019 interview w Robert van Eyden, author of "Badass Trader"

Hello and welcome to the Consistent Profits podcast brought to you by Inside out trading and Brian McAvoy. Where the focus is on consistency because when you have the consistent part down, profits become easy. Hello everyone, this is Brian McAvoy with a new episode of the Consistent Profits podcast brought to you by Inside Out Trading. I'm excited today to be interviewing Robert Van Aiden, author of the book Badass Trading. Very cool title by the way. Thanks for so much for being here today, man.

Thank you, Brian. It's great to be here.

Excellent. So everybody knows, over his career Robert has taught, presented research, published and blogged everything stock market related. He's also led and managed three stock brokering firms and and one international CFD provider. His trading journey has now come full circle. Having initially applied artificial intelligence in predicting and selecting stocks when AI was in its infancy, he's currently practicing the significantly more straightforward going back to the basics approach. By following a well defined trading strategy while eliminating any emotional biases, he aims to help traders achieve long term success in the stock market by focusing on method and mind. Along with having had, having had significant roles in his career, Robert, he's also a pretty cool person, very down to earth again. Thanks for being here and being gay for the interview, man.

You're very welcome, Brian.

Now I gotta ask because anytime I'm interviewing somebody, I always look to see what they're doing before trading and I see now it was a long time ago, granted, but way back when you worked for an air conditioning company, how did you wind up in the trading world?

My father actually started an air conditioning company and he had high aspirations for me to actually take it over at one stage. And when I was about 18, 19, someone at university introduced me to the stock market and the bug bit quite hard and I, I studied a finance degree or initially studied an accountancy degree. My intention was to become an accountant and then I changed majors to finance and then. Yeah, since then I've always been fascinated by the stock market. So at university it was very much more the fundamental approach. And then when I was growing up, technical analysis was, it was just in its infancy and it was looked down upon at one stage as well.

Really?

Yeah. So I think the forefathers of technical analysis, the books of Edwards and McGee, they were out there, but it was all Benjamin Graham valuation and all of that good stuff. So fundamentals. So I started doing technicals but definitely back then it was viewed as a. Yeah, as the stepchild in terms of forecasting stock prices.

Wow. I find that really fascinating because yeah, I Mean, everybody's, you know, nowadays just used to, you know, speaking and it's, you know, so commonplace. Really? Yeah. Huh. How very cool. Now you were, you had worked your way up through, you know, the banking world and you know, all the way up to, you know, CEO where you actually led more than one firm. So I gotta ask you though, just because, I mean, of course, you know, some people are brokers and everything, but at the higher level on the firms, how do the firms just in general view the retail traders? You know, can you talk about how do they see them or us?

Yeah, I think it depends where the firm is structured. So I've been with stockbroking firms that have been part of a bank, okay. So if they're part of a banking group, they would be viewed as part of the value chain of the bank and one of the value added product offerings to the clients or the bank. Usually they're quite small contributors in terms of, let's say, profitability, but they viewed as stickiness factors. So from a banking perspective, and then if you view out, if you take the banking angle away and you look at the independent stock brokers, how do they view retail clients? They view retail clients, you know, as people that want to get involved in the stock market. And I think the biggest challenge for a lot of stockbrokers is longevity. You know, there's an opinion that, you know, it's, it's, it's just buying and selling. But I think through experience and you can see it as well, you know, most clients do not, or most people, retail traders do not succeed on the stock market. And that's not good for the stockbroker nor, nor the retail trader. So I think from, from stockbroking firms that are more independent and not owned by banks, there's a lot more focus in terms of, of, of longevity.

That's cool. That's cool. And I appreciate your perspective. That's, that's neat. I mean, I've known, you know, several brokers over the years and I find it interesting just to see how, like I said, how, you know, the clients are perceived. I know there are some brokers, they, they just kind of look at traders as, you know, just it like we're cattle and it's just going to be, you know, we just ramp through and process them. We know there's going to be a lot of turnover. Don't worry about it. Don't worry if they're dying off and suffering and they don't care and others do. And there are, there are a lot of good Brokers out there, they genuinely, genuinely do care about people and they see us as people, so that's cool.

