My Background

Hey everyone! My name is Mason. I’m 21 years old. Born and raised in Houston, TX. I attended Texas Tech University for a couple of years, but decided to drop out and pursue my dreams. It’s an honor to be asked to contribute a blog post to this community and I just want to say thanks to my mentors: Tim Sykes, Tim Grittani, Roland Wolf, Mark Croock, Michael Goode, and Steven Dux who have all played a role in my recent trading success.

I’ve taken interest in the stock market since 18. My first investment was $NVDA. I was buying in the low $20s and it ultimately went to like $300. I did not stick around for that entire move though, certainly wish I did haha, but I did manage to make about 50% in a few weeks, and so my journey began. I dabbled in options for a year. Managed to turn $10k into about $70k, but then lost most of those profits. That’s when I realized I needed a mentor because my risk management skills were nonexistent. It’s kind of funny because right around the time I started thinking it would be a good idea to get a mentor, all these annoying ads from this guy named Tim Sykes started popping up on my Instagram feed. I thought the guy was a total scam lol, but after looking into him a bit further, I realized he was legit.

In late April of 2017, I watched Tim’s free 11-hr guide called Trader Checklist and came to the realization that there are in fact patterns in the stock market that repeat themselves over and over again, and if you master those patterns, you could potentially make quite a bit of money in a relatively short period of time. In May 2017, I decided to join Tim’s Millionaire Challenge so that I could prepare myself in the most efficient and effective way to take advantage of future market opportunities. If you are reading this and are not already a part of Tim’s challenge, I highly encourage you to apply. It’s worth the investment. But, if you’re not truly dedicated and not willing to put in the work, which is more than you can imagine, don’t do it. **Update 12/1/2020** If I went back and could do it all again, I'm not sure I'd do the challenge. It was useful and I'm not sure I'd be where I am without it early on in my career, but I think you can learn everything you need with the following sources (and I have watched quite a bit of dvds out there): Pennystocking Framework DVD by Tim Sykes, How to Make Millions by Tim Sykes, and most importantly Trading Tickers by Tim Grittani. The best chat room in my opinion is Investors Underground. 

I started trading immediately, which I don’t recommend, with about $13k, lost half of it, made it all back and then some. In November 2017, I received a $15k scholarship from school and put it all into my trading account to put myself over PDT. I had on and off success, but never really got things going the way I wanted to. In early August 2018, it was make or break time. I intentionally put myself back under PDT with $17.8k in my account and told myself that if I want to make something out of trading, this is it, my last opportunity… Either I manage to trade myself out of PDT in a three months’ time span or I’m done being a trader. I had a little bad luck and lost my first few trades which brought my account down to $17.2k. But since that point, I haven’t looked back. In a two months’ time span, I have grown my account to nearly $170k. Over $150k in profits! I never added any money to my account. In fact, my account would be a little higher if I didn’t have to make withdrawals to pay bills.

At this point, I’m sure you’re like… Okay, this guy set a goal to make $7k in three months and instead he makes over $150k in two months. WTF, How?!?! Well, let me explain…

 

How Everything Changed

I’ll start by saying that I got a little lucky with how everything fell into place. Marijuana stocks, which are my specialty, got hot at the right time and the market started breaking out to new highs. But if you do some research on this term we call “luck,” you’ll come to realize that it’s in our control more than we think. Through proper preparation and taking the initiative, you can put yourself in a position to take advantage of opportunities. So yeah I was lucky, but mainly because I had been preparing for this moment for over a year, and man did I capitalize!

The majority of what follows is not new. These are ideas I have received from my mentors from the beginning of my journey, but it just took a lot of pain and disappointment for me to finally implement them into my own trading.

My recent success stems from the decision to only focus on the three long strategies that I completely understand. Those patterns are: breakouts, first green days, and morning panics. **Update 12/1/2020** I rarely buy morning panics anymore. Anything else, I ignore. It’s as simple as that. Let me mention that I do understand short selling pretty well, but in my opinion, if you are looking to grow a small account, which I’m certain that most people reading this are in that position, you must focus on going long. Everyone sees the success popular short sellers like Tim Grittani and Steven Dux have had and want to emulate that, myself included early on in my trading career, but their situation is different from yours. They are trading very large accounts and have access to shares of the stocks that are actually worth shorting. You on the other hand are going to have a hard time finding those shares. So, don’t waste your time early on trying to be a short seller, but you must understand how a short seller thinks. When you can put yourself in the mind of a short seller, you can take advantage of certain setups that make shorts uncomfortable leading them to cover their shares which is called a short squeeze. You’ll also be able to understand when shorts are likely to come in on a particular play so that you can take profits. Furthermore, going long generally offers more upside. If you go look at my trades, I have a decent amount of 30, 40, 50+ % winners. That type of upside is possible quite often. As for shorting, the percent gains are generally much lower.

