Paso Milak Interview

Transcript

Cam:
Hey, guys. It's Cam for Investors Underground. It really is my pleasure today to get to sit down with a member of the Investors Underground community who’s really been making moves on the long side recently with some of his bold positions and size on a number of beat-up charts. We've got a real decent chunk of time blocked out to go deep into some of his thoughts on strategy, timing, psychology, and other topics that we sometimes don’t get a chance to go over in some of our shorter interviews with IU members. I've been looking forward to this interview for a long while now. A big welcome to Paso, aka P_Mil.

Paso:
Great. I'm excited.

Cam:
For the people who are being introduced to you for the first time, let us know a little bit about yourself.

Paso:
Yeah. My name is Paso, P_Mill in chat. I live in Dallas, Texas. I just turned 29. I've been trading for about four or five years now, and I joined the community within a couple of months of starting. I've been with IU for a while now.

Cam:
Nice. I've always been meaning to visit Texas. Were you born and raised there?

Paso:
No. Actually, I moved here from Bosnia when I was about five, six years old. I don't know how much you guys know about the history of Yugoslavia, but a war broke out, basically, in the early ‘90s, and my parents were forced to flee the country. We came here as refugees. A lot of bad stuff was happening. We were pretty lucky to get out when we did. I've been here ever since I was a little kid. Started school here. I'm almost a citizen, so going through the naturalization process right now.

Cam:
Very cool. I can't detect much of an accent on you. Did you learn English while you were in Bosnia?

Paso:
I learned everything here. I was pretty young when I came to the United States. I've got a couple of siblings, and they have an accent. I don’t think I do. People will generally ask, oh, where are you from? When I tell them my name. I say Bosnia, and they're puzzled, like, where is that? I've got to give them a little bit of a background to where Bosnia is and the history behind it. But no accent, and English is not my first language.

Cam:
Tell us a little bit about when you were first introduced to the concept of trading.

Paso:
As an immigrant, your parents are generally pushing you to either be a doctor or a lawyer, because that's all they know. That's stability to them. Through college, my plan was to go to law school. Was in undergrad at University of Missouri in Columbia, Mizzou, and taking pre-law and prepping myself for law school. Got to law school and within the first semester, I was like, this isn't for me. It was absolutely dreadful, boring stuff I wasn't really interested in. I dropped out, and I got a job at a—it was a startup pharmaceutical company. The ticker symbol is SUPN, Supernus Pharmaceuticals. It was just getting off the ground.

At the time, I didn't really know much about the market or anything, really, except from taking one finance class in college. We got an equity piece in a stock options package, which I never paid attention to. My main focus was how much money am I going to make? What are my commissions structure going to be like? And things of that nature. A couple years had passed, and we had this big celebration at the company. We had crossed a billion-dollar market cap or whatever the—I don’t really recall, but everybody was all pumped up about it, and I didn't really know what it means. My manager was like, it means the value of the company has gone up, your stock, and all this stuff. I was like, I don’t really know anything about that.

When I started working at the pharmaceutical company, I was living at home and ended up moving out. All the mail went to my parents’ house, so I never opened up a letter from Fidelity regarding the stock options piece until I went home and actually found one. I saw this chunk of cash there. I'm like, what the hell is this? How did I get this? I realized that in a couple of years, I had made more money in stock than I did working at the company as a sales rep, salary and bonus included. I was like, can I cash out, or can I take this money? And figured out, this is what I want to do with my life at the time. That's how I found the market, through that job. I ended up quitting not soon after, and thought I was just going to start trading and make a bunch of money right after that, which didn't last very long.

Cam:
Right. I'm curious as to what your parents’ opinion of all that was.

Paso:
My parents have no idea what the stock market is. They really don’t understand the concept of it. My parents are high school education. Especially coming as immigrants, all they're focused on is, get a nice, steady job that pays you a paycheck. You get health insurance. That was their primary concern for me and what they wanted me to do. When I told them I was going to quit and do this for a living, they were just shocked. It was already a disaster, me quitting law school, and we were still on edge there. Now it was like, now I'm going to quit this job that I—because I was doing relatively well, and now I'm telling them I'm going to quit this job and go out and trade stocks. I guess it was scary for them.

Our families are relatively close together. You're very bonded because you're in this foreign land and you don’t really know much about it. Ever since I was a little kid, I saw my parents struggle with money, and it was always an issue. We have these bills and this, and you can never make ends meet. My mom was working. She was cleaning houses during the day, and then she would come home, and then she would work at this sewing factory. She had two to three jobs. My dad was always on the road. He drove a semi-truck. They worked extremely hard, but it was very difficult still to make ends meet and to make money. Just seeing them struggle as a kid, I've always said to myself, whatever it is that I'm going to do when I grow up, my main focus is making money.

That's why I wanted to go to law school. Attorneys are supposed to be paid generally well. A sales job was okay, but just by luck and by me finding the markets through that job, figuring out and seeing the opportunity to be able to take care of my family and make sure they were okay, because they were always living in a sense of fears. You're going to lose everything. You're going to lose everything, because they did. They did go through that. When the war broke out, they lost everything. You lost your home, your land. Any trucks, cars, whatever you had, you had to forfeit all of it and leave it. It was extremely scary for them. Just going back to my main driver was, I always wanted to make money. When I discovered the markets, I was hooked instantly. That's how I started to find my way.

