Schaeffer's Market Mashup Podcast: 10-Minute Trading

Discussing a new tracking metric to use in your trading

Managing Editor
Apr 30, 2021 at 10:00 AM
facebook twitter linkedin


On the latest episode of the Schaeffer's Market Mashup podcast, Patrick is joined by Christopher Uhl to talk about his 10-Minute Trading podcast. Chris chats with Patrick about what led to starting 10-Minute Trading (12:13), the new tracking metric he's found success with (17:40), and how to use investment social media effectively (22:10).

 

Transcript of Schaeffer's Market Mashup Podcast: April 30, 2021

Patrick: Ladies and Gentlemen, welcome back to the Schaeffer's Market Mashup. This is your ever dutiful host Patrick Martin coming to you. Unfortunately, not from a South Carolina beach anymore, but the suburbs of Westchester Ohio. I am very excited to introduce this week's guest, Christopher Uhl CMA. He's a two time, top 100 person in finance and the host of the 10 minutes stock trader Chris, how are you now?

Christopher Uhl: Hey, thanks for having me Patrick, looking forward to chatting with you today.

Patrick: Great and I take it you're in the Dallas Fort Worth area. How's that right now?

Christopher Uhl: Yes, yeah. That's great I mean, everyone's moving here. I mean, if you haven't heard every company is up and moving to Texas, so if you're not here yet, you will be at some point.

Patrick: I have one friend who was moving to North Texas, but besides that, I'm afraid to say I've only been in Austin briefly, so I'm a little behind the eight ball, right?

Christopher Uhl: No, that's okay. There's two types of Texans there's people who liked Austin and people who don't and I'm in the don't camp.

Patrick: Interesting.

Christopher: Yeah, it's funny, I've lived in Texas my whole life and every time I go to Austin, I just shutter because it's just a terribly laid out city. Traffic is miserable, the people are terrible. It's just not where I want to be but on the other side there are people who would like fight me and say, no, Austin is the best place in Texas. So, I guess there are two kinds of people, some that like them and some that don't.

Patrick: That kind of sounds like almost, you know coming from a native that just jumped the shark essentially. Almost a little bit like a Nashville where it's over touristy. Is that, am I right?

Christopher Uhl: Probably so, yeah, I mean the last time I went there, it was for a formula one race and, the racetrack is amazing, but you know, getting around Austin, you know, going to hotels, going up and down sixth street doing the whole Austin thing, you know, this is pre pandemic. It's just not my scene I am, I, yeah, like I said, it was just not my scene, you know, it's right for some people it's right for Elon Musk, it's right for Joe Rogan, but it's not right for me.

Patrick: So, let's jump right in. I looked on your website; you are very candid about your investing mistakes. You don't even, shouldn't really call them mistakes, lessons, I guess. Do you want to walk through some of the highlights of what got you to where you are now?

Christopher Uhl: Oh yeah, absolutely. So, you know, I've early on in my career, I decided that whenever I had a mistake or a lesson, I considered it, my Wall Street tuition. So, five figure Wall Street could have been worse, I suppose. But you know, if you think of like a doctor or a lawyer or any sort of professional who jumps into their profession, their career. They can't do it overnight, but yet the trading industry is full of people who say, take this course, do this lesson, follow these three simple patterns or whatever. And you'll be an instant millionaire. It's just not true. And the reason I'm so Frank about it is because I don't think there's enough people who are right.

And I think that that's why I've gotten the audience and the recognition that I have is that I'm there to be vulnerable. So other people don't make the same mistakes I did. I mean, Patrick, I blew up my account the first time, 60 days with an opening. Like the stat is 90% of traders blow out 90% of account in the first 90 days of trading. I beat it, 60 days. The way I did it was I was overconfident and taking way more risk than I ever should have. But at the same time, I learned a lot from it.

And the big take away from that point, when I lost the account, the first time I was trading against trends, I had no idea what I was doing. Like I said, but I also, wasn't going to give up. And I remember driving up the Dallas north toll way with my wife, since we're going to be specific here. She was driving, which is a very unusual circumstance, but she was driving. I looked over and I was like, Jennifer, I got to tell you something

She was like, what? And I was like; you know I started trading a few months ago or a few weeks ago, really? She's like, yeah. I was like; things haven't gone so well, she's like, what do you mean? I'm like; I lost a lot of money. And she was like, how much? And I was like, like two thirds of the account. And she's like, you know, what do you mean.

Patrick: Brake slam.

Christopher Uhl: Yeah. I'm like well, I learned a lot and she's like, okay, Chris, don't even think about trading again. Can't you learn to trade with fake money? And Patrick, the light went on in my head and I'm like, oh, paper trading. That's a great idea. A great idea on how to learn to trade so I did that, and I did that for, several months to the point where I felt really confident again. And, then gold was tanking.

