades. Okay, I know I want to look for little tech tickers that are weak, especially on quad witching. So then I can start to really focus on these little areas and repeat, repeat, repeat and get data.

So once they have all these data sets, do you still recommend these new traders to, how should they approach risk management? We talked about earlier that you recommend traders to have to use, you know, a little bit more risk on for one or two shots they're good at. But what if they're just starting out, they don't have that, you know, A+ playbook yet? How should they risk in the very beginning to get to that point?

Yep. And so I would also say, big picture, you're touching on an important topic, which is one of the pitfalls of information out of context, right? What might be true for one trader at a certain part of their career and their development is totally different for another trader at a different stage of their career, right? And so if you're a new developing trader, what I would say is you might not need to be trading any size whatsoever. The best place for you might be in a virtual account. And if you don't know the basics, and if you don't have data yet that proves that you have edge, you probably don't need to be trading any money at all. Or you can just trade one share. And you want to know what happens to most people when I tell them, hey, there's nothing wrong with trading one share. They say something like, but how are we going to make money? But how am I going to make money? And what happens is this magical thing called our ego takes over. And it says, I can't make any money on one share. It doesn't matter that I don't have experience in this or that I'm going to trade bigger. And that's how people take a loss, uh, too big of a loss, and then they learn. But so what I would say is, for a lot of people, sizing tends to be a much later skill, only once you have a track record of positive expected value in that trade. So in the very beginning, you might not even need to be in virtual. Just collect the data. Then you want to be in a paper account and trade it that way. And make sure, does it work in a paper account? Then, guess what? No one feels good doing it, but the magic one share. There's nothing wrong with it. And it's so funny because I see traders of every skill level, from beginner to elite, when they're trying to build a new strategy or test a new playbook play, they all trade it on too much size. And the elite traders, they're, they're too big with their puffed-up chests. They don't, they don't want to be trading 100 shares. And it's just human nature. But guess what? If we don't have proven edge, you don't want to be making bets because you're just throwing the money out the window, right? And especially if you're trying to develop as a trader, you need to save your firepower for once you really have have edge and, and, and experience. So I would say, forget about sizing. Just trade one share at a time and start to build up those reps until you have data that you're making money. Then start to gradually, prudently, start to increase that size.

Would you say that mistake is more prominent, prevalent, sorry, that mistake is more prevalent with the retail traders? Because in prop, I imagine you get allocated account sizes. So in the beginning, you probably get very little account capital to trade with. So even if they're reckless in the beginning, they're not really losing that much, right? But as a retail, you have all of your $30,000 or $50,000 all at once. And that's when people start doing dumb mistakes. Is that the case with prop, where you have like a risk limit and it kind of increases over time?

Yep. So I think that's part of the beauty of being on the prop side is, is first of all, you have experienced risk managers and people helping you protect yourself. Yeah. So it's just a no-brainer. Every single trader on the retail side, regardless of experience, you need to have risk limits. You need to have, ideally, them coded in at the broker or at the software level, so that you can only lose a certain amount each day, so that you can only have a certain position size each day, because you can so often be your own worst enemy. And it's so important to have those rules, um, because there will be times you're wrong, there will be times you're on tilt, there will be times you're just totally missing something. And so it is 100% true that a huge benefit is on the prop side, you have your, you're, you're starting off with a set amount of buying power, a daily risk limit, and you can't go beyond that. You know, you can't enter in an order or do anything else. And so it's a lot of those best practices from the prop side that retail would do very good by implementing and trying to replicate some of that.

What were some of your biggest losses and some of your biggest wins?

Sure. So start from the, with a green one. Yeah. Yeah. Let's, let's start with the green one. The funny part too, is I, I think for most traders, and I think this is just classic behavioral psychology again, I think most traders remember their losses way more detailed than their wins. Wouldn't you say the same?

I agree. Like, yeah. And also, like, impact, emotional wise, you don't feel that much when you make money. It's, it's incomparable. Yeah. It's so, like, some of the wins are a blur. But I think probably my best tickers ever were actually G, uh, GameStop and AMC. Okay. And especially in 2022, I think it was like January and February of, of '22. Those tickers were really going wild at the start of that year. And in, in January of '22, I think I ended up putting up like a, it was some absurd start of the year where I ended up having like a $12 million month or something. Wow. And a lot of that was just, just seven-figure days in GameStop where you would get these moves where so many people from the meme, Wall Street Bets, and everything were trading on margin, and there was so much going on the options. So you would get this momentum to the upside where it would go up, up, up, up, up, up, up. And like that pendulum would finally crack, and you would short it, and it would just go limit down, limit down, limit down. It held it down so many times.

