New Trader Rich Trader | Steve Burns

Scott McGregor  
Steve Burns is the founder of "New Trader U". He has produced many different trading courses and with his wife, Holly has written over 20 books about trading. He is one of the most frequent faces on financial Twitter. He tweets about markets, financial freedom, and great motivational materials for traders. He's also very active on Instagram and Facebook and has a following of nearly a million people across all his platforms. I'm just honored to call him a Twitter friend, Steve burns, thank you so much for spending your time with me today. It is so great to speak with you. 

Steve Burns  
Oh, great, great. Thanks for having me, Scott, I appreciate it. Looking forward to talking to you as well. 

Scott McGregor  
So let's start with a little more background. Steve, tell me about your journey as a trader..

Steve Burns  
Really started back in the early 1990s, maybe even the late 80s, you know, first started with the understanding of the power of compounding gains, of course, back then, you know, we had the interest on bonds and, and, and better dividends on a percentage basis. But I understood, you know, compounding whether it be interest or capital gains, had huge powerful effects. And when I realized this from a chart I saw at an insurance pamphlet in when I was about 17 years old. And I thought that's what I need to do get started really early and have the time on my side to compound my capital to have something substantial in my life and to get to financial independence as quickly as possible. And I was fortunate to be starting the stock market game in the early 90s When I started getting my capital together and growing and had a great run in the 1990s. With the trend of the tech stocks during the.com Mania. So started off everybody says How long does it take to be profitable? And how long it takes me and it's like, well, you know, it just depends and a lot of luck early on, you know, the 90s were a great time to be buying tech stocks and trading up trends and buying dips, and it just worked out. And a lot of that was luck at the beginning. 

Scott McGregor  
So how would you compare some of the markets that you've been through to kind of what we're going through right now? 

Steve Burns  
Yeah, I can say, you know, I've had difficult years with choppiness and different levels of volatility. But this recent one we're in right now, I don't think I've ever seen so many false momentum signals or false breakouts. reversals are almost random. And then day by day by day moves to the upside, downside upside, downside. I mean, this is a different level. It robot 2015 was a pretty flat sideways year that nothing hardly worked. But in this year, it's almost like a very few things work. And you can also lose a lot of money. On most strategies this year, it's been a very strange, strange year is unprecedented. And just false moves in the market almost hanging on every fed governor and everything they say and having to drastic moves in either direction on any day. It's I've never seen anything quite like this for this long.

Scott McGregor  
So how are you navigating the market?

Steve Burns  
I'm just trading my system like I always have taking them as they come in. A lot of the momentum signals have been false signals, hasn't really given a lot of good dip buys. It's been a lot of cash holding cash. And just taking little jabs here and there in the market with nothing really turning into any substantial swing or trend in the past several months.

Scott McGregor  
I've heard you talk about the different styles of investing that you've done over the years. How did you develop the current system that you're trading for this market?

Steve Burns  
A lot of it has been based on trial and error learning through market conditions I experienced in real time over the last 30 years. And a lot of backtesting a lot of back testing to see what price action led to catching swings and trends and stocks and being able to profit from it looking at historical risk-reward ratios when you buy a certain Moving Average crossover and holding it until it gets overbought, you know are buying it oversold D up and then waiting to it to revert back to at least the mean. And a lot of it's a combination of experience chart studies. I went through and studied all the most powerful stock charts in the history of the market to understand how they act in real-time. And in backtesting and just understanding the nature of volatility and trends and swings.

Scott McGregor  
I think that's one thing that a lot of people struggle with is really trying to decide on how they're going to trade. And so what were the steps that you took to actually back test a system and then decide, okay, this is the one that I'm going to use for this market environment. And this is a different one that I'm going to use for another market environment. How do you back-test a system and then implement it into your trading? 

Steve Burns  
Yeah, I started my watch list, you know, charts and stocks I think did well, especially index ETFs are my favorite and leveraged index ETF because they've been so historically stable stock This can come and go in and out of favor the years and decades but the indexes tend to have the same kind of a nature of trends and swings in price action, and the built-in buyers in the stock market equities as an asset class themselves. And they they function pretty stable on the ETF level. So I'll go take all the different ETFs and I'll backtest them you know, I'll do five 5/20 Ema crossovers. 10/50 day EMA crossovers. You know, the 5/30, the 10/30, I'll back, test them all and see how they react, you know, how do those signals do to navigate volatility, because that's all we're really doing when we're trading is trying to profitably navigate volatility to create good risk reward ratios. And our profit factor comes from the fact that our winners are bigger than our losers over time. And that's what I'm trying to focus in on, I'm not worried about taking a small loss. A couple of times, if I know, eventually, I'm going to catch that swing or that trend and have a substantial win. Because my profits really come from my big winners, you know, not being right every single time, which is, you know, absurd. So I'm really looking at risk-reward ratios. Historically I can see the expectancy of a single if I bought when a crossover happened, and I held it till across under happened, you know, what was the average gain? And what was the average loss, it was a win percentage, and I look at the expectancy of signals, and then I put them together based on different charts, and different watch lists over time.

