Transcription
What separates a great trader from everybody else? Today, Brian Shannon, a professional trader with over 35 years of experience, takes on the Trader Line Quickfire Gauntlet to answer exactly that question. 30 important trading topics, fast answers, and we're looking for five golden nuggets. Answers so good they're worth putting up on your wall or printing out. For every golden nugget, Trader Line will donate $100 to charity. And if this video gets 2,000 likes, we will double everything. Let's see how much trading wisdom we can pull out of one interview. And as a bonus, we're giving you guys the option to choose two additional golden nuggets, each worth an extra $200, by commenting down below your favorite answer or quote. So follow along and pick yours. Brian, are you ready for this?
>> Ready.
>> All right, are you guys ready? Make sure to comment down your favorite quote. Let's go.
When did you start trading and how many years did it take you to become profitable?
>> I first officially started trading in 1991 and I was profitable that year. My prior brokerage experience kind of gave me that opportunity to to come out of the gate knowing stuff basically.
>> Yep. And what were some of your memorable first trades in your early years?
>> Um, I think we discussed previously EMC when I was just uh prior when I was a broker at Lehman Brothers. EMC was on this incredible tear and I just kept making 500 and a thousand% in EMC options. The stock just kept splitting over and over and over again. That was a great one. Um, 911 was really, you know, I hate to say 911 was so profitable but because you just even at that time I felt weird about it. But I, you know, I had identified a handful of stocks after that that I thought would go higher, security type stocks. Um, and you they gapped up. I waited like 3 days. I was trading at Marketwise with their money. Went to my boss and said, "Hey, I really want to go heavy. Heavier than you've ever seen me go. Heavier than maybe you've ever gone, but I've really got something here." And he gave me the green light and I made a ton of money on these, you know, like Vizionics was one I think facial recognition. Anyways, rapid fire questions.
>> Yeah, that rapid fire, but we'll add slack because it was a good answer. Um, what were the most important concepts you had to learn to become consistent and profitable?
>> The market doesn't care what I think. I I used to be stubborn about, you know, the fundamentals that, you know, how can the market be so wrong. Um, so, you know, not averaging down, instead cutting losers. And anyone with any experience who's been around a while will tell you you just have to cut your losers.
>> There you go. First golden nugget. Well done. Um, what did you struggle most with as a young trader?
>> It wasn't confidence. It should have been confidence. Um, you know, I thought I knew everything. I think what I struggled with was probably cutting losses in and ju just just the same thing I just spoke about thinking that my opinion mattered. All my biggest losses came from doing things that I knew not to do. I got exactly what I deserve. I sound harsh when I say that sometimes when some when I'll say, "Well, you got what you deserve there, didn't you?" And it's not to be mean. It's I've been there. I I experience it.
>> Yep. And this is a little bit of a softball, but what is your favorite technical indicator?
>> That would be the anchored volume weighted average price.
>> And why?
>> Because it tells the truth. It takes price, volume, and time and tells us the truth of who's in control from any point we choose to anchor from.
>> There you go. Second gold nugget. There you go. Um, if you could only trade one setup the rest of your career, what would it be and why?
>> It would be stage two stocks on a daily time frame that have pulled back three or four days, settled down two to three days and then they break into the continuation of that uptrend. So uptrend continuation, never buying the dip, never buying the touch of the moving average of a buying strength after the little consolidation.
>> All right, I hate to say this, but I'm going give you one more golden nugget and I'm going to be stingy with the last two, but that was a good answer. Um, how much do you size a high conviction idea or how do you determine your sizing in general?
>> I kind of tend to do it in terms of I say dollar amount. I I I have certain dollar amounts where I get a little nervous, but it it's it's not consistent. So, I have to consider the ATR of the stock. if if the stock trades a you know so some of these critical mineral CRM I call it criminal the way it trades critical uh minerals um it's got a 20% ATR so I'm not going to trade that the same way I'm going to trade a a good growth stock with a 5% ATR so it I don't have a formula but I know there's certain comfort levels and it it tends to be more of an R unit than than percentage of account.
