Steven Dux - Trading $27,000 to OVER $50+ MILLION

In a captivating discussion on the Words of Wisdom podcast, renowned trader Steven Ducks shares insights into his remarkable journey from turning $27,000 into over $50 million in the stock market. He emphasizes the importance of understanding human psychology and statistics in trading strategies, cautioning against the pitfalls of gambling tendencies among traders. Ducks advocates for a disciplined approach, highlighting the necessity of risk management and the value of learning from losses. He also discusses the challenges of maintaining performance amidst market volatility and the significance of staying humble and focused on continuous improvement.

• Steven Ducks transformed $27,000 into over $50 million through trading, achieving significant financial success.
• He learned trading within six months, emphasizing the importance of rapid skill acquisition.
• The growth in trading success accelerated after reaching equity of $2 million.

"You've essentially taken $27,000 and made north of $50 million from the markets. Is that true? Yes. And you learned to trade within 6 months? Yes."

• Steven Ducks confirms his remarkable achievement and rapid learning curve in trading.

• Persistence and long-term focus are crucial to avoid instant gratification and ensure sustained success.
• Implementing a risk management system is essential for survival in trading, such as reducing position size after mistakes.
• Taking profits regularly and psychologically treating large gains as losses helps mitigate greed and maintain discipline.

"First of all is the persistency and make sure that you're in the game for a long run, not seeing the instant gratifications for how much money are making one day."

• Ducks emphasizes the importance of persistence and long-term focus in trading.

"I developed one of the systems for me is every time when I made a mistake, I size down in the next one."

• Ducks discusses his risk management strategy to control losses.

"I have to tell myself that I actually took a loss because I withdraw money from that trade."

• Ducks explains his psychological approach to counteract greed and maintain discipline.

• Ducks immersed himself in trading by studying intensively, listening to audiobooks, and simulating trades.
• He focused on understanding trading psychology rather than just trading methods.
• Learning from others' losses and understanding their mindset was a key part of his strategy development.

"I was putting a really a very urgent spot because my dad and mom had its separations and they were sending tuitions to me."

• Ducks explains the urgency that drove his intensive study and learning.

"I try to understand their psychology, not the method of trading."

• Ducks highlights the importance of understanding trading psychology over methods.

"I don't look at other people's gain. I only look at their losses and I want to go in there, find out, try to guess their entries and exit."

• Ducks describes his approach to learning from others' trading mistakes.

• Ducks developed a trading strategy based on human nature, exploiting typical trader reactions.
• The strategy involves shorting stocks when traders are likely to sell after a temporary recovery.
• He emphasizes the importance of understanding market cap, volume, and other factors for effective trading.

"Let's say you bought a stock at $10. Stock drops to $1 next day. You feel very frustrated. After six months, stock gapped up to $7. Your instant reaction is to sell at open."

• Ducks describes the human nature-based strategy he uses to exploit typical trader reactions.

"You want to track down the market cap. Which market cap works the best?"

• Ducks explains the importance of understanding market cap in his strategy.

• Ducks uses statistics to determine entry and exit points, ensuring precise and informed trading decisions.
• He stresses the need for strategies to be fundamentally and psychologically sound, not just based on technical indicators.
• Backtesting and live testing are crucial for validating trading strategies.

"Statistics will give you very accurate how where you should go in and where you should get out."

• Ducks highlights the role of statistics in making informed trading decisions.

"The strategy has to make sense fundamentally."

• Ducks emphasizes the need for strategies to be based on sound principles.

• Accurate data collection is challenging due to factors like reverse splits and changing market conditions.
• Ducks manually tracks data to ensure accuracy, highlighting the limitations of existing tools.

"If they do that, it's impossible to find the flow on an accurate date in the past."

• Ducks discusses the challenges of data accuracy due to market changes.

"I personally keep all my data starting 10 years ago, manually tracking it."

• Ducks explains his approach to maintaining accurate trading data.

• Market conditions, such as the availability of retail funds, significantly impact trading dynamics.
• Ducks observes a decrease in retail trading volume following the distribution of stimulus checks.

"As the Fed keeps printing money there's more money being distributed to the retails."

• Ducks notes the relationship between monetary policy and retail trading activity.

