Focused on Identity and Development – Troy Noonan – Episode 068

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. Hey, everybody, this is Brian McAvoy with another episode of the Consistent Profits podcast. Today I'm interviewing Troy Noonan, the backpack trader. Hey, Troy, thanks for being here today, man. Thanks for taking us on.

Hey, my pleasure. Thanks for inviting me.

Yeah. So Troy, he's been in the game for a bit. Got a little bit of a different stick and read a couple of cool books. So we're going to talk about that today. Let's go and start off with, you know, how you got started in trading. You know, what, what were you doing before trading?

Yeah, that's a good question because that's something that most people are faced with where they're at now. And, you know, maybe trading is a good thing for them to make some changes, reinvent themselves. Happened to me back in the early 90s, actually. I was in a. Had my own business. It was very busy. Was in my late 20s, maybe. Yeah, it was, I think 29. And, you know, maybe I was sleeping three hours a day. Know, the business was killing me. Working way harder than a job. Right. And one day I got a brochure in the mail and it introduced me to these concepts. It literally showed price patterns and how so much money was made from this and from that. And it basically introduced me to the idea that I should look into trading. And the pattern that caught my attention was the head and shoulders.

That wasn't. It wasn't Ken Roberts book, was it?

It actually was. I probably owe him a thank you card because it changed my life. Although I didn't. Oh, yeah, I didn't describe any of his stuff, but he's.

Yeah, he had a great, great mail campaign. Got a lot of people into trading. Yeah, sure did.

That was amazing. And that was before the Internet. So, yeah, as I was getting started, I had to get a discount broker when it was, what, $50 round turn, discount commission.

Yeah, that used to be discount. Yeah, yeah.

Lynn. Waldo. So you go back that far too, I guess, huh?

Oh, yeah, yeah. I started in the 90s. Yeah.

Yeah. So, long story short, after I was all set up, get my paper charts filling in by hand each day and, you know, every week a new round of paper charts. I took a, a trade that I, I literally shorted the British pound against the dollar. And it unwittingly was the same price action that George Soros broke the bank of England with And I was in on that trade, too. And I took my several grand and backpacked through Europe for about three and a half months, took a. Put someone in charge of my business and just kind of went to Europe. And I played drums. So along the way, I picked up a set of bongos, which were portable, and started sitting in with street musicians. And it was amazing, you know, the freedom that I experience. And just it. It got me. And the interesting thing is, is I met a Venezuelan musician in Italy, and we decided to play for free beer and bars around the country. And maybe a year, six months later, when I finally got back and got settled in, I received a fax from him inviting me to Caracas, Venezuela. You know, hang out with his band, learn some rhythms. Anyway, within 24 hours, I met the woman who I've now been Married to for 29 years. Wife and kids. So Soros made billions. I made a wife and kids. I let everyone decide who got the best end of that trade. But that's how it all started for me. And I. I usually tell that story not to really talk about myself, but to emphasize how important it is to get trading right because of what it could do for you in your life. You know, it change your life in so many ways.

So. Well, you know, you said a mouthful. You said a mouthful right there, though.

Yeah.

There's so many haters. And. And I. I was guilty of it when I first started trading. I mean, I didn't start off, you know, hitting it big. I. I did okay my first year, but I was. I was flying by the seat of my pants and I didn't really know what I was doing. And I would like a lot of, Like a lot of people to get into trading. There's a lot of bad information out there. A lot of people just, you know, waving dollars in your face and the, you know, the cars and the houses and all that kind of noise. And they get you. Everybody just chasing money instead of. Like you said, focus on getting it right.

Yeah.

That is huge. Like I said, you said a mouthful right there. Just a little handful of words. That is such a big deal. It's like just. Well, just like in business, though. Just like in business. I mean, it doesn't matter what your business is. You want to sell surfboards or, you know, flip burgers or sell pizza or, you know, have an architecture firm or whatever, you still gotta focus on getting the business right.

Exactly.

Or it's gonna fail or it's gonna be full of heartache. And so long as you focus on doing the things that, you know you should do and developing yourself into the person that is good at that thing and capable and competent, that's when you. That's when you can do all right. But as long as you're just chasing dollars, it's gonna be rough. You gotta get it right. And it starts with the person.

Yeah, no, I totally agree. And a lot of times I'll tell that story and I'll even flip it, and I'll say, trading's too darn important to get wrong. So it's the same thing, but it emphasizes another point, another side to that point, because most people do get it wrong. You know, there's a way.

Not to knock anybody, not. Not to put anybody down, because it's easy to get it wrong. There's so many people that want you to get it wrong so that they can. So you keep buying their stuff.