Cam:
It seems like a bit of a Catch-22 for some of these companies offering stock options, because if everyone works really hard and their share price goes up, I imagine it becomes harder and harder for employees to get up in the morning and go to work when they've got a ton of options sitting in their account waiting to convert to cash.

Paso:
I imagine so. Again, over time, I never paid attention to it, so I never really knew until we had hit this milestone. I had no idea what was going on, but I was the first wave of 40 reps that was hired. We were generally given more stock early on, and the stock went from $4 or $6 relatively quickly into the $20s, and then it doubled again. As the value of the company started to go up, they were giving out less and less stock. I could assume that, yes, people would leave or wouldn't be incentivized to work. I guess for me, it was the right place, right time scenario, where I did get in early. I didn't touch any of it until later on. It all worked out in my favor.

Cam:
You've got a bunch of money, and you're ready to trade and become a millionaire. What happened next?

Paso:
After I quit my job, I had gone into thinking, I've got a nice chunk of money. I can go out and I could replicate this process of buying low, finding companies that were cheap, and selling them at a higher price. Simple, right? Quickly, I realized that that was not the case. I'd quit my job, so I was solely focused on this, but there was no more money coming in, and I was losing a lot. I'd joined a room initially, and it just wasn't fitting. There was a lot of stuff happening. I didn't really think I was getting any help. I would ask questions, and I wouldn't get a response. When you're new, it's such a challenge and you're like a deer in the headlights. You have no idea what's going on. You just feel so lost.

I was like a lone wolf in it. Even then, I was a little hesitant to ask questions. When you did, it just felt like nobody really cared. A month after I got into this room, I had left, and I discovered Nate on Twitter. I was searching one of the stocks I was in, and I saw Nate posting something about it. I clicked on his page, and it had a direct link to Investors Underground. I joined, and it was just a completely different dynamic. There's guys going long, short. There was game plans written out. In the morning, pre-market, guys are calling out, hey, this is what I'm looking for. Long, short. This level, this level. I was like, shit, this is awesome. The biggest thing for me was, up until that point, I wasn't really getting any questions answered. I was still so new to this. I remember I was so hesitant to ask Nate a question, and he would always respond.

It meant a lot. When you're new and somebody’s saying, hey, this is what I think, it was like, whoa. Somebody actually gives a shit or actually cares about what I'm doing. I've been in IU ever since then. Besides that, I did struggle. I was trading all kinds of stocks. Chasing mostly. Stuff was gapping up. I would chase, and I would get slammed on. It was mostly junk stocks. Just the typical stuff you see now, like some piece of shit company running, and me jumping in and just getting—it would just roll over on me, and I'm taking a loss. Day after day, it seemed like a challenge to make $100. I remember my first winning trade was $82. Up until then, I think I'd lost like $5,000. It was ridiculous. I'm like, how is this so hard? Plus, I had the stress of my family.

I was out of work. All the money I had was used in trading, and I wasn't making anything. Then around 2014, at the end of 2014, my dad suffered a massive stroke. Complete paralysis. Couldn’t walk, couldn't talk. It was just terrible. Then two months later, my mom almost broke her neck. She got rear-ended by some guy flying off the highway. Both my parents were out of work, and now it was up to me to take care of my family. I was still pretty young then. I'd only been out of school for a year or two. Here I am, no job, trying to trade, losing every single day. It was really tough. The period with my dad was probably one of the most challenging things I've ever been through in my entire life. Day in and day out, given the circumstances of the situation I was in, it just made you want to crawl in a hole and die.

It was such a challenging period in my life, but I had to go back, leave trading. Not full-time, but I had to go back and get a job. I had to go back and go to sales again to get some money coming in. I was trading part-time, just in the mornings. Luckily, I was doing sales again, so I had the flexibility of being able to trade in the morning. Then I would go off to work, come back, and try to catch a couple of hours of the day. I remember that in itself was a challenge, but I had to do anything I could to make it work. That's where I got introduced to swing trading a little bit. I was slowly starting to pick up, but I was still struggling to find some consistency. I did that for another, I would say about two years, where I was trading part-time and working, until I finally started to get some consistency. It's been a rocky road for sure, but that's where I am now.

Cam:
Casting your mind back to when you first started trading, tell us a bit about what you think you were doing wrong and how you fixed some of that.

Paso:
Sure. Early on, like I said, I was chasing stuff that was running. Most of the time, I was trading against the guys who were doing exceptionally well in the room. Nate, Eric, D4. These things would be running up, and I'm trying to buy, and they're shorting. I didn't really understand what I was doing wrong. I was still making mistakes, buying things that were running up, and it would slam and I would sell. You're buying high and selling low. Totally opposite, obviously, of what you should be doing. Then, as I mentioned, I was working part-time. I was looking for a swing trading strategy or something that I would be able to make money on, not so much as in day trading.

