Full transcript: Alessio Rastani on London Real
0:27 This is London Real. My name is Brian Rose. Joining me as usual is Mr Nick Gabriel, and today we have in studio stock and foreign exchange trader, the Robin Hood of Wall Street, I would say, the extremely good-looking Mr Alessio Rastani. Welcome. Hi, how you doing?
0:45 Great to be here. Thanks, Brian, Nick, having me on the show. Yeah, nice to have you here. Let’s, you know, we were, we were so excited to get you as a suggestion for our guest and then when I posted last week that you were coming on the show, there was like this crazy amount of fan mail coming from the London Real people, and I was shocked, ever had I was amazed, I thought there might be you know, negative comments, or who’s this guy coming in? And all of a sudden everybody loves you.
1:11 Can you explain that? First of all, it’s funny how you introduced me, because there are two things wrong with that introduction, which is the Robin Hood of, what did you call it, Robin Hood of finance, of Wall Street? Wall Street. I just made that up today. Okay, you just made that.
1:24 I guess that’s supposed to make me like a good guy, right? Oh yeah, I’m a good guy. You are the good guy. Really feeling I get out there from everyone I speak to, there’s no such thing as good and bad, Brian. We have to wait, is, and what was the second thing that I made a mistake on?
1:37 Yeah, that was. Oh, the good-looking part. Good. I don’t think that’s true. It’s subjective.
1:43 That’s subjective. You wouldn’t have made it on the show if we didn’t consider you extremely good-looking. That’s one of our criteria, right? You know, I first saw this guy, and I think I was on the trading floor at my former employer, which is ICAP PLC, which is a big inter-dealer broker, and I was watching him, and I remember seeing him. I was, and I was just like, this is the only f***ing guy that ever actually spoke the truth about trading, and like everybody knows it on Wall Street, I think, and it’s like, I think that was like, it was such a breath of fresh air.
2:09 You must get this from traders that just are like, yeah, that’s what I think. Yeah, actually I have met traders in the City who have seen me, just like you did on a trading floor, and they’ve said this, pretty much the same thing. Not everybody agreed with everything I said, but yeah, the majority have, probably about what I said on, I guess just for your listeners, what we’re talking about, like, I’m assuming you’re talking about my comment on Goldman Sachs, or Goldman Sachs, and then, like, I go to bed hoping for a recession.
2:38 Right, right, yeah I mean, most people in the City probably wouldn’t say it, the way I worded it probably, but that’s although I don’t regret anything I said. I absolutely stick by it. I, that’s exactly what I meant, but probably most people in the City wouldn’t outspokenly say what I said because of what people may think of them, but actually as you probably saw, I was, I was just bored. I’ll be honest with you. I was on that BBC show and I just thought, you know what, why am I going to, what am I going to do here, saying the same old BS that everybody else is saying, almost every other financial analyst or bank guy who comes on those BBC or whatever, Fox, or they say the same old stuff, the same old, the same old garbage.
3:21 You know, oh yeah, we think this is going to solve a problem. We think that’s going to solve a problem, and here’s the solution, and I thought you know what, because the lady, the interviewer on that TV clip, was basically saying how do I fix the solution? Do I have a solution? And you know what, I think I thought for a second, you know what, I’m just going to say it. I’m not looking for a solution.
3:39 I’m looking at this crisis as far as I was concerned was an opportunity, and I was looking to make money from it, and I thought everybody else should join in, and I was happy to show people how to do it. Probably, probably looking back on it, I was a bit naive. The fact that I, one, the fact that I thought people, well, that was naive in the sense that I didn’t think that anyone would pay attention to what I said. I thought, you know what, this interview is going to be finished over that’s said, done with, and then I’m going to call BBC, say, hey, could you send the video over to me so I can put on my blog.
4:10 That’s how naive I was. And the second thing I probably was naive about was I thought that what I said was, I thought it wasn’t controversial. I thought probably everyone knows what I said was true. So wow, and what was the next 24 hours like? Yeah, the next 24 hours, actually, I think I’m trying to think, for people that haven’t watched the video, can you just give, like, a quick one minute summary of what you said.
4:34 Okay, so basically what happened was, actually, I’ll tell you the interesting parts. I walked out of that studio on the BBC after what I said, and I immediately could sense there was something wrong. I don’t know what it was. I don’t want to call it a sixth sense, but it was the way that people. Okay, for example, I walked out at a BBC reception, and the receptionist who’d been very chatty to me suddenly, they looked, because they could see everything I said on the TV monitor, and it, it was live, right?
4:57 Yeah, it was live, and they had seen everything I said and they were suddenly very different towards me. It’s like, oh my God, it’s like I just pronounced to the world that I’m Satan or something. So I, I could sense something was wrong, but that wasn’t it. Then I went home and people in the office, in my office, were talking about it. They say, hey, they were saying, hey, your tie was skewed or something.
5:17 Said, oh, okay, is that all? That’s cool, not a big problem. So then I go home and I noticed on my Facebook page somebody had posted, hey, Alessio, your video is just about to go viral, and I said, okay, well, what, whatever, you know, so what? No, the way I knew something was really different, or something was about to happen was that evening. I suddenly realized a lot of people were coming and visiting my website.
5:44 In fact I got a call from an IT guy, say, hey, look, Alessio, do you know what’s going on? I said no. Suddenly I realized all these papers are writing about it. Yeah, Independent, Guardian, newspapers in Yemen, been talking, what’s going on Alessio has just basically, that’s what they were saying, unless you just lifted the lid on what’s going on in the City and I said, have I? I thought this was, everybody knew this, right?
6:06 Everybody. Can you describe briefly what you said, if you had to summarize it, and what date was this? By the way, this is, yeah, this is probably the 26th of September 2011. So a little less than a year ago. That’s right, 26 was the interview, so what I said really was, okay, I guess, there are three main things about what I said, which has shocked people, because I’m getting the reaction I’m getting from people is people seem to select three moments in that video, which stood out.
6:30 Number one was probably my prediction on the Euro, saying that the stock market was toast and the market’s going to crash the euro with that one. Number two was probably my comment that I was dreaming of a recession, and that this is an opportunity of a lifetime, has been, I’ve been dreaming about it for three years, and the third comment was that the governments don’t rule the world, that Goldman Sachs really rules the world. So those are three things that kind of stood out in that video, and everybody sort of picked on one of those.
6:59 So, in any case, the next day I’ve got Forbes Magazine calling me. So my God, Forbes supposed to talk to me. Then I’ve got journalists as far away as the Israel, like Haaretz and mag newspaper. Israel wants to talk to me. Sydney wants to talk to me.
7:14 CNN CNBC, all these guys. I, oh my God, this is can’t be true. You know, there’s no way I got to be honest with you. I enjoy, I was enjoying it. Okay.
7:23 Is this your first bit of press in your life? Yeah, okay, totally. You know, people who said that, there was some newspaper said Alessio was an attention seeker, that I they actually said that I, they quoted me as saying there was an attention seeker. It’s not true at all. If that was the case, I would have probably gone into show business.