GameStop. Yeah. Yep. And so people, a lot of people are like, oh, like, you know, why aren't you giving me specifics? And so what I would say is, what we spoke about with capitulations earlier, that GameStop was a super, super in-play ticker. And if people were to pull up the charts, and so I use two-minute intraday charts. There's nothing magic about it. These, these patterns work on any time frame. And so if you were to pull up that chart, that was something that it, it went upside this one day. I think it was like late January 2022. Can't remember the exact day. But then it went limit down, limit down, limit down because it's so many people getting margined in, so many stop orders, there's so much volatility. And so you might have had like five or six limit downs in a row. Then what I wait for is, right, essentially, stock went from super strong and super, super bullish, then all at once that pendulum goes all the way to the other side, and it's, oh my God, GameStop's going to zero. And then the second you get that turn and you break prior bar highs, or you go limit up, that's where, guess what? That pendulum finally is shifting back in that momentum. And so a very simple rule again, when applied to an in-play stock, waiting for that break of prior bar highs. And that was something where it's like, especially to the downside side, because you're dealing with a lower bound of zero, where the upside, when a, when a stock can squeeze to infinity, is way more scarier. So there would be these times in GameStop where you'd get all these limit downs, it would finally turn higher, and you would just plow into that thing, knowing that you now have a defined stop below that. And so often what would happen is once that pendulum starts to shift back, you would go limit up, limit up, limit up. And I would again, just ride that trailing stop. And it ended up having for such, you know, a simple system, amazing, amazing wins because these tickers were so hyper in-play at the time. The ranges were so big, the momentum, the volume, everything was so incredible. So all throughout 2021 and 2022, you would get these stock moves that were just unbelievable. And again, if it's trading cleanly on the downside and just going down, down, down, down, down, those reversals, so often were clean. And so, so GameStop just had some incredible, incredible moves. And that, those, those two tickers must have just been my best tickers ever by a huge, huge margin.

Okay, so those were your biggest wins trading the capitulation play we talked about. What about your most memorable loss?

