Cam: Hey, it's Cam from Investors Underground. Welcome to another trader interview. In today’s interview we're speaking with Michele, also known as Offshorehunters on Twitter. She runs the blog TradeOnTheFly.com, and she's the moderator of the swing trading chat room at Investors Underground. We're going to be chatting with her for around 25 minutes today about her trading and also a couple of new things that she has in the pipeline at the moment. Nice to speak to you today, Michele. How are you doing?
Michele: I'm doing great. How are you, Cam?
Cam: I'm doing great. Thanks for asking.
Michele: Thanks for having me today.
Cam: I'm sure everyone’s very interested to hear about your early trading life. Can you tell us about how you got started with everything?
Michele: Sure. I've been trading full-time now for 13 years, and I had traded part-time for a year while I was still working in high-tech sales before I switched over to trading full-time. I had always had an interest in the stock market and just started dabbling in it, like I said, part-time when I was still working. It was during the height of the dotcom. When the company that I was working for lost all of its venture funding, I decided to switch over to trading full-time and focused primarily on the swing trading side of things, but day trade as well. The swing trades are what I really love and where most of my big gains come from.
Cam: Very cool. Through those 13 years, you must have really developed and refined a unique style of trading. Can you tell us a little bit about the style and also about the timeframe that you trade around?
Michele: The style and the timeframe that I trade in by day trades are even longer than most people’s day trades. My swing trades are anything from overnight to, I would say my average swing trade hold time is three to five or six days. I have had things that I've held for two or three weeks at a time. Primarily, I do all of my trading from a technical basis. I'm looking at charting. I'm looking at support and resistance areas to buy and sell, and looking for specific chart pattern setups to buy breakouts or breakdowns of those specific chart patterns.
Cam: You mentioned that you trade based on technical analysis. Can you tell us a bit about what you're looking for in a chart? I know that you use a few more indicators than some of the other traders that I've interviewed in this series. Can you let us know a little bit about those?
Michele: Sure. Through the years, I've tried many different technical indicators that are out there, and what I've developed for my particular style, I try to stick to the KISS method, which is just keep it simple stupid. The fewer indicators that I have and using the ones that I'm very familiar with, I think they work as guides, I guess, for myself to help verify the price action that I'm seeing in the stock. The ones that I prefer to use, I use different ones on my daily charts versus what I use on my intraday charts. On my daily charts, I like to look at the RSI, which is the relative strength indicator. I like to look at the MACD, which is the moving average convergence-divergence line. Then, I also have my 50- and 200-day moving averages on my daily charts. Then, on my intraday charts, depending on the timeframe that I'm trading, I talk about this in my webinars a lot, I really like to use the 60-minute charts. I use the 50-period exponential moving average. Then, I love to use the slow stochastics with that to help determine the overbought and oversold levels intraday as I'm trading to help, along with those support and resistance lines that I draw on my charts to help determine good risk-rewards areas to make my entries from.
Cam: That's really interesting. Out of all those patterns, when would you get really excited about a chart? What would it have to be showing you for it to really perk up your interest?
Michele: I think it depends on the daily charts. I like bull flags a lot. We're in a bullish market currently. I tend to trade more in this market from the long side. People don’t know that I am a bear at heart and I actually love shorting, but because we're in a bull market, I really like the bull flag setups. They seem like they're more reliable, at least in my experience, and those tend to break higher and they take less time to develop. The other patterns, though, that I'll say that I do really like are the ones that spend a lot of time consolidating and coming off the bottom. So, rounding bottoms and the cup and handle patterns, I really like because those bottoming processes, they take time. It takes a long time on the daily charts for those to develop, and I feel like that the amount of time that those stocks that I find in those patterns, in those bottoming patterns, when they do usually come and break out of those patterns, those breakouts are usually reliable and you know that that stock is spent the amount of time that it needs to spend working on that bottoming process. Usually, you'll get a move out of that area that can be sustained. I also really like the triangle patterns, too, because you can play those either waiting on your daily chart for the breakup or the breakdown of the triangle pattern, but also while that pattern’s developing as that pattern develops, you can have some swing trades inside that pattern and even some intraday trades as well off of those support and resistance levels of that triangle pattern as it develops. Even though that pattern hasn’t broken out yet, as it develops it can give you some nice trades inside that pattern, and you know what's going on with the stock and the stock’s acting as expected.
