Investing Podcast
How This NYSE Floor Trader Found His Edge With Technical
Indicators
Mar 4, 2024|JUSTIN NIELSEN, MIKE JUANG, ALISSA CORAM, LILI
BORNO
It's not about knowing the technicals, it's about putting
them to work. Long-time NYSE floor trader Jay Woods of Freedom Capital Markets
talks about technical trades, risk management, and the value of writing paper
notes on your trades (yes, by hand).
00:00:09:24 - 00:00:14:00
Unknown
So with the algos, you mentioned the algos come in and the technology and
everything like that.
00:00:14:03 - 00:00:34:25
Unknown
How did how did that change your, I guess, sense of from the open outcry, the
psychology, the the sweat that you could actually smell, you know, when when
there was fear in their eyes to, okay, now it's just all being done by
computer. Well, that's that's where the technical analysis really came into
play because you had humans in front of you.
00:00:34:25 - 00:00:53:14
Unknown
You could see human behavior. You could hear a buzz on the floor of the New
York Stock Exchange. You walked the floor. Now you hear humming of computers.
You don't know if the Dow was up 200 or down 200 back then. You knew you could
tell by the attitude, tell by the smell in the room. So the technicals are what
always gave me a little advantage.
00:00:53:14 - 00:01:12:08
Unknown
I credit it to why I went from 330 and survive to 15. I was always one of the
top producers. I was always somebody people could talk to because they didn't
understand the charts. What levels are you looking at? J And I would tell them,
it was technicals. There's always if this then that. So I would get them
prepared.
00:01:12:08 - 00:01:43:03
Unknown
If it does this and be prepared for that. And being on the floor risk
management, which is always job number one, Job number two and job number
three, each other before his launch. But job number one, two or three is risk
management. Technical analysis is the perfect tool for that because if
something changes, you have to change. I'm not going to just watch the computer
screen and get run over because something broke out of bubble level or, you
know, we had a little cross from the undersold oversold to just back above 30
on the RSI where you can use border bands.
00:01:43:03 - 00:02:03:19
Unknown
I used every little indicator, anything that I thought gave me an edge, but the
technicals are what really help me explode my career from a trader and made
myself more relevant to the trading community. Because not everyone understood
this and I had a good understanding to grasp and I could talk about it in a way
that was relatable to many people.
00:02:03:19 - 00:02:20:00
Unknown
Come on, and I can do it too. I could talk about each chemical cloud again and
and Fibonacci levels all you want. You know, you want to go there and let's go
there. You know, I realized when you're talking to people, when I do these
shows, I do it for an audience of one. That's my mother. My mother can
understand what I'm talking about.
00:02:20:06 - 00:02:38:08
Unknown
I'm doing a good job. I know you guys can understand it, but I want a general
audience to have an idea. Okay, We want to buy it. If it does this, this is how
we do it. This is how we manage risk and then make the trade their own. I'm not
here to give advice and then, you know, get yelled at for being wrong or
praised for being right.
00:02:38:15 - 00:02:56:11
Unknown
I want people to know the setup, what they're getting into and how they should
play it once they do. But knowing first and foremost, manage risk. And maybe
that made me a very boring person, a scary person, because when I bought
something right, I still I think of the downside before I think of the upside.
Am I going to cost average into this trade?
00:02:56:11 - 00:03:13:09
Unknown
What am I going to cut bait? There are so many different structured products
and stocks you can trade. Don't get married to one and too many people didn't.
I saw too many people blow up over there. Yeah, you know, and I got to credit
your Uncle Ralph because he is such a genius in terms of keeping a lot of the
things simple.
00:03:13:09 - 00:03:30:28
Unknown
And for those people that don't know, Ralph Acampora, of course, is he's the
one that kind of started the CMT program, the chartered market technician. And,
you know, when he was on our show not too long ago, I mean, it was like, hey,
is it in an uptrend or not? You know, are there higher lows? Are there higher
highs?
00:03:31:02 - 00:03:54:16
Unknown
It's, you know, sometimes just that simple. So they're very good stuff. Arusha.
What what what did you have? Yeah, well, first, you know, Ralph is the
godfather. So given what I want when I was also my godfather. So full analysis.
I don't know. Yeah, but Jay, talking about the indicators, you know, after you
learn because especially going through the CMT program, you learn about tons
and tons of different indicators and they're all super cool.
00:03:54:19 - 00:04:11:15
Unknown
Well, how did you evolve? Did you, did you find yourself after using them a
number of years that you kept them or did you reduce and try to simplify? How
did you evolve during your time? no, I keep evolving with those indicators. I
try to keep it simple. So I was blessed when I studied for my CMT exam.
00:04:11:15 - 00:04:23:21
Unknown
Guess where I was? I was on the floor of New York Stock Exchange. Well, guess
what I did? I was a market maker. I had access to buy and sell stock like no
one did. Was it really my money? But I treated it like it was and I was buy a
stock based on we're studying Bollinger bands band.
00:04:23:24 - 00:04:56:26
Unknown
Okay. It just broke above the midline of the Boulder band. It's out of the
whole of your band coming back in. I would test different indicators every
single day, one to help me study for the exam and to put it to work. That's the
only way you really learn is if you kind of put it to work. So paper trade,
write notes as you're doing these indicators, the indicators that work for me,
the simplest ones or Mac D crossovers with your RSI levels, especially when
we're oversold, we go to, you know, when we're oversold and we go back, we're
oversold, we go back below 70.
00:04:57:02 - 00:05:22:16
Unknown
I probably want to sell it oversold. Does it mean you have to sell the stock?
It means it may be getting a little toppy here or trend sideways for a little
while. So those are the simple ones moving averages and VWAP trading. My
relationship with Brian Shannon started in CMT when I brought him to the floor
of the New York Stock Exchange when I was on a panel and I said the biggest
change in the industry is people don't care about price when they come in and
they ask me, How's IBM look this morning?
00:05:22:20 - 00:05:40:17
Unknown
They don't care. It's down to dollars. They want to know the volume. 20,000
shares. Here's 2000 shares to buy. I just want to be 10% of the volume. So I go
up right down and he sat with me as we opened IBM, ironically enough. And he he
was floored. Then all they cared about was volume. Everyone was volume
weighted, average price.
00:05:40:22 - 00:05:59:05
Unknown
And, you know, I will take a little credit. Brian said nice things about me in
his book. I was part of the inspiration for him to write that second book,
which he had to do because he was onto something so big. So any day Trader
Swingtrader that's not using average volume weighted price, then they're
missing out because that's what everyone does.
00:05:59:10 - 00:06:16:11
Unknown
And the thing that scares me because only price pays is when I was trading on
the floor, you know, your job was it to be average. Your job was to do very
well. I didn't go the average, but the way people execute stock, if they're
average or God forbid, they beat it by a penny, you did a great job.
00:06:16:11 - 00:06:35:12
Unknown
You're getting rewarded with more order flow. It's hard for me to fathom, but
that's the way it is. And so if you don't know your VWAP levels and you're not
following that, you're missing out on what's really happening behind the
scenes. And then algorithmic trading rocket stocks that stop to the penny on 50
day and 200 day moving average.
00:06:35:12 - 00:06:53:10
Unknown
It floors me that it's happening like an apple. This week it rallied on the
news that they're not making a car Don't get me started which rallied on that
news where did it rally up to a flattening 200 day moving average to the penny
and then it came in. Tell me that's not algos behind the scenes.
00:06:53:15 - 00:06:53:25
Unknown
That's amazing.
00:06:53:29 - 00:06:55:00
Unknown
Yeah, absolutely.
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