With the stock market repeatedly breaking through all-time historic highs throughout the pandemic, and more recently, all of the hype surrounding Reddit trading forums and the Gamestop saga, millennials are jumping into stock trading at an unprecedented rate. Services like Robinhood have also made trading more accessible and affordable than it’s ever been, clearing the way for anyone with as little as a few dollars to buy a share of their favorite brand. But the implications of this could be far-reaching as inexperienced investors put their life savings at risk without a sound strategy behind their trades. Most traders lose money. Someone who knows those risks all too well and took some large losses of his own when he was first starting out is Paul Scolardi, the CEO of the trading hub, SwingTrades.
Paul has seen firsthand the surge of new traders, especially millennials, who are reaching out to him for advice and mentorship to beat the markets. His teachings are widely followed on the internet and his story is rather relatable as a former corporate accountant who ditched his 9-5 day job in search of financial freedom. He found it many years ago when he made his first million and made more than $5 million in 2020 alone (he’s also up $4M in 2021 at this time of writing). Whether you’re a new trader starting out or you’ve gone all in as a “pandemic trader” this past year, Paul had some advice when we caught up with him to make sense of the crazy past couple of weeks in the market.
GritDaily: Have you seen an uptick in millennials getting into stock trading during the pandemic?
Paul Scolardi: Absolutely, it has been an unprecedented rush of retail traders into the market since March-April 2020 in conjunction with the quarantine shutdowns due to COVID-19 and it continues with the recent news media attention due to GameStop and AMC. I have been pleading on social media for new traders to learn before they jump in to avoid losing all of their money.
GD: What are some of the biggest mistakes new traders should watch out for?
PS: Let me just be clear and direct. If new traders jump into the stock market without training and education, chances are the majority of them are going to lose all of their money eventually. Granted, there will be exceptions. The stock market is not a video game and without a structured, rules-based, and disciplined strategy like the one I teach it can be very dangerous.
GD: What do you think of the recent Reddit/WallStreetBets controversy and new traders jumping into stocks like GME?
PS: I think it is incredibly dangerous and while there were some grand success stories, many traders lost most or all of their money since the stock crashed. That is sad to me. I have seen an uptick in people reaching out to me to learn how to legitimately trade stocks after getting burned by chasing GME and AMC after they were already up. I understand those early on in the trade might have made money if they sold. But there was so much irresponsible hyping that I am afraid many retail traders have been really hurt by chasing those stocks without any knowledge of what to do.
New traders have to want to learn a system and not just jump in without any education, which causes most new traders to lose all of their money. That is why my strategy is so important for new traders. It can be learned within 1-6 months depending on how much time you have to put into it.
Additionally, it is equally important to learn to control your emotions and be disciplined as it is to learn the technical knowledge about stocks. Fear and greed can destroy accounts. Hope is not a strategy in the stock market. Regret can paralyze your ability to make money in the stock. I coach my students like athletes to master trading psychology.
GD: How did you make your first million as a trader?
PS: I am known for finding momentum before the crowd. I found several momentum stocks early on and was able to make my first million. However, while I always had talent to find momentum stocks before the crowd, initially I did not have my strategy that teaches simple to understand rules on when to buy and sell to minimize losses and maximize gains. So I lost my first million within a few months and I was devastated. That devastation caused me to take my strengths of finding momentum stocks before the crowd combined with simple to follow rules on when to buy and sell that I created from my weakness. Now I am a multi-millionaire. In 2020 I made over $5 million and so far in 2021 I am up another $4 million on top of that using my strategy.
GD: Is it true that you need a six or seven figure account to make a living from trading?
PS: It is not true. But let me be clear. To make a living from trading, the first thing that needs to be done is to learn how to do it. That is why I teach my strategy. I do not want new traders to have to go through the difficult lessons I went through while teaching myself the stock market. Those lessons include losing all of my money many times. Once a student learns how to trade stocks, they can start with a small account and grow it over time. When it gets large enough, then they may consider trading full time. But that is the outcome from learning a strategy and being a disciplined trader. It is very possible as I have done it and so have some of my students.
GD: What is something most people don’t realize about the trading lifestyle?
PS: That it requires a lot of research and reading and staying on top of the overall market as well as your positions. The beauty of it is I am my own boss, I make my own schedule, I can trade from anywhere, and I have all of the freedom that comes from being self-employed and financially free. I hope to inspire and teach many others to have this lifestyle as it is super!