7:41 But you know, it simply wasn’t true, and you know the good part was when all these papers were, you know, writing about me. The worst part was when some papers like maybe the Telegraph or something started just outrageously twisting everything I said, and it was kind of naive of me because I accepted, I accepted one of the journalists to talk to, and he basically, I don’t want to, I don’t want to put the blame on him. I was play blame on me, but he twisted a lot of what I said, but yeah, I mean, it was an incredible reaction.
8:12 A lot of people just suddenly saying, there’s no, this guy was a hoax. Oh yeah, so I, this is another cool thing that happened, which is I went on Twitter, and I checked with the trending topics on Twitter, and it was two things stood. That one was Goldman Sachs, and the other one was Yes man, and I couldn’t figure out what the Yes man has to do with it, but apparently I was being accused of being a hoaxer. You know, that I wasn’t real. Yeah, I was a hoax, part of the Yes Men group.
8:40 In fact, Forbes, that’s part of like a comedian troupe, or you know, the thing is, Forbes was calling me, and saying, hey, Alessio, so why did you go? She was saying, are you part of the Yes man? I, I never heard of the Yes man. Who are you talking about? Is this a movie you’re talking about with Jim Carrey?
8:58 ‘Cause I like like that movie. So, yeah, I’ll be honest, that was the most incredible 24 hours I’ve had. It was amazing and crazy and scary at the same time, especially when certain newspapers decided to basically twist everything I had said to make me look like a complete, the one to swear, but a jerk off. So yeah, okay, and then you had also the people that were rallying behind you and loving what you said. There was a lot.
9:26 That’s the thing I was totally amazed by the support I got. Just like you said, you know, a lot of people are saying hey, Alessio, thank you for your honesty. I still get that even today, still people coming into my, like, Facebook page or my emails and saying, big fan of, you know, I really thank you for being honest and just saying how it is didn’t f*** people, you know, and really, you know, I find that still very overwhelming, that people are still doing that.
9:53 I thank them all the time, but I’ll, you know, I don’t think of myself as a hero. I don’t think, you know, people are trying to make out that I was some somebody special. I don’t think I am. I’m just an ordinary trader. There, I don’t think of myself in high esteem in any way.
10:10 I just basically told the truth, and that really is it. I guess the reaction I got from people was because they’re fed up with their politicians and the system we are in, where everybody just goes on TV and says the same BS and nonsense. So do you think there’s, that the banking and the financial system is inherently corrupt, or do you think there’s a problem with it that needs to be rectified? Or there’s absolutely a lot of things that I’d be cor I think corruption certainly is part of it.
10:40 I, I don’t, I’m not that naive to say that corruption is ever going to go away. I think it’s going to be with us, but yeah, there’s a lot of flaws in the banking system. I mean, as you’ve already seen, what’s happening with JP Morgan, Barclays, you know, even before that HB, you know. And when you cast your mind back, back in March, when that guy from Goldman Sachs came out and said what most of us really knew, that Goldman Sachs was ripping off their clients.
11:13 Oh yeah, okay, yeah. One of the interesting things, probably I didn’t mention this, is, is that within a couple within a few weeks after I finished that interview, a lot of papers, the same papers who’d been mocking me well, not mocking, is probably the wrong word. The same papers attacking me suddenly came out in my defense, saying, oh, maybe the sky was correct that Goldman Sachs does rule the world, because then what happened was when Berlusconi left as the prime minister of Italy, the guy who replaced him was Mario Monti.
11:43 This guy was a vice chairman, oh, adviser, like a part adviser for Goldman Sachs, and the same happened with Greeks, with the Greek leaders who was also involved with Goldman, has pre-Euro introduction kind of thing. So it almost immediately all these papers saw that there was some, there was some truth in what I said. So the same papers who said Alessio is a hoaxer. The same papers came back and said maybe Goldman Sachs does rule the world after all, this traitor was right.
12:15 So I found that really funny, how you get that the media is a s*** bro, very fickle, as they say. Yeah, bet is, you, you felt it, right? How did you get that interview? Yeah, people ask that question, and I, I’ll be honest with the simple answer is that they did they called me up and asked me to be on an interview. It was as simple as that.
12:34 They, I did a radio interview a few days before that, on the BBC World Service. I had said the same comments on the BBC Radio. I guess the producers thought, okay, this is good stuff to be on TV as well. Okay, so then they asked me to come on TV. It was as simple as that.
12:47 I, I didn’t force my way in. I did I, I wouldn’t even know how to do that, but it was simple, as they, they found out who I was. They knew that I was a trader, and they liked my opinions because they were different from everyone else and they knew that I was honest about it. I wasn’t trying to put on for effect or like that, with that of those three, like bombs you dropped on that show, the one that I found most interesting was when you said bankstone rules the world, Goldman Sachs rules the world, governments don’t rule the world.
13:17 Sorry, yeah, governments don’t rule the world. And what I wanted to know is, could you give us a concrete example of that, like a real world example, especially for the laymen who are listening to this, who aren’t like in finance, who aren’t in yeah. There are two ways of interpreting that. To say the governments don’t rule the world, and I could have have said the banks rule the world instead of using Goldman Sachs. I could have said the central banks rule the world that could have been exactly the same, because I’m not forgetting JP Morgan here.
13:40 I’m not forgetting all the other big guys here. So there are two ways of thinking about that. The one way I think the majority of people, when they read, when they hear that statement, they think that I’m some kind of conspiracy nut, and don’t get me wrong here, I do believe there’s a lot of truth in that, there are probably some central banks actively controlling the world governments, and we’ll come to that in a second. Okay, I think there’s truth, but the best way for perhaps to explain this, Nick, right?
14:05 Yeah, I mean, best way to explain it’s very simple. It doesn’t have to involve any conspiracy. The banks do actually rule the world in one sense, which is probably very simple to explain. If you ask yourself who here’s one thing we can be sure of. Whoever controls the world’s wealth will end up controlling the world.
14:25 Okay, now you’ve got to ask yourself, okay, the world’s wealth, first of all, what is the world’s wealth and who controls that, and in my view, and if you ask almost every other financial guy, they will say the world’s wealth is all tied up in one thing, which is land, real estate, property. Let me explain that for a second. It’s very simple, Nick. Let’s say for example, you digged up your garden tomorrow and you found some gold in your garden. Okay, who knows, you know, and wow, you find, you find all this amount of gold in your garden.
14:57 You don’t know what to do. Now you know, obviously there’s value in that gold, but the fact is the real value is not so much in the gold that’s in your garden. The real value is in the land that that gold is found in. Right? So for example, if somebody wants to get that gold from you, if I wanted to get that gold, I would, I want to actually get that land from you, because who knows, maybe more gold in your garden.
15:19 Right? So the value of, the value of that, the real money, the real value is not so much tied up in the gold, but it’s tied up in the land, in the real estate, the property, the garden of yours. Okay, now, so if I want to get my hands on that gold, the best way for me is to actually go to the bank, get a loan, get a mortgage, and get that loan, sorry, get that garden from you. So in a way, really, the banks will end up owning that land in any case. So it’s, I don’t actually really end up owning the entire, you know, your piece of property, because I have to go to a bank and get that loan and get it from you.
