Trading Depth Interview #15: Madaz Money — Off The Charts!
Max, affectionately known in the trading community by his nickname, Madaz, is a retired structural engineer-turned-full time trader based out of Los Angeles, California. Never feeling fully challenged in school, he has been always in a search of a quick buck: from selling miscellaneous items on eBay to scalping tickets to counting cards in blackjack.
When he was excited to enter the workforce, the recession hit. With no job prospects and buried in student loan debt, Max was forced to agree for a minimum wage job at a local computer electronics store for 6 months. He calls it the most humbling experience of his life. At the same, time he attended graduate school at CSU Long Beach to pursue his Master’s Degree in Engineering. After meeting a co-worker at his new workplace who drove a Lotus Elise despite not having a high salary from his job, Max immediately got intrigued about trading stocks.
So he opened an E*Trade account with $6,000 making a lucky first trade on DANG. Started with IPOs, he soon moved to penny stocks and the website InvestorsHub. Using a trial-and-error approach, he grew the original account of $6,000 to over $43,000 and back to $7,000 in 2012.
After a 3 month break, Max returned with a stronger mindset and developