Doc Severson has been trading since the mid-90s. According to him, that’s when it was relatively easy to make money. Stocks were discounted compared to today’s prices. When 2000 hit, he realized he didn’t know what he was doing. Everyone is a genius in a bull market. He understood the tech market well and knew what would be hot or speculative. But when the market turned, he no longer had an edge. He kept buying on the way down. So he went dormant until 2004 when he attended a motivational seminar about the stock market and options. He jumped out of his seat and signed up for the program. He’s been a solopreneur, market trader, and coach ever since. Listen to this episode of How To Trade It to hear his philosophy, trading strategies, and why he thinks you should “speed-date” the market.@DocSeverson shares his trading strategies in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet
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You’ll want to hear this episode if you are interested in...
- [0:28] Doc Severson’s background in trading
- [3:35] The unpredictability of the market
- [6:32] How Doc learned from his losses
- [9:30] Trading range strategies
- [10:45] Fractal Energy Trading (Doc’s book)
- [16:38] Why you should “speed-date” the markets
- [24:47] How to connect with Doc Severson
Learning from unpredictable markets
Doc points out that during a down market, things become more chaotic and less predictable. Candles can stay green in a corrective market—which gives you a false sense of security—and then all of a sudden the red hits. It’s why corrective markets are so difficult. The range strategies he’d normally employ don’t work in a crashing market.
He notes that “Trading is a series of dawning awarenesses on your consciousness.” When you realize you have something figured out, the market teaches you something new. You have to be receptive to what the market is trying to tell you. But most people struggle with confirmation bias and cognitive bias that keeps us from seeing what’s happening.
In 2008, Doc took a sizable loss, which was a shock. He had gotten confident in what he was doing. But the market is like a football game. If your defense (risk management) isn’t there, the market will find your weaknesses. He learned that risk management is #1. He also learned that range contraction is a prelude to range expansion. When markets contract, they’re about ready to move. You have to be able to see what the market is doing. Knowing this gave him a better sense of how to stay in sync with the market.
Trading range strategies
Doc can anticipate the phase change between the two. Most people trading range strategies step back and wait until things start to begin to trade more sideways. But he emphasizes that you have to learn to take the trades that feel uncomfortable. Why? Because the whole herd is waiting for “comfortable.” When markets are going sideways, they’re about to break out. The herd is applying a neutral strategy and about to get run over. They need to anticipate the market instead of reacting to the market.How can you trade range strategies? @DocSeverson shares a few things he does in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet
Fractal Energy Trading
Doc emphasizes that you must simplify your charts. You have to strip off the oscillators, MACDs, moving averages, etc. and simply read what price is doing. Then you have to understand the compression and retraction behavior of the market. Expansion and contraction is a cycle that never ends. You can find opportunities both ways by using price action to accurately figure out which way it’s going as it breaks the range.
Doc points out that we assign our own value system to markets. We try to apply our own linear logic and the markets laugh because they’re irrational. People get disappointed and defensive and lash out. You have to remember that markets are NOT rational. Look at the last few months, for example. We are in a recession and thousands of people are jobless, but the markets are at all-time highs. Doc believes the market will always find a way to punish the conventional thinkers.
Why you should “speed-date” the markets
Doc thinks people need to go speed-dating with market strategies. You’re allowed to rotate through strategies and see if you form a connection or not. Maybe you start with stock trading, then move through futures, options, or crypto. There are so many ways to learn to trade. You have to scan the area and find the one thing that will work for you and then master that thing. You can’t master 32 strategies and a watchlist of 200 stocks. By “speed-dating” with paper-trading, you can get a sense of all the market has to offer until you find the one thing to stick with.
Why does Doc believe the speed-dating strategy works? Because he often sees people get excited by someone’s package or program. They commit themselves for a few months, then they take a few trades that flop. So they give up immediately and move on to the next shiny object. What they don’t realize is that there is no holy grail out there. But you do need to commit yourself to something and go deep.
Trading is an unnatural act. Life skills can’t apply. Most people don’t actively go out to take risks. But you have to risk something in the market to make a return. You can’t wait for things to be perfect because then the market will be at its high. To learn more about Doc’s trading strategy and mindset, listen to the whole episode!Why should new traders “speed-date” market strategies? @DocSeverson shares his thoughts in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet
Resources & People Mentioned
Connect with Doc Severson
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