15:51 Right? Because it’s going to be a lot of money involved, obviously. Right. So if you think about it, the world, banks, the way they have their laws tied up in everything is by controlling the world’s wealth, which is tied up all in land. Right?
16:04 The same goes with, you know, oil, you know, if you found a piece of oil in Texas, you know, and another piece of, you know, land that’s got oil in it, again, that oil is not so much the value, it’s the land that oil is found in, and banks want to get their hands on that piece of land. Right? So really the way the world works is that, almost everything in the world’s wealth has to do with land, real estate and property, and all, all these banks want to get as much their claws into those pieces of real estate.
16:40 I mean, I don’t know if you know this, for example, Brian, that in America, for example, even people who paid off their mortgage, you know, people in their old age who’ve paid off that mortgage, what are banks doing now? Banks still want to get their hands on that piece of land, on their, on their house. How they’re doing that is by something called a reverse mortgage. I don’t know if you heard about it, just giving them, ing, basically exactly. So I mean, I went to, I went to America for Christmas, and I met a relative of mine who paid off their mortgage.
17:05 She’s, she’s in her 80s, and I realized that the bank has found a way I didn’t even know about this concept until she told me that. You know, the banks have found a way to get their hands on her property by something called a reverse mortgage, which is essentially for people who paid off their mortgage, so reverse mortgage different from just taking equity out of your home. By ref, be honest with you, yeah I mean, I don’t want to get too technical here, but go into whole details as to how it all works, but really my point, so I don’t diverge from what I was saying, is that to understand how the world works you’ve got to first understand who controls the world’s wealth, and the banks control the world’s wealth, and they will continue to get, do as much as they can to get their claws, little tail, on, onto, the world’s land, because they know that everything is tied up in that.
17:55 Okay. So when you think about it, the whole financial crisis that’s been caused just recently, as we’ve seen, has all to do with the housing crisis, the housing market that just burst, and that’s a, it’s one of the worst financial crisis we’ve had for a long time, and the only solution that these banks have found to get themselves out of this mess is to print the heck out of the economy. It’s all they’re doing, printing, quantitative easing. There’s no other solution they can think of right now, so we had one QE back in 2009, printing, and then we had the one in 2010, probably going to have a third one too.
18:33 What are your thoughts on that? I mean, right now the Fed and Bank of England and all these places are basically zeroing rates out and pumping cash back into the markets by buying all sorts of random securities, not government bonds, that kind of thing. To give us, technically, what negative real interest rates is, is that the right thing to do, or do they have any other choice? I don’t think it is the right thing to do, but the banks will continue to do it.
18:54 Obviously it’s going to lead to hyperinflation in the future, and we all know this is going to lead to disaster. You know, they don’t have another solution. The only solution they have is, okay, hey, the problem is this right now. We’ve got obviously a financial hole in Europe. Europe is in a mess.
19:11 Interestingly enough, America has a stronger market than Europe. Here’s the way I think about it. Almost every market in the world, if you think of every market in the world, it’s basically it’s all manure. Okay, it’s manure everywhere. Okay, I don’t want to use, I don’t want to use the S word, but basically it’s a bold statement, it’s, it’s all, yeah, if you think about it, the entire markets around the world, housing and the stock markets, are all effed up.
19:40 Okay. They were all in a big mess. All right, but interestingly, the American manure smells much better than the European manure. That’s the only way you can think about it. It’s all messed up, but it’s just what happens that Europe is in a much bigger mess, much smellier manure than we have in America.
19:57 Okay, so, and the only solution banks have of saving Europe, as you, as you’ve already said, is to print, print, until we finally get ourselves out of it. And in case you’re thinking it’s just my opinion, that’s not true. The memos themselves from the banks have said that they’re targeting a 2.5 to 3% inflation rate annually in the future. That’s their target, and they, why, why are they doing this? Because they have, paid, they have paid they have lent out a lot of money to these European countries like, you know, Spain, Portugal, Greece.
20:28 They want those loans get paid back. They’re not going to say, oh okay, let Greece fall apart, let them fail. No. Their interest is they want to get the loans paid back. Same with Spain, same with the other countries, and they will do everything they can.
20:40 They will continue throwing money at this problem, printing, printing, until finally they hit that goal, the 2.5% inflation rate to get, get themselves out of this mess. Of course that’s going to have adverse consequences, as we know, hyperinflation and disaster in the future. On that interview you said that you were trying to tell the Everyman that he can get involved in your trading strategies, which is kind of to short the market, I think is what you were saying, or to short maybe the euro, that kind of thing.
21:04 And part of me said, yeah, I mean, everyone should look after themselves and not just hope for the government to get them out of the solution. And then part of me said, isn’t the everyman long the job market by definition, almost, maybe long the real estate market by definition if he owns his house, you know, long a bunch of these markets, and is it very hard for him to go in, set up a futures account and go short these kind of things, or are there things that, you know, our listeners can do to protect themselves from the upcoming recession? Or wait, wait, upcoming recession.
21:30 I mean, are, do you think it’s going to get a lot worse, because, I, a lot of my clients are, people in finance, and quite a few of them actually believe that there’s an imminent economic apocalypse that’s going to take place in Europe. What are your thoughts on that? Do you think that’s going to ever happen, or do you think it’s going to be a soft landing? Right. Right.
21:50 Okay. Actually, it’s a very good, there’s two questions there. So I’ll come to yours, Nick, first. Firstly, there are two types of traders. Okay, there are traders who make predictions and will stick by those predictions no matter what, because they have their big egos.
22:05 Okay. I will tell you that, that probably is about 90% of people out there who trade the markets. They have very strong egos, very big. They don’t, they don’t want to be wrong. They’re, they’re, they’re kind of analyst minded.
22:19 If they make a prediction they have to, they want to stick by it. I’m not like that. I’m I, I count myself as among the 10% of professional traders out there who actually would probably agree with me on this, that we believe we, we’re not involved in being right or being wrong. The only thing that’s right and the only thing that’s always right is the market. So in other words, there are two types of traders.
22:42 There are traders who think that they’re always right because of their egos, they don’t want to be wrong, and there are traders like myself who know it doesn’t matter whether we’re right or wrong. The market is always right. The market is the jury, the executioner, or the judge of everything that will happen. So if, if the market says to me that I’m wrong, I will change my mind immediately. Just to give you an example, to you on this, George Soros once went on Bloomberg, and actually I think I read this in one of his books, or, George Soros said that he, on, he went on Bloomberg, and he made a prediction on the euro.
23:14 He said that the euro was going to fall in the next six months. That was his prediction on Bloomberg. Here’s what happened. He wrote that the next day he checked his account, because he was short the euro. Okay, he was betting the euro’s going to go down.
23:27 The next day he checked his account, he noticed that he was in a loss situation. The euro was not doing what he thought it was going to do. It was going against him. Okay, guess what he did? He closed his position, he exited.
23:36 So even though he told the world that he was betting the market was going to, the euro was going to fall the next six months, he did the exact opposite of what he said. You know, he could have, he could have stuck by his ego, right? He could have said, no, no, no, I just said this on Bloomberg to the whole world, I’m going to stick by that. No, he was thinking like a professional trader, like not like an Aly. He was thinking like, like the market maker, was call them market makers, the professional traders out there who know that it’s not about ego.