Cam: So, rewind back to the beginning of your trading career. Maybe when you were in the first few months of trading, what kind of signs or signals do you have that told you that you were good at this and that you could entertain doing it full-time for your living?
Michele: Things were much different when I started trading than they are today. When I started trading, the e-Trades and the Ameritrades were just coming online. More people were able to trade on their own. You didn't have to trade through your D.A. Davidson or your Morgan Stanley broker and get charged $200 or $300 for a trade. It was very new. We didn't have chat rooms and we didn't have Twitter and we didn't have the access to information that is so readily available now, which I wish I had had back then. I think my learning curve would have been much shorter if I had had that, and I didn't have a mentor. I had gone to Montana State University and gotten my degree in finance. Like I mentioned earlier, I had always had a really strong interest in the stock market, and I always had had this feeling out there that there was something that I was meant to do where I could be my own boss. I wasn't going to be capped by an hourly rate that I was getting paid or a salary annually that I would have a lot of flexibility in what I would be able to make.
I had felt that for a long time, and when I stumbled into the trading world, I just felt like I had had my niche. I had lots of early success using the charts. I had lots of books that I had bought and studied very hard, reading my books on technical analysis and that was the way that I had chosen that I wanted to trade. But like all new traders, that early success led to failures as well. I got too big for my britches and nearly blew my account up twice, and learned and am still learning that you have to have patience and having a plan moving forward. In my early trading career, I didn't necessarily have a plan. I had a journal and I would write stuff down. I just wanted to make money. As I saw my account grow, that's what I was looking for, was the way that I could make money and continue to make money very quickly through the trading, like I had mentioned earlier. I wish the availability of the information—I just didn't have it back then. I was trading at my house, in my room off of charts. Having a mentor, I think, would have been really helpful.
Cam: What kind of goals do you set for yourself on a day-to-day, week-to-week, month-to-month kind of basis? How do you track and measure your own personal success?
Michele: I think now, obviously still to continue to make money, to try and make less mistakes in my trading, to be more patient. It seems like I'm always working on that, especially since I'm a swing trader. When I go back and look at charts and setups that I've had off and I wish that I had more patient with the setup. I guess some of the goals and some of the things that I enjoy now, working with Investors Underground is just helping some of the new traders hopefully find a path that makes sense for them and picking and choosing things from different traders that can help them be profitable more quickly. I really enjoy working with the people out there. That was something that obviously, I didn't do early in my trading career, but feel like at this point trying to give some of the knowledge that I have learned through the school of hard knocks back to maybe some of the newer people that are starting out. Hopefully, their learning curve is shorter than mine was.
Cam: Sort of like the mentor that you never had.
Michele: Yeah, exactly.
Cam: How was it that you found Investors Underground yourself?
Michele: I had stared out in another chat room for a few months that didn't fit my style of trading, and my personality type. I think in that chat room, when I was in there, I saw somebody mention Investors Underground. I went over and checked it out and definitely felt more at home and really liked Nate and moderators that he had in there at the time, and really liked the clean format of the room with good alerts and not a lot of the other garbage that went along with the other chat room that I was in. I think that was about four or five years ago now. I'd have to go back and look exactly, but that's how I found the room. I just love the room. It's grown through the years and just a great group of traders in there and lots to learn, for sure.
Cam: It was probably around a year ago now that you and Nate teamed up and started the swing trading room at Investors Underground. Can you tell us a little bit about that?
Michele: Sure. The swing trade room, we started the first of this year in January. I had been suggesting to Nate for a while, really, I think since I first came onboard because of my style of trading that I thought that there was an opportunity out there for people who maybe can't be in front of the screen full-time due to maybe they work. They're not trading full-time or maybe life commitments or people that are just interested in a slower trade style. I thought that having that option out there would be a great addition to the Investors Underground community. The first of this year, we went ahead and started the swing trade room. I think it's been a good addition, and it's a different style of trading. The room is, we're a little quitter, not as many setups, but definitely putting quality setups in there, and we're trying to set it up where it's a good learning environment for newer traders or people who are trying to learn some of the charting and the technical analysis. We give a lot of examples in there during the day and can have some discussions in there on the setups of the stocks or discussing some of the things that are going on in the market.