I don't remember what year this was. In the 2015 ballpark gold was tanking like hitting, you know, recent decade lows. And I'm thinking to myself, this has got to be the bottom. Several people on the Twitters that I followed were all saying, this has got to be the bottom. So, I'm like, let's go long, long gold, long silver, long GDX, long GDX J, long every possible thing with metals. And it kept going down and it kept going down. And Patrick, I don't know if you know this, but it kept going down after that. And again, I was staying at a loss because I refunded the account, got the things back up and running. I was staring at a loss that was about two thirds of my account again. And I'm like son of a, B this, okay. I am doing something wrong.

And the way that I learned to trade I feel is not conducive to most traders. So, I learned a trade with like selling like naked calls, naked puts, you know, taking much higher leverage for a much smaller return, right? Like let's say taking 10 units of leverage for one unit return. And if you lose on that one trade, you know, you lose 10 units. And then you got to start all over again and now you're, you know, you have to get 10 perfects in a row to get back to even. And I was like, this suck, this is not right. I mean, there may be a high probability set up with this, but I am like on the opposite end of the curve. Like how is it like how am I getting all these wrong, right? So, then I started thinking, okay, there's got to be a better way.

So, I started a podcast, which is approaching nearly 2 million downloads now it's called How to Trade Stocks and Options podcast. And in the process, I have talked to some of the brightest traders in the world and it's completely transformed my trading. And at the end of the day, the best piece of advice that I can give to somebody is number one, buy low, sell high is the quickest way to the poor house, that's not how trading works. Patrick, if you bought something at $10, hey, it's a pretty crappy stock because it's already at $10 b, you bought it because it was on sale, right? Like at the grocery store, it's on sale. I'm going to get a great deal on it. But Patrick, not only was it not on you know, it was on sale today, but it's going to be on sale tomorrow, but for like a bigger discount.

And the day after that, and the day after that, and it's the opposite of the grocery store, getting things on sale mentality. When you're using financial products, you've got to buy them when they're going up, because the market is going up because people are buying the stock, people want to be there. If you're buying something that everyone wants to get out of it, I mean, in the simplest form, you could think of it like with GameStop, when it was hitting its all-time high and then Robin Hood locked it down and said, the only thing you can do is sell. There was no physical possibility in this world that it could continue to go up, it could only go down. So, if everyone is selling, everyone's getting out of the stock and you've seen your stock drop from 20 when you liked it, 10, you must really love it.

5 men, that's the blow out deal of the century. Who's to say, it's not going to go to one or zero, but let's say your stock that you used to love at 20 it's now gone up to 30 and everybody's getting into it. You see a higher volume rally. It's above every moving average you've ever seen, you've back tested it with all of your data that you have access to. And you can see, hey, you know what? As long as it's above its 10-day, exponential, moving average, something like that. For example, it has shown a historical win rate of like 120% over the last two years or something like that.

This is the kind of thoughts that go through my head. It's like; the last thing I want is something on sale. I want something as expensive as possible because I know other people are trying to get into it. So, buy low, sell high, throw that in the garbage can, you want to buy high and sell higher? Every trading book written by a real trader will tell you exactly that Jesse Livermore, Martin Minnervini, Steve Burns, you name it. They all said the exact same thing, buy high, sell higher.

Patrick: Yeah. It makes sense from a standpoint of, if this is something you're going to own, don't you want it to look good for everybody?

Christopher Uhl: I don't care what everybody thinks about it. I really don't what I care about is if I'm buying it at 30 and it goes up to 35, right? And the way that I really think of it, I mean, I have a, you could call it like a five-step system, right? one of the steps in the system is to use back just the train lines, right? And some people call it, support, some people draw shapes on charts I can't do that. I am very much a data analytical person. So, if I can go in and I use Tran’s finder for all my back testing, it's really cool. You can click a stock. You can say, you know, tell me the back-tested results every time it's above the five X finished, moving average and, exit every time it's below the five X finished, moving average, and you can see what those results are. Try it with the 10, try with 15, try with the 20.

Patrick: 60.

Christopher Uhl: Basically, you can get in anywhere while it's going up the stairs right. But you've got to know when you're going to get out. Because I mean, if it's going to go from 30 to a 100, you could get in at 35 or 50 or 70, as long as you understand that you've got $1 or $2 at risk or something like that. So, I am not at all a long-term holder. I'm not a 10-minute holder; I know that's a misnomer. We can talk about that in a minute, but I want to be in and out of something with the weakest hands possible. If it's going up, I'm there. But as soon as it turns around, you're going to have it back I don't want this. It's like hot potato.