Scott McGregor  
So it sounds to me like you're more of a trader than an investor, is that a fair assessment?

Steve Burns  
Absolutely, I started as an investor, but I lost interest in just holding things and, and waiting for them to go up, you know, the 90s was just a brutal education and how bubbles can be created and how much money you could lose in a bear market. If you hold through, you know, I have a lot of respect for people that are able to sit there and hold, hold something for, you know, 10, 20, 30 years and Rod an equity curve. You know, people think traders have equity curves, you know, they go up and down. And we have drawdowns. I mean, I just can't imagine holding through the drawdowns, by note investor did during 2001 2000, to 2008. And 2009. I just, you know, even Warren Buffett and Charlie Munger have had 50% drawdowns multiple times just in Berkshire Hathaway stock, you know, and that's painful. And investors just have to keep believing it's going to come back to all-time highs, and that's just not, you know, not how I live my life for our men. It's just, it's just, you know, going through the cycles, I've been to enjoy the early 2020. I mean, to hold on to that and think that everything's gonna be bailed out and come back. I mean, that takes more guts and trading, I tell you that

Scott McGregor  
A lot of sleepless, sleepless nights, for sure. Yeah, I remember, someone showed me a chart of like a Walmart, for example. And someone said, Look, if you had invested in Walmart, guess what, your money did nothing for this long period of time. But if you had traded Walmart, then you would have said, okay, my money is out of the market. And now it's somewhere where it's being rewarded. And so I definitely see the benefits of trading versus investing. But that said, Steve, you know, if you are seeing a company, for example, that you like, and you can picture Oh, you know, I can see the success of this company, you know, name any company, Tesla, Netflix, whatever, you know, how do you separate maybe a bias from a stock chart?

Steve Burns  
Ya, for a Trader it's really price action on a for a investor, it would be watching the fundamental trends of sales and profits and making adjustments. So think it's two very different things. But I think even investors have to have some type of filtering process to understand where they're just getting locked in and bias because you can lose this like, a lot people in the crypto space, NFTs, to learn how much money they could lose when they didn't have a clear exit strategy.

Scott McGregor  
So you know, speaking of your experience, it sounds like you have suffered big drawdown in the past. That's kind of what transitioned you into a trader. Take me through the process of how you were able to reset after a drawdown, regroup and then ultimately attain financial independence.

Steve Burns  
Yeah, 2001 I really went back to the drawing board to understand and sort of get out the too much of the investor mindset and the was a lot like the HODL mindset of the crypto people thinking you know, "tech stocks are way to go" .com Mania, the "internet (is) the future" which is correct on a fundamental standpoint, but like you said, if you would have invested in Amazon it had, looking backtesting, it had over and that was 96% or 95% drawdown from the equity peak and Amazon going through the.com bubble burst. I mean, people that said, Oh, Amazon was a holy grail, you buy it, and you hold it and you make a fortune. But uh, you would have had a 96% drawdown I mean, who, and even if that's the right thing to do, to invest in something and hold something, I don't even know Warren Buffett and other great investors, besides Bezos, Bezos held everything he had all the way down all the way back up. But very few people could do that. Or even that may not be the right thing to do, it was the wrong thing to do and almost every .com-era stock, and looks like almost every crypto now has been the wrong thing to do. So, once you know, I learned when I had my first 50% drawdown, drawdown when going into 2001-2002, for my lowest level was a 50% from my peak, and you know, I thought I will never have another 50% drawdown again. And I took a lot of lessons into position sizing and exit strategies, stop losses, structures, you know how much I would hold. And I took all those and I learned the lessons of "why did I lose 50% of my trading capital from the peak" coming out of the March 2000 high. And I took those lessons and integrated them into my system to have parameters and to make better decisions and to understand risk-reward ratios. And, you know, biggest thing I learned how to have an exit strategy, I had to have a way to lock in profits. And I did great, great run from 2003 to 2007. And I took all those lessons I learned and in 2008 I started seeing all the warning signs, and I was ready. And I did not have any substantial drawdown 2008 into 2009. And I was ready, fully capitalized ready to get back in the game in 2009. So that really was a valuable lesson even though it hurt 2001 and 2002.