>> Yep. And just to I guess double click on what you're saying you're sizing much less on a name that's moving 20% ADR than a 5% ADR.
>> Yes, 100%.
>> Um, do you shoot for singles or doubles or more for home runs?
>> I think I shoot for home runs, but I end up with a lot of singles and doubles. I mean, doesn't everyone shoot for a home run? Like everyone wants to point.
>> Well, you might swing your swing swing and miss a little bit more if you're if you're going for home runs versus contact. So,
>> I do I I look for home runs, but I manage risk tightly. And I'm happy to get the home runs, but I don't get them
>> as often as the singles and doubles.
>> As often as we'd like. Uh, in a few senses, how do you find stocks? What's your general process for that?
>> It's largely a manual process. So, at the end of each week, I go through a large list of stocks, you know, about a thousand or so. And I I know that, you know, there's 947 of them that I won't trade in the next month, but I get a real feel for the market. I start to see I don't trade bank stocks, but I look at bank stocks. I trade I don't trade energy names, but I look at the energy names because I want to know where's the money going. I don't want to just look at XLE. I want to look at the components of XLE and say these three stocks are firming up. I could see how that could change the XLE. So it's it's it's a manual process
>> and just to emphasize what you said you're kind of see looking at all the themes and seeing within those themes where money is flowing and looking at the individual stocks themselves versus just the higher order compon you know uh index ETFs or theme ETFs gives you that kind of granularity to spot that market rotation
>> bottom up first because the the the strongest one you mean just like coming out of a market bottom right the market you isn't going to bottom till 3 days after the leaders start leading And people start noticing, hey, well, that stock's going, that stock's going, that look at those, those are the strong ones. Money's starting to slowly rotate in. It's going to drag the market up with it because people's confidence grows. So, the components always lead the sector and the index.
>> Excellent. Um, what are the top three books that traders should read? And you've got a bunch here. You could you could show them all if you'd like, but what what are the top books that traders should read?
>> Okay, this is a separate video, so I've got to go with my two. Um, the technical analysis using multiple time frames and maximum gains with anchored VWAP. The most influential book I have over here is Stan Weinstein's Secret for profiting bull and bare markets. So, those three.
>> Excellent. Um, and this kind of goes along with it. Which traders influenced your style the most?
>> Ah, great question. Um, you know, lately I'm looking at a lot of the people that you interview and who, you know, some of the USIC winners and and super performers. I think Ariel is really he just holds things so much better than I do. And he's I think he's probably at the prime of his career. Doesn't mean he can't get better, but he's like in his top few years. good for he he's he really is and so he is really inspirational me um Oliver I've taken a lot of inspiration from um you know younger people I I see what you're doing I see what Ted Zang is doing I love his energy and his passion for learning and just digging in every time time I turn around on uh on Twitter he's just like always learning something it's it's crazy he's like okay we've got this mini Mac for Claude thing and no, we're moving over to this. That one's, you know, no lie. It's just crazy. It's it's so inspirational to see younger people really knocking it out of the park.
>> Excellent. What does only price pays mean to you.
>> It means at the end of the day, we're in this to make money. We can look at all the oscillators, indicators, reasons, opinions. There's only one thing that matters. How is price behaving? Some people will say the most important price is the, you know, the price at the end of the day. That's the worst price of the day because business is done. You can't do anything with it. Your most important price is what did I pay for the stock? How do I manage risk around that? How do I protect my profits? So only price pays. Don't you know other people have opinions about what a stock should do? They're investors. They're different swing. You know, they're maybe a day trader. Learn to focus on market structure, market action, and base your opinion. Be aware of things that influence, but it comes down to price. That's the scorecard.
>> All right. I get I I'll give a golden nugget for that. Well done. Um what are some of your other favorite sayings that maybe you haven't shared uh ju just yet or uh any come to mind that are right up there with only price pace?
>> Well, I know with uh with Jim, you did outside of the market, and I like um life begins at the end of your comfort zone. That's good because I'm always trying to push myself, hold a little bit longer, size up a little bit. Um as I said, you know, simplicity is the market's greatest disguise. It It truly is. And and it kind of goes handinhand with only price pays. It It's price. That's what we're doing here. It's simple.