Yeah, sure. So I guess for, for full disclosure, to always, uh, talk about the, the bad along with, with the good. So in P&L terms, my worst loss was probably about $2 million. And that was in, in Avis car, uh, when that did that crazy move, uh, probably mid-late '22, that crazy squeeze, um, which is also highlights some of the dangers of shorts more than the longs. But at that point, I mean, I was already up such a ridiculous sum that year that it wasn't that really wasn't that big of a loss. But the most emotionally devastating loss to me actually came in Valeant, and I think this might have been around 2013, 2014, or so. Um, it was pretty early on my career, um, where I was finally just starting to break out. And I think I was on track for maybe, I was going to have like, I don't know, a pretty solid month, maybe like my best month ever by a big margin, like a $60k month or something. And I think my lockout, meaning the amount I can lose each day, was maybe five grand or $10 grand or something. Okay. And what happened is there was a huge buy imbalance going into the close. The stock was already overextended on the daily. And so then it seemed like, oh, maybe this is just order flow. Somebody's been buying a lot of the stock over the last week or so. And the way the imbalance worked, it closed high by like a couple of points. And you're like, oh, wow, like this is a huge, multi-billion dollar pharmaceutical company. Uh, okay, doesn't seem all that crazy or scary. And so then after, after hours, it started to kind of like pay across the spread a little bit. And so we're like, okay, like this, this happens. You know, a lot of people are stuck short from that imbalance. This isn't so, so crazy. Um, so what we, what we did is, is I had other offers in higher in this stock. And thinking like, oh man, if people get, get skittish after hours, this, this could really, like, that's just a massive move. And so then what happened is that whole buy imbalance and all that buying of the last week, that was actually front-running a, a huge headline. And what that headline was, was Bill Ackman of Pershing Square was doing a hostile reverse merger to, uh, with with Allergan. And despite that being a huge, multi-billion dollar pharma company, that ticker ended up going, I don't know, maybe like 40, 50% up after hours. And I didn't have that headline quick enough. And I had my offers in. So then in a split second, all my offers get, get filled. I'm down way more than I would have ever, ever imagined. So on like a five or $10 grand lockout, like, and I, I can't even explain, 40% for this stock to be up is such a crazy, unimaginable fat tail for a company of that size. And so within minutes, I was down like $110,000 or something. Oh my God. And this was at such an early stage of my career. And that loss just seemed totally insurmountable. And for something like that, like, I, I know I took the next day off. And I just remember talking to my trainer and and him, uh, who always kind of just would, would shrug things off and kind of, you know, say like, you know, don't worry, just, just keep on working hard. I remember his reaction was like, well, you know, crap, man. I, I don't know. But just hopefully this ends up being, being a blip in, in the long term. But, uh, you know, we've got some wood to chop. And, um, and that was the first time I said to myself, like, like, wow, like, could, could this really have been the thing that just ruined my whole career? And, um, it was, I think I got somewhat lucky in that, like, the loss was so, so big. It was just like, so emotionally impossible to, to process at that point. Like, that was so many multiples more than my whole career had been, right? It, it was just like a crazy sum. And so I think like sometimes what happens, not that you ever want a loss, is a lot of these losses then gives you perspective. And you say, like, okay, like, now I'm actually, it was almost freeing in a way, because I knew like, okay, Lance, like, you're either going to, you're either going to make it or you're not. If not, you have nothing to lose at this point. Like, just give it your all and whatever happens, happens. And like, I think that was my first lesson in process thinking. Because I was only like 23 at the time, maybe. Yeah, probably 23. And like, all this talk about follow the process, don't focus on the outcome, all the stuff that Bella preaches about, I didn't know all that stuff yet. I wasn't the Lance that, you know, now. I was just the scared deer in headlights, 23-year-old without a dollar to his name, saying, oh my God, am I going to lose the, the job of my dreams right now? And so then I was just free to say, like, okay, like, I have nothing to lose now. I need to just give it my all every single day. And I, I can just pray that I'm still at this job six months from now. And, um, that was like an important lesson for me that you, I couldn't control stuff like that. That was just a total crazy fluke. I was short into like, the biggest, one of the biggest fat tails I've, I've ever seen in just like a crazy random situation. And so then it just, I just focused on improving and getting better, uh, day by day. And, and what was so crazy is I got out of that hole, I think by the end of the next month. And it was transformative to my trading. And because all of a sudden, if risking $500 to $1,000 seems, oh my God, this is so much money, you think about that loss you took, and it just, it just freed you emotionally from the capital. It all became divorced from the money. And it was just the computer game at that point. It was just a number on my screen. And it was, it's, it's almost, it's almost freeing to not have to think about it in dollar terms. And I think the best traders, the best traders don't think about it in dollar terms whatsoever. That P&L is simply a number in a computer game. And there's no upper bound to what you can make in this, right? So where some people think, oh man, I just made a thousand bucks in that trade, that's crazy. And, and they can't even imagine or fathom risking 2,000. And I've seen that in trainees before. I've had to literally rip up and set real money on fire to show them, like, it's, it's, it's all a game. This is fugazi, right? It's just numbers on a screen. You need to disattach yourself from to ever be good. You can't think about, oh man, I'm risking. If you can't think, I'm risking a Lamborghini in this trade, I'd rather have a Lamborghini. You know, you'll, you'll never, ever put the trade on. You want that Lamborghini, right? But if, if you don't put that Lamborghini worth of risk, you're never going to make a million-dollar trade. You can't make a million-dollar trade risking a thousand bucks, generally, right? Yeah. It's, reward is scaled linearly often times with risk. And sometimes, if you want to make more, there's nobody making $100,000 months on $10 risk levels, you know? So it's like, it's like you need to risk more. And you need to accept that. And you need to recognize that, like, you might be afraid of the big losses, but unless you accept and, and come to terms with that risk, you're never going to have big gains. And once you divorce yourself from the thought that this is real money, and you just view yourself, I'm trying to be the best I can at this game and be my personal best, that's when you're free to just break the bounds. That's when you become Neo in the Matrix, and you're playing your own game. And that's when all the competitors that are too focused on the money and too focused on on what they can buy with this stuff, they don't stand a chance anymore.

I think a lot of that is also from your reflection after so many years of experience now, looking back at that $120k loss. That's all the stuff you learned. But at that time, after such a big loss, how do you stay inspired and keep pushing forward?