Patrick: It's not a fast paced it's a reactive pace. I feel like the old John Wooden phrase be quick, but don't hurry. And so, I, you did mention the 10-minute trading thing. Was that something, when you were founding this company, is that something you were cognizant of or did it kind of come along later on?

Christopher Uhl: So let me tell you how it came about. So, I was working in corporate finance, went through the whole corporate finance track. And I really, I love, I'll tell you the whole story it's one of my favorite things. So, I was working in corporate finance, and I overheard two people in the office talking about, you know, if you really feel so strongly that Deutsche bank is going to go down, why don't you go out and buy putts? And people who have listened to my podcast would know I've told this story a hundred times, but I just, I love it because like immediately a light bulb went off in my head and I'm like, wait a minute. I've heard of putts. I know about this, hang on a second. And so, I'm Googling it right? And it's like; putt rises in value as the stock price goes down.

And I'm like, well, this is cool. Okay, so you can make money when stocks go down. I didn't even realize that because I hadn't really traded right. I just did, you know, corporate finance accounting type stuff. And then I was one of those nerds who kept all my textbooks and I turned around behind me and I pulled out my finance textbook and threw it on the table. You know, that's one of those 900-page textbooks where you drop it and the whole earth kind of shakes a little bit, right.

Patrick: It's wider than it is tall.

Christopher Uhl: Yeah. And, it had two tabs on all 900 pages. One of the tabs was for bonds because bonds, you know, they're wacky in the way that they do pricing with the yields going up and the price going down, et cetera. But the other tab was for options.

And I'm like, how did Chris from 10 years ago know to put this in there. So, I flipped to this page and I'm reading all about the options. Keep in mind, I'm still sitting at my desk and I'm like, this is kind of cool. All right, let me check this out. So, I was Googling around, and I found several websites that teach how to trade options. And like I said, the majority is basically just sell, sell putts. Sell costs, it doesn't matter, you've got a 30% probability of profit at a 70 Delta, and you know, 30 Delta or whatever, all day, every day, you don't have to worry about trends, trends don't exist. The market is efficient, all this other stuff that as an actual trader, I don't believe in anymore. And then, I needed to fund my first account and I can't remember where the account, I feel like it was, like a Schwab knockoff.

Like it was Options express by Charles Schwab and it was awful. The worst platform I could have ever wanted to learn on, but it was the first one I found. And so, I was like, okay, they need $5,000 to open the account and I, was like, where am I going to get $5,000? I'm looking around and I'm like, I've got this old 401k that I've literally done nothing with ever. It was at a previous job I never contributed to it. And it was just sitting and I'm like, let's cash it out. So, I cash it out, I get the check, and I remember walking into my kitchen, opening the envelope, pulling out the check and I kid you not Patrick that check. I needed $5,000 to open that account.

Patrick: 18 cents more. It's 18 cents more.

Christopher Uhl: $5000 and 15 cents. And I'm like, whoa, is this not a sign from God or what? Like, I am on the right track here. Which of course, like I said earlier, I proceeded to blow the next two months, but it was the lesson learned. But you know my trading these days, I really just, I go with the trend. I still like to sell spreads, right. But I'm not selling anything naked. I'm not selling anything just Willy nilly. Like if a stock is going up, you better damn believe I am not selling calls against that, but I'll sell putts, I'll sell putts spreads you know put spread, why not, as long as it's blowing back just a trend line, you've got a helacious, probability of profit right there. But I'll also do what some people call a stock replacement, which is buying deep in the money call paying little extrinsic value for it.

And you're really getting a huge amount of leverage there. You get five to eight X leverage, versus just buying a stock outright. So, if I hadn't started a podcast and if I hadn't learned my Wall Street tuition, I probably would've continued to make the same mistakes over and over. And that's just assuming that, hey, the market's efficient, which probably goes against, you know, half your audience, what they think and B that you can, you know, a 30 Delta call has just as much probability of a winning as the 30 Delta putt, right? And early on my media career, I wrote articles for a few different websites. And I was like, hey, do you like oil? You could sell a call, or you could sell a put either way. You're going to have a 70% probability of making money on it. And now looking back at it, I'm like, I was really ignorant then, like good intentions, but not wisdom enough to talk about that.

Patrick: It's the first stuff you write you always look back on and say like, why did I say that? We touched on it briefly, but for the summer of 2021, what macro trends do you see on the horizon? And then any options strategies that could be heavily utilized this summer.