Yeah. Look, I think it's. With any business there's an acquisition cost involved. So if you believe in the churn and burn approach, you either need very low acquisition costs, but I think generally, you know, acquisition costs are quite high if you start adding marketing, etc. So, you know, I think the longer the client is with you, the better, the quicker you can actually recover your actual acquisition costs. So yes, there might be brokers that go for turnover, but there's a cost involved.

True, true, very true. Huh. Well now, so, you know, you worked your way up. I mean, you spend a fair amount of time and then the banking and, you know, your whole career has been pretty much in finance and you worked your way all the way up to, you know, CEO of what near billion dollar company. How do you go from that to, you know, bringing your focus all the way down to the individual trader and like writing your book and stuff?

I think it's always quite clerical, you know, that doesn't depend on which position you are in an organization. You need to stay close to the client. So I've always made a concerted effort to, you know, stay close to our clients and in various roles even, you know, we talked about mentoring. You know, I've, I've offered my mentoring services to retail traders as well. And you know, after hours after my day job as managing a business, I spend a lot of time with, with retail traders also getting their insights, their frustrations. I attend a lot of events in my role as well and I do tend to spend a lot of time afterwards mingling with clients and just trying to get an idea, you know. Well, firstly, you know, what are the competitors doing? What are their constraints? What are their frustrations and what can we do better?

Huh? Very cool. Well, so as far as the events, what different types of events are you talking about?

So we do a couple of events. So we do trading summits. So the idea of the trading summit is where we invite prospects and existing clients. On the trading summits. We focus but specifically on sharing success stories of, you know, normal folk that have actually succeeded in trading. It's, it's always quite refreshing because sometimes you just hear the horror stor. And then we also spend quite a lot of time in terms of psychology, what it takes to become a successful trader. And also the big thing is how do you manage your emotions and this wonderful journey? So we do that, we do seminars, we've got trader network Sessions. For example, if you're a new trader once a month, you can come to our offices and we'll all be there and we'll try and assist you in terms of platform, product knowledge, maybe trading strategy.

Wow, very cool. Excellent. Now you, of course, of course we're have to talk about it, you know, psychology of trading. Now one question I'd like to ask again because, you know, we say psychology of trading, that can cover a lot of ground and different people have different, you know, different views on it. What do you consider? I mean, if somebody asks you what's the psychology of trading, you know, they haven't heard of it before, how would you, how would you describe it from your perspective?

Start with the first principle. The first principle is that money is emotional.

Okay?

So if you start with the first principle that money is emotional, then, then we can, we can bring it to the next. We can bring it to the derivative and say that trading is emotional and investing is emotional. Why is it emotional? Because we are not always rational and we are basically driven through fear, greed and hope. If you talk the three emotions and they have a play on everything we do, you can, even as I mentioned, money is emotional. The most simplest form of investing is savings. But you get people that can't save for fear, hope or greed reasons. So you can imagine how it is amplified and magnified in trading.

Oh yeah, okay. Huh. Well, so when, when you're talking about like, you know, method in mind, what, what do you, how do you approach the matter though, as far as like getting a handle on it?

So the method is, you know, to succeed in trading. There there's a saying, I'm not sure who came up with the saying that trading is the hardest, easiest thing to do or to make money. In order to succeed in trading, you need a method. There needs to be some method and the method needs to result in some sort of edge. And if you've got an edge and you play the edge over time, you should succeed at trading. The problem is with a lot of methods, a lot of people can't apply the psychology to the method, which is basically the discipline. And a lot of, in the last couple of years, there have been a lot of behavioral biases that have been identified. I think we over 200 at the moment. So I can go into these biases. For example, gambler fallacy, herding, FOMO is one, Jomo is a new one that has popped up in the, in the last couple of months. Yeah, so a lot of them. Jomo is the joy of missing out it's the opposite of fomo. Oh, that's cool.

I hadn't heard of that one before.

Yeah, that's quite a new one. So I actually like it quite a lot as well.

Huh. Interesting. Well, so, okay, I mean, fear of missing out, that. That's pretty straightforward. Understand? So how do you, how do you view, how do you see the joy of missing out, though?

Well, the joy of missing out is basically if you've got a method and you're. It doesn't provide you with any signal, then there should be no need to actually trade or take a trade. Okay, so it's the joyful matter, because if you do violate your system, it either could end up in two ways. You would make money and you would be very pleased with yourself, or the odds of you not making money is also quite high. And then you've got this feeling of regret and anger, etc.