I got introduced to swinging stuff off the bottom. For some reason, I think it's because I had got this equity piece from this company that was $4 or $5 or whatever, it went from that to in the $30s. I was always looking for oversold stocks. Stocks that could go up from where they were at massively. One of the first big breakthroughs I had was, I swung Gevo back—I think it was 2016. Maybe it was the summer of ’16, where I think it had two gap downs, washed out to 25 pennies. I ended up picking up 100,000 shares. It had doubled, went to $0.40, and then $0.60, and then one night, it gapped in the afternoon. They put out some PR that their fuel was going to be used on a test run on Alaska Airlines.

The thing gapped to $1.70 the next day, $1.90 pre-market. It was $100,000, and I was like, holy shit. This is insane, because I had struggled to make $5,000, $10,000 consistently. I had this huge win, and that was my first big breakthrough on the swing trading side. I couldn't sell. At the time, I was with TD Ameritrade. Their pre-market doesn't open, I think, until about 6:00 a.m., and I couldn't sell. I was watching this thing ride back down to $1.60, $1.50. Finally, pre-market trading opened up on TD Ameritrade’s platform, and I dumped my entire position. That was my first big breakthrough on the swing side. That helped give me some confidence. Still, to this day, I swing and I swing trades off the bottom. It's a little bit different now, where I'm looking for large caps only.

I got burned so many times on buying these junk stocks where a filing comes out or an offering, or whatever the news is. I no longer trade, or I haven't in a couple of years now, haven't been trading any small cap or micro cap stocks. Generally, it's companies that have been oversold, bad news or earnings. I love stuff off the bottom. Anything breaking down, 52-week lows. I'm really looking for that for a swing. That's kind of how I developed my swing trading strategy. On the day trading side, in those two years, I was slowly starting to get some consistency. As I mentioned, I was always buying stuff that was gapping up. It had gapped into resistance, and I was chasing that. More oftentimes than not, those things would fail and ended up rolling over.

I started to buy gap downs. I was like, these guys are always shorting stocks that gap up. Why not buy stuff that's gapping down into support? It took some time to figure out a system to do that. Multiple, multiple trades and multiple losses until I finally figured out a process in taking these. Generally, these companies, whether it's Macy’s or JD or more recently, they're not going to go to zero. It would have to be something catastrophic for them to get completely annihilated. I'm looking for the selling to get exhausted, then to get in and looking for that quick reversal. I love the gap downs on the day trading side. Just let it wash out, base, and come back. That's where I have a set risk, and that's basically what I look for on the day trading side.

Cam:
When you quit your job and started originally, you went full-time right off the bat for a little while. Then you were saying you went back to work for a couple of years and were trading part-time. How long have you been trading full-time now? Tell us a little bit about the decision and the process that you went through to transition from part-time trading back into full-time trading.

Paso:
I've been full-time for a little over two years now. Gevo, my big win on the swing side, was the first catalyst to help push me back into that. I was getting some consistency on the day trading side, and that was my big focus. I would have $2,000 to $5,000 days, $2,000 to $5,000, $2,000 to $5,000. Then I would take a big hit, $10,000 or $15,000, and would wipe out a week or two weeks of work. I was still struggling on the day trading side, but the swing still seemed to—were picking up some more consistency. I was looking to get more consistent on the day trading side before I totally left my job again. Again, I didn't want to go through the same situation again with leaving my job and having to go back to work. Leaving day trading and having to get a job was—it sucked, and I didn't want to go back and do it again.

I wanted to make sure I was fully okay and consistent enough on the day trading side to be able to make money or pull money out of the market. If not every day, if I was at least green on the week, or if I was getting some consistency and not taking these big losses to wipe out a couple weeks’ worth of work. Over time, I think you just need time. Anybody starting out knows that it doesn't happen overnight. I still struggle. Everybody does. I just felt like at a certain point, I was okay financially, where I didn't necessarily need to work for another two years if I didn't have the paycheck coming in, and I was getting some consistency on the day trading side. Once I got there, I left, and it's been a little over two years now where I've been trading full-time.

Cam:
When was it that you felt like you could make trading a real career for yourself?

Paso:
I think from day one, I always had this—I think the market just grabbed ahold of me from that first big win. Again, going back to my early childhood, making money was my first priority, and making a lot of money was the goal. I discovered this in the markets and saw the potential. I said, this is what I'm going to do, and I've never once said, this isn't something that I wouldn't be able to do. It's just the time and putting in years of effort and struggle and falling down a hundred times and getting back 101. I never once said to myself, this isn't something I could do. I struggled so much, like anybody starting out, but I always—from day one, I was like, this is what I'm going to do. I just fell in love with the markets.

I fell in love with the idea of it. Still, to this day, getting up and going in the morning—even when I leave and I come back home, I just love coming back to my office and sitting in my chair and being surrounded by the computers and the monitors and the belling ringing in the morning. There isn't anything better. I think it's just the passion for the markets developed at a very early point, and I've never walked away. I've always said to myself, this is what I'm going to do, no matter what. I don’t think there was a point in time where I said, now I can do this for a living. I always said, this is what I'm going to do, and I'll find a way to make it happen.

There was a lot of struggles, a lot of ups and downs, but I never once backed away and said, no, this isn't for me. My mom asked me—we had this conversation before. She knows how much I had struggled and how frustrated I get sometimes. I was like, if I had $100 million tomorrow, I would do the exact same thing. Nothing would change. Maybe a couple of material things, but as far as my day-to-day, absolutely nothing would change. Not a lot of people can say that, and I think the guys that are really involved in the markets and that do this for a living, they're really passionate. They're really obsessed over it, and I think that's what it takes. It's always stuck with me, and I've never once considered anything other than that after I found it.