Scott McGregor  
Mm hmm. That's, that's really powerful. How did you create your trading plan? You know, I think that's what a lot of people struggle with. Okay, you know, there's a million ways to make money in the market. How did you, you know, kind of determine what works best for your personality, and then write that down into a plan that that you then follow.

Steve Burns  
Step by step, you know, about 21 Questions went into my trading plan, what signals me to get in what signals me to buy momentum? What signals me to chase the bull market? What signal signals me to buy after a bear market? What signals me to, to get out, you know, it was....a trading plan really, is like executing your trading system, which you know, has a statistical edge based on the expectancy into a written operational form, you know, when, its exits, its entry signals, those different types of entry signals. There could be dip buys, momentum, breakouts, of volatility expansions, volatility contractions, and all kinds of different entry signals. Then it's trade management, you know, where will you admit you're wrong? Or, you know, wherever you exit for a loss, where's your stop loss gonna be? You know, how big is the trade gonna be? What's your position size, based on the average true range and the volatility in the market? You know, how many positions do you have open? You know, what's your trailing stop? If you're in a winning trade, and it's moving up? How do you protect your open profit to not hold it to where you go all the way back to where you started? Or even worse, go into a loss? Do you have a profit target? Do you have a thing where you're completely happy, the market gapped up after a big swing or trend to the upside, and you're just gonna lock in your profits, I mean, I have to have every contingency plan for so I don't have to ponder and become a philosopher during the open market hours. And the end of the day, I just execute based on what I already knew I was going to do and everything in my trading plan is in service to executing my trading system, and to create a positive expectancy and to create bigger winners than losers over time, that that's what it's all built upon those principles. Nothing to do with ego or opinions or being right or predictions. You know, all that stuff is very expensive in the market to play with.

Scott McGregor  
It sounds like you do a lot of work after hours when the market isn't open, and that you spend a lot of your time when the market is open, just executing your plan. Can you talk about some of the work you do after hours to prepare for the day or the week or the month? 

Steve Burns  
Yeah, I go through every chart on my watch list. I have a defined watch list of stocks, it's always evolving, things are coming in. Thanks for coming out. I go through all of my watchlist by hand every day. At least the last hour of trading. I look for patterns, trends, volatility, expansions signals, I have all the key moving averages on charts. I have specific moving averages on each chart based on which ones backtested the best, you know. Some... they're all different. Some charts will trend better with a 10/50 (Moving Average) crossover a long term trend other ones have more and more momentum with a burst where the other 5/20 crossover and swing to the upside. I have on my charts 70/30 RSI parameters so I look when a chart becomes overbought or oversold. It might be time to lock in a profit or cut a loss short. You know, I have parameters and I go through it all by hand. And that's usually, most of that happens when the markets open between 2pm and 3pm. Now, the, hundreds of hundreds of hours over the years of researching, studying charts to go into all of William O'Neil's chart books going through page by page of every chart and studying them. Read reading. I've read this point somewhere around 400-450 trading and investing books at one time. At one time, I was the number one reviewer on Amazon for trading and investing books. And I was like #142 of all Amazon reviewers that were helpful, about 10 years ago, at my peak, maybe more than that. So, you know, that's where I really started getting...

Scott McGregor  
Wait, wait wait.... Okay, so this is crazy. You were one of the biggest reviewers on Amazon for trading books and you've read over 400 trading books!?

Steve Burns  
Yes. On average... of, I've probably read 1000 books. I probably read 1000 nonfiction books on Amazon..

Scott McGregor  
That's insane! How do you? You know, first off, congratulations. That's amazing. And the fact that you became one of the biggest reviewers I think is pretty cool. What did that do for you? How did that change you as a trader? I mean, there's so much that we can pull from this..

Steve Burns  
Yeah, it really helped because I get a lot of the great trading authors contacted me this was somebody to think of, well, yours is really good by think I started serving around 2005 and by 2007 or eight I get to be on the top reviewers in my space and on Amazon. I got to emails from Michael Covel, Alexander Elder,  Become Facebook friends with like Van Tharp, Tom Basso, really got a lot of great connections got to like interact with some legendary traders and trading authors. So it really helped me really get into that space, and this, people, you know, my heroes in the you know, they actually wrote down quantified really big fan of Michael Covel, you know, his work with actually going to the trend followers that all become millionaires and some billionaires in his trend following books. And Jack Schwager, had some great messaging back and forth him on email, and Facebook friend, and about how he studied all the Market Wizards. So really, really great, great connections I made. And I learned a lot by reiterating the reviews on those books, getting to actually write down what I learned.

Scott McGregor  
Wow, yeah, share, share with me some of your interactions, what do you think was one of the most impactful interactions with some of these, you know, amazing traders and authors? And what did you take away from that?