"We saw there is a significant slowdown in 2020. So not much money being distributed anymore."

• Ducks comments on the reduction in retail trading volume following stimulus distribution.

• The discussion centers on identifying market cap thresholds and the behavior of retail investors to strategize trades.
• Retail investors reach a limit in purchasing power, leading to potential shorting opportunities.
• Hedge funds avoid buying all shares to maintain liquidity and aim to capitalize on retail money.

"For example, let's say the initial market cap for very recent RGTI, the quantum place, it was 100 million. It went up all the way to $20 and we traded probably around 600-700 million volume."

• Explanation: This quote illustrates the rapid increase in market cap and trading volume, which is crucial for identifying when retail investors might reach their limit.

"Once we hit that specific threshold of retail in terms of on the range of market caps then stock goes down."

• Explanation: This quote highlights the strategy of identifying when retail investors have maxed out their purchasing, signaling a potential decline.

• The identification of hedge fund positions versus retail is crucial for timing trades.
• The focus is on the psychology and the amount of money being placed into a ticker.
• Volume and price movements are indicators for potential shifts in stock momentum.

"There's amount of volume use the volume times the price that's how much dollar is being traded."

• Explanation: This quote emphasizes using volume and price to gauge the total dollar amount traded, aiding in identifying stock momentum changes.

"You place your short positions based on once you start to lose its momentum."

• Explanation: This quote explains the strategy of shorting stocks once momentum slows, often after retail investors have reached their purchasing limit.

• Specific criteria are used for selecting trades: stocks up 20% for the day, over 1 million shares traded in pre-market, price over $3, market cap under 1 billion, and float less than 100 million.
• These criteria have been tested and proven to yield the best results.

"I only use tickers that's up 20% for the day. Traded about over 1 million shares in the pre-market."

• Explanation: This quote outlines the criteria for selecting stocks, focusing on significant daily price increases and high pre-market trading volume.

"Because I have tested them and they work the best and they show the best results."

• Explanation: This quote confirms the effectiveness of the selected criteria, based on extensive testing and observation.

• Biotech stocks are blacklisted due to their unpredictable patterns and minimal returns despite heavy trading.
• Their characteristics include abnormal actions and irrational holding by investors despite weak fundamentals.

"I traded biotech for 10 years. Technic trading them based on pattern not about fundamentals."

• Explanation: This quote reveals the speaker's extensive experience with biotech stocks and the decision to avoid them due to poor returns.

"People tend to have more will to hold the biotech longer even though their fundamentals are not there."

• Explanation: This quote highlights the irrational behavior of investors in biotech stocks, leading to unpredictable price movements.

• The speaker predominantly engages in short trading, with a focus on small caps for higher rewards and winning percentages.
• Going long is seen as less favorable due to lower winning percentages and unpredictable large gains.

"I'm 98 99% short."

• Explanation: This quote underscores the speaker's strong preference for short trading due to its higher success rate.

"Shorting has higher winning percentage especially in the small caps."

• Explanation: This quote explains the rationale behind focusing on shorting small-cap stocks for better returns.

• The importance of maintaining discipline and avoiding emotional trading is emphasized.
• A "perfect trader" concept is used for self-comparison to maintain humility and control ego.
• Regular review of trades helps identify mistakes and ensure adherence to trading plans.

"I have this one calculator that supposed to be the perfect trader."

• Explanation: This quote illustrates the use of a hypothetical perfect trader as a benchmark for self-assessment and improvement.

"It's not the money I'm supposed to make. Every penny that I made by luck or went against my plan that it's the money I'm going to lose in the future."

• Explanation: This quote highlights the speaker's belief in disciplined trading and the avoidance of luck-based gains, which are seen as unsustainable.

• Success in trading is attributed to passion, discipline, and the ability to withstand emotional challenges.
• Many traders fail due to a lack of long-term commitment and focus on immediate financial gains.
• The speaker emphasizes the anti-human nature of trading and the need for strategic withdrawal and risk management.

"A lot of people go into this industry because they see how much money they can make. Now I actually love trading."

• Explanation: This quote contrasts the speaker's genuine passion for trading with the common motivation of financial gain among traders.

"You have to be in this game long enough to see how yourself really behave throughout the years."