Well, I. I have a way of explaining it to my audience where I say, look, we all start out as somebody trying to trade, and that's normal. We all start out that way, and there's nothing wrong with it. We're human beings, but human beings aren't wired to be good traders. And there's a lot of reasons why, but it's a very primal thing. The way I explain it is that a losing trade represents a threat to our survival. On a primal level. We run away from it. We try to avoid it. We want to avoid pain. And that's not what traders do. It's a different mindset. You have to transform yourself. You can't talk yourself into it. So I have these steps that I take people through that's designed to transform someone from a person trying to trade into the CEO of their trading business. As you. You describe. You already compared it to a business, and I believe it's just like any other business. Like what you said. We're 100 on the same page there. And I. There's a certain pathway or steps to take that you can transform yourself and become a CEO of your trading business, where instead of worrying about whether trade wins or loses, your job now is to implement a trade plan that you've worked hard at proving will make you money before you ever risk your money. And it's like one of the. The few businesses that you can do that in. I always call this the best business of the world for that reason could prove it first. Then when I say most people don't do that, it's not. I'm not trying to put anyone down. It's really designed. It's Just that we're all born as people and people aren't born to be good traders. So you kind of have to go through a journey to recalibrate your internals and evolve into a successful trader. At least that's been my experience over the years working with tons of traders. I, I hosted a live trade room for 18 years. I'm not sure if I, if you knew that, but.

No, no, no, indeed. Well, now you. So again we're on the same page. Trading is a business and, and you do need to, you do need to evolve yourself into that kind of person. Bomb. I've been preaching the same thing for a long time and I know the path that I generally take people on or my perspective on the path that gets you there. What's the path that you generally view kind of a high level. What do you see as the path from somebody trying to trade to the CEO? What are the steps along the way on that path?

Yeah, that's a really great question. I have a whole mastermind program that focuses on exactly what that is. And I have a framework where you go from one step to the next and you have to earn the rights of passage, own and take ownership of that step before you move to the next step. And I always tell people they have to judge themselves by what they know they need to do intellectually with how they think and feel. But most importantly their actions have to be congruent with that. And most people think certain things but then do other things instead. And that indicates where they're at in their evolution of becoming a good trader. And that's fine. Again, that's all normal too. It's a process. So I always start people on the very first step is about self evaluation. You have to come up with some answers like when do you want to trade, when can you trade? When can you not trade, how much capital, how much experience, personal things. It's different for everybody. I mean there's general categories that are the same, but the answer is always different. And then with process of elimination, you could kind of get rid of all the things you shouldn't trade and see what's remaining. What are the best choices. One of those decisions, I think the big one is are you going to start first trying to learn how to day trade or swing trade? You could do both, but you really should focus on one first. I think you're good at it, you know, add the other. And also backpack trader style, the way I look at it, and this is another thing that I teach right away is that trading should Give you the kind of lifestyle you want. You shouldn't have to change your lifestyle to accommodate your trading. You need to figure out how to take trading to accommodate your lifestyle. Because most people trade too much and they over trade and they end up putting their personal needs in front of the needs of their trading. As a result, it's not realistic for someone to think they can trade hours every day, Monday through Friday. You know, maybe they can do it at first when they're excited, but think, you know, three months down the line, six months down the line, six years down the line, you don't want another job, do you? I mean, so backpack trader style is get in, get out, get done. Trade as little as possible. Let your money work with power of compounding with a proven trade plan where you hit your goals, you're done for the day. On a day trade plan, sometimes we hit it in the very first trade. If you want to trade more, just duplicate that process. You can duplicate another trade plan. But for me, it's all about creating a trade plan and proving it through certain back testing steps and then learning how to execute on it going forward. You should be able to do it without a mistake 25 times in a row. Like a little musician trick. You know, I learned that at a young age. If, if I want to learn a new rhythm and I've been playing drums my whole life, right? It still feels like I'm learning how to walk again. I got to get the coordination between my hands and my feet, my brain. I have to be able to trade, play that rhythm one time really slow. Finally, when I can, then I do it two times in a row slow. But when I can do it 25 times in a row in tempo without a single mistake, now it's a part of me. No one could ever take it away. It's like a reflex. And I want, I want people's trading to be like that as it relates to them trading their trade plan that they've proven through, you know, tools that I provide and the steps to follow and definite techniques. It's not just, you know, intangible ideas you shake your head yes to and move on. They're actual things you do physically. And as you go through that process, it faces, you face things that you want to face before you have your money at risk. Because it came up today in a live training. I did a live training a couple hours ago and one of my members brought this very topic up and he was afraid of fomo. He kept, he has a trade plan. He's been Doing really well too. But he always sees all these trades that he could have taken and he feels like he's missing out and is messing with his head. And so we had this very conversation here. Making money is not whether a trade wins or loses, because they're going to do that. They're going to win and they're going to lose. Right. He's seeing the winning trades he missed out on. But is he also noticing all the losing trades that he avoided? He wasn't. You know, and the thing is, is it's the results of your trade plan over time is what grows your account makes you money, not whether a trade wins or loses. Because we know trades are going to win and lose. The winning trade plan has losing trades, but it's the trade plan over time that's going to make you the money and satisfy your, your reason for trading in the first place. And, and, but people don't really teach that. And they don't teach in a way that people can actually follow along and, and use those techniques to actually achieve the success they want.