Steve Burns  
Yeah, Alexander Elder is really cool, because I really learned the three M's from him, you know, "Money Management, Method and the Mind" and just interacting on, questioning back and forth early on, oh, gosh, what's had been 15-20 years ago, really getting his own getting a response, like, email him like an ask him questions to get a response back on the finer details of his teachings and his technical analysis was pretty fascinating. Really, to have be able to interact with authors. You know, it was almost before there was even social media. It was more emails.

Scott McGregor  
Yeah. And so do you still keep in touch with some of these people? And I guess, what's your favorite book? And do you have one?

Steve Burns  
Man, it's just.... the two favorite, I'd say two favorites Trend Following by Michael Covel and the Market Wizards by Jack Schwager. And really, because it's just no opinions, and it's no fluff. It's the actual practitioners of trading and what they really did in real life, to make money consistently for long periods of time. And it's funny, people try to accuse both of them of having survivor bias, where you're just picking out the winning traders, you're not picking out all the people that did that and lost money. But what they're missing is that there's common characteristics of all the Trend Followers and all the Market Wizards all have common characteristics that come back to show what? What it takes to be a profitable trader. And that's really what my series of books are about, is really drilling down and finding the commonalities whether you're a day trader or trend follower, you know, and even the investors have a lot of commonalities. And even the crossovers of investors and traders have a lot of the same commonalities. Warren Buffett said, you know, they accused him of Survivor bias, where, you know, Warren Buffett just got lucky. You know, he's just one that it worked out for him, in the right place, the right time, the right years. And Warren Buffett even said, that'd be a good theory. But if you see that all those successful investors came from Graham and Doddsville, then obviously, there's something more to it, there's something in the water of value investing, and those specific teachers. So you know, Warren Buffett saying if you know, value investing itself, you know, (the) skill, because there's so many people that learn under Benjamin Graham, and Dodd and become so successful and value investing. So it's really fascinating, even like a risk-reward ratio, you know, Warren Buffett buys a company to acquire for Berkshire Hathaway. He's looking at the risk-reward ratio, you know, what did he pay for it? And what is it really worth and he looks at the discounted cash flow into the future, like what can that company be worth in the future? Because He's establishing a risk-reward ratio. If he's wrong, his risk is how much he paid for the stock. If he's right, he could get a 10-bagger, 20-bagger, it's the same thing with day traders. Day traders may be risking $1 per share trying to make $2 or $3 a share. You know Trend Followers you know putting in a breakout if it goes back in the range, he's stopping out if he turns into a big trend, you could have a 5X win, those fast anyhow, so many of the same principles risk-reward ratio, positive expectancy, trend following. It's so funny because you know, Warren Buffett also will follow the trend of positive fundamentals. You know, it's a trend of Coca Cola growing every single year, he will invest in it because he's following the trend of coke expanding in sales, revenue and profits. I find it fascinating that all the arguments go inside of the financial world. And it's all the same principles almost entirely, every successful venture. And you can even go take this into a lot of the business world with companies have a lot of the same exact things. Jeff Bezos loves to have risk of million dollars in amazon business, and he might can make 100 million out of and get successful.

Scott McGregor  
Yeah, I mean, like I said, there's so many ways to make money in the market, it's almost the problem is deciding on what to do. Right? 

Steve Burns  
Yeah, and having the psychology to execute it properly for long periods of time. That's the psychology and the risk management asset aspects are just amazing and complex, and new traders and investors have no idea the psychology involved in executing something profitable for a decade.

Scott McGregor  
Steve, you mentioned some of your books, was I right in saying that it's more than 20 books that you've written with your wife, Holly?

Steve Burns  
it's something around 25-ish, and I had five, I four or five or six with the publisher, small publisher, before we started writing our books. I think it's...

Scott McGregor  
Wow, take me through the process of what, you know, what sparked your interest to become an author, obviously, you've read a lot of books, so I can see the connection there. But what gave you the idea to put your own kind of process down on paper, and then share that with everyone?

Steve Burns  
It's almost like, you know, what else do you do? Once you're, you know, financially independent, and you're doing good, it's like, what are you gonna do watch TV and go to the movies and eat? I don't know what you do. So it's like, I try to structure my life where I'm doing something constructive and productive every day. And I love reading books and learning new things. And it just was a natural evolution, after reading so many to like, having a desire and inspiration to put that down in paper, put it on paper myself. And to break it down. It was just a natural evolution. To get it out. It's very therapeutic. I tell you, my best trading has come after I've written one of my books, whether "New Trader, Rich Trader" or Options Trading Book, you know, generally, after I read one, I just I do better at trading for whatever reason, it's like really because I have to like quantifying and getting it out on paper, it's really amazing process of education when you have to write it all down. That's one of the reasons I was writing so many book reviews was just getting it down. And you know, getting my thoughts together and capturing those lessons. Like you said, it's just very hard to capture so many lessons, so many books, you have to have it written down at some point. So, the expansion into the writing was really just a natural progress of reading so much, and you know, and my blog and really enjoyed the format of blogging as well. It's like expressing yourself and getting it out there. So I've enjoyed the process.