Christopher Uhl: And for me, that's not the greatest of questions or topics. I only say that not as a criticism to you, but because, like this week I'm long financials. Like I'm in discover financial fifth, third bank, Charles Schwab and I also [unclear 00:17:44] some oil, but I could be out of all of that by the end of the day. Like if all that turned around, you know, by the end of the day I could be back out and I don't keep a long-term focus. I keep it very, very short-term focus. But here's something that your audience could do that they may find useful. I've got it built into a spreadsheet. So, I don't have to actually do anything, but like take, for example, the sectors. So, like Excel E, Excel F, things like that takes the relative strengths.

So just basic RSI, take RSI and then divide it by the S and P five hundred RSI. By doing that, you're going to get a relative strength across the market. So, you can say, let's say, I don't know let's say Excel E energy has a 30% on your relative strength calculation there. And in financials, Excel F has a 50% relative strength in your calculation; their financials are a better buy. And then you can just go into that sector and find what works best for you. But that's how I narrow my focus. You're literally doing that very simple calculation and saying, if this is the best sector in the market, that's where I want to be.

That's how I cut the whole move in oil earlier this year. Like my account went up like 75% and I thought it was like king of the universe, right? Because it's like, I caught all of these moves, I caught every single stock, I caught oil and all the, you know, Exxon Chevron's whatever’s. And it was literally because I had taken that calculation and saw, oh, geez, Excel E is performing really well against everything else in the market. Let me go investigate those, got long those booms.

Patrick: You picked out the one.

Christopher Uhl: It's a really simple metric. I have not seen anyone ever talk about that. But when I discovered that I was like, this is a big deal. Like this actually seems to work, no it doesn't work every time, but it does give you some insight into where the money is going, right. Cause then you can, it's an apples-to-apples comparison versus anything else that's, you know, an apples to oranges comparison.

Patrick: Well, I also think that relative strength is something that a new retail trader can easily grasp. It’s a concept I think that is a lot more digestible than some of the other stuff that's out there.

Christopher Uhl: And it'll make a lot more sense when the S and P 500 is not hitting all-time highs every day. And then you've got, more opportunities in different sectors, right? Cause like when the S and P 500 is, let's say it's coasting at a 70 or 75 RSI, not everything is up there. So not everything is showing like a greater than one value, but let's say the S and P is down at like 60, 50, 40. And then you see something that peaks really strong. Like, let's say at that point in industrials, XLA has RSI of like 60 versus the S and P of 40 that's one and a half times as much, but that's where the money is going right now.

You should be out the industrials. So that's an easy, easy apples to apples comparison that somebody could make, and this is, I mean, I just discovered that this year, and as soon as I discovered it, it was like a game changer in my returns. And so, I'm telling everybody, I can, like, this is a very simple metric that you can easily calculate in five seconds, and you can use that and, you know, just do it on the 11 sectors. You know, how long would that take you a day, 30 seconds if you've got a spreadsheet or something like that?

Patrick: Not even that, especially with some of the tools that, I know people are gaining access to. Yeah, I really liked that it's kind of an opening salvo. And then you kind of dig deeper from there and you pick out which ones, you want. yeah.

Christopher Uhl: It'll get you on the right playing field, right. Instead of trying to play basketball and football and baseball and all the other racket balls and, you know, lacrosse balls and things like that, you can just go straight to, oh, everybody's playing football I need to go play that.

Patrick: I like that. I like that a lot. I want to pivot just for a little bit here. You see, you are very active on social media. And I've had a couple of other guests that I wanted to pose this question to them. How do you parse out, filter out the trustworthy information you see out there when it comes to investing? There is so much risk, I think of information overload, analysis paralysis, or just straight up bad faith advice that you see on Twitter, on Stock Twits. What's your kind of filtration system that you use to look through that kind of stuff?

Christopher Uhl: You know, I think Jesse Livermore even said it way back in the reminiscences of a stock operator, but you have to do your own research for yourself. You can't rely on somebody. And like I said earlier, right? I'm in discover financial, it's been busting, it's up 12% this week. My stock replacement strategy in the money deep calls, they're like 90% over the week everything's going awesome. But if I told you that today, Patrick, and you went out and bought it today and it went down tomorrow, you would say this Chris guy has no idea what he's talking about.

Patrick: Exactly.

Christopher Uhl: So, I would tell somebody, because I fell under this a long time ago of following what I guess you could say, like Twitter gurus were saying, and you're not going to find me out there putting trade recommendations. I mean, you can go through my feed. You ain't going to find one. Because my trading is not you’re trading. And I can't tell you how much to trade. I can't tell you when to get in. I can't tell you when to get out. And if I, I mean, I keep a journal of all my trades, but there's lots of great people you can learn from like Martin Minnervini, he's fantastic. I just had him on my podcast couple of weeks ago, you can learn a lot from Brian Shannon. The guy's a trend spider they're fantastic. But you've got to make your own decisions, like literally your own decisions.