• Explanation: This quote emphasizes the importance of long-term commitment and self-awareness in achieving trading success.

• Many individuals who call themselves traders are often addicted to the thrill of the market rather than engaging in genuine trading practices.
• The mindset of successful traders involves competitiveness and a focus on personal performance rather than competing with others.
• True traders focus on the process and performance, with financial gains being a byproduct of these efforts.

"Do you feel like there's a lot of people who call themselves traders, but more so they're just addicted to the markets and therefore they probably should quit, but they keep trying because they're essentially addicted to the P&L?"

• This quote highlights the issue of addiction to trading, where individuals are more focused on the excitement and potential profits rather than the disciplined approach required for successful trading.

• Successful trading requires a deep understanding of one's own strategy, including specific metrics and thresholds.
• Traders should avoid impulsive decisions and instead focus on learning the statistical and data-driven aspects of trading.
• Recording and reviewing trades can help traders improve their strategies, similar to how athletes review game footage.

"If you're really aiming for a long game, you have to know inside out of your own strategy."

• This quote emphasizes the necessity for traders to have a comprehensive understanding of their strategies to succeed in the long term.

• Continuous evaluation and optimization of trading performance are crucial for success.
• Traders should identify areas for improvement in their trading process and create structured plans to address these areas.
• The focus should be on maximizing performance, not just financial gains.

"It's not about the money side; it's about how do I perform better, right? How do you control risk to the maximum and amplify the reward to the maximum?"

• This quote underscores the importance of focusing on performance and risk management rather than solely on financial outcomes.

• Traders should employ dynamic risk management strategies, adjusting risk levels based on confidence and market conditions.
• Immediate reinvestment of profits can help compound gains, but traders should maintain backup accounts for financial security.
• Diversification through external income sources, like investments, can provide financial stability.

"Make sure to set up two bank accounts for your backup account."

• This quote advises traders to maintain financial safeguards to ensure long-term sustainability in trading.

• Many successful traders are self-taught, learning through personal experience and informal mentorships.
• Building relationships with other traders can provide insights, but detailed strategies are often developed independently.

"It's more of a self-taught journey."

• This quote reflects the self-directed nature of learning and growth in trading.

• Traders should be aware of macroeconomic trends and potential market shifts, such as changes in political leadership or economic policies.
• Volatility provides opportunities for both long and short trading strategies.

"I think we will have probably a little bit more dip before we go up."

• This quote provides a personal market projection, indicating expected short-term market fluctuations before recovery.

• The number of trades taken can vary based on market conditions and the fit of trading patterns.
• Traders often focus on specific times of the year when trading opportunities are more abundant.

"Majority of the money that was made is between October to I would say maximum March."

• This quote highlights the seasonal nature of trading opportunities and profitability.

• Traders often set personal goals, such as reaching certain financial milestones or affecting market dynamics.
• The love for trading and the challenge it presents can be more motivating than financial targets.

"I just love the game. I love to trade."

• This quote captures the intrinsic motivation and passion that drives many traders beyond financial success.

• Speed in executing trades can provide a competitive edge, especially in securing limited shares.
• Fast decision-making is crucial when shares are scarce, allowing traders to capitalize on opportunities before others.

"Speed because shares back in the days are very limited."

• This quote explains the importance of speed in trading, particularly in acquiring shares quickly when they become available.

• The speaker discusses the importance of timing in trading, mentioning that they sometimes trade at unconventional hours such as 1:00 a.m. if an opportunity arises.
• They emphasize the need to adapt to market conditions and seize opportunities as they present themselves, even if it requires trading at inconvenient times.
• The speaker highlights the importance of having a flexible schedule to accommodate significant market events, such as elections, which can create unique trading opportunities.

"Sometimes even 1:00 a.m. I made the DJT trade at 1:00 a.m. Really? Yeah. It was crazy."

• The speaker discusses trading at unconventional hours when significant market opportunities arise.

"So essentially the opportunity was then at that time. So you had to just if you wanted to take advantage of it, you had to be there."

• The necessity of being present and ready to trade when market opportunities arise, regardless of time.

• The speaker stresses the importance of dedication and a strong work ethic in achieving success in trading.
• They note that many traders are unwilling to put in the effort required to replicate the success of top traders.
• The speaker emphasizes the need for continuous learning and adaptation to improve trading skills and performance.