>> Excellent. Um, you touched on this a little bit just just recently, but how do you spot themes to fish in in the market? How do you know where to focus your attention for swing trades?
>> Well, a lot of times those stocks will be on my master list that I look through and I'll see themes start to emerge. So, I'll write down on a piece of paper, these are the stocks for for the week. I'll get that list down to 200. they'll say, "Well, you know, that's the third lithium stock that looks like it's getting ready to break out, or that's the third energy stock that looks like it's about to roll over." Um, but beyond that, you know, I I'll pay attention to some people on social media who are good at curating lists, and if I see somebody say, "Here's the, you know, rare earth list," I'll make sure that all those stocks are on my list. Or maybe one came public that I don't have on there yet. Uh, in fact, there was one, what was it? Uh, it doesn't matter. I I digress. It got destroyed yesterday.
>> What is your favorite riskmanagement rule?
>> Uh, cut your losers.
>> And where where do you like to cut your losers? Where do you typically place your stop loss?
>> It's never at a percentage. I I find those to be better than no rule at all. Um, but but percentages are random. The market doesn't care about your percentages. To me, it's based on the definition of trend. If it's an uptrend, I'm buying uh, you know, uh, after a short-term consolidation, I'm buying that higher high, I'm going to set my stop be below the most recent relevant higher low. So, as long as it's making higher highs and higher lows, once that higher low is violated, that's it. That's where I cut it.
>> And that kind of ties into this one. Once you're in a position, what's your favorite sell rule?
>> Yeah, breaking the definition of trend.
>> There you go. What you know, you've mentored a lot of traders and tallout traders. What do you think are some of what are some of the biggest mistakes you see new traders make?
>> Um, not knowing what their uh true knowledge is. Uh, you know, they that they come in and think um, you know, they read something online and just take it for face value, not doing their own research and making the trade their own. That's something I harp on. Make the trade your own. Here's here's how I'm looking at the stock. Here's where I'm going to set a stop. If you don't like that stop, maybe a little bit lower below here. Um, chasing trades is, you know, I say it all the time. It's crazy. When people ask me, "Hey, Brian, will you look at this stock?" Eight out of 10 times. It's a stock that was up 10% in the last three days and it's getting ready to break out. I'm like,
>> it's expended energy to get to that.
>> Yeah. I I like to I like to Exactly. So the questions that I always say are where has it come from? Where does it have the likely to go potential to likely go before there's a source of supply that might become resistance? So a level of interest is there, you know, is that breakout, it just ran three days, 10% and it's breaking out now. Do you want to be the breakout buyer or do you want to be and and complain about how breakouts don't work anymore or do you want to be me who's selling a piece to you because it broke out? Short answer.
>> Sorry.
>> No, that's good. That's a good answer. Um, how does the general market trend impact your trading?
>> More so about position size than anything. So, as we're coming out of the April low, um, and we had all of the still have all the tariff and not the ter well, there's still some tariff news actually. Um, but the war news and oil and all that. I initially treated the market very tepidly and was just taking, you know, small size and then going to half-size risk units and increasing my size as confidence in the market goes. But then balancing it with that with now we're getting more extended. I can't be getting maximum share size when a normal pullback might be 3 4% in a course of two days.
>> What are some of the most important principles for achieving consistent returns?
>> Um, well, focusing on the process, not putting random dollar amounts or percent amounts. Hey, I need to make $5,000 this month. I need to to cover these bills because sometimes you're going to make $25,000. Sometimes you're going to lose$10,000. So, don't put that pressure on you. Just focus on the process. Most important, the cornerstone is risk management.
>> Excellent. Do you buy and sell based on technicals, fundamentals, a mixture of both? If both, what percentage would you place on technicals? What percentage would you place on fundamentals?