Okay. Yeah, that makes sense. Well, now, since we're on the topic of psychology here and everything having, having seen, you know, trading from different perspectives, what do you consider the core beliefs that a person needs to hold to be successful? And what are some common beliefs you see out there that kind of lead toward failure? Beliefs about trading or money or whatever?

Yeah, I think in my book I talk about the uncommon truths about trading, so maybe I'll talk about the four of them. So in the book I mentioned, the first thing is that trading is a game of uncertainty. You're never certain that the price is going to go where you want it to go. It's a random outcome. So that's the first thing. You have to be quite comfortable that you're dealing with a random outcome. So that would be the first uncommon truth I actually touch in the book. The second uncommon truth is basically you need capital and you need to protect your capital. And that's where risk management comes in. And for example, in terms of position sizing, there's a term called portfolio heat in terms of how many positions you should have open at one specific time and then your total exposure per position. The third thing I address, which is also not common human behavior, is that you should expect more losses than wins to succeed at trading. I think the pundits out there, and you know, the, let's say the less good operators out there would, would, would, would let people believe that trading is, it's a, it's an easy game. It's not. We, we know the stat. And then the fourth uncommon truth is basically you need an edge, whatever the edges you needed, and it must also be Understood that the edge needs to play over time. So, you know, you need to probably, you know, minimum of 25 trades or on a demo account to see that you've got a positive edge, which means basically your return is higher than your risk. So those are the uncommon truths that people usually don't understand. They see the glitz, the glamour, the 2% a day, the dreaming about the yacht, the jet, the Bahamas, et cetera.

Oh, yeah, yeah. And heaven forbid they go on YouTube and look up trading and the guy's like, you know, Yeah, I made $10,000 today with my thousand dollar account. Yeah. Oh, yeah. Huh. Well, so. Well, okay, so those are some of the, you know, the uncommon truths. What do you consider a few of the rules that traders should live by though? Just that they need to keep in mind every single day when they're, when they're trading.

I think the biggest rule is basically you need a trading plan and you need to execute your trading plan consistently and committedly. The problem with that is good trading is boring and executing a plan over and over is boring. And that's where the challenge lies in.

So.

So for traders to succeed, they need some sort of edge. The edge will be determined in the trading plan, and they need to execute the trading plan consistently and without hesitation.

Okay, now, kind of shifting gears again a little bit. You actually have three different books. You started with the Money Fountain, right?

Yeah.

And then I noticed also that you wrote Investing Happiness. Yeah, very cool title. And then you got Badass Trade. Now Badass Trading has not been released yet. That's coming out soon, right?

Yeah.

Okay. What's the state on Badass Trading?

The Badass Traders should be out in the next two weeks. So I expected around the week of the 14th of July.

Cool.

And I just want to position the two previous books I actually wrote. They are. Well, they were self published, first of all.

Okay.

And then secondly, they focus on more buy and hold. So what I'm telling. What I'm telling you now at the moment, I try to expand quite a lot in the books, but it's basically you buy a mutual fund, a mutual index fund. You buy that every month, like the S&P 500, and you do that month in, month out. The problem is I could have probably put that all in a paragraph. So what I did in my first book, the Money Fountain, is I made it a journey where someone discovers little pockets of this little secret traveling in South Africa. And then the second book, the reason for the second book is I realized I got a lot of people that said, we understand this principle. Even Warren Buffett mentions this, you know, but we too scared. We. We're not sure when to do it. And I wrote the second book, and the second book is basically addressing all of these biases. For example, like fear. You know, I address dollar averaging, et cetera. So the first book is more the buy and hold the first two books. And then I had the opportunity to write Badass Trader. And it's quite an interesting story, Brian, because I was approached by a publisher in the UK and they said I need to submit a proposal, which I did. It's between 20 to 30 pages. I did, and you wouldn't believe it. They actually rejected me.

Wow. They came to you, asked for the proposal, and then rejected you?