24:02 It’s not about being right or wrong. It’s the market is always right. If the market’s saying no, no, no, I’m, I’m going, I’m going, I’m going this way, I’m going up. I’m not going down anymore. You got to change, you got to change your thoughts.
24:12 Taking emotional, Abol, take your emotion, you got to take your personality, your, your ego, your opinions out of it. Is that something that can be trained, or you think it’s just like an instinct? Within unfortunately, yeah. And this is the reason why 90% of people lose money because 90% of people have been taught to think like an analyst, not like a, not, not like a trader, not like a market maker or a professional trader. Again, most, how did this apply in your days in the City?
24:36 It’s not it’s not human to do what he’s saying. The stop-loss order is not human in my opinion. I mean, we’re all meant to, we buy something and it, it goes down, and we would never sell it because we would take a loss, and like, you know, it’s fear and greed always works against us. Right. I guess the best way for your listeners to understand is this: imagine that you bought a stock.
24:55 Okay, and based on a tip. Maybe, maybe it’s not a recommendation. Maybe some maybe you heard somebody say I’m going to buy, or maybe because you have an opinion about the company itself. Maybe you bought a stock. God knows, not, I don’t know, Pfizer Pharmaceuticals, whatever, and the stock does not do what it does you bought it, but it’s not doing what it’s, your, it’s actually losing your money, and it’s going down.
25:14 Two months later still going down, still losing. You’re holding on to it, right? Why? It’s not because just because somebody said to you that it’s a good buy. It’s probably because you don’t want, because you know if you sell it, that means you’ve lost money.
25:27 You’ll have to admit that you made a mistake, you just lost. Okay, and again, that’s the biggest, you’re absolutely right it’s instinctively. We’re not trained to think that way. We’re trained, all human beings are trained to think that you got to stick. Oh, you know, you know, things in our culture, the key phrase we hear in our culture, oh, we will prevail against all, you know, I keep hearing this, the president, you know, eventually we will prevail.
25:50 Eventually we will succeed, hold on to your guns until you finally, that’s the way we’re taught to think. And imagine this, imagine if the president of America went on, every, imagine if David Cameron, for example, every day or every week went on TV and said, okay, whatever I said last week, I’ve changed my mind. Yeah, that’s not, it can happen. So basically you’re saying you should assemble a team of Buddhist monks to run a hedge fund and that’d never be wrong, right?
26:14 I guess I’m not that much familiar with Buddhist monks, but yeah, I guess what I’m talking about is that you need the kind of person who, immediately, as soon as he realizes the market is not doing what you expected it to do, you got to change your mind and exit your position. Put it in the plain terms: if you bought originally, you got to sell it before, cut, cut your losses short. What Gordon Gekko said, never get emotional about stock, right? And I mean, it is I mean, you’re emotionally invested in that trade because, oh, now I lost money, so people will hold on to this risk for days and days and days until it breaks even, and they can sell and say I didn’t lose money, which is the wrong mentality.
26:47 It is a wrong mentality, and actually, and one thing I learned from George Soros is something he said which is he never has any attachment to any of his positions, which is opposite to what many people do, isn’t it? most people when they buy stocks of a company like a bank, they have some sort of attachment to it, like a like their child or baby. You know, no, no, I can’t let it go. It’s going to go up eventually, I’ll hold out for it, and that’s the reason why so many people, even experienced individuals that I met, even doctors.
27:13 I, one of my, one of my clients was a doctor. He came to me because what he had done was he remortgaged his property, one of his, for half a million. He put it into his trading account. He lost that half a million within 6 months. Hadn’t told his wife about it.
27:28 Of course, gosh, of course she divorced him when she found out. So obviously he, he came to me for, he came to me for help, and I have to tell him, look, the way you’ve been taught, the way you’ve been thinking about trading is completely wrong. You got to give up this ego, you got to even though I say it, and even though every educator out there says a cut loss is short, most people, they don’t think that way. They, it’s, it’s counterintuitive. You know, this is, this is the, that makes total sense for me.
27:56 The thing I find very interesting is, in fighting in Jiu-Jitsu, it’s exactly the same, man. It’s being able to take your ego out of the equation, right? Right, because what happens is, let’s say some guy hits you, or he gets a sweep on you, a reversal or something, if you analyze it and start thinking about what just happened, you’re stuck in the past, right, and you’re not able to act in the present moment, and it’s, I’m guessing it’s the same thing. Actually, it’s a very good example, Nick.
28:20 I’m glad you mentioned that, because you’re absolutely right. It is very much like those kind of sports. So when you see somebody coming out, I don’t know anything about those kind of sports, not an expert, but I’m guessing this much I know, that if somebody’s coming at you, you will take action. You’re not going to sit there and look around and see what other people are thinking. No, you’re going to take action, defend yourself, right?
28:38 Exactly, same thing here. When things are going against you in investing or trading, you got to take action and immediately cut those losses. That’s the way market makers, the way professionals think. Unfortunately, the 90% of people out there, oh sorry, even those who have had education in the markets, they’ve been taught the wrong way. They’ve been taught that, there’s that if they’re, if they’re losing money, there’s something wrong with their analysis, or there’s something wrong with them.
29:06 They’ve not, they’ve not been taught that even if you had, even if you’ve done the best analysis in the world, even if you’re the best trader in the world, you’ve done the best analysis, the market can still change its mind and do the opposite of what you think, because it’s all about odds. It’s all about probabilities. It’s not about certainties. I’m reminded of my dad, he taught me to play Jack, Blackjack, when I was younger, and he just has the set of rules that he follows no matter what.
29:28 Like, he will never hit on if he has 15 or whatever it is, and, you know, like it, it’s that’s the way it is. It’s just probability, right? Absolutely. I’m glad you brought up Blackjack, Nick, because I don’t know if you guys know this, but if you go to casinos in Vegas, they’re actually, they actually have bookshops in some parts, some casinos, where you can go and buy these books on how to beat the house on in blackjack, for example. Now here’s the thing, why would a casino put those books about beating the house and beating, beating the best, because they know people have no emotional control.
30:00 That’s right, because they know if people read those books, H buy those books and read about how to beat the house in blackjack or the roulette, whatever. Okay, what’s going to happen is they will go and say, okay, I’ve got a system. That’s how people think. Okay, I’ve got a system now to beat the house. They’re going to go at the table, probably put a huge amount of money because they think their system is safe, or whatever.
30:22 Now they might make some money, but as soon as they start losing money, as soon as they start losing money, what will they do? They will tweak their system or change it or throw it away altogether. It’s a backwards rationalization, or they tell themselves the market’s wrong. That’s the point. Oh, the market’s not right.
30:36 Okay, by definition the market is right, and this is what Alessio is trying to say, is that there’s a bid and an offer. There’s where you can buy or sell your position, so by definition you have a mark-to-market loss or a mark-to-market gain, and that’s the truth. That invisible hand is far more powerful than any single human being’s, like motives, or just more than that, it’s the truth. So it’s that, where the value is today. Here’s a good example.