Cam:
Talk us through your process for creating a watchlist and scanning for stocks.

Paso:
I typically am scanning after market, when things settle out. I usually take a nap after the market closes, let things do their thing, the news or whatever the case may be, if it's bad earnings, or if it's a news-driven play. Typically, by 6:00, 7:00, all this stuff has happened. I'll jump on my computer again and I'll scan the markets after close and start to look for news and seeing what happened after. That's when I do my initial scan for the next day, is the night before. I'll prep through, I'll go through the news and do a quick overview of the company. Like I said, it's never micro caps or any small cap. Generally, it's large cap. I'm looking through, just a quick peek of the financials, make sure it's not anything too bad.

Asses the news and go through the chart and really find past gap downs, how it's acted before, where it's coming into. What are the key levels? I'll mark all that stuff. I'll take notes. I write everything down. I've got a legal pad and I just write out a quick plan. I'll limit to two to three stocks max, and I like to just focus in on those. I have my one top pick, and then my two secondary. As I go into the next morning, you're seeing how it's acting pre-market and what it's doing. I'm generally looking for steady sell into open, and then a big washout. Let it base and come back. I'm just looking for sellers to get exhausted. Try to find some sort of support and take my trade from there.

Cam:
Tell us a little bit more about identifying the stocks that you're looking to trade. How do you go about entering an initial position? Then also, a little bit about scaling.

Paso:
As I mentioned, the night before, I'll go through and I will draw all my key levels out. I think this has helped me the most over the years, is getting some consistency. It's finding where the key support and resistance is. I use VWAP, but that's about it. I'm just looking at level two and the price action to dictate the momentum shift in the stock. I go through and I'll zoom out on my intraday chart if it's a month to the last gap down or whatever happened, and I'll try to figure out where the support resistance is. If it breaks below a certain point, I know to avoid. Or if it holds here, then I can start buying. I have my levels mapped out before I even get into the trade.

Where I've gotten in trouble in the past is jumping in too early. I'm trading obviously, bigger size now over the years, but if I want to get to 20,000 or 30,000 shares, I would jump in with a 5,000-share position on a $20 or $30 stock. That has gotten me in some pretty deep holes, and I've been lucky and bailed out. Other times, you end up really getting hurt on some of those. I've taken my starters way down. I cut them by half. I'll put $20,000 or $50,000, 2,000 or 3,000 shares. I'll add in if I'm right. I'll double up. If a trend holds, I'll double up again. This is something I talked to with Eric a lot about, and he's the master artist at this, and scaling is definitely a challenge when you're trying to build a position out.

You don’t want to ruin your average, but when things start moving in your favor, you really want to press it. I think for me, the biggest change I made was really taking my starters down, waiting for it to bottom out. I'm okay with jumping in with a couple thousand shares. I know, even if it goes red against me, there's really—whether it's an indicator or a certain price point, no one really knows where the stock is going to turn. You've got to get your feet in there and see how the stock is going to act. I like jumping in just to get my attention, and when things really start to set up, I'm really focused in on that one or two trades.

Earlier this year, I got probably one of my biggest day trading debacles turned luck, was ACXM. They ended up getting bought out, but it had gapped down from, I think, in the $30s to $24. It was washing out perfectly how I would hope it would set up pre-market. Making new lows, steady lows into open, and it opened washed out. I think it broke below $25. I was planning on that $22.50, $20 range. I started buying in at $24 for some reason, doubled up at $22, went to $20. I doubled up again. Before you know it, I had 40,000 shares. Man, and this thing broke below $20, and it was $18 in minutes. I was down $100,000 within the first 30 minutes of open.

That was the first big day trading loss. I hadn't realized it yet, but that was the first big hit that I would have taken at the time. I was completely blindsided. Couldn't see. It was really scary. I had taken losses close to that range, but it was more swing trading stuff. To lose that X amount of money in one day, it caught me out of nowhere, and it was just my bad rules. I didn't respect my stop. I didn't have a plan in that. Everything was working so well, and then things were coming back so quickly, or would eventually bounce back, that I just kept going in, kept adding, kept adding. I was in a pretty big hole. I had walked away from my screen. I called my mom. I didn't tell her anything. I just wanted to talk to somebody, like a calming presence, and just seeing what she was up to.

I walked back and I was like, okay. Let's figure this out. I had no choice, and I doubled up again. I think I had, at one point, man, 60,000, 70,000 shares, and I was still down a little north of $100,000. Then it just squeezed straight back up through VWAP. Monster volume. Pushed again, and I ended up making money on the trade, which is just absolutely mind-blowing, from being down that much. I think I walked with $20,000 or $30,000, but had I waited, had I respected my rules, had I waited for this thing to set up, and had I not been so stubborn, I would have walked with north of $100,000, $150,000 on that trade. I was just lucky to be out alive. That one was a big lesson for me.

Cam:
It's always a bit of a dangerous situation when you end up getting rewarded for a bit of a stubborn and reckless trade, right?