They rejected me. So I thought, okay, this is not cool. I probably realized why, because I won't mention the publisher. But in the last year and a half, they published a book by Michael Cavell, an update on his. A book with. With Tom Basso. So I can understand, you know, these are huge draw cards. And, you know, I'm. I'm unknown and I've written a little book about investing. But I wasn't deterred because I put in the hours and I started, I submitted my proposal to other publishing houses and then in a very short while, and this was not the hope, I wish I could have told you a story. I submitted to 50 publishers, waited for years, and nothing happened. On my second submission to Penguin Random House, they accepted it, which was absolutely amazing. But the book had a different title.

Oh, really?

Yeah, they felt that my title was not good enough. They felt the contents of the book was. Okay. The title of the book was. Actually the initial title was Unbeatable Trader.

Oh, okay.

Yeah.

Well, that's not bad. But, yeah, Badass Trading is a good title. That's a sexy title. So, yeah, that works.

Agreed. Yeah, that was the view of the marketing people as well. So, yeah.

Yeah. And title counts, actually. It's so funny. I don't know if you've heard of Eben Pagan. He's kind of famous in the Internet marketing circles and. But he got his start with the book Double your Dating, you know, in the. In the dating niche. And it was. He wrote this short report where he's talking about how important the title is, though, and he says, okay, so let's say you've got two. Two books coming out. One of them's written, and they're both for, you know, weight loss for women. And the one. The one book's written by, you know, A team of, you know, well qualified doctors, and they've done all this research, and it's just, you know, very, you know, very thorough, very excellent book, very well supported. And the other book is written by a single mom. And so, but. And so, you know, the first. The first book by the team of doctors has written, you know, weight loss for women. And the second book is titled Skinny Bitch and which sold more.

I know which one did.

So I love that example because that is so true.

Yeah. Yeah, absolutely.

Yeah. Well, so that's cool. Well, so as far as writing your book, I mean, about how long did it take you to write Badass Trading?

You'd be surprised. It actually. So the book is written in two components. So the first component is the first 110 pages. It's got four chapters. The first chapter is about the uncommon truth of trading. The second one is where I go into developing a trading plan. The third. The third chapter is basically managing your emotions. And then I also got a chapter on a checklist. Those chapters took me about. About a year to write.

Okay.

And then I've been very fortunate, I think by. Let's call it luck. About four years ago, I started producing trading principles on LinkedIn. So every Saturday morning I used to. And I'm still doing it. I've got a LinkedIn trading principle. I'm sitting at about 206 of these principles. So that's about four years worth. And the other half of the book is basically the best of back then, the top 125 principles. So they're about 103 of them. But I could probably. I've got a 206 at the moment, and I've got inventory, I think 350. So I probably got enough just on the principles to publish another book.

You could do that. That's true.

Yeah.

Well, and that would be worthwhile because that is a long accumulation of thought.

Yeah, absolutely.

Huh. So. So it took you a year for the first. First part of it, so basically another year or so for the second part. Just accumulated. Yeah. Wow. Okay.

Principles. And. And people actually ask me, where do I get the ideas for these principles? And it's. It's interesting because I listen to a lot of podcasts and do a lot of reading, and for example, I'm busy listening to. To a podcast where. With McConaughey. And then he mentioned something, and then it triggers me something, and then I try and condense the thought and galvanize a thought from a trader's perspective. Matthew McConaughey, he was talking A lot of things. You know his book about the red lights and the orange lights. So you know, he sparked a couple of thoughts and I just go into my notebook in word and I just jot it down and then yeah, that's how I've built up, you know, a reservoir stock of about 350 of these principles.

Very cool. Now do you focus almost exclusively on the stock market or do you also share thoughts on the other markets as well?

So my principles and in the book as well, it was neutral. My bias personally, I'm a stock trader and I trade indices. I not big on forex and cryptos. I really got into the peak when everyone at about 60, $70,000. I also got involved but just because I violated my own biases, the herd biases. Got in the fear of missing out. Got in. So to your answer. I'm predominantly stocks and indices.

Okay. But your principal, now your principles, that's usually for the most part this is going to be like trading in general, right?

Yeah. I don't, I would never in my principles specify if it's a stock principle or an ethics principle because these principles are exactly the same because I, I view everything as price action. It's just a different market and, and there are different dynamics in the market. But at the end of the day most traders look at price action so it could be anything.

Well now as far as method, so you favor price action, do you have other methods that you like?