Yep. And I think, I think the best way, the best way to stay inspired with anything, I think, is to love the game. And I think it's to have fun with the game. And, and I grew up playing video games a lot. And, and so much was just, how can I become better and better at this? And especially if you're doing it with your friends. And I think that's the power of the pod. And especially when I was running that Chicago office, I was so, so lucky because my best friends in the world were in that office. And so every single day, it wasn't going to a job. It was, I'm going to play this video game with my friends. And we're going to joke around, we're going to have fun, we're going to grab lunch together. And at the end of the day, like, we're all going to help each other be better because I want my friends around me to win. I want the office to win. And like, that is when you're in the perfect situation, um, because you're doing it for the love of the game rather than for any material thing. Or rather than, um, I think some people can have like a chip on their shoulder or something to prove. And it, it gets down to like, what's your why? And, and why you do this. And, uh, Shark at SMB, he's, he's one of their best traders. And I think he's one of the best, um, he's got one of the best mental games of anyone I've ever met. And his why is, I want to be the best trader I can become. And so when he doesn't need to worry about money so much anymore, and he's, he's got a family, it's easy to ask, why do I still push myself and sacrifice myself for this game? And his answer is, because I'm trying to see just how good I can be. And that's a very powerful why, 'cause it's, uh, it's kind of like the infinity game, right? You're just trying to do it for the love of the game. And I think if you were to look at, um, the LeBrons, this, the, the Tom Bradys, the, uh, the Steph Curries, they're, they're out there having fun. And yes, they're competing, and yes, they want to win, but they're doing what they love. And there's nothing else they'd rather do. And you can't out-compete those people.

So after that big loss, you just talked about, did you ever think that you might not be able to make it and maybe you should just give up?

Oh, absolutely. And what's, what's so funny is I had actually been at the point where at times in my career, I was interviewing, uh, to to leave trading because I didn't think I, I could make it. And I think everybody inevitably has some level of self-doubt. I think if you're just a rational person during that struggle, you might be working so hard, and you might have that passion, and you start to see other people start to get it, or other people start to quit, and you say, man, like, I don't know if, if I have what it takes. And I think what was really special about the prop side and what Trillium did is at the end of each year, they had a holiday party with the top 10 rankings. And so I remember on my first and second year on the job, uh, we would go to this holiday party. And the whole year, it's over 100 plus traders, everyone's trying to compete for the top 10 slot. And so at this holiday party/award ceremony, they would call up in order, 10 down to one, the top 10 traders of the firm. And they would all go up there, and they would shake hands, they would get their, their trophy. And I just remember this being the most inspirational moment, right? Because you would look up onto that stage, and you would see traders, young people that were that were in their late 20s, early 30s. And you would look at yourself and you would say, wait a second, like, that, that person isn't so special. There's no reason why I can't do what they're doing. If they're able to do it at this job, why not me? Any, any single person out there, I can do what they can do. I just need to keep at this. And it was this super, super motivational desire to end up on that stage one day. And it was that, that dream of just saying, like, I, I don't need to be number one. I don't need to be the best. But if I can just get on that stage, man, will that be amazing? And that whole thought pushed me through so much. Recognizing that, hey, if those people are up there, I can do it too. Anything, any of those people I'm competing with, there's nothing that makes them different. We each have a couple keyboards, a couple monitors. I can do this. And that's what really motivated me to be up there one day.

And you were, and you did close out your last two years trading the prop firm as number one on that ranking, right?

Yep. Yep. And I set the all-time record for for highest P&L in a year. And, and, and everything else. And so one thing that I do want to speak with, given my seat at Trillium running an office, as well as SMB Capital, and being fortunate to be a guest on your podcast, is I think what's so special that you do is you role model for so many females out there that they too can be successful in trading. And so when I saw that award ceremony as a male, seeing the top 10, which was all males in a firm that was pretty much almost all males, especially on the trader side, it was, it was very easy for me to say, oh, wait, if those guys can do it, I can do it. And so for the females in your audience, what I would say to them is, if Shay can do it,

It you can do it too, and so much, and so, so much of the prop world is so hungry for higher diversity and for hiring more female traders. And I feel like on the institutional side, in sales and trading, and research, and wealth management, there's a lot of females out there in those roles. But on the prop side, it's still lacking.

And what's so hard about the job is the learning curve leads to so much failure. And so we'll get some female applicants, we'll get some female hes, but inevitably, you need one to break through and set that example on the prop side. And so my challenge to your audience is, yes, Shay did it on the retail side. Which one of you will lead the way and be that shining example on the prop? And so if you're listening, go out there, apply to Trillium, apply to SMB, and be the one that breaks the mold and sets the example for so many others to come. Yeah, I would love to see a female prop trader appearing in one of the SMB Capital videos one day on YouTube. That'll be very inspiring to all retail and prop traders for sure. Yeah, and you get a difference of perspectives, and you get a difference.