Scott McGregor  
Your book, New Trader, Rich Trader is an absolute classic. It's almost like a conversation between this bold New Trader who's all fired up, raring to go. And then this Rich Trader who is more calm and collected, what are some of the biggest mistakes that New Traders make? And how can they make the leap to then become a Rich Trader?

Steve Burns  
Yeah, there's the biggest thing is so hard in the trading world, people just do not take it seriously, or professionally. It's like, nobody goes up to a doctor and say, I'm gonna make some quick money practicing medicine. Are you Hey, man, I heard you my lawyer. You know, can you tell me real quick? Tell me the secrets. You know, it's like, it's so long...

Scott McGregor  
"I've seen Judge Judy, I know how this works. "

Steve Burns  
Yeah, it's strange because there's such a low barrier to entry to become a trader, he's got a brokerage account, get a little capital together, then you can be a trader, you know, you can't go you know, challenge an NBA player to a basketball game against, "hey, I'm gonna be in the NBA" and buy a uniform and run out on the court and start playing against NBA players. But you do that in trading! It's one of the lowest barrier to entry, things you can do professionally. Except for maybe start a business if you had enough money. But even that takes more capital to start some type of business. That's what the first thing is not respecting the seriousness and you're going against professionals that are trying to take your money. And on the other side of your trade. It's, it's really odd. It's like a gambling mindset where people think that trading is like gambling, it's random and you're scratching a lottery ticket, are you going to the casino, which they do create the casino experience because the casino has a mathematical positive expectancy over them. And they're trading with the odds against them. And that's exactly what almost every New Trader does, but no understanding of the positive expectancy of what they're doing, or whether there's any parameters or trade outside of a positive expects the trading system has no meaning, It's random, which is exactly what gambling is. So that's I think that's the biggest first step is they don't they don't take it seriously or professionally and really have no idea And then they launch into putting money at risk without any, any understanding what they're doing. Then you go into like, you know, the emotions, flood them, like the book talks about and then the no risk management or new traders risking all the capital they have on every trade every time until they blow up.

Scott McGregor  
Have you ever mentored someone that has blown up and trying to help them kind of pick themselves up and get back to, you know, the proper process?

Steve Burns  
I do get emails daily, but it's always after someone has blown up. And generally, they finally all the new traders that you know, I do get approached by, they have done they gets enough capital together, some of them have meaningful, meaningful little amounts of capital, and then they merely launch into it. And they quickly lose it. A lot of them go into, you know, futures or crypto or options and lose it all. And they come back, you know, it hurts my stomach, when they tell me hey, I just lost $5,000 trading, you know, they didn't they start it's like, man, you, you gotta educate yourself first, then you go trade, you don't start putting money at risk, then after you lose it all, then you come figuring it out, because then you get like the risk of mental ruin, where you're just, you're almost at PTSD from losing so much money so fast, because capital is very meaningful to people, especially when most people you get into the 1000s of dollars. The other things...

Scott McGregor  
yeah, definitely 

Steve Burns  
...undercapitalized where, you know, they don't even have enough to day trade properly. With a pattern day trading rule, much less any kind of real trading, I don't have an understanding that like in any business, you know, for any kind of serious trading, you need at least $100,000, $200,000, $300,000, you're doing something serious and meaningful. I mean, you can play around with day trading for $25-$30,000. But that's just really not properly capitalized for proper position sizing and risk and be able to go through drawdowns. It's very fascinating to see people's journeys, there's so many reasons why, like over 90% of traders, you know, they say 90% of traders fail, you know, 90% of traders, you know, they don't fail, they blow up very quickly. And the ones that stick around, don't make money. So I big 95-96% Just stick around and they give back all their profits because they trade too big. It's just a fascinating journey. And I so many people contact me, and I feel sorry for them. But anybody listening to this thing about trading, I mean, you start with a profitable trading system. That's when you start with Not, not after the fact.

Scott McGregor  
Yeah, I mean, that leads me into my next question is what advice would you give to someone who is starting at zero, which is where I think we all start as active investors, you know, just try and build up an account that you know, to your point is meaningful, and then to get into trading?