Oh, yeah. Well, what you mentioned one thing and it's, it's really cool that you did because like when, when my boys were young and they were in sports, my daughter too, and you know, they, and when I was coaching, it's like you don't practice it until you get it right. You practice it until you don't get it wrong.

And also you got to practice the right things because a lot of people practice the wrong things. They go in a SIM account, they feel like it doesn't matter. It's fake money. Any. And what they do is they develop bad habits. And, and so, I mean, what you say is true practice. You don't get it wrong. If you may. If you have to get 25 trades in a row without a mistake per your trade plan, it could take a few months. Because what if you hit your goals on the very first trade today? Oh, it took 18 minutes. Well, now what? We got to wait till tomorrow for the second trade. You got to try to get 25 in a row without a mistake. But if you can't do that, what makes you think you can run your business with live money? And that's how you're training to become a CEO of your trading business. And, and so you're, it's like what happens when you make a mistake? Well, you should start over because if you can't do it 25 times in a row without a mistake, you're just going to lose money if you do it. For real at some, you know. No, no fault of the strategy. The trader has to be as good as the strategy, I think. And you could, you could train and become that. You could acquire that. It's worth it. It's worth the time and effort, in my opinion.

Well, yeah, it always comes down to the. Always.

Yeah, yeah. And, and all well, execution physically, but also mentally being able to just do it. Some trades feel uncomfortable and you're like, ah, that trade's gonna lose, I take it. Well, what's your trade plan say? What's the trade plan that you tested and got these results, measurable results that's grown the account. What's that say you should do? Oh, take the trade if it wins or loses, doesn't matter. We know there's going to be losing trades. The thing is, if you don't take it and it wins, you're gonna, that's going to kill your confidence. And I mean, if you do take and it loses, it's not your fault that you got to take the pressure off of yourself. Let the trade plan work its magic. Over time, the trade plans work in mysterious ways.

Oh yeah.

I have a lot of stories about how losing trades were actually a good thing because it led to another trade that the plan said you had to take and ended up becoming the mother of all winners versus if the first trade won, you would have missed out on that. So it's like you can't worry about it.

And the other thing, and this, this is from a, you know, psychological standpoint. I remember hearing it starting way like almost 20 years ago. And it's absolutely true is, you know, as far as being able to stick with your plan is when you, when you hit a, a little bit of a drawdown, that's when it's most important to stick with your plan. If it works. Yeah, because you stick with it. That's what's going to get you out of the drawdown. Drawdown, you give up on the plane, you start messing with it, you're probably just going to continue the drawdown.

Yeah, we call that chasing performance. In my circle. People often wait until they see the best trades and they think it's safe to get in the system's winning and then they get in right at the end of the three steps forward. Now they're in the one step back, right when they've had more pain than they can handle, they throw the baby out with the bath water, run for the exits, never to be seen from again. And then they're chasing the next shiny object doing the same thing. And all they see is account going down, down, down, no matter what they do down. I mean, because they're always on the wrong end of that curve. I mean, if you test a plan and you've got a time where you've hit your 25 in a row without a mistake, that's when you earn the rights of passage to start trading live. But I always say, following your earlier question on what the process is, the next step would be another 25 in a row, but this time in a real account. But the smallest possible size you can trade like a J. You're on the JV team now, so now let's do another 25 in a row. It's not sim, it's in real money, but the smallest possible size you could put on maybe a micro or whatever. And then you do another 25 in a row. Can you do it? And you go through that process where eventually you've got 50 trade plan trades in a row, right? 25 in your sim, 25 in with real money, but small. And then you've earned the rites of passage to join the varsity team, where you go open your doors to the public, finally open your business as a metaphor I use, and you can go with your full risk, which I believe should be around 2% of your.