30:56 I mean, Brian, here’s a good example. Let’s go to Facebook, probably the most hated stock right now in Wall Street, which is funny because only two months ago all the major news channels, in so hypocritical, it’s unbelievably hypocritical. CNBC and all these other financial channels, before the Facebook went on market, they were all saying, oh, we’re looking for this stock to go. You know, yeah, it was the darling of the media, the darling of the media.
31:18 Yeah, but I think most of us, like, most between ourselves, I think most of us knew it was Muppet baits. You know, it was bound to because I mean, I actually wrote an article about this on the day of its launch saying that this is a train wreck about to happen, but it wasn’t. You have to be smart to figure that out when everybody is so excited about something. When something is so hyped up, you knew that that market, that that stock was overpriced. Okay, you knew that the people who made the money, was it, it wasn’t the punters on that day who were going to buy it.
31:48 It was the people who bought it way beforehand. Okay, like the Goldman Sachs of the world, that Goldman Sachs was selling 50% of its stake in Facebook on the day of its launch. Were they? So yeah, it always makes me suspicious when one of these, like, private asset managers goes public, like when BlackRock goes public. It’s like, why would any of these guys sell even a little bit?
32:05 Absolutely. Why would they want to sell 50% of their stake on the day of its launch, if, unless they knew that, you know, what it was? Done. These guys are not stupid. So yeah, so basically we saw the stock plummet from 40.
32:17 It went to 45 at the highs, and now, was it yesterday? It was a 29. I actually think that Facebook’s probably going to go down way to 25, maybe below 25, but at some point Facebook will become so hated, and this, the thing people don’t understand this. I have made a rule now. My rule is this: that whenever a stock or any asset, in fact, could be gold, could be anything, whenever it’s, whenever it’s, people are excited about it, whenever people think they’re going to make money from it, there’s something genuinely wrong.
32:44 The markets are not designed so that people can make money from it. Quite the opposite. The markets are geared in such a way that people lose money. All right, that’s why Warren Buffett famously said that when everybody’s fearful, get greedy, when everybody’s greedy, get fearful do the opposite of the masses. It’s like when blood and bread’s on the street, buy, real estate, blood running down the street, buy real estate street, as real estate, buy.
33:04 So basically your strategy, I mean, a simple strategy that our listeners can formulate from what you’ve said so far, is, if someone’s, or if the market is excited about a stock, short it instantly? No, I wouldn’t. So I mean, I understand what you’re saying, Nick. Yes, you could probably get lucky and short. There’s the thing is, I would, I would always back that up with some other piece of knowledge.
33:28 For example, yeah, certainly, if somebody if everyone’s getting excited about something, like Facebook for example, what I would do is look at the, look at the price I look at the charts. I know most of us trade off charts, as you probably know. Can you explain what the chart is real quick? Yeah, charts for folks who don’t know, stock chart or a chart is basically a visual representation of the market. So what you would see, for example, is, the price of a stock going up and down on a specific day or over a course of a few weeks.
33:56 Okay, so visual representation, the price of the stock as it’s going, exactly, right, exactly. And basically, the way I’m, I’m a strong believer in the Dow Theory, and for folks who don’t know what the Dow Theory is, the Dow Theory says that the charts, in other words, the market, what we see on that graph is the sum of all the fears, the hopes, the expectations of everyone in the market. So if you want to really find out what the smart money is thinking, the insiders are thinking, there’s no point going listening to Bloomberg or CNBC.
34:28 You have to find that one single guy. Well, the way, here’s the thing, the Dow Theory says that the market, okay, represents everything you need to know. In other words, everything about what’s going to happen, like price expectations, even presidential expectations, are all priced into the markets. In other words, that information is priced in, because if somebody out there thinks something’s going to go up, guess what, they’re probably going to take a position on it.
34:52 Okay, now let me explain this to people. To be a good trader, you do need to follow footprints. It’s like being a detective. If you’re a detective, you want to find out, like, some guy who’s burgled your house, you probably would go and look for evidence of where this guy went. You look for footprints, fingerprints, and follow his, follow his trail to find out where this guy is.
35:16 Okay, same with, if you want to identify a mass murderer or whatever, or serial killer. Okay. I don’t know if you probably, you watch CSI, think something like that. To be a good detective you got to look for evidence to see where this guy is, to identify him, where he is. Same with being a trader in trading.
35:33 Whenever the big money, the smart money, you know, the big funds out there, there’s about 20 funds actually, really, that have major pushers in the market, you know, Goldman Sachs, JP Morgan, whenever these guys are making decisions okay. You know, for example, if they’re buying into certain markets, they can’t do it without leaving a trail, you know, in the old days, before technology, back in the 80s, maybe 70s, you know, they could, could hide things, right? There were no daily marks.
35:59 You couldn’t say where the stock was moving, right? But we’ve leveled, we’ve gone into a world now where everything is so transparent. Now, you know, look at, you can see the graphs. You can see on the graph which market’s going up, which is going down. You can see how much money is involved now.
36:13 So if you can find, so if you can find out where the money is going, where the clever money is going, so you, what you want to decide is, okay, what is the, what are the insiders doing? What are the insiders, the people in the know, what are they buying? All right, and if you can, if you can, find those patterns, because if you look at a graph you’ll find patterns, signals that say, oh, this is what the insiders are buying. The insiders are buying into, this market, this stock, maybe gold, maybe, maybe the insiders are leaving gold, maybe they’re going into, a different market like bonds or something like that.
36:46 So if you can find out where the clever money is going, all you got to do is jump on their coattails. You know, hang on their coattails and go with them. No, you don’t want to fight them. You don’t want to fight the big money. You want to go where these guys are going.
36:57 Famous trading saying, the trend is your friend. The trend is your friend. Absolutely, and you also have to know when that trend’s going to finish too, so sometimes the trends will come to an end, and then you got to be prepared to reverse your position. This is actually where a lot of people go wrong, by the way, because the 90% of people who lose money in the market, I guess I don’t want to say it, but we call them the donkeys out there. So the dumb money, they find the trend way too late.
37:23 Okay, good example is what happened with gold. Gold, by the time most people wisened up to the gold market, the bubble, that was back a year ago, was when gold was just hyperbolically going up to $1,900 an ounce. At that point, PE people, the dumb money was just coming in, because everybody thought, oh, if I put money in my, in gold, then I’m going to make even more money, because everybody was talking about it. Then you know, newspapers. And here’s another clue: when, whenever, whenever the, media, especially social media, starts talking about making money in a particular market, you know it’s too late.
37:58 Yeah, it’s too late, and it’s topped out or bottomed out. If it’s the opposite way around, if the market is too negative, one of my friends suggested that, just before the gold market topped out, a TV show in America, Saturday Night Live, even they were talking about how the gold market had made them money by that time. If those guys are talking about it, you know you got to be exiting this one so how do you find out what the inside is doing? Yeah, that’s, that’s the thing that will take some, that’s that’s the bit where people really have to get educated on.
38:26 So really, I mean, for example, the way I did it was, I study, I, I sat down with some great traders. I learned, I sat next to them, you know, spent every, almost every day with them, seeing how they’re trading. You could do it from books. There’s some good books out there to learn. I, me, a lot of things I’m doing right now.