>> My my answer for this is, you know, that that 90% of the reason I buy a stock is technical. I'm aware of the fundamentals typically for most of the stocks I trade and I just, you know, get a snapshot look at sales and earnings and I I treat them the same is that a stock that's touching its 50-day moving average has interest because people have been trained on that. a company that reports 200% revenue increase and 436% earnings, people are trained. Those are the good stocks. So, I will position size a little bit heavier in the names with the good fundamentals because I know that there's likely a pool of buyers who are going to support those. Whereas just a random stock with mediocre technical uh fundamentals, it's more likely just going to fall apart. It's not going to have that strong rabbid, you know, group of of growth buyers.
>> Gotcha. How do you control draw downs so that you can compound over time?
>> Well, as soon as I start having multiple in a row, then I kind of take take a step back um and say, what am I doing wrong? Is it the market? And I start to, you know, size down on positions. Um sometimes I'll just take a day or two off. It's not actually often that I can sit at my desk and not do something. Um, you know, sometimes someone will say, "Oh, what did you trade today?" "Well, I didn't really trade." Well, I mean, I did those four trades, but I mean, it was I was just kind of, you know, messing around.
>> Yeah.
>> What are some of the most important rules or principles so that someone can trade for decades? And this could be outside the market to, you know, maybe they have to get away and, you know, you know, focus on stuff outside the market, come back to it when it's the time to do so. Yeah. What are some most important things so people can you know be a participate in the markets for for a long term?
>> The markets will always be there. So people are you know obsessed about and I used to be this way. Oh it's a three-day weekend. Why you know that's a wasted day where we can't trade. I wish every day week was three day you know four days three day weekends. So find some balance in life and and you know you have to be obsessed with it to succeed. You have to put in the long hours but balance it out somehow. have hobbies outside of the market. Um, and it shouldn't be computer games, right? Get outside actually in life and find the balance there.
>> How is trading like fishing?
>> Well, um, you're you never know what the fish are biting on. You never know where the fish are hiding. Um, you never know the size of the fish that's going to be there. You know, you you go in and you think, you know, the it's you don't have the risk of loss in fishing. Like the fish got off. Who cares?
>> Yeah. Out there having fun. Um but you don't know what your reward is going to be. I mean, you can tell by the water you're in a little bit. Like there's never a big fish in this river because the size of it, but um it's you're you're in the process of hunting. You're trying to maximize your effort to reward. I mean, it's it's like any, you know, it's kind of like golf. People liken it to golf a lot.
>> Yep. Do you prefer buying strength or buying weakness or strength after weakness?
>> You get a gold star for that one. Strength after weakness.
>> All right. How can you tell if a stock is higher potential? And maybe it goes back to you don't always know, but what are some of the characteristics you look for that might make you prioritize a setup that looks similar to another setup, but there's some some few, you know, some differences there.
>> Well, you know what the company does? If it's a grocery store company, you know, I mean, yeah, you you can make a good swing trade in there. You're probably going to have to hold it two, three weeks to make three or 4%, but still that's nice money. But if you see a lithium stock or if you see a uranium stock breaking out, you might make 15% that day. So in and you know what can be the better trade is a stock that has previously shown you know a big ATR and then you see it compressed for 3 months 6 months people kind of tend to forget about them a little bit and then they wake up and then it's time to look at those real strong again. I immediately thought of SNDK. They had a great run in 2024, 2025, paused, and then obviously they're what they're the best stock of 2026. So, right.
>> Um, exactly. I'll give you another golden nugget there. Your last gold nugget. So, you pass the gauntlet. Well done. We've got two more to to hit on. Uh, what do you think most stock traders forget or not remember enough or not focus on enough?
>> Well, it kind of all goes back to some of the other answers, which is, you know, to manage risk, not to chase. um the market doesn't care what they think. That that's a good that's what they forget.
>> And then finally, if you had one piece of advice for a new trader, what would it be?
>> Focus on the process and especially risk management.
>> Excellent. Well, Brian, you've passed, at least according to me. Uh everybody in the audience, be you be the judge and let us know if you think Brian passed. Uh but well done. We we'll go ahead and and donate that all to charity. Uh so, thanks so much for being here and congratulations and thanks to all of you for for watching. And we'll see you guys in the next one.