Steve Burns  
Yeah, I mean, that's another thing is to master their personal finance. First, if you have credit card bills, or you have a huge car payment, or you're struggling with your personal finances, you need to start with personal finances, you don't need to be trading, you probably need Dave Ramsey or Robert Kiyosaki. Start there. Once you get your personal finances in order, and you have you are saving money and having some trading capital, then the education begins. I mean, you have to you need to be read, you need to find you know, five really good books that fit whatever your method is, or belief system. You know, if you wanna be a day trader, you know, go study, the best five-day trading books, if you want to be an investor, go study five, the best investing books, you'll start with educating yourself on the best, cheapest education is with books, and libraries are free. And Kindle Unlimited, you can probably get a lot of good ones there. But, the information on the internet, you know, find sources you trust, that are free, even with YouTube and blogs. And you can get all the basics for free. You know, when you want to start saving time and effort, then you can go buy yourself an expensive $50 Trading Book or an E-course of some nature, there's a lot of really cheap ones on Udemy. But you got to find this from the right source. But that's the, you know, education that these are the steps and most people skip all those steps. A lot of people say how can I make some quick money and I'm broke, I need to make some quick money. It's like, well, this ain't the place to do it. It's like, No, you're not gonna go make some quick money, going and play against the professionals in any field. Why they think trading would be any different than that is beyond me.

Scott McGregor  
"The fuel that takes a new trader from dreaming of success to being successful is desire, passion, faith, resources and knowledge. If one of these elements are missing, a new trader may not survive long enough to attain their goals". That line is from New Trader, Rich Trader Volume 2. Steve, can you dive into these five things with me and expand on their importance? You kind of already did. But I'd like to go deeper with you.

Steve Burns  
Yeah, it's got to be a passion, you're not going to create enough energy to get through the learning curve of trading unless you have that passion. You know, and passion is not going to make you money. You need the knowledge of understanding how to trade and having a positive expectancy model to trade with. You have to have every element of the things you need to be successful. It's very serious it's not...it's the same it'd be in any business. If you want to go be a successful restaurateur, you know, you need to be passionate about food, you need to know how to cook, you need to know where to put the restaurant, you need to know who your target customers are, who you're selling to, what your profit margin is, how many customers you have every night, you know, how much they spend on average. I mean, this is nothing different. You need all of those elements that I mentioned in that, to get through it, because it's a very, very treacherous learning curve. And the barrier to entry is very low. But the barrier to be profitable is very high. You know, you can, I had a friend one time a kid who said that he wanted to go to law school, and he was really excited about going to law school. And I said, "You think you can do that? You think you can be successful?" He said, Yeah, I think I can get into law school. And I think I think I can graduate. I said no, I'm not talking about getting into law school, graduate and public getting a law school and practicing law. Go be... the intern when you're in college or be, if you're, if some of them become paralegals to get their foot in the door, or the other ones, you know, go become, try to work to be a partner get in as a new associate and work 100 hours a week to try to make partner in a law firm. You know, those are very different things than just going to law school. You know, that's what people do not count the cost before they do anything. And I think those elements show those, that's, that's what you need to pay the cost. And you're going to need to get to the learning curve. You know, even after you're successful, you know, there's still ups and downs in any career, or any business and trading is the same thing. So you need each one of those specific elements to even do it. If you're missing one, the odds of you making it are very, very, very low.

Scott McGregor  
Let's talk about resources a bit, Steve, because I think a lot of people will go on Instagram or Tiktoc and say, Oh, look, this guy just and I saw this thing yesterday, where he's like, "I just made $5,000 trading options, and I put $5,000 into SPY Puts. And then I made $5,000 and follow me it's that easy." And was just like, okay, so you risked $5,000 You know, what was your... Where was your stop? How did you manage this? You know, and so resources, I feel are so plentiful right now, what are some resources that you consider important for your style of trading?

Steve Burns  
Yeah, the best resource I have is what the markets telling me and my trade management signals and watching the chart in real time to go back to what you said about that guy. So funny people like how can I make 10% a month? Or how can I make Can I make a million dollars? Like the mathematical absurdity that is so shocking that immediately if you see a luxury car, real luxury car, someone's showing you, it's rented, or their subscribers or their paid subscribers are paying for it. Nobody that's rich shows off the car. Nobody, I can't even conceive of how stupid I mean, just from a dangerous standpoint for letting someone know you have cash, people showing cash. I mean, that should be a warning sign to get as far away from that as possible. To see anything like that. And in the compounding amount of like 10%. You know, Bernie Madoff took over the world. With the money management getting all the money, he could stand by returning a little bit over 1% a month. 1% a month was the most unbelievable compounding greatest return that anyone could conceive of he was able to raise enough capital for the in the real world 1% A month does it consistently because most real managers have drawdowns 15%, 20%, 30% and the so erratic with their returns, you know, having good bull market years having bad bear market years, that's all it takes. And if anybody can return or make $5000 in the blink of an eye, they could compound that to being a billionaire and within a year there's if you can really make that kind of money consistently and have a high win rate and put the money back in you know mathematically that's how Warren Buffett and George Soros and Paul Tudor Jones become billionaires was compounding year over year over year over year their capital. So with that kid can really do that and he should be a billionaire within at least few years, especially what he's claiming he could you could scale something like that a SPY Options very easily be a millionaire very quickly.