"If you really want to be a trader, you can be a good trader. If you don't have the dedication, you won't be. It's very simple."

• Dedication is crucial to becoming a successful trader.

"A lot of traders they won't go above and beyond...making sure to even if it's inconvenient."

• Many traders lack the willingness to go beyond their comfort zone for success.

• The speaker mentions being inspired by a trader named Gratani, who made millions at a young age.
• They value learning from others' experiences and strategies, particularly focusing on thought processes and psychology.
• The speaker acknowledges that everyone makes mistakes, and learning from them is part of the growth process.

"At very beginning, Gratani. Yeah. He was the one that, um, I believe made millions when I was 19 years old."

• Gratani served as an inspiration for the speaker in their early trading career.

"Everybody makes mistakes. It's more about patience and more about being able to survive for this long."

• Mistakes are part of the learning process, and patience is key to long-term success.

• The speaker shares details about recent trades, including a significant trade in Holo that resulted in a $2.5 million profit.
• They discuss the importance of controlling risk and adjusting strategies based on market conditions and momentum.
• The speaker highlights the need for adaptability in trading, such as resizing positions based on market behavior.

"Last trade was Holo. Made $2.5 million. The thought process behind that is...there is not enough momentum to support that consolidation spike."

• The speaker outlines the reasoning and strategy behind a successful trade in Holo.

"Once it panics, I added more shares...then just went all the way to four."

• The speaker explains their approach to adjusting positions during market fluctuations.

• The speaker does not measure success solely by financial gains but by making the perfect trades throughout the year.
• They emphasize the importance of having a process-oriented approach rather than chasing profits.
• The speaker mentions using a calculator to track specific tickers and their performance, focusing on process rather than profits.

"I don't really track it by money wise. I track it by the calculator that I built."

• Success is measured by process and performance, not just financial gains.

"It's more about just...you only eat three meals a day. Start eating me 10 meals a day."

• The speaker underscores that lifestyle changes do not necessarily correlate with increased financial gains.

• The speaker discusses the importance of being dynamic with risk, knowing when to amplify it based on market conditions.
• They highlight factors that influence risk decisions, such as statistical advantages and profit buffers.
• The speaker stresses the need to concentrate entries during specific market conditions to maximize potential gains.

"You need to know when you need to amplify your risk."

• Amplifying risk is crucial when market conditions are favorable.

"For tickers that opens that you're expecting massive panic I would highly suggest that you concentrate maybe 50% your positions in one go."

• Concentrating positions during specific market conditions can lead to significant gains.

• The speaker discusses managing the mental toll of high-stakes trading, especially during losses or market crashes.
• They emphasize the importance of having activities outside of trading to maintain mental balance.
• The speaker shares strategies for dealing with self-sabotage and overtrading, such as reviewing account statements and identifying patterns.

"I tend to listen a lot of calm music, plays a lot of video games."

• Engaging in calming activities helps manage the mental toll of trading.

"Every week or every month. Go to your account statements, look at your losses."

• Regularly reviewing account statements helps identify and address overtrading patterns.

• The speaker highlights the role of intuition in trading, particularly in making exit decisions.
• They discuss how intuition is informed by experience and statistical analysis.
• The speaker stresses the importance of balancing intuition with data-driven decision-making.

"Intuition plays in into trading into your trading in particular? 20 30%."

• Intuition plays a significant role in trading decisions, especially in exits.

"You follow the average statistics...you exiting half and where you think it's going to drop more you exiting half but that's based on intuition."

• Intuition, informed by statistics, guides exit decisions during volatile market conditions.

• The speaker reflects on their journey and growth as a trader, acknowledging the importance of continuous learning.
• They express humility and a desire to keep improving, regardless of past successes.
• The speaker shares personal insights and quotes that resonate with their trading philosophy.

"The money you gambled and won will be doesn't matter how long will be will be lo you will lose in the future and more."

• The speaker shares a personal quote emphasizing the importance of sustainable trading practices.

"I want to I think it's actually doable. If I am in the perfect state, if I perform the perfect way that I think I will perform, I think it's doable."

• The speaker expresses a belief in the potential for continuous improvement and success.