Yeah, I think over time as I mentioned, I started off with the fundamental school which doesn't help trading, not much. So I do favor technical analysis. So my method for the indices, I trade a 30 minute chart and I, I use a open breakout. And then for, then my other method is more of a swing trading method which is also a breakout. You could probably call it a 820 moving average.

Okay.

And then I use that. So in, in terms of my daily method, I'm in the morning and potentially out by close. So I carry no overnight risk. And then my swing, I would, it's my actions and my exits will be solely determined on closing price.

Okay. So for your swing trading, I mean how long are you typically in a trade? A few days or a couple weeks or are you like going maybe sometimes going into months?

Yeah, look, my average holding period is about 20 days.

Okay.

So I'm, I'm about 20 days in an average hold. I think with the method I also trade, I use CFDs and there is an interest component to it. So the longer I hold, the more interest I need to, to Pay the broker. So I need to weigh that up quite. And for every position I'm in, it prevents me from getting into an alternative position because I limit the number of stocks to five.

Okay, yeah, yeah, that makes sense. And, and it's good that you're cognizant of that one. One rookie mistake I see some people make is they don't pay attention, as you mentioned, the portfolio heat, or I've also heard account heat because. And yeah, that can be a big deal, especially if you know you're in the more capital intensive trading, which stock trading can be. Yeah, so yeah, very cool. Well, since, since this is the consistent profits podcast, I have to ask, so what do you, what do you consider the keys to the consistent part of consistent profits?

I think the biggest thing with consistency, and I think consistency as a trader is measured by your equity curve. And if you look at my principles on the book, I said it's a consistently upward rising equity curve over time. I think, you know, there will be months and there will be days that you will not be consistent. I think the biggest thing for me about being consistent as a trader is following your trading plan. And I always, at the end of each trade, I would look at two things. Was it a good trade or was it a bad trade? And for me, a good trade or bad trade is basically have I followed my trading plan? And then sometimes good trades end up as winners, but sometimes good trade, a good trade would end up as a loser. But I do know if I, if it is a good trade and as a loser and I've got an edge, I will succeed over time. So it comes back to the consistency. To be profitable, you need an edge. You need a trading plan. You need to execute the trading plan. You need to be resilient as well, because there will be periods, I think statistically speaking, you could probably have eight to 11 losing trades in a row. Conversely, you can have four winning trades in a row. And then that's just as dangerous because then you suddenly feel very know it all and you might violate your, your trading plan. And yeah, I am the hero and I have beaten the market and I am the guru.

Oh yeah, yeah, Been there, done that. Yeah, more than actually, I heard, I got reminded of a quote I heard the other day, which I totally love. It's like I never make the same mistake twice. I make it five or six times just to be sure.

Absolutely. It seems our minds, we need a lot of reinforcement to learn the lesson.

How funny. How excellent. Now, before we started this interview, we were Talking briefly about the possibility of you actually, you know, doing some coaching and maybe even start starting that up as a regular activity. So what do you, what are your thoughts on that as far as what, what you, what you'd like to do?

Yeah, look, I think given this, this badass trader term out there. So I think I want to expand on the idea what I've also realized and you know, engaging with a lot of authors on trading books a lot of the times, which is a bizarre thing because everything I put in the book, you know, there are no secrets in the book. I even, I've got a bonus chapter in the book which was also not planned where I go through a step by step on, on an Apple share in terms of position sizing, monitoring his stop loss, etc. But it seems strangely there's always a need for a course. So I think two of the things I'm thinking of at the moment is to do a course, a follow up, you know, just to bolster or reinforce ideas on the badass trader. And then secondly offer mentorship because I've realized and I've done mentorship for the businesses I've managed to. And there's a huge need for it because a lot of times trading is a very lonely thing and sometimes we just need someone just to bounce an idea off or, or challenge an idea. I think the one thing that surprised me doing mentoring for clients of the organizations I worked for, two things really struck me. The first is basically they've got no trading plan. And then the second thing is stop losses as a thing they've heard but do not apply. It's something someone else uses or your friend uses, but it's not for me.

Yeah, yeah, yeah, let's. Well, and a lot of that's just perspective. As far as stop losses. Personally, I love stop losses because it's like I know that I'm not going to be right 100% of the time.

Yeah.

