Silverfin Interview: Simple Ways to Develop Your Own Trading System

By Charlie Bathgate Trader_Interview

By Charlie Bathgate

If you’ve ever been in the Steamroom or seen some of the daily gains we post on Twitter, you’ll recognize the name Silverfin. He’s about as consistent as they come hitting singles and doubles, and yet he’s also mastered the art of letting his winners run. He’s been a part of the community since 2012 and has developed some really smart ways of managing his trading. We’re psyched he agreed to sit down and drop some free knowledge on our audience!

Let’s start with where you’re from and your professional experience relevant to trading.

I live in northeastern Pennsylvania in the Wilkes-Barre/Scranton area. Always lived there, went to college in Colorado. I was pretty big into ski racing – I was a competitive ski racer since four years old – so that is why went to Colorado State. Then I lived in DC for 8 years and was a broker for Morgan Stanley and Merrill Lynch for about 15 years… started ‘95 and left in late ‘11.

After that, I ventured into trading for myself.

Did you move into trading full time then?

Yes, and I am full time right now.

So you went right into fulltime trading in 2011?

Yeah, went right into trading, and expectations were a bit high. As most people’s are in trading. Partly because of the market at that time, kind of like today, everybody felt like they just could buy and hold. 

How did things go in the beginning?

Early on biggest problems in trading was that I was all over the place. Rumor on this stock, a lot of flow on this stock… I was all over the place. I had no real strategy or discipline and I was not getting anywhere, just spinning my wheels. This was in 2012. I started developing my system, narrowed my focus down to about 20 stocks, and that really just came from listening to Lucci a lot. He talked about just learning the patterns of those stocks, so that’s what I did. PCLN, AMZN, AAPL…I stuck to those about 90% of the time and I do that to this day. I trade NQ futures now as well, but that came later.

So that was kind of how I transitioned into consistent trading… I narrowed the focus, and things started to come together for me.

When you say focus does that mean you started to read the tape on those particular stocks?


Did you learn that from Lucci?

Early when I joined, Wall St. Jesus was not here so I really just learned from Lucci.

It took me awhile early on listening to him and trying to see what he was talking about. I tried to focus on it a good 6-8 or months and then I started to see things that he was talking about. This was before you guys offered a course on Tape Reading so I was just learning what I could in the chat.

I used to go into an option and just buy it, and he would tell me, “wait a minute, there is a huge seller here or bids underneath, wait.” By watching the tape I learned where to scale in and out a lot better. He would always preach it: your entries are so much more important due to time decay. As a broker I would always sell options, so there was definitely a learning curve there.

How do you trade right now? Do you use technicals?

Yes, I use technicals a good bit, I have that basket of stocks and I have charts up everyday. Some of the ones I trade don’t have huge flow. I trade PCLN basically every week. It has been my best winner over the past few years. I never traded it until I watched Lucci. Funny because it is always that Wed, Thurs, Friday trade for me.

I go over my P&L every quarter – I didn’t do that for awhile – and then I started to weed out the stocks that I suck at trading based on my performance in them. Now they’re on the “do not trade” list. I stick to the same ones, and just really concentrate on those.

What are some that are on your do not trade list?

TWTR, REGN are two of the ones that have murdered me over the years.

So you honed your style essentially by trial and error, and doing more of what makes money?

Yes, I try to hit singles and doubles. I rarely swing for the fences and I don’t trade earnings unless I am having a good week and take a couple lottos. Realistically, I would be 50/50 on earnings bets and that is one thing that I learned quickly and stopped.

Does your personality match with your style?

Absolutely. I am 46, and when I was 30 I decided I was going to play golf. I started taking all of these lessons and then got addicted to golf and I went from a 25 to 4 handicap. My friends say that I am the most boring 4 handicap they have ever met. I don’t go for a par 5 in 2. I try to just grind it through, and that is my trading style.

It is funny I look back, and not that you follow rumors all the time, but you would hear on Benzinga that this biotech has the next wonder drug. I would always take 40 or 100 of ten cent lottos, and then they would expire worthless. So I just got away from all that stuff. But then when I try to hit singles or doubles, sometimes I get a lot more than just that. I’ll take a $2 option all the way to $15, and I wasn’t looking for that, I was just looking  to make couple points.

By not swinging for the fences, it’s funny, you catch more home runs than playing rumors or lottos like I used to do.

So you’re legging out on the way up in trades like that?

Yes, I will sell half pretty quickly and then move my stop, then sell more and then leave runners to see what happens for the next couple of days. I do that pretty much religiously.

Did you ever have a lightbulb moment where stuff just clicked for you?

Yes, but it wasn’t one trade that did it.

In the beginning, I would start to get it going for a couple good weeks and then I would take a hit and wipe those profits away, so I would look back and see what I was doing to create that: the three weeks of great trading and then getting smashed. And I saw that I was going outside of those stocks that I was doing very well with. I started to stick to a plan and then just do that. It is hard because you have a friend or online, everyone has an idea. But I learned that when I stuck to my plan, I made money, so I let that guide my decisions.