38:44 I have a website now where I’m doing free webinars, online seminars, almost every week, to show people what I’m looking at, to show how I’m trading, and to show what, to show what some other great trader friends of, and that’s it. It isn’t just about me. I’m also showing what other great traders are doing, fellow friends of mine, and what we look for. So yeah, you do need to have some kind of training. Again, if, if people want to find, want to find out more about it, they can come to my website as well.
39:12 A lot of, like, analyzing these charts, I think is what he’s seeing, so you can do a lot of trend lines. You can kind of see when it dips, are they buying when the stock goes down, you know, is they’re selling when the stock goes up, and like, if you analyze this chart well enough and with the right theories in mind, you can, I guess what you’re saying, try to, absolutely, but here’s the main thing, and here’s actually thanks for mentioning that, Brian, because I’m glad you mentioned those words. I, when I first started trading, I was, I, I kind of was taught that same kind of way.
39:39 You know, you analyze these charts, you follow these, markets, you, you, you you draw these lines in the chart, and then you know where the money is going. But actually, as I, as I was saying just about, 10 minutes ago, that is also a major problem, because the way a lot of people have been taught how to trade is to think like analysts. So yeah, what people are taught is, okay, you all these lines You do, you do this analysis, right? And then that analysis tells you that you’re right, and you got to go buy it, but people don’t understand that.
40:06 That doesn’t matter how much analysis you can do. It isn’t about them being right. The market is always right. So if the market, the market can change its mind about your analysis, maybe tomorrow or two days from now, and at that point you got to say, okay, you know what, I don’t want to say the root word, but forget my analysis, throw that out the window. The market has changed its mind, and therefore I’m not going to buy the stock.
40:30 I’m going to short it, or I’m just going to leave it. Okay, so the thing people what I’m trying to say is, there’s a, there’s a number one rule in trading, which is you have to accept uncertainty in the markets. There’s absolute uncertainty in the market, just like life. Dude, it’s just like life. Yeah, absolutely, and when you know the market’s telling you, when the market is telling you, look, look, well done on your analysis, but I’m not going to go that way anymore.
40:55 I’m not going to go up any higher. Look, let’s take, let’s take gold for example gold in September 2011 made a signal. Actually, one of the signals that I look for, which I don’t, I don’t want to get too technical for your audience, but you know what, I don’t want to dumb down this show either, so one of the signals I look for to find out when a market topped out is something called a double top. Okay, and a double top is, looks like, two mountains next to one another.
41:19 You want to visualize two peaks of a mountain. Now imagine that as two, two, two tops on a graph okay, like, like a letter M, if you want to call it that, right? That actually happened on gold last year. Okay, and that actually, now, why is that a bad signal for any market? Because it, the second top.
41:43 Okay, put it, the market went, made one top at $1,900. Okay, it went down, then made another attempt to go above $1,900 because you wanted the market to go past that high, high level, and it didn’t. It failed. The market failed to go above $1,900 on gold, and then it just plummeted. That formed what’s called an M-type pattern, it’s called a double top.
42:04 So you’re looking for the double top, and all sorts of markets, not every market, that’s a good question. Not every market will fall on a double top, but that’s just one signal that actually says to you, you know, what, this market is probably done. It’s probably just going to reverse. You know, I wanted to ask you, I I watched a documentary many years ago about, some guy, he seemed kind of kooky. His whole theory was he had taken, statistical data from stock markets from the past 100 years or so, aggregated it all, and he said, or he had come to this conclusion that markets follow a seven-year cycle or something like that.
42:38 What are your thoughts on that? Do you think there’s any truth there? There is truth in the fact that markets do follow cycles. Yeah, but the fact, one thing I will tell you is this, there’s a lot of economists who come out with theories about cycles. Unfortunately, the evidence has shown that the markets rarely follow those cycles, ex, to the world.
42:56 You know, the thing is, you always have to corroborate those theories to reality. So people who just follow economic theories, and this is why there’s a phrase we have in trading circles, which is, no two economists ever agree on the economy, and also that markets have always predicted five out of three recessions. That sounds a bit strange, but that’s what we’re saying: doesn’t matter who, what the economists say, the market is a, is a true judge of when a recession will end, when it will start.
43:27 So we had a trader at Bankers Trust, where I started off, and he called economists lagging indicators. Yes, they’re very much lagging indicators. They say it like way after it’s happened. I know that George Soros, I mean, he builds his global strategy based on the boomas cycle of capitalism, and, I mean, there’s got to be something to that, right? I’m not saying there isn’t there’s definitely cycles that do repeat themselves, and certainly, I, I hugely respect George Soros.
43:53 What all I’m saying is, yes, if you have a cycle theory which is based on evidence, by all means use it. I’m not saying it’s wrong. What I’m saying is, what I would do, is, I, I’m sure George S does the exact same thing. He wouldn’t just follow a cycle theory. Yeah, he would then look for, signals, patterns to then show either he is right or is wrong And there’s actually something else I have forgot to mention, which is a major difference between professional traders and the retail traders.
44:20 But retail traders, I’m talking about the 90% of people out there who are non-institutional. The major difference is the non-institutional or retail traders, the way they’ve been taught to think, is they look for evidence that they’re right. Okay, so if they, they have an opinion about something, they will go and look for any evidence to show that they are right to justify making a decision, whether buying a stock or selling a stock, whereas professional traders, that’s not the way they think.
44:47 Professional traders, like George Soros, myself, and many other friends of mine, the way we think is we look for evidence that we are wrong. Okay, we look for evidence to show, okay, okay, so we have an opinion, but is the market is the market showing us that we are wrong? Because if, if it is, what we’ll do is quickly cut it out. We won’t even bother to wait to see if we are wrong or lose money. You can use that in your whole life.
45:07 Right, yeah, I was just thinking the same thing. I think people walk around looking for evidence that they’re right about everything relationships, people, and that’s why trading, even though it’s fun, even though it’s a great profession, is one of the hardest ways to make money. That’s why it will take a long time for folks out there to even, I don’t want to put people off by that. I’m not saying it’s impossible. Definitely, if you really want to be into trading, if you want to make money, go for it, but just realize it is so counterintuitive.
45:34 The way traders think, it’s contrary to everything we’ve been taught. The fact that we have to change our minds the next day if we are wrong, we have to admit that we are wrong and look for evidence that we could be wrong, because that’s the way the market is. and that’s why smart people, I actually have a phrase, which is the more smart you think you are, the more money you will lose. If you, if you look at anybody who thinks they’re smart, like people who got a Yale education or or Harvard.
45:59 I hope I’m not insulting you guys. Okay, but if you look at those guys who’ve been to Yale or Harvard, he went to MIT. Just be careful. We get a pass always. For some reason anybody who thinks they’re that smart will probably become a very bad trader, because they don’t want to admit that they’re wrong.
46:16 I, how many friends do you know, for example, Nick and Brian, who will admit to you that they made a wrong decision? They’re wrong today. Not many people, I guarantee you. I don’t have, I don’t have probably one friend who will do that. There’s something that’s such an interesting parallel to what you just said.