And I need something there to protect me from me when I'm wrong.

Yeah. Look, it's, it's very similar to life insurance. I, I think initially when they brought out life insurance, the actuaries call it death insurance and it didn't sell and it's a grudge purchase. But it leaves you not, not you personally in a better position, but your loved ones definitely in a better position.

How funny. Yeah. Well, excellent. So as far as the mentoring and the coaching, what do you have a timeline in mind as far as when you're, you know, maybe look at start.

Certain that up Brian, you Wouldn't believe it. I don't have a website. So I think the first thing is I need to get a website up and running. I did register the name. I could not get badasstrader.com but I got the badasstrader.com so I do need to get a website up and running. But I think in the interim people can follow me on LinkedIn. I'm quite responsive on LinkedIn and maybe that would be the route going forward initially on LinkedIn, but I do want to formalize everything with a website that I can offer mentoring. I also want the website because strangely enough, one of the requests after all of these years, I get a lot of people asking me where can they get a view of all the principles? And, and my standard answer would be on LinkedIn. That's not the perfect answer because it's quite difficult. So, you know, I would also love to put the principles every week on a website and then offer mentoring. I think it's the biggest thing to support other people in this dev is through mentoring. I think it's like I mentioned, trading is the hardest but hardest, easiest thing to make money or profit. But there needs to be guidance and you know, with all vocations, you know, no one becomes proficient immediately that most people. Everyone's got a coach, tennis, golf. But when you talk about coaching or mentoring in, in trading people, like, why? Well, you do.

True, true. Yeah, well, yeah, as far as getting a website up, that would be. Yeah, and there's a lot of do with that. I mean, as far as, yeah, publishing your, your principles there like a blog or however you might want to do that. But so for now, best place for people to catch up with you if they're interested to go ahead and. Well, yeah, connect with you on LinkedIn and I'll make sure that the LinkedIn profile, the link for that is in the, the notes below. And so. And of course, when you do get your site launch, you'll be announcing it on LinkedIn, I presume.

Absolutely.

Well, and let me know and I'll go ahead and announce it to my list and stuff as well just to let people know that, yeah, you're up and live and you said your book's coming out in a couple of weeks, so this would also be a good opportunity for people to jump online and go ahead and get that. Now, are you selling that through Amazon or other channels?

It will be through Amazon at the moment. And Brian, ironically, you can already buy the T shirts. I'm not sure who makes them, but they are Badass trader T shirts available on Amazon. I actually ordered my own one, so it's got nothing to do with me. But there are the T shirts and the hoodies, etc, so, yeah, so it'll be complemented by the book. Maybe I should tie up with the supply of the T shirts.

True. Sure, why not? Yeah. And I love, yeah, I love your quote on the book on the back covers that trading is the hardest way to make easy money. Well, again, Robert, yeah, thanks for, thanks for being here and doing this, man. This has been a lot of fun and interesting. You're definitely an interesting guy. You've had an interesting career and what you're doing is good and I can tell you your heart is in the right place. So that, that's excellent. And everybody, yeah, go ahead. You know, if you're interested at all in his book, go ahead and connect with him on LinkedIn. It's Robert J. Vanaden, and like I said, the link will be down in the notes below. But yeah, go ahead and connect with him on LinkedIn and that way when the book comes out, you'll see the announcement of it and the link to go get it. And also when his website goes live and the coaching and all this other stuff that he's got coming up, you'll be first in line to take advantage of it. So that'll be excellent. Yeah, excellent. And again, Robert, thanks. Thanks for being here and sharing all you have today, man.

Yeah, thank you very much. It was an honor and a delight and it's evening where I am, but I'm feeling very energized after this podcast interview and happy to share and thank you for the invite. I'm truly honored to be part of it.

How excellent. How excellent. Well, everybody, thanks for showing up today and joining us and appreciate, appreciate your effort and, you know, looking to grow and develop as a trader. And we'll see you on the next episode of the Consistent Profits podcast. Take care. Thank you for joining us today on the Consistent Profits podcast brought to you by Inside Out Trading. Make sure to swing by Inside Out Trading and pick up your copy of the proven formula for consistent monthly profits. If you enjoyed the show, make sure to subscribe on your favorite channel and we'll see you on the next episode. Cheers.