Paso:
I know, yeah.

Cam:
What were your key takeaways from all of that?

Paso:
It could have been a total disaster. I was so lucky. Just pure luck getting bailed out on that. I saw some blocks getting swallowed up at the lows. I ended up taking some screenshots of the trade, and I remember seeing the big blocks get swallowed up at the very lows. There was a $150,000 block, and then another one for $300,000. I was like, I'm going to—whatever buy power I have, I'm using it, and I'm jumping back in. My average was still shit, but I was like, we'll see what happens. Like I said, it ripped through VWAP, and monster volume came in, just shot straight back up.

The company ended up getting bought out. ACXM, I think, got taken out in the $40s, but that's why I love the swing trading. These things that get beat down, they come back pretty well. That was not a good lesson to learn at the time, because more oftentimes than not, they end in disaster. I've taken some hits after that similarly, but that was a big lesson for me to slow down, wait for it to bottom out. Through these trades and trading the same setup over and over for the last couple years, I've gotten better. I've gotten a lot better at waiting from the setup. I still make mistakes. Sometimes they just don’t go. Sometimes they reverse, sometimes they don’t.

We saw Roku. I took a pretty nasty hit on Roku a couple months ago when they gapped down. I was trying to bounce that three, four days, and it just never rebounded, and went from $48 to $45, and below $40. We didn't see a reversal until the $30s. Sometimes these things just don’t come back. That's the importance of respecting the law to stop, and not getting too aggressive early. But again, it's something I've developed over time, and again, this is typically—this is really the only thing I trade, things that are gapping down. There's been days, like today, for example, you had asked me what I traded, and I didn't trade anything. We'd gapped up. The market started fading off. I can't see anything tradable there, so I didn't day trade anything.

Cam:
Getting into a trade, what exactly are you looking for? Is it some kind of indicator cross? Is it a volume or a price action thing?

Paso:
Again, I'm not using a lot of indicators, but what I'm mainly looking for is initially, the selling to get exhausted. More buyers coming in. The dips, the hold. When I'm really in a trade and I'm really in pretty big, I'm just glued in on the level two, watching the big bidders coming in. Even if it's gotten a little bit away from me, where I didn't want to add here, and I really see the momentum shifting on level two, I'm pressing it, and I'm adding. I'm going in as much as I can, because typically—again, doing this type of setup day in and day out and generally, this is all I'm really trading. I really have gotten a good feel of these things, but other times, as I'm trying to buy dips, I'll see the selling pressure come in on every pop, and dips are just not holding, and this thing starts to roll over.

I still get caught, but I know better now to size down on these pops. When I see the selling pressure coming in, I'm definitely sizing down. It's never picture perfect. Sometimes they just rip way too fast, and I don’t have enough size there. Then it gets too far away from me, where I'm like, you know what? What I have is what I have, and I'll just dump that into the push. It never works to the T, but I'm generally just looking to try to keep it as simple as possible. Again, I have my key levels drawn out before, so I know if it crosses a certain point, it's going to go here. Then if we get to this point and hold this level, we're most likely going to go to the next spot. From that and level two, that's all I'm really looking for.

Cam:
How do you size up into these names that you're trading?

Paso:
If it's day one, I'm never going full size, especially if it's something I'm holding overnight. I make sure that I have plenty of room, and I'm wanting to get into 30,000, 40,000 shares of something, I leave room for at least three adds, and I'll add three times on that one. If it's overnight and if it's the first day of the sell, I generally like to stay relatively light. The second day is where I—if it's the first red day and it's bottomed out and tried to come back and failed a couple times through VWAP and didn't really get going, but you saw some support, I'll hold onto the initial starting position and some adds. Then the next day, if I get a gap down and wash out again into support, I'm really looking to add into that point for a follow through move.

If it gaps down and just rolls over, I'm quick to bail on that one, just because I know it's broken through yesterday’s support. It's not going to hold. I'm out. Then if it gaps up and stuffs into a prior resistance point, I'm just taking it off, just because most likely, it's just going to roll over and fade off the rest of the day. On the first day, I generally like to stay pretty light. I think Match was one of them I ended up holding for a couple days. I don't know if you remember earlier this year, Match, MTCH, got crushed on the Facebook news that they were coming out with some dating feature, and Match just got hammered.

I was early on that one, but I saved some room. That one came right back to where—I didn't hold it the entire way, but it had bottomed out and then all the dips were holding into that. I ended up holding that for, I think it was four or five days. Something like that, a news-driven event, where I don’t necessarily think it's going to impact the stock as much, but overreaction. Earnings are a little bit tricky, because if it's bad earnings, these things can get some downgrades in it, and you get a gap down and it could just continue to sell off. That's a little bit more tricky, stuff I don’t really like to get too aggressive on. Again, it's assessing each news, each play differently.

Cam:
That's really interesting. Tell us about a change that you've made that you feel like has really improved your trading results.

Paso:
I think one of the things I had really changed over the last couple years that has helped me the most was avoiding all the indicators and waiting for when it crosses this certain point or when it holds this indicator, then I'll buy or sell, and just really focus on what was actually happening in the trade. Where are the buyers? Where are the sellers? Ultimately, it's the big money that moves the markets. These hundreds of thousands of 100-share prints don’t really mean anything. It's just more of a distraction in my opinion. I'm looking for the big blocks. The big sells, the big buys, and that's why I'm so closely glued to level two.