Patrick: Yeah. I think you also have to put in your own sweat equity where if you do see a piece of advice, not necessarily a recommendation, because you're right. Anytime I see something like that on Twitter, I am incredibly leery of that. But even if you see like advice or just thoughts, or just, you know, ruminations, you kind of have to run it. You put in the work and look at this through your own lens. I'll give you a very simple, basic example that I saw. I saw on some Twitter, and it was some random account with, you know, 6,000 followers or so it got retweeted. It got picked up by some big thing, and he listed all the big names that he's watching for 2021, and then looked like a little brief blurb about it. And the person called this company, the Chinese Tesla, and it takes two seconds of research to look and say, their headquarters is in Arizona. And you had all these people being like, wow; love this pick it's great. It's like, guys, you have to do your own research. You can find a couple people, like you said. And I think it's very important that you latch on to a couple people that you trust, but you have to put your own sweat equity in there.

Christopher Uhl: I agree, but when you put your own sweat, sweat equity in B, be humble enough to say when you're wrong.

Patrick: Yes.

Christopher Uhl: Right. Because you may, I have been guilty of this and I've heard of a lot of other people who have been guilty of this, that they will analyze the trade to death. And they were like, all right, I'm ready to go long apple. And it's the day apple goes down, but they'll never get out because they're like, I did all the research. This should be going up. Should, should never be in your vocabulary either is going up and you're riding the trend or it's going down and you're planning your exit.

Patrick: Right. I mean, that's a very good point.

Christopher Uhl: Very simple trend trader at the end of the day. Now I get lots of different ideas from different places. But if the only thing that matters is price going up or price going down if you're going short, but I don't ever go short I just go long. It's not, I mean, if you're going to go short, hey, you got to have a market working for you, which doesn't happen all that often. And B you've got to be very precise because the largest bull rallies ever happened in bear markets. And if you get in on the wrong side of that, your toast.

Patrick: Very well said, very well said. Well, we're nearing our time limit here. So, I want to wrap up, I always like to end the episodes with giving you the floor to plug what you guys are working on. So, tell me about 10 minute’s stock trader.com. What do you guys have coming up for the next couple of weeks?

Christopher Uhl: For sure? I would definitely encourage everyone to go check out the podcasts that we put on its called How to Trade Stocks and Options podcast. It's on every podcast platform on YouTube we're getting this close to 2 million downloads now. And it's about 500 episodes, it's you know, a labor of love. I've been working with a FinTech firm called, Fin club, Fin club.ai, and they provide artificial intelligence stock picks. And originally when they first contacted me, they're like, hey, we've got this cool service. And I'm like yeah right sure and then I tried it and I was like; this is pretty cool. And it works really, really well. I am an investor in it myself after that point. And we created a course, and, in that course, you actually get a month of their software for free when you take the course. So, you'll learn how to trade, and you learn how to trade with AI and to get 30 days of free AI stock picks, whenever you do that. And the way to get there is through AI stock trading system.com.

Patrick: Great, great. I saw that on your site, and I was hoping I was going to get a chance to hear about that it piqued my interest.

Christopher Uhl: I didn't get a chance to go into it but maybe we can make that a second episode because the first time that I used it, I was on vacation in the shower and I made a trade in the shower and I got out of the shower and I'm like, oh wow, this works that was really cool. Alright, let's go out to lunch.

Patrick: You step out with an epiphany. I bet you it's the best tasting lunch you've had in a while.

Christopher Uhl: Exactly, yeah. So, I'm a huge, huge, huge advocate of that. And I factor that into my trading, right? If they, the simplest of terms, they give you picks, they say, you know, stock a is going to this price by this timeframe. And here's a stop loss in case it doesn't. And then they also give you like a red, yellow, orange, and a green light on each day. And I took that and it's like gospel, ii it's a green day I'm looking to go along with everything. If it's a red day, I close my computer I'm out. So, I mean, it's a really amazing program and I definitely encourage people to check it out. AI stock trading system.com, absolutely.

Patrick: Absolutely, check it out. And then of course, 10 minutes stock trader.com. Christopher Uhl from Cincinnati to Dallas, just like Andy Dalton. I appreciate you coming on. Yeah, part two it's got to happen. So, we'd love to hear from you again in future take care, Chris.

Celebrate 40 Years of Schaeffer's With 4 FREE Stock Picks!


 




 
Special Offers from Schaeffer's Trading Partners