Scott McGregor  
I'll have to follow him on Instagram and see if he does become a billionaire. We'll see.

Steve Burns  
This like a gambling kid that kid this might won the lottery. It says I want to teach you how to win the lottery.

Scott McGregor  
So when you attain financial independence, you didn't go out and buy a Lambo then??

Steve Burns  
No, that's the best path. Like, The Millionaire Next Door series you know, the best path to financial independence is frugality is making high income and frugality and compounding capital. And the moment that you're you have enough money to pay your bills easily. Every month, you're financially independent, then you can go scale to whatever you want to be in your trading or your investing or your business or whatever pathway you take. But it's everybody I know all And I know some Market Wizards even secondarily know some, some people worth, you know, hundreds of millions and they're all dressed plainly. And it's you know, a lot of living very, very nice houses, but they don't they look the opposite of what the Get Rich Quick Gurus look like, oddly enough, you know, the bunch of millionaire traders I know that have minivans, you know, it's just. I don't, can't even tell you any millionaire or multimillionaire or rich person that I know that's very extravagant about anything except for maybe their home, they live in a very nice home very nice neighborhood. You know, even Warren Buffett has the same home he's had since the 1950s. And he his biggest luxury is he bought NetJet, so he can ride in his private jets, you know, and they have to make Warren... that's another funny story. They make Warren Buffett, his daughter's make them, his daughter will make him buy a new car every seven or eight years because she starts and "this is ridiculous Warrren", you have the same car for eight years, eight year old car and he's like, "this is nice, it's a Cadillac, I don't need it. No big deal. Who cares?" They have to talk Warren Buffett, who was the richest man in the world many times into buying a new car because he doesn't care. Like I'm the same way I could care less. I just you know, what I value is independence, freedom doing what I want to do living my life the way I want to live it, autonomy. You know, that's what I value. And that's what I focus on. I could care less about, you know, very materialistic things. I mean, I just don't even understand it. 

Scott McGregor  
So as someone who has already attained financial independence, how do you then as an active investor, set goals? You know, what's your process for daily, monthly and yearly goals?

Steve Burns  
Yeah, well, it's so much is out of my control. I mean, I just execute my system. And I want to always see my capital growing, you know, month over month, if possible, a lot of that doesn't happen, I want to see my capital grow, you know, every three months, six months, but I don't really have a lot of control over it, you know, if the market makes me go flat, and it's choppy, and I don't get any really good trends, I can't have a really great year, if I do not have great swings and trends. I mean, that's my methodology. No matter what your signals are, whether you're a day trader, or a value investor, you know, whatever your positive expensing model is, and your system is you have to have, the market has to be in Confluence with what your systems and signals are. You know, Warren Buffett is going to lose money in a bear market year, you know, it doesn't matter. He's a value investor, his all his stocks he held when down. However, his system is he has a lot of cash on hand, people don't know that Warren Buffett will go in and buy during the bear markets that he's not a buy and hold. Because he doesn't always put all of his money in the stocks, he lets the cash flow from Berkshire Hathaway insurance division build up. So he has a lot of cash, and he'll go in and buy the dips during bear markets. And when stocks get in trouble that he wants to own. The same thing with me, I tried to have a diversified system and I try to make money on momentum crossover signals, I try to buy the dip. And I try to have a diversification of signals. So it's a market, plunges and then reverses and swings to the upside, I'll make money if it breaks out. In trends, I'll make money, you know, if it's a confluence to my signals only money if it's just a tight, choppy market, you know, I don't drop down and start day trading is just not my thing. So I'd have months where I do not make money. That's just part of the game. But you know, with my blog, and business and books, you know, I try to always, and my social media, trying to always be a little better than I was the previous day, every single day with everything I do trading, and all my educational resources, every day, I should have made a little bit better.

Scott McGregor  
Steve, I'd love to wrap up with a few kinds of current topics here. You know, we'd love to get your thoughts on Bitcoin and crypto. How do you view this market and the potential technology and the potential trading opportunity? Maybe not now, but down the road?

