Momo Traders

1. Hustle and Early Exposure Sparked Trading Interest

I became rich when I realized every OTC stock is a scam.

Early entrepreneurial spirit. Many successful traders started with a strong work ethic and a desire for financial independence. From building swing sets to bartending at rave clubs, these early experiences instilled a drive to find efficient ways to earn a living.

Exposure to the market. Early exposure to the stock market, even through simulated contests or family members, can spark a lasting interest. This initial curiosity often leads to self-education and a desire to understand the patterns and dynamics of the market.

Examples of early hustles:

• Building websites
• Working at fast food restaurants
• Playing poker
• Sports betting

These experiences, whether successful or not, laid the foundation for a future career in trading by fostering a competitive spirit and a willingness to take calculated risks.

2. Mentorship and Community Accelerated Learning

You’ll never find another person who trades exactly like you.

Learning from others. While some traders are self-taught, many benefit from mentors or trading communities. These relationships provide valuable insights, feedback, and support, accelerating the learning process.

Benefits of mentorship:

• Guidance on strategies and risk management
• Emotional support during drawdowns
• Access to new ideas and perspectives
• Accountability and motivation

Finding the right community. The key is to find a community that aligns with your trading style and values. Look for experienced traders who are willing to share their knowledge and provide constructive criticism.

However, it's important to develop your own trading style and not blindly follow others. The best traders are independent thinkers who can adapt and innovate.

3. Risk Management is Paramount, Especially with Size

The correct decision to make at any point in time on a trade has nothing to do with my profit or loss.

Protecting capital. Risk management is the cornerstone of successful trading. It's not about avoiding losses altogether, but about minimizing their impact and preserving capital for future opportunities.

Key risk management principles:

• Setting mental or hard stops
• Limiting position size
• Diversifying across multiple trades
• Avoiding overtrading

The "oh shit" number. Some traders use a maximum loss threshold to prevent emotional decision-making and protect their accounts from catastrophic losses. This number represents the point at which they automatically exit all positions, regardless of the circumstances.

Effective risk management requires discipline, self-awareness, and a willingness to admit when you're wrong. It's about playing the long game and ensuring that you can survive the inevitable ups and downs of the market.

4. Technical Analysis Guides Entries and Exits

I’m only interested in the part of the chart that has volume.

Reading the tape. While some traders rely on fundamentals or news, many successful "momo" traders use technical analysis to identify patterns and predict price movements. This involves studying charts, volume, and Level II data to find entry and exit points.

Key technical indicators:

• Support and resistance levels
• Trendlines
• Candlestick patterns
• Volume spikes

The art of interpretation. Technical analysis is not an exact science. It requires experience, intuition, and the ability to adapt to changing market conditions. The best traders can see patterns that others miss and use this information to their advantage.

However, it's important to remember that technical analysis is just one tool in the trader's arsenal. It should be used in conjunction with other forms of analysis and a solid understanding of risk management.

5. Adaptability is Key to Long-Term Success

I have the idea that every trade is going to pay me forever.

The market is ever-changing. What worked in the past may not work in the future. Successful traders are constantly learning, adapting, and refining their strategies to stay ahead of the curve.

Finding new edges. This might involve:

• Exploring new markets or asset classes
• Developing new trading strategies
• Incorporating new technologies or tools
• Seeking out new sources of information

The importance of flexibility. The ability to adapt is crucial for surviving and thriving in the ever-changing world of trading. Traders must be willing to abandon old habits and embrace new approaches when necessary.

The truly successful trader is the adaptive trader. Yes, that means trading your edge with conviction and discipline, but it also means looking at markets through fresh eyes and finding new sources of edge.

6. Trading Psychology: Emotions and Discipline

The correct decision to make at any point in time on a trade has nothing to do with my profit or loss.

Emotional control. Trading can be an emotional roller coaster. Successful traders have learned to manage their emotions and avoid impulsive decisions driven by fear, greed, or regret.

Strategies for emotional control:

• Developing a trading plan and sticking to it
• Setting realistic expectations
• Taking breaks when needed
• Practicing mindfulness or meditation

The importance of discipline. Discipline is essential for executing a trading plan and managing risk. It involves following your rules, cutting losses quickly, and avoiding the temptation to overtrade or chase profits.

Trading psychology is a critical component of success. By mastering their emotions and developing a disciplined approach, traders can increase their chances of achieving consistent profitability.

7. Trading Style: Scalping, Momentum, and Conviction

I have the idea that every trade is going to pay me forever.

Scalping. Some traders focus on making small profits from quick trades, often holding positions for only a few minutes or even seconds. This approach requires lightning-fast reflexes and the ability to read the tape.

Momentum trading. Other traders focus on identifying stocks with strong momentum and riding the wave. This involves buying breakouts, shorting breakdowns, and adding to winning positions.

Conviction trading. Some traders develop a strong conviction in a particular trade and are willing to hold it for days, weeks, or even months. This approach requires a deep understanding of the underlying company and the ability to withstand short-term volatility.

The best trading style depends on your personality, risk tolerance, and market knowledge. It's important to experiment and find an approach that suits your strengths and weaknesses.

8. The OTC Market: A Unique and Risky Playground

I became rich when I realized every OTC stock is a scam.

The Wild West. The OTC (Over-the-Counter) market is a decentralized marketplace for securities not listed on major exchanges. It's known for its volatility, illiquidity, and prevalence of pump-and-dump schemes.

Opportunities and risks. While the OTC market can offer opportunities for quick profits, it's also extremely risky. Traders must be wary of promoters, manipulators, and companies with questionable financials.

Key strategies for trading OTC stocks:

• Identifying and riding promotions
• Shorting overextended charts
• Reading Level II data
• Managing risk aggressively

The importance of skepticism. The OTC market is not for the faint of heart. Traders must approach it with a healthy dose of skepticism and a willingness to cut losses quickly.

9. Trading as a Business: Routine, Tools, and Mindset

I have the idea that every trade is going to pay me forever.

Treat trading as a business. Successful traders approach their work with professionalism, discipline, and a long-term perspective. This involves developing a routine, using the right tools, and cultivating a winning mindset.

Key elements of a trading business:

• A dedicated workspace
• Reliable technology and software
• A well-defined trading plan
• A system for tracking and analyzing trades

The importance of mindset. Trading is a mental game. Successful traders are confident, disciplined, and resilient. They can handle stress, manage their emotions, and learn from their mistakes.

By treating trading as a business, traders can increase their chances of achieving consistent profitability and long-term success.

10. Success Beyond Trading: Balance and Perspective

I have the idea that every trade is going to pay me forever.

Trading is not everything. While trading can be a rewarding career, it's important to maintain a healthy balance in your life. This involves pursuing other interests, spending time with loved ones, and taking care of your physical and mental health.

The importance of perspective. It's easy to get caught up in the ups and downs of the market, but it's important to remember that trading is just one aspect of your life. Don't let it define you or consume you.

Finding fulfillment. True success comes from finding meaning and purpose in your life, both inside and outside of trading. This might involve giving back to your community, pursuing creative passions, or simply enjoying the simple pleasures of life.

By maintaining balance and perspective, traders can avoid burnout, reduce stress, and increase their overall well-being.

Last updated: February 21, 2025