What Steps Do You Take Daily To Approach Trading? Derrick Oldensmith, Senior Trader and Managing Supervisor for T3 Trading Group
Derrick Oldensmith is a Senior Trader and Managing Supervisor for T3 Trading Group, LLC and VP of Trading and Education for T3 Live, LLC. Derrick first joined T3 Trading Group as an equity trader in 2011 and has been running a trading desk for the company since 2013.
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Transcript
00:00 Talk about your typical setup, because you started saying,
00:02 you take the top-down approach every day.
00:04 I've been trading, and I was with Bright Trading.
00:06 You're probably familiar with Bright Trading for 23 years
00:08 as well.
00:09 I trade on my own now, just through IB.
00:11 But I have a typical approach where I do the same thing
00:14 every day, routine.
00:15 I wake up, I do this, I do that.
00:17 It's steps.
00:18 It's the same steps every day.
00:19 Can you just go through those steps?
00:21 Because the chat knows my steps, because I've
00:22 talked about them multiple times.
00:24 But it's nice to hear other professional traders,
00:26 the steps that they take.
00:27 From the minute you wake up and get to your desk,
00:30 what's the first thing you do to get to where
00:33 you're trading the open?
00:34 Sure.
00:35 So I agree, routine is a big part of this.
00:38 And preparation is huge.
00:41 I think that I make most of my money with the work
00:44 that I do pre-market.
00:46 That's my preparation.
00:48 So I'm actually also a retired professional fighter.
00:50 I fought professional kickboxing for over 10 years.
00:54 I had won two world titles and two weight classes.
00:56 And what we always said in that sport
00:58 is that the fight is won and lost in the gym
01:02 before the fight.
01:03 And then the fight itself, when you're actually in the ring
01:06 and you're in front of all the people,
01:07 that's just about executing the six to eight weeks of work
01:11 that you had just done to prepare for that moment.
01:14 Markets and trading, to me, it's the exact same thing.
01:17 My battle with the market, for the most part,
01:19 is won or lost before the bell actually rings.
01:22 930 to 4, it's about execution of the game plans
01:26 and ideas and thought processes that I created for myself
01:29 before the market actually opened.
01:32 So I usually wake up pretty early, 5:30, 6 AM.
01:36 First thing I do, roll over, grab a cup of coffee,
01:39 and log into my trading system.
01:41 I keep swings every night.
01:46 So I combine day trading and swing trading.
01:48 I probably haven't gone home flat in seven years.
01:51 So the first thing I'm doing is I'm seeing
01:52 where the market is gapping.
01:54 So for example, I have a position in Chewy.
01:57 Chewy got an upgrade.
01:58 It's up pretty big this morning.
02:00 It's potentially breaking out a little bit on the daily chart.
02:03 My game plan said, into the price
02:05 in which it was gapping up to, that I'm supposed to sell stock.
02:08 And I'm a big believer in following game plans.
02:11 I think that game planning and risk management
02:14 are really the key to success in this business.
02:16 I think whenever anybody tells me about any psychology issue
02:19 that they have with their trading,
02:21 they hold their losers too long.
02:23 They get out of their winners too early.
02:25 I think that the counter to that is having good game planning
02:29 and just following through with the game plans
02:31 that you've already created for yourself.
02:32 Because it doesn't matter how you're feeling.
02:34 Doesn't matter if you're feeling nervous about the position
02:36 going against you, or you're like, oh my god,
02:38 I'm up a little bit of money.
02:39 I better take this off the table.
02:41 No, what is the preset game plan that you already
02:43 created for yourself telling you to do?
02:46 So any swing position that I have already
02:48 has a preset game plan.
02:49 I get a little bit lucky, like I did this morning.
02:51 And it's definitely luck when you're in a position already
02:54 and it gets upgraded.
02:56 Well, my game plan says I got to book a little bit of profit
02:59 at these prices.
02:59 So I was immediately selling some stock
03:01 at probably 5.45 or so this morning
03:04 when I first logged in.
03:06 So I get an update on all my swing positions,
03:09 and then I really start my research process.
03:12 My research process is an update on all pieces
03:15 of information and news.
03:16 I take a look at a lot of institutional reports
03:20 that come out of the big banks, specifically
03:22 for the flow and sentiment information
03:25 that I was kind of already providing.
03:27 That's how I know that the pension funds are
03:29 due for a $5 billion buy rebalance
03:31 into the end of this month.
03:33 So I pay attention to that data.
03:35 That's how I know that the blackout window for buybacks
03:40 is beginning to end, especially when
03:42 we can get through Apple--
03:43 Apple being one of the biggest companies that does
03:45 buybacks in the entire market.
03:48 Then I go through the market technicals themselves.
03:51 How are we gapping?
03:52 How do I want to game plan myself around the market
03:55 based on how we're gapping?
03:57 Market always comes-- stocks have a very strong correlation
04:01 between what the market's doing and what
04:04 that stock is doing, obviously.
04:05 Hey, Derek, can I hop in here one second?
04:07 I know we're getting up against the clock.
04:10 Just tell us about, real quick, what was your setup on Chewy?
04:13 I mean, they made multiple lows in the same area.
04:15 The stock has just been a serial underperformer.
04:19 I mean, it got a distance itself from the lows, a minor breakout.
04:23 Just tell us your setup and what you got into it.
04:25 It was great you're following your plans,
04:27 but what was your setup?
04:28 What was your trigger on that one?
04:30 Sure.
04:30 So stock is brutally beaten up, right?
04:33 We all know that.
04:34 I think at one point in the end of September,
04:36 there were statistics that was coming out that was saying it
04:39 was the most oversold S&P 500 stock in the market.
04:44 What does that mean?
04:45 It doesn't mean come in and buy it just because it's
04:47 an oversold stock.
04:48 If anything, it means the opposite.
04:50 It means be careful.
04:51 You could look at it and say it's cheap at 24,
04:54 and then by the time it's at 1650,
04:57 you're in a world of hurt before it potentially turns up.
05:04 But what you can see here is in mid-October,
05:09 it started to actually show a good bit of relative strength
05:11 compared to the market as the markets continued to sell off.
05:14 This thing actually started to create a base around this 1650
05:19 area.
05:19 And if you compare that to the market,
05:21 relative strength, relative weakness
05:22 is a big thing that I pay attention to.
05:24 The markets just continued to fall out of bed,
05:26 whether you're looking at the average growth
05:28 stock that's out there, or the IWM, or the SPYs itself.
05:32 This chewy has started to hold in.
05:34 And then it finally gave a day one initial breakout candle
05:38 here on some volume back on October 26,
05:43 where it was able to bounce off that base and continue higher.
05:45 So for me, that's a signal.
05:47 I had already started to build into a position.
05:49 That's a signal to get a little bit more aggressive.
05:52 This thing's beginning to tell me the right things.
05:54 It still has a lot more work to do.
05:57 Then if you go back on the 27th, which is a more recent day,
06:00 I actually like that little rest day right
06:02 into the 2021 EMA, which is a market this thing has not
06:05 been able to get above since it broke down from $37 back
06:11 in July.
06:12 I like that rest day.
06:13 I like the relative strength again,
06:16 which has helped a little bit with the market yesterday.
06:19 And I was calling this thing out for continuation
06:21 above 18 quarter yesterday if it was able to go.
06:25 And then it did that in a small way.
06:27 It wasn't a fantastic close yesterday,
06:29 but then I was a little lucky with the upgrade this morning.
06:32 It was a position that I was already in.
06:34 I'm looking to see if I can get a move into the low 20s.