Now, I don’t just buy any breakout, or any first green day, or any morning panic… I’m looking for very specific variations of those patterns with other catalysts working in my favor so that I can give myself the best odds of success. I won’t get into all the specifics because it is a lot of information to cover and doesn’t quite fit the scope of this particular blog post; however, if I get enough requests, I will consider future blog posts delving deeper into the specifics of the patterns I trade and may even consider doing some video lessons. But that is all going to depend on demand, so if you’d like me to contribute more content, please like this post and leave a comment below mentioning what you’d like me to discuss.

Here are a few more reasons I’ve been successful:

**Update 12/1/2020** Entry is very important. The money is made on the buy, not the sell. That's why I am always very meticulous with my entries; however, the most important part of the trade is the risk management I incorporate. I follow the 20/1 rule.

1.       The entry is the most important component of the trade.

-          This is my philosophy when it comes to trading. I know that other traders will disagree with this, but here’s why I think it is so important… I think the biggest issue traders have is getting shaken out of the trade. There is nothing more frustrating than buying a stock and then selling it because your risk level has been breached, just to see it turn right back around and do exactly what you thought it was going to do. Believe me, I’ve been there so many times and it actually used to make me sick to my stomach. But, I managed to overcome this common problem. The reason you’re getting shaken out of the trade is because you’re picking the wrong risk level. The level you should always be risking on a chart is what I call key support. I identify key support by looking at the chart and asking myself, “What level would have to be taken out for this chart to be broken?” Once I determine that, I look to take my entry as close as possible to that level. If I never get the opportunity to do so, then so be it - I don’t take the trade! That is how I prevent unnecessary losses and stay comfortable in the trade.

2.       Take partial profits into strength.

-          I pretty much always sell in pieces. The reason I do this is so that I keep my psyche comfortable. As human beings, we have a lot of cognitive biases and distortions. One particular tendency we have that applies here was identified by Nobel Prize winning psychologists Daniel Khaneman and Amos Tversky and is called loss aversion. This refers to people's tendency to prefer avoiding losses rather than acquiring equivalent gains. So how does this apply? …When you have unrealized profits and that total starts decreasing because the stock is getting weak and the price is going down, you are going to be tempted to sell into weakness because the pain of losing what you just had hurts more than the joy you’ll feel by making more. So, I sell into strength along the way because I know that stocks don’t go straight up and straight down – they’re choppy along the way. This is how I stay comfortable and patient ultimately providing myself with an opportunity to realize more gains.

3.       You MUST master market psychology.

-          There is nothing more important to trading success than understanding market psychology, in my opinion. If you go back and look at everything I’ve written up to this point you’ll see that at its core, I’m referring to psychology. My take on understanding short sellers, that’s psychology. Determining risk levels, that’s psychology. Loss aversion, that’s sure as hell psychology… If you want to be successful in this game, you must think differently from the 90% and to do so, you must first understand exactly what they’re thinking. I won’t go into this topic any more, but I’ll provide a couple of sources on how you can improve your understanding of psychology. My go to source for understanding human psychology is Poor Charlie’s Almanack, Talk 11: The Psychology of Human Misjudgment by Charles T. Munger, Warren Buffett’ business partner. I recommend reading the entire book, but for the sake of what we’re talking about here, you only need to read Talk 11. Another book is The Psychology of Trading by Dr. Brett Steenbarger. Nowhere near as good as the almanack in my opinion, but it certainly offers some value. I encourage you to research other sources.

 

Some Advice on Attaining Success

One of the most influential quotes I’ve ever encountered comes from Charlie Munger, a self-made billionaire and Warren Buffet’s business partner. Here’s what Charlie has to say about success,

“To get what you want; you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people. Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts… Slug it out one inch at a time, day by day, at the end of the day – if you live long enough – most people get what they deserve.”

I understand that we all come from different backgrounds and circumstances and that the road to success is more difficult for some than others, but I’m a firm believer that anybody is capable of getting what they want in life as long as they put in the time and energy required. So, if you want to be a successful trader or anything for that matter, go work on becoming just a little bit better every day and eventually you’ll get what you deserve.

 

Final Thoughts

I feel a lot of people get into trading because they’re looking to get rich quick and they think that money is going to solve their problems and make them happier. Unfortunately, that’s not how it works. Money is great because it provides you with freedom and the opportunity for new experiences, but money itself will not make you happy. Looking at those profits I’ve managed to accumulate feels awesome, but believe me, what feels a million times better is what I feel when I reflect on where I was a little over a year ago, and all the work I put in to get here. I said no to a lot of things and it wasn’t easy to do so, but to sit here today and know that it was all worth it feels incredible!

Every single day I aspire to grow more, become more, and achieve more. I acknowledge that I still have a long long way to go, but I’m excited for what’s in store. There’s no need to rush the process; rather, enjoy the process. I invite you to join me! If you have found any value here, I ask that you please follow me on Profitly, Instagram, Twitter, and YouTube where I intend to post more helpful content. My handle for all social media outlets is @mrileytrades.

Thank you for taking time out of your day to read this! Have a prosperous day!

Mason