Another thing I did was stopped watching CNBC and reading all these websites. The past 3 or 4 years everyone is calling the top. I just stick to what I do.

So you have the Steamroom open, do you have anything else open, maybe Twitter?

I have Twitter open sometimes. I talk with Crane (Steamroom handle: Dennycrane) in the room and we talk back and forth all day with ideas because we trade similar styles. For the futures, I have charts and then have another program that I have open for the NQ.

With futures and options, I created my own simple scale, 1-5.

1 is a lotto and so on up…5 means everything I’m seeing is basically aligning, it’s a very high probability trade based on my analysis, so I take the bet big with that. It helps with controlling my emotions a lot more. I used to have no discipline. It’s not that this scale is always right, but it definitely helps with the sizing and reminding myself of what kind of trade I’m getting into. 

So when you’re going into a trade, you mentally assess whether it’s a 1-5, and that helps you keep yourself in check and calibrate your position size?

Yes, exactly.

What’s the hardest thing about trading for you?

When I started I didn’t have a system, so I was trading everything. Developing a system and then sticking to it, that took time. And it’s still hard to maintain discipline sometimes.

Like, the toughest thing for me is walking away after a good morning. I found that I would give profits away by waiting all day so I am trying to do it a little more, just stopping after the morning because I know that’s when I’m most likely to make money.

So do you have a daily P&L goal? Or you trade the morning and no matter what happens, you’re out?

I rarely trade the lunchtime lull anymore. Typically I’m doing good up until about 11, and then I go work out or do something to clear my head.

How do you keep such an even demeanor? You don’t get cocky and size it up even more?

I did that. In August 2015 I was doing very well. It was one those times where I couldn’t lose. Then, from August – December, every trade went bad. I got plastered not following my rules. I did everything wrong. I just came back in January and continued to do what I know, and then 2016 was a really good year. I was a broker in 2008 so I knew that you could bounce back. But it was a tough time… that was definitely tough.

Do you still get excited about trading? Is it still fun for you? A lot of people that reach your level of success, ironically it becomes almost a burden for them. They know they can make a lot of money but they get bored or jaded.

Yeah, I still enjoy it. I like how everyday is so different. Like last week when I took PCLN for both ways, which is different because I am more long biased typically. So I get into the fact that I’m always adjusting myself, adding new layers to my abilities and strategies, and the market is pushing me to do that.

And the challenge to try to control my mental state, not to get too down on a loss or too happy with a win, is hard, but I like the challenge and what it demands of me. Always remembering that your next trade is independent of the last trade, that’s not easy.

Say you have a good day, do you go to the “real world” do you celebrate? Vice versa for a bad day?

I try to keep it even. When you do it long enough you learn that even though you had a good day today, that doesn’t mean that you will have a great week; the next you could lose it all. I am more conservative.

I know you have a young son. What if your son told you that he wanted to trade? Would you want him to trade knowing what you know? What would you tell him to guide him?

I’d tell him yes, you can do it. If you can get all of the tools that you need in terms of learning charting and the tape and how options move, then you’ve got a shot. But the mental part is the most important thing. Sports has helped me, and I also read a lot of psychology books.

I would explain to a new trader, “this is your job: I am going to give you 100 bricks, and you have to lay them all up on top of each other. It may take you a week. Then on Saturday, I am going to come in and knock them all down. You then have to come in and rebuild them up on Monday.”

That is the reality of trading for many new traders. The question is, how do you mentally get past the being knocked down part? I did it as a broker in 2000 when my business dropped 40% and then again in 2008 when it dropped by 50%. I rebuilt it, but after that I had had enough and decided to trade for myself.

So what I would tell my son is that you have to overcome the mental aspect of trading because it is hard to take losses. I learned from Lucci, he is the best in that he changes on a dime and then makes up whatever he lost going the opposite way. That is something that I could not do before but now I can do it a lot better.

You said you have been trading for a long time, where do you think the biggest changes will come from for traders like ours in the Steamroom?

With all these algos you can get shaken out very easily. It is getting so much faster, everyone is calling tops and so on. For the new guys coming in, again,  the mental part and maintaining discipline with a proven system, that’s what you need to focus on. A year and half ago I started playing UVXY and SVXY, and it became a consistent way to make money and that is what I still do as a consistent extra profit. But I was only able to do that because I had my system down and the mental part together. Just like when I added NQ futures too. Adapting to the environment, watching what works, doing more of that, and ruthlessly eliminating what doesn’t work.

You don’t get down when you make mistakes? Is there a time when you used to get mad for making mistakes?

I used to early on when I took losses, but now I just get mad at myself when I go outside of what I do, and I do something stupid. Taking losses is part of the game. With newer guys taking losses is so hard to do. Treat it as a business… there is always losses.

The next session of the Sang Lucci Master Course starts on December 11th. New students get access to the Master Course PLUS exclusive new interviews on topics like trading psychology and options market making. Learn more and email for discount information!

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About the Author

Charlie Bathgate


Charlie Bathgate is the man behind the scenes making sure everything runs smoothly. He’s also the resident psychology fanatic. He graduated from Duke University in 2009 with degrees in English and Business.

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