If it's something that trades a lot of volume, 20, 30 million shares a day, I'll adjust my time and sales sheet to just show orders above 1,000, or maybe 2,000 shares to mute out a lot of that noise, because as you're looking for these, there's so many prints going through. It's hard to keep in track, and one might slip in there, and you don’t see it. I'll adjust accordingly, but really, the big thing now is, I'm looking for where that big buyer comes in, or where the—essentially, it creates support and resistance, where there's a lot of supply or a lot of demand. If a big buyers comes in and starts swallowing up the offers, that's a pretty good indicator, better than anything, that the momentum is going to shift.

Also on the opposite side of that is, if you see these constant blocks getting sold, and the bids just get chewed up, you know there's a seller in there. That's really your best bet. Obviously, there's a lot more that goes into it in determining—looking at the chart and going back on the intraday and the daily chart and seeing where it's failed. It doesn't necessarily mean it's going to hold just because it's held before, or whatever indicator you're using. It doesn't mean it's going to work. It's just, you have to plan on that, and that's really the big thing that I've changed. Quiet all the other noise, and then just focus on the buyers and sellers and the big guys that are involved in trades. Ultimately, that's what's really helped me over the last couple years.

Cam:
I know that you're a big advocate for a structured day and a strong morning routine. Tell us a bit about it.

Paso:
I think the morning routine is by far one of the most important things. It's crucial, especially in what we do and the stress that we go through day in and day out. You look at athletes like Kobe Bryant and Tom Brady, and these guys don’t just wake up, roll out of bed and brush their teeth and go out and play a football game or a basketball game. Kobe Bryant shows up four hours before a game and shoots 500 shots before any game starts. He's one of the first people there. He talks about the usher being there, and you could hear the sound of the rim as he's shooting. That's essentially what it takes. As traders, we get an opportunity to play, to trade every single day, and you've got to have a routine. I'm so religious about mine and what I do, just because of the level of stress that this entails.

I usually start pretty early. I like working out in the mornings. I'm in Dallas. Obviously, it's a central time zone here. 8:30, market opens. I'm up at 4:00, 4:30, head to the gym at 5:00. From about 5:00 to 7:00, I'm at the gym. I come home, hot shower, then switch over and finish up with cold and just really get my body just in a shock state, just to really wake up. I'll always, always incorporate something positive. I've got a list of reaffirmation, just something to bring me up. As I'm scanning the market, I'm always listening to something that's going to help me throughout the day. I have a strict rule with anybody that knows me. No phone calls. Unless it's an emergency, don’t call me before 12:00. My parents know that. My sister knows that. All my friends, strict rule. No phone calls. My phone is on silent.

I'm getting tuned in. Again, I mentioned I scan for ideas the night before. I'm seeing what's going on in the morning. I know a lot of people are iffy on this topic, and it helps some, it helps others, but I started meditation about a year, a year and a half ago. Guided meditation. I do a quick five- to 10-minute, nothing crazy, just to calm me down, because I have intense workout and I want to get zoned in. I have my list of songs that I play, just to pump me back up. When the market takes off, I do the same thing every single day. I don’t deviate from it. I'm extremely religious about it, and I think it's such a crucial piece to trading. I know Nate’s always talked about that, and in the videos, too. This is a professional job. You've got to treat it not like a hobby. Take it as seriously as possible. That's basically what my day looks like, the morning.

Cam:
Is it as vigorous after the closing bell as well?

Paso:
Most likely, I'm going straight to my couch to take a nap, because I'm glued to the screen all day. I'm taking a nap and let things settle out. I wait for the news to happen after close. Then I'll start scanning again 6:00, 7:00, when all the post-market action is done. That's basically it. Make dinner, relax. Since I get up so early, I'm in bed by 9:00, 9:30. I'm not sticking around, going out at night. I'm just getting ready for the next day.

Cam:
I think everyone needs to balance out a crazy day with a little bit of time to unwind in the afternoon. Shifting gears a little, what part of trading do you feel like is your biggest weakness?

Paso:
To this day, I think my biggest challenge is taking losses. When a winning trade comes, I forget about it quick. Short-lived hype. Make money, you move on, and go to the next one. Loss, I still to this day, struggle so much, and especially early, because I'm always planning on adding more. If something is going against me, I have room to add, and sometimes I'm fighting things way longer than I should be. I've learned my lesson not to jump in with size too quickly, but that doesn't mean I don’t let stuff go against me. I let it happen all the time. I'm thinking, if this thing bounce—it’ll bounce at some point. I'll add on every washout, and then I'll get my average down, and I'll sell in the pop.

I've bailed myself out many times, but other times, it just doesn't work. I've gotten in a lot of trouble. It's something I could definitely work on the most, but it's definitely put me in some very tough situations. The biggest issue I had, I could have walked away with this scenario I had with PDD. I've been in this thing now for three, four months, since about September. I just refuse to be wrong. It failed to break out over $29, $30 back in September. It slammed. I had a pretty decent chunk there at the time. I was up north of $150,000, $180,000 at the time, and I rode it to flat. Then, what's even worse, I started adding again, and I kept adding. I kept adding. Being up that much and then it going against you, then riding it to red and then—I don't know if any of you are familiar with the hit piece that came out.