Uh, and so the other thing is, especially on the investor side and the portfolio management, um, they've been able to do studies and there's even actually huge advantages for whatever reason where most females tend to outperform males. And I wouldn't be shocked if that's the same thing on the prop side, but we just need more data points and more venturing into the field. And it's not really the wild west of of of old. And the more we get people applying, and the more people we get doing this, it's just going to make the whole industry so much better. Okay, so you do have people apply, and you do have female traders would get in, but but never, never enough, especially with with the failure rate because it's just such a hard job, right? And if you're only on average going to keep maybe one, one in every four, you really don't get enough female applicants to sustain a a meaningful female population in prop, and it's, it's badly needed. Yeah.

And that's say each class you have 20 people, um, doesn't matter the gender, but how many at the end actually make it out of that 20? If if I had to take a guess, and um, a lot depends on on the year, but if I had to guess on a class of 20, um, maybe four to five, 10 to make it. You might get, you might get one star out of the 20. You might get two or three good, good to great traders, and maybe one or two okay, just they're able to get by traders. And the rest, either due to due to the learning curve, or it's not the right fit, or or they're interested in other stuff, um, just just don't make it past. It's a hard game. And I'd imagine, I'd imagine on the retail side where you don't have the resources, the mentorship, the technology, um, the environment, it's the, the statistics must be staggering. Yeah, it's probably even tougher, a lot tougher. Absolutely.

Yeah. Lens, nowadays, uh, what's, what's your focus on? I know you, yes, you advise at SMB, but you also started your nonprofit. Can you tell our audience a little bit of about what you do and what's your mission there? Like we touched on earlier in this conversation, it's so important to selflessly role model helping others. And a lot of what I do, even from the content, it's to show people that there's really, in my view, three ways of giving back. You can give back money, which appeals to a lot of traders, uh, because we're financial people. But you can also give back with your time through volunteering or or stuff like that. But you can also give back wisdom. And so a lot of why I do the free content and everything is to show that, okay, I built up this education and wisdom and experience at trading. Okay, I'm going to just give this knowledge out to others to help them improve their game and be better. But then I also give back financially, and I also give back with my time by running what is called the Impact Competition. And so this is an idea I came up with in 2018. And so what the Impact Competition does is we host these competitions at about a dozen universities in the states, potentially soon to come to Canada as well. And each year, at these competitions, we challenge students to solve the issues of a local nonprofit. So for example, we had University of Chicago students addressing local gun violence. We've had students address uh food insecurity on college campuses. We've had students address mental health issues. We had students at the University of Houston uh help the Houston Food Bank, which is one of the largest food banks in the country. And so the winners of these competitions, they get a cash prize and they get the money to implement their ideas and make their ideas a reality. So we've seen some really incredible experiences where students are learning that they can make a difference in their community in a very local, actionable way. And all the people in the community benefit from these nonprofits being able to be more effective. And the most important part is everybody involved has a lot of fun doing it. And so what I really try to role model is, okay, if it's trading and trading's your thing, how can we make that fun and give back to others? If you care about an issue, how can you make a difference? How can you have fun helping others make that difference in the world, a better place? And no matter what, like people will say, oh, Lance, like, you know, you're only giving back because you've, you've done well in your career. But that's not true, right? Even when I was 22 and struggling at Trillium, I was helping network and mentor other students at Indiana University get onto Wall Street. I was helping people with resume reviews. And I think no matter where you are in your life, there is some way that you can give back. And if if we're honest, like yes, you can make the excuses, but I promise you, no matter who you are, even if you're busy with kids, even if you're busy early on in your trading journey, there is some way that you can make somebody's day better. And if we all take that initiative on ourselves, the world becomes a better place, and we also find happiness in doing so. Like you said, money, time, or wisdom. I'm sure anyone can find a way to to give one of these three. 100%. And if if you say otherwise, it's just an excuse and you're not being honest.

So where can people find out more about your nonprofit and where can they find you if they want to find out more of your message? Sure. Yeah. So for the nonprofit, our website is www.impactcompetition.org. And then I'm always tweeting uh the latest tips, content, concepts, videos, and more uh on Twitter at theonlanceb, t h e o n l a n c e b.

All right, thank you, Lance. Thanks so much, Shay. I'm very inspired by today's conversation in many different ways, but most importantly, how Lance always reflects on what he's done well and what he has learned from trading. I think to succeed at a level like Lance, you do need to be very introspective and have a lot of attention to details. For me personally, I like to journal my trades every single day, whether it's a red day or a green day, because it helps me become very self-aware of my best setups and fix the mistakes that I tend to repeat a lot. If you find this podcast helpful, please remember to give a thumbs up and share this video with your friends. You can also listen to the experiences and strategies of other traders on this playlist over here. [Music]

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How to be the Top 5% Winning Trader? Ft. Lance Breitstein (VERIFIED 8-Figure Trading Mentor)

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