46:28 One of the best Jiu-Jitsu instructors of all time, this old guy, Helio Gracie, he just died actually a few years ago. He said the two most difficult types of students were the very strong because they couldn’t, they didn’t, they just overpower their opponent instead of using technique, and they’re very smart because they’d overanalyze without just doing. Which I find fascinating. Exactly what you’ve just said there. So there are some parallels, correlation, but also it’s important.
46:54 I’m always talking about being wrong, but also people have to realize when they are right, they have to stick. They have to try and, as, make as much money as they can. There are certain, there are, of course, occasions when you’re right about, something, and unfortunately the problem is that, when people are usually right about something, as soon as they make a little bit of money, they will take it, because they’re so afraid of the market taking it away from them, and that’s a big problem.
47:18 Because it’s the same thing, it’s just emotion again. Exactly. takes a lot of discipline to be a, a lot of, I mean, this is discipline, like at night when you sleep and when you wake up the next morning and you have a bad day. I mean, I used to go down to the pits in Chicago, Chicago Board of Trade. Actually, still work, guys in the pit.
47:33 There’d be 300 guys in the bond future pit, which is the most liquid, probably one of the most liquid instruments in the world. Maybe the dollar mark at the time was more liquid than that, but, these guys would go into the pits with the locals, and, and one of the guys said if he had a bad argument with his wife the night before, he wouldn’t go in and trade that day, because his mind would not be clear enough to be like, okay, I just bought, you know, 10,000 contracts. It just went four ticks in my face.
47:55 I got to dump it. I got to dump it, and just because his mind wasn’t working straight, so he’d stay at home. You know, he just not engage. The way I think about the market as well is kind of, that’s, I think of it like a, a pet dog, except a different kind of pet dog, which is, sometimes it’s nice to you, but sometimes it come and bite your hand, sometimes bite your whole arm off. is the thing, and the thing, the thing is, it is that kind of relationship.
48:20 You, in the times when this beast, this dog, hold it. That when it’s nice to you, you got to, you got to basically make as much money as you can when it’s nice to you, but at the time when the dog comes and bites, your bites, you got to make sure you don’t get, you lose your whole arm. Maybe you lose a little bit of skin, maybe a bit of nails. Every now, sounds like you had a shitty dog. Then, then you have to put it to sleep.
48:42 Right, and that’s the problem. The thing is, most people eventually will, quit them, quit trading against that. That’s equivalent to put the dog to sleep, because they’ve had enough. They can’t take you. Reckon 90% of people who start trading, lose money.
48:56 Yeah, and it’s not their fault. It’s not, I don’t think it’s their fault. It’s because one, because the culture we live in, it’s so ingrained within us. The way we think, we have to change our mindset about a lot of things. Number two, the way people are educated how to trade, from books, from courses, all this kind of stuff.
49:13 It’s taught them to be analysts. It’s taught them that you got to do an analyzing here and be right. They haven’t been taught doesn’t matter how much analysis you do. You could still be wrong. The market’s always right, not you.
49:24 So what would you say to someone who wanted to, who has no experience trading but they’d like to dabble with it? They got a spare few thousand pounds and they want to start. Where would you, what kind of road map would you set up? That’s a good question. Just to go back to the question earlier, what are the things the everyman can do?
49:39 I think it’s a similar question, Nick’s asking. It depends what your goal is. If, if you don’t have quick, no, definitely not. No, no. I mean, actually, a friend of mine says the fastest way to go broke is to try to get rich quick.
49:51 On the other hand, investing is not going to make you rich either. You know, people who go and invest their money in something, wait for returns, and I, the thing, the thing with investing is if you’re looking for 10 to 20% a year, that’s going to take a lot of time. Most of the people I know, you know, are in the 30s, 40s, 50s, sometimes. You know, they don’t have a lot of time on their hands. So investing is good for growing your savings, but it’s not going to make you rich.
50:13 So if you’re looking for, it’s all about your goals. If people out there have a job they go to every single day, I can’t expect them suddenly to give up that and go into trading full-time every single day. They’re probably looking for something to do after they come back from work, you know, in between, you know, we call that end-of-day trading. Okay, if that’s the case, yeah, you can still make money from that as well. Very good friends of mine do that.
50:38 On the other hand, if they want to go into full-time trading or day trading, you know, where you’re trading in and out during the day, Yes, that, that comes with the price too. Number one, you, okay, here’s some, here’s, here’s some key, key things people will need. If people really want to pursue a career in trading, you got to ask yourself what for. What are you doing this for? Are you doing it for making income, or are you doing it for making wealth?
51:04 All right, I would say this, focus on making wealth first before you make income. Can you, define if you want to make an income from trading? So if you want to replace your job, then you’re looking, for example, to make at least, I don’t know, like between 2,000 to 5,000 a month, depending on what your original wages were. If you were looking for to make £10,000 a month, then put it this way, you need to, capital, you need a large amount of capital to start off with.
51:30 I, ideally, if you want to make an income from trading, you need probably over 50,000 to start with just in your account. Yeah, 50,000, 100,000. Otherwise what’s going, if you, if you start with £10,000 and you want to make an income from that, that means you have to over-leverage that 10,000, okay, to make, to make a monthly income, and believe me, you’ll very fast blow that account, because if you start, if you start by, by leverage again, if you’re if you’re risk, rising 10% of, 50% of your account, of 10, £10,000, if, if every day you’re putting £5,000 or even ,000 at risk, you’ll very quickly evaporate that 10,000.
52:06 You just have one bad day and your capital will be gone. Basic yeah, or maybe a series of bad days. That’s the thing. No, ideally people should be realistic about their goals. If you want to make an income from trading, you should save up as much money as you can, maybe at least over 50,000 or £100,000.
52:22 This is what I’m saying. That’s why I said you need to make wealth first, so you, you got to first get to that £50,000 or £100,000 before you can start making income. So first focus on how. So for example, if, if people are listening right now and thinking, if they’re thinking they have only about 2,000 saved up, well, you got to make, you got to learn, you got to work hard, a bit harder maybe. Not just from your job, but also, learn how, learn how to grow that 2,000 into maybe 10,000 to 50,000.
52:50 You mentioned £1,000 before you can make an income. Okay, I would say if you really want to start, start off with, start with £10,000, grow that £10,000 gradually to, to 40, 50,000, and then start making an income from then, quit your job, and then go for the income level. So make some wealth first. Make some wealth first. Absolutely, and then go into making income from it.
53:11 Unfortunately people have not been taught this. They’ve been taught, oh yeah, and this is the thing, the biggest part, the biggest problem with the industry, the trading industry right now, is that if you look, if you open any paper right now, newspapers, online, and I’m sure you’ve done this, you’ll see BS all over. By, I don’t have to explain myself, but a lot of, lot of crap out there saying here’s how you can make an easy 500 pound a month from trading.
53:34 Here’s how you can make an easy, by just, by just maybe two minutes a day or something like that. Unfortunately, even if it’s true, maybe, maybe some really good guys out there. What, what I’m trying to say is, they don’t really give the facts. they don’t tell you to do that. First of all, you do need to have substantial, capital to start off with.