Cam: Very cool. What kind of feedback have you been receiving from the members who’ve been spending some time in there?
Michele: The feedback that I've gotten so far has been very positive. People like the feel of the room. It's a little slower trade style in there. We do both the day trades in there and obviously, the swing trade setups that we're looking for. Even on our day trades, they tend to be a little slower in nature. We're looking for the same types of setups that I'm looking for on my daily charts. We're just doing that on a smaller timeframe, usually off of the 60-minute and the 15-minute charts and often get moves. We're looking for the breakouts or the breakdowns or pushes off support. We get some really nice moves in there, even on our day trades. We're getting a lot of stuff that's moving $.50 to several dollars during the day for those that might be looking for a little slower style day trade. I think people really like the availability, I guess, to ask questions. I've been trying to encourage people to put some of their questions in the chat room so we can all benefit from the question as well as the answers that they're getting on it from me. Then, also from the other moderator in there, Tim Parker, who’s autumnalcity. He's the other moderator in that room and does a great job helping the members of that room. We've got some great traders in there as well who are always willing to help out some of the new folks in there.
Cam: It sounds really positive. I noticed last year that you verified over half a million dollars in profits in a single year of trading. Is that your best year-to-date?
Michele: Sure. I did verify last year on Profit.ly, and last year was my best year. I have typically been in the six figures on my trading year over year, but last year was my best year. That was definitely good. It was a great year for me.
Cam: What would you say was the highlight ticker that you really crushed a trade on that year?
Michele: Last year, I think FNMA was my biggest gainer, and definitely it had a great run last year. I was in and out of it a couple times. Like always with some of my swings, I look back and wish I would have bought and sat still and been patient through the whole ride, because I never catch all of the moves, but I always feel like if I can catch the meat and catch the middle part of the move, then I'm doing pretty good.
Cam: Back to the teaching side of things, what is it you find the most rewarding thing about helping new traders and sharing quality information?
Michele: I think that when I was a kid growing up, we lived obviously, here in Montana. I started giving riding lessons at the age of about 13 and gave riding lessons all the way through high school and college. I think that the teaching part in me, I just have always really enjoyed helping people. I get a lot of gratification out of that. I like seeing people succeed and be successful and have the lightbulbs go on. It doesn't mean that they have to do things exactly the way I do them, but if they can take things, take ideas from what I do and add that into their trade plan and come up with something that's going to help make them successful, I love that. I like watching people succeed and do well. I think that trading’s definitely a hard path and not everybody makes it trading. I think it offers a great lifestyle and a great way to earn a living and a lot of flexibility, and pretty lucky to be able to do it. So, if I can help other people find success there, I get a lot of enjoyment out of that.
Cam: For quite some time now, you've been running a pretty popular blog at TradeOnTheFly.com. Can you tell us about the vision behind starting that and some of the exciting things that are happening in the future?
Michele: Sure. So, Trade on the Fly, I started blogging a few years ago and doing swing trade chart setups and do the updates two to three times a week. We have a complete new look and feel of that that's getting ready to be launched here shortly as well as a service and an upgraded offering that we haven’t had there before. People will be able to still have the scans and access to a webinar, but they will also be able to have access to a private Twitter feed that I will be doing, the scans, the webinars, as well as access to the swing trade chat room. I think the big thing with Trade on the Fly and the charts that I do for people, everybody’s lives are busy. One of the biggest questions that I get over and over again from people is they want to have my scan recipe. Literally, the way that I scan is, I have hundreds and hundreds of charts stored in my stock charts account, and I go through those. I'm always adding and deleting charts to that.
People always say, these stocks that you're coming up with, there's a big variety in the things that you come up with. People are always wanting to know, where are your scans coming from? My scans are literally coming from me combing through hundreds of charts every day. A lot of people are busy in their lives. They don’t have time, maybe, to do a lot of scanning and what Trade on the Fly offers them is quality setups two or three times a week, and I've recently made some changes in the way that I've been doing then to be able to update and do notes on the charts so that people can follow the trade through or if the trade doesn't trigger, we take it off. I'm always adding new setups on there. What it's really offering people is the high-quality swing trade setups with specific breakout levels or levels of support that we're watching that it needs to hold at and potential price targets. If it's a specific chart pattern, we can talk about that in my notes on that of where the price may be going or what the next area of resistance is that makes sense to take profits at. I think it's a great option for people who are looking for setups that just don’t have time in their lives, maybe, to go out and do tons of scanning and tons of homework every single night. It offers them the option of some great setups multiple times a week.