Steve Burns  
Yeah, I do not trade crypto due to the extreme volatility and dangers of the unregulated market. I did find some good backtests for 5/10 crossovers for crypto on a watch list. And I did trade em for a while but the wild volatility and chop and swings and danger even with brokers themselves have led me away from crypto. I do believe crypto is, the ones that are built on something like The Sandbox and as a metaverse. You know, Bitcoin that has a huge following Ethereum, that has a blockchain, in the long term. Some of them will survive and actually be valuable and be trading instruments. I think right now we're just such an early speculative cycle, what are there 10,000 Crypto coins? The odds are 99% of those will no longer exist in the next few years. So just too wild of a market for me. I don't know which one's going to survive and win yet, long term. So I just avoid the market itself.

Scott McGregor  
Yeah, definitely looking for more regulatory clarity. To bring kind of that, you know, potential for traditional investors into the space. What do you think about artificial intelligence? You know, I've seen you tweet about AI and ChatGPT a few times here and there. How do you think it will affect markets and trading and will it really put everyone out of work?

Steve Burns  
Yeah, ChatGPT is gotta be the greatest technology I've seen next to the internet and the iPhone. I mean, it is mind-blowing the power of aggregating the internet for, for quick answers. It's, it's almost like having an employee or a coder, you know, or somebody working for you or a knowledge expert, you can say act as a nutrition expert, give me a diet plan. I mean, it's incredible. The weakness of it is that it's not real-time, it gives you wrong answers. And what you get is only the quality of your prompts, what you tell it to do, but I'm just stunned at the power of ChatGPT. It's just incredible. It's a really powerful like research tool to find things that are more evergreen lessons, you know, if you will learn something, it's a very powerful platform. So I do think a I think that we've moved from the crypto world into the metaverse world for a while. I think AI is a new hot technology, you will see the ticker symbol AI how wild that's been trading to show the AI bull markets already arrived in stock market.

Scott McGregor  
How have you used ChatGPT personally do use it to help you write articles? What kind of questions have you asked it?

Steve Burns  
I asked it if I want to research something. Oh, no, you know," tell me, you know, the S&P 500 Over the last five years", you know, it's very quick. It's very fascinating that can be used if you just want some quick, specific information before 2021. and above, you know, and I'll just I'll ask, you know, ask questions too if I want a quicker response than Google search because it gives you a specific, you don't have to go to Google search, search it and look at all the blog posts and figure out which one you want to go to or find information. I think it's a really good tool for information. If you want to know something factual and specific like around 2021 and back.

Scott McGregor  
Yeah, very cool. I think there's definitely going to be some interesting things that come out of this, you know, we saw someone from Citadel say that they're looking into using AI and tools like ChatGPT. So I think it's an exciting time to be interested in technology to see how it all plays out.

Steve Burns  
I think it's gonna replace a lot of jobs.

Scott McGregor  
Yeah, definitely. Talk to me, Steve, about how you use social media, you know, you are great at posting information on Twitter, you're very active on Twitter, Instagram, and Facebook. And you've really developed a knack for creating and posting, engaging trading content. And that is a real skill man, talk to me about your process, about how you use it, not only as a tool as a trader but also as a tool as someone who's sharing information.

Steve Burns  
Yeah, it's all like my train of consciousness, you know, and I learned a lot. That's what people don't understand. Like, I learn a lot from the questions I asked people say, Why do you ask so many questions? Because I learn a lot from the questions, it really helps me with my cognitive biases. You know, if I asked to see, you know, what percentage of people are bearish or bullish? And what people think about different technologies and what people think about a charter are people's opinions about things. It's incredible what you can learn from the replies. So I enjoy the learning aspect of that. It's also like, it's like getting stuff out of me, like I have something I want to share, like just to get it out into the world and write it down. It's very therapeutic and really helps me clarify my thoughts and, you know, put it up for public scrutiny and learn a lot when you put your put your thoughts and opinions into public scrutiny. It's an educational tool and a stream of consciousness for me,

Scott McGregor  
As a Twitter power user, is it better or worse after Elon?

Steve Burns  
It's different. It's really It's interesting. So many more people are back that were banned. And it seemed like it's a more open and communicative environment now than it was previously. Yeah, I would say it's more open and more serious conversation now than it used to be because of his stance on freedom of speech, no matter what. So yeah, I have enjoyed the new features and longer format tweets and the different things he did.

Scott McGregor  
Well, Steve, I thank you so much for your time today, my friend. It's great to finally connect. And I hope that we can do this again soon.

Steve Burns  
All right, sounds good. Scott. Hope you have a great day.