It flushed out to $16, and I was down close to $340,000, $350,00 on that. I ended up having a panic attack midday while I was trading. When I saw the news came out and I saw the stock flush—typically, when these things happen, the hit piece comes out, that is the first move of the next leg to the downside. It had flushed to $16.50, and I was like, oh, shit. This thing’s going to go $15, $12 before it even bases out. I was already down $340,000 on that trade. I had taken a couple big losses because of the market slamming back in October and November. I was already down $500,000, realized, and then this trade—I went totally numb. Couldn't see. Heart start racing, disoriented. It was the scariest thing I've ever been through in my entire life.

I ended up driving myself to the hospital in panic mode. Got to the ER. I was like, I'm dying. I'm dying. I'm like, I don't know what's wrong with me. They rushed me to get a CT scan. I had to do an EKG. They're trying to calm me down. It was the most frightening experience that I've ever gone through, and this was because I just refused to be wrong. I could have gotten out and taken the loss early. Riding it, being up almost $200,000, riding it to flat, I could have taken a $50,000 loss. Then that $50,000 loss went to $100,000. From $100,000 to $200,000, and then $200,000 to $300,000. Then potentially, I was looking at another half-million dollar loss on the trade. I lost it.

That was one of the most frightening things I'd ever experienced. I ended up sticking with it. It came back, and I've been in this thing for, like I said, three, four months now. Coincidentally, we're doing the interview today, where this thing’s had a huge, huge day. I'm up huge on it. I've been locking in, which I didn't do last time it moved into $28, into $27, $28. Nate and all these guys have been like, you need to sell some, lock some in. I've been locking some in. This has turned out to be, at the moment, my biggest win to date, but man, so much stress and fear could have been avoided had I just taken a loss. This is relatively recent. It's one thing I absolutely still struggle with. Definitely need some work in that area.

Cam:
What do you do to handle a big realized loss?

Paso:
For me, walking away is the most important thing, and just getting away from the screens. Whatever the situation is, just get away. Just clear my mind. I generally will leave my house. I'm really close with my family, as I mentioned. My sister and my niece are here in Dallas with me. I use my niece as my outlet. We're extremely close. I was there when she was born, that first night. We're just attached at the hip. She just helps erase all the negative and helps me get my mind off the markets. She just wants to play, and it's always smiles with her. That's been my out, and I really think that—I don’t have any pets. I'm single. I'm 29. I'm not married. I don’t have a significant other or a pet to help cheer me up, but I have this little girl who just helps bring me up every single time. I'll spend some time with her. Get away from the screens at all costs, and she helps cheer me up and reminds me of why I'm doing all this. That's been a big one for me.

Cam:
If you could go back in time five years, what would you tell yourself before you started on your trading journey?

Paso:
One of the things I would go back and tell myself when I just started is to not follow random alerts, not jump into stuff that I'm not familiar with. Have a plan, because what hurt me, and still does to this day, is jumping and not having an exit plan. If it gets here, what do I do? I stop. If it gets to this point, I'll sell, or if it gets to this point, I'll buy. I think the most important thing would be focusing on a single setup that works for me and that I'm comfortable with, and just sticking to that and figuring out a way to make it work and just trading that day in and day out instead of always chasing stuff.

I think when I started out, the majority of time where I was losing money was, I was chasing stocks I wasn't familiar with. I didn't know how or why they were moving. That's what ultimately hurt me, and I was trading all over the place. Five, six, seven stocks a day. I'm not Nate. He's a human algorithm. I can't do that. I find my two, three, and those are the ones I focus on. I wish when I started, I just said to myself, this is your one or two trades. Wait for the setup. Just trade this instead of being all over the place. I think that's one of the most important things I would tell myself.

Cam:
Very cool. Similar question but a little different. What pieces of advice do you think new traders need to understand and know before coming into the world of trading?

Paso:
One of the biggest pieces of advice I think new traders should start with is to trade small but trade consistent. Take the size down when you're early and just be involved every single day, and really pay attention to how these stocks move. Over time, you become familiar with certain names like—MU has been my go-to. Whenever I see something moving with MU, I know how this thing trades. I've traded it 1,000 times, and I'm very comfortable taking it. I know the stock, the background of it. Over time, you develop your go-to plays, whether it's an oil name, whether it's a semi, or whatever biotech that you like.

The key is being involved every single day, getting that screen time, because if you trade today and then not again for a couple weeks, the market changes every single day. We've seen it in the last couple months. Even now in the last couple weeks, we've rallied so much off the lows, and the market is acting completely different how it was a couple months ago. Even the down days, selling hasn't been that bad. Just being involved and seeing what the market’s doing every single day. If you're trading 100 shares or 1,000 or 10,000 or whatever, just stick with it. Ultimately, you will figure it out. It just takes time. I know it sucks when you're starting out, because nothing seems to be going well and you can't find any consistency.

