Eddie Z’s dad was a floor trader at the New York Mercantile Exchange. Ever since Eddie was 7 years old, his Dad would take him to the trading floor. He loved seeing the men yelling and screaming. Any of the rules about “language” at home didn’t apply on the floor.
When Eddie graduated high school, he got a job as a clerk on the floor. The first thing he was assigned to do was to track charts with pencil and paper. The pit trader he worked for taught Eddie how to draw point and figure charts using graph paper. He explained if he could learn to spot patterns, it becomes easy to predict what happens next. Eddie knew that’s what he wanted to do.
After working there every summer and during breaks throughout college, he ended up working at Gruntal & Co as a stockbroker for 17 years. What does he trade? What are his strategies? Find out in this episode of How To Trade It!In this episode of How To Trade It, Eddie Z shares the 4 he Uses to Trade Stocks. Check it out! #Stocks #Stock #Trading #Trader #StockMarket #Investing #DayTrading #DayTrader #SwingTrader #CANSLIM #StockPicks Click To Tweet
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You’ll want to hear this episode if you are interested in...
- [1:13] How Eddie Z got started trading
- [3:39] Looking for patterns in the data
- [6:48] Computerized charting
- [9:55] What success looked like on the floor
- [16:15] What Eddie is trading right now
- [20:53] Eddie’s trading strategies
- [26:51] Don’t build head trash
- [28:24] More about EZBreakouts
What success looked like on the floor
The louder guys who were aggressive did better than the others. The trading pit was surrounded by booths with guys on the phone talking to clients to get instructions. The guy on the phone yelled it to the guy in the pit who tried to fill the order. If you were a guy who did a lot of volume, you got more attention.
In January of 1991, Eddie spent his Christmas break on the trading floor. Saddam Hussein had invaded Kuwait and crude oil was fluctuating between $21 a barrel to $28 a barrel. The energy on the floor was intense. The morning that the war broke out, most people expected oil to jump. It went from $25 to $30 a barrel at open. It hit $40 a barrel and then was back at $19 by the end of the day.
In this day and age, most people sit in their office by themselves trading. The guys at the exchange went to lunch together and tossed ideas around and berated each other. There was so much good material and getting ideas in real-time that’s hard to duplicate today. Those conversations were intense. Eddie points out that you don’t see anything like that now.
What Eddie is trading right now
Eddie trades stocks with a very exact methodology. He follows four patterns and some simple rules about when to buy and sell. He believes if you get involved with the story of a stock, it will burn you. Eddie’s system is built on William O'Neil's CANSLIM system. Eddie uses his chart patterns and added a layer for short-term trades.
The “Cup and Handle” is his favorite pattern. He also uses a “High Handle” pattern that is similar to a “Bull Flag” pattern. He also likes to use the “Double-Bottom” and “Flat-Base” patterns. All four of them form after a stock has hit an all-time high. The pattern begins to develop after that.
Once he screens for the daily charts, he drills down to a 60-minute chart to find the best possible entry price. Eddie believes that looking at the two charts will help you find the optimal entry point. It gives you a higher win rate and a tighter stop-loss.What does Eddie Z trade? What methodology does he follow? Learn more about his trading strategies in this episode of the How To Trade It podcast! #Stocks #Stock #Trading #Trader #StockMarket #Investing #DayTrading #DayTrader #SwingTrader #CANSLIM… Click To Tweet
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Eddie’s trading strategies
Eddie uses a stop-loss strategy and identities as both a swing trader and a day trader. For swing-trading, it doesn’t last longer than 7 trading days. When he swing-trades a stock, he’ll use a 6% stop below his buy price. For day-trading, his stop is attached to an exponential moving average. He only enters day trades after 9:45 EST, because in the first 15 minutes you will see the most false breakouts. He believes best trades happen between 9:50–10:30 in the morning. When the stock starts to punch through the exponential moving average, the initial pump is done and he gets out of the trade.
Eddie takes whatever the market can give him. He doesn’t look for a certain number of trades per day. He lets stocks come to him. You don’t have to be trading 24/7. A lot of trading is waiting for the next setup to happen. When the market is going down, Eddie is on the sidelines. What does Eddie do when things go wrong? Listen to find out!
Don’t build head trash
According to Eddie, “If you close a trade and you made money, it was a good trade. If you close a trade and you protected your principle, that was a good trade. If you missed the trade, so what. There are trades every day.”
He emphasizes that you can’t allow yourself to build “head trash.” Head trash can be all of the negative feedback that you absorbed into your psyche as a child. Maybe a parent told you that you weren't smart enough and it stuck with you. Maybe a girl broke your heart. Anger can come up. Put a couple of bad trades together and see how angry you get. Trading is as much psychological as it is tactical.
What does EZBreakouts offer its members? What tools and software had Eddie developed? Listen to the whole episode to learn more!What is “head trash?” How can you avoid it when trading? Eddie Z shares his thoughts in this episode of How To Trade It! #Stocks #Stock #Trading #Trader #StockMarket #Investing #DayTrading #DayTrader #SwingTrader #CANSLIM #StockPicks Click To Tweet
Resources & People Mentioned
- FREE PDF of Eddie’s $80 book: What it Takes: The Secrets of Becoming a Successful Trader
- How to Make Money in Stocks by William O’Neill
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Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.