53:54 Number two, you do need to, to have the discipline and the, the skills to do that, not to mention all, everything else I’ve been saying here today. So there’s a lot to go with it, but of course the, fin, the financial trading industry is geared in such a way that they will BS people to part with their money, because they know people want to get rich quick. They know people want the easy stuff. They know people have no emotional control. Yeah, that’s probably true too, and everyone, that’s why everyone’s going to watch the show, is because they kind of, everybody wants to learn about getting rich or trading markets.
54:23 This kind of thing. I don’t, I’m not trying to put people off, there, Brian. By all means, I am doing my, I, I’m, I’m doing my best to educate people out there. A lot of the stuff I’m doing completely for free on my website. One of your seminars, just about, I think you were talking about trading the gap, which is kind of the market close from the market open, from the close the previous day.
54:40 It’s great little instructional. To check it out. So, we’ll put your stuff up, but that’s on facebook.com/Alessio Rastani. What’s your day like? You, you know, you wake up in the morning and what is your typical day like?
54:52 Yeah, sure. The, the myth out there is is that traders are trading every single day. That’s a big myth, that every day you’re trading. Not necessarily true in reality. Okay, so I, I would wake up, something along like 6:00 in the morning, 6:30.
55:07 I trade usually the euro from the morning, from about 7:30, 8:00 in the morning, the euro currency, for about a few hours, but then the real show starts about 2:30 GMT. Okay, so I’m talking about UK time here, so 2:30 GMT is 9:30 in New York, so the stock market opens, so at that point there’s a lot of volume, a lot of activity happening, and I would trade the first couple of hours of the, of the New York Stock Exchange open. So S&P futures. I would trade S&P futures in the morning.
55:37 I’ll trade the euro, maybe the British pound as well, but in the afternoon I would trade the, S&P. You’re looking for, like, the most liquid markets out there. Absolutely. Yeah, and I only trade the first couple of hours of the open, from 2:30 to 4:30, really, because after 4:30 the market becomes a little bit, we call it doldrums, where the traders in New York just go on lunch, lunch hours, and then the activity just becomes very unpredictable and just sideways.
56:01 A lot of fake movements happen out there. Okay, so then I might come back to trading at about 8:00 again, UK time, GMT, because the last hour, a lot of activity happens as well. And here’s the thing, you don’t have to trade every day. A lot of people think, oh, you got to trade every single day. No, that’s a lot of BS.
56:17 Again, brokers out there tell you because they want you to trade every day, so I make them commission. No, the reality is, CH churnam and Burnham is, yeah. the reality is, the good, the informed traders know that the best thing you can do is be patient and just wait for that big trade, that the, the trade that has not a 50% probability of going right, not a 60% probability, but maybe an 80% probability, so when everything’s saying yes, yes, yes, this is going to go higher.
56:47 So there are those moments which are probably, happen maybe two or three times a week. Okay, but you got to be really patient. You got to you got to say no to a lot of trades, so you don’t accept every trade that comes your way. No, you wait for that one trade, maybe a couple of trades that just everything lines up, and by everything lines up I mean saying, maybe, for example, the Dow is saying this is going to go up, maybe the other market saying this is going to go up, and maybe different time frames.
57:14 I don’t want to get too technical here, but maybe different time frames you’re trading, or saying this is going to higher. Every signal you’re looking at your chart saying this is going to explode to the upside. So you got all these different data saying it’s going to go higher, and then what you do is you go and place that one big trade. So instead of putting, simply 1% of your capital at risk, you’re going to go and put maybe 5% to 10% of your capital at risk, because you know that’s the one rare trade.
57:40 Everything’s saying, hey, but still requires a lot of observation. It does require a lot of patience. Observation. It’s like the big jumbo jet is coming by. Oh my friend, a friend of mine calls it the big elephant.
57:50 The big elephant is passing by. Instead of sitting there like a, like an idiot, holding, you know, holding your rifle, you’re gonna go and get, take action. Actually, it’s not a good example, to kill an elephant, but, but you’re gonna go, go for it. Okay, you’re gonna, you’re not gonna let the elephant pass by. You’re going to go and get that, the trade.
58:08 But your broker has you so busy, like shooting squirrels, that you miss the elephant. Right? Exactly. A lot of brokers want you to trade every, every moment, or every day. Their goal is that every time you trade, you’ll make commission for them.
58:20 Absolutely. That’s not the way I teach it. I, I like my students to learn that. Look, I want you guys. I want the best for my students.
58:28 I want them. Look, you don’t have to trade every day. Just look for the good ones to set up and go for those. You know, but the fact is, even though I say it, it’s very difficult to do, because there are moments when you just want to do something. You know, you get bored.
58:42 One of my, yeah, one of my students, he was a, he’s a very young guy. He wanted me to teach him how to trade. I told him, look, just follow the simple pattern, a bunch of little signals. Okay, very simple thing, for example. One of the things was if the bars are blue, go, go by.
59:00 If the bars are, red, just stay out. Okay, until the bars go blue, don’t do anything. Okay, and once they’re blue, stay in it until it changes color to red again, just to keep it simple for the people that like a momentum type trade. Yeah, momentum. Okay, and I told him, look, until any, until the color changes, play some, play a solitaire or go, I don’t know, watch Simpsons or whatever.
59:21 And he did exactly what I said. He, he, he played something, card games or something like solitaire, and he didn’t come to, as soon as he saw the colors changing there was an audio alert, by the way, so it, an audio beep sound. As soon as the colors changed he went and placed that trade, and then he stayed in it until, there was, there was an exit signal, and he actually did a lot better than the other clients that I had who did not follow my methods. So in other words, in other words, so what I’m saying, the other guys had been distracted, you know, you know, they got bored, you know, as soon as I saw a trade, it play something, you know.
59:57 That’s so, I mean, this sounds like something that a piece of software could do for you. Yeah, But again, the, remember, the softwares by themselves, I don’t think, yeah, there are softwares out there that are really good. There are robotic automated systems out there that are really good, that do work, but there’s a lot of software, there’s a lot of automated programs out there that are just scams. Okay, you know, they were just out there to rip people off.
1:00:20 They don’t work at all. I do happen to know some good trader friends of mine who actually have established some good automated software that do work, but the majority of stuff you find on the internet just is a lot of rubbish. I’ve got a few questions here, and I want to ask you, and then we’ll wrap this thing up, but just for our iTunes listeners, I’m just going to cut this off now, and then, because we’re right about an hour, but people want to find you.
1:00:43 You’re on Twitter at Alessio Rastani, and you’re on facebook.com, your name and your, what’s the, tra, your website? Yeah, people can come to LeadingTrader.com. LeadingTrader.com. Yeah, yeah. In fact I’m doing a webinar very soon about what’s going to be the trade of the decade.
1:00:59 Oo, I like that. I’d also like you to get you on the London reers group maybe sometime next week and just answer questions for some people. That’d be really good. By all means, yeah. Okay, well, thanks for coming on anytime.
1:01:07 Absolutely. If anything else you want me to comment on in the future, feel free to let me know. Okay, we’ll ask you a few questions right now, but until then it’s about the journey. Okay, and we go [music] [music]