I had started out—I told you one of my first wins was $82, and I had lost thousands of dollars up until then. My goal was to make $1,000 a day. When I got to that, then it was like, I'll make $2,000, and $5,000, and then $10,000. I kept going, but I started with very, very small wins. What kept me going was, I never walked away from trading. I kept trading as much as I could. There was obviously days where just life happens, and just can't, but 90% of the time, 95% of the time since I started trading, I've traded. That's the best piece of advice that I can give to new guys coming in and starting out. Just stick with it. Be consistent. Find your niche. Find what works for you and keep hammering at it, because it will come together. I guarantee you, it will come together if you stick with it.

Cam:
Some really solid advice for newer traders right there. How about guys who have been in the game for a little while and are looking to step up what they're doing?

Paso:
This is a tough one, because as an experienced trader, you're always looking to level up. As much as you don’t want to compete with another guy or whatever somebody else is doing in the room, you're in competition with yourself. You always want to improve, and it sucks that we are this way, because you could make $10,000 or $20,000 in a day and you left another $5,000 or $10,000 on the table, and you're still upset. You could do well, but it's never good enough. I struggle with it. I'm sure a lot of guys do.

I think what I'm trying to do or have been recently is just take more enjoyment in this opportunity, this life that we have, and being able to trade. For me, it's such a neat thing. I'm obsessed with it. I love it. I love every minute of it. And just enjoying the process and not so much the end result, because if your destination is C, and if A and B clicks and you get there, it's a cause and effect relationship. If this happens, if I make $5,000, then I'm going to be happy. If I don’t, I won't. That's a big one that I've tried to work on. Just try to find some fulfilment in the day-to-day process, and not so much the end result.

Cam:
P_Mil spitting some knowledge for everyone. You've been in Investors Underground for some time now. What is it that you get out of the community?

Paso:
When I started, again, it was just somebody that actually gave out a plan. Nate does a phenomenal job of saying, if this happens, then this is what I'm looking for. This is the key level. He's warning guys. It's not just an alert room. For me, it's having that experience surrounded by guys who've been in the markets for such a long time. The guys that have been around for a while know, nothing trumps experience. The screen time is one of the most important things you can get. You have guys in the room who have 20, 30 years experience and who have just been trading day in and day out. You just can't replace that. I love being around the guys who are like, hey, watch out for this, or warning new guys. Be careful with this. It's really hard to find, and that's why I've never left. The quality of the guys in the room is irreplaceable.

Cam:
In the past, I had noticed that you were a little more under the radar in the IU chatroom, but recently, you've been posting more and coming out of your shell a little. Would you care to shine a little light on that a bit?

Paso:
For the longest time, I was such a lone wolf. I've realized that that was not the way to go. I didn't have really any trading friends. You can't tell a friend who doesn't understand trading, hey, I just lost $30,000 today. People just don’t understand. I should have branched out when I was just starting out, and I think that's one thing, if I could go back, I would do a lot sooner and try to reach out to some guys and connect with people and not wait until being a couple years in. I'm really good friends with Josh.

It grows so naturally, or so organically, because you have so much in common with the guys who are in this room, and it's crazy to me that I'm still upset with myself that I didn't reach out to people sooner. I just had a lot going on. Work, family stuff. I always just kept to myself. In the last couple years, I've really started to branch out. I'm really regretting I didn't do it sooner, but now it's such a cool thing, because we're so closely—you spend all day with these guys in the room and talking to them. It's such a neat experience. I've become such good friends with a number of guys in the room, and it's been pretty awesome.

Cam:
Looking in the short- to medium-term, what do you think we're going to be seeing from P_Mil in the future?

Paso:
Just continue to look for the buy-side trades. I do a significant amount of prep work on the weekends. Again, I'm scanning the markets, stuff that's oversold, just beat to hell over the last week or two weeks. Just waiting for stuff to bottom out. Just keep an eye out for the same stuff. Oversold plays off the bottom. If you see some gapping down, you know I'm most likely going to be taking that at some point.

Cam:
What do we think we're going to be seeing from you in the long-term?

Paso:
I think I'm going to be 80 years old and still trading. There isn't a thing in the world that I could see myself, envision myself doing. I'll probably be in my wheelchair at some computer at 80 years old. I'm in it for life. Catch me in my 80s.

Cam:
I think this is the longest interview we've ever done with an IU member, and it's definitely one of my favorites for sure. It's been a real great insight into the mind of a trader who is happy to risk it for the biscuit, as we would say in Australia. I've really enjoyed the opportunity to get to know a bit more about you as a person and also, your trading style, and the feedback that you've given about the IU community has really reinforced to all the staff here that we're on the right track in making sure that members are getting value for their subscription. If anyone wants to reach out to you, what's the best way to do so?

Paso:
I'm P_Mill in chat, and P_Milak on Twitter. Feel free to reach out anytime. I'm more than open to answering questions. I don't know everything. I don’t pretend to. I'll give you an honest answer based off of what I currently know, but definitely, if anybody has any questions, reach out.

Key Points

  • Paso dropped out of law school to pursue his trading career.
  • Paso has now been trading for about 5 years.
  • Paso is incredibly focused and watches 1-3 stocks at a time.
  • Paso keeps his indicators and trading style simple.
  • Paso believes in the importance of discipline and routine.
  • New traders need to recognize that trading success takes time, perseverance, and hard work.