Cam: It's sort of like people want the recipe, but you're saying the main ingredient is time and sweat. So, you spend all the time going through hundreds or thousands of charts, and they end up getting a snapshot of what you think is worth watching. What kind of format does this end up getting condensed into? Are we talking about a handful of tickers or charts with commentary?
Michele: Correct, yeah. Usually, in my scans when I do them, I try and do updates on the ones that need to be updated. Some of them are just spending time consolidating so there's no additional comments on those, but anything that's moved up to a resistance area or maybe has fallen back to support, I can comment on it. Then, I'm adding in two to four or five new setups with each scan, depending on the market conditions and what I'm seeing. I'm trying really hard to focus on what I think are the best setups. It would be easy for me to throw 20 or 30 charts out there, but I've tried to really condense it down to the stuff that looks to me like it's very ready to move or will be moving in the next couple of days so they can put it on their watch list. They can put an alert out there for looking for a specific breakout area so that they'll be able to trade that as it moves.
Cam: You mentioned that you also do webinars every two weeks. What are the format of these? What can members look to gain from attending those or watching the past one in the webinar archive?
Michele: The webinars that I do are usually between an hour and two hours long. I open it up ahead of time for members to be able to send in any kind of questions that they have either on the type of trading that I do or specific questions if they're having issues in their own trading, as well as chart requests. I can have all that material prepared ahead of time and go through that with chart examples, live audio. Then, at the end of every webinar as well, if additional questions come up, we can go through those and I can give specific chart examples or talk through the issues or the questions that people may be having. Then, we also spend a bit of time where people like to send in or ask questions on maybe charts that they're watching or thinking about, and I can put those charts up on the screen for them and we can go through those. We usually go through those. I start out by looking at the daily views of those charts and then we break it down and look at the intraday chart, usually the 60-minute chart on those as well. I can draw my support and resistance lines and tell them what I see on the chart.
Cam: A lot of the listeners to our YouTube channel would have probably already seen Nate’s first DVD, Textbook Trading, or the most recent release, Tandem Trader, but something they might not know is that for the last six months, you and I have been working together using your experience and expertise in swing trading and some of my experience from making Nate’s DVDs to create a comprehensive crash course of your strategy condensed into around eight hours of lessons to give people the foundation of knowledge to understand the key concepts of what you're looking to achieve from your trading every day. Can you tell us a little bit about the progress of that project?
Michele: Sure. I'm working on a swing trading DVD, and we're looking at having that ready to go January of this next year. What people can expect from that is the basics of swing trading, understanding swing trading and the technical analysis, the viewpoint that I bring to swing trading, which is using the charting, using the technical indicators, why technical analysis is important. Risk management, entries and exits, and then how I apply the indicators and the charting patterns into my own personal trading. All of that will be in the DVD and lined up for everybody.
Cam: I don't know if you can tell, but I'm pretty excited myself to be able to release that for everyone pretty soon. What's the future hold for Michele’s trading?
Michele: Well, I hope for the future of my trading I just continue to get better as a trader. That's one thing I love about trading is, I feel like I could do this for 300 years and never know everything. I like the challenge. Every day is a new day, and just continue to do well trading and enjoy helping new people and new traders as they come into Investors Underground and become part of the community there. And lots of fly fishing.
Cam: Well, Michele, I really appreciate the time you spent with us today to give our listeners some kind of insight into your strategy and style of trading. I also wanted to take a moment to say thanks for all your hard work running the Investors Underground swing trading chat room. I'm really looking forward to spending some time checking out your sister site service at TradeOnTheFly.com, and I'm really excited about finally releasing the swing trading DVD with you in January 2015.
Michele: Well, thanks for taking your time to visit with me today. I sure appreciate it, and look forward to meeting some of the new chat room members out there and maybe just new members of Trade on the Fly. So, I'm excited about the future for sure.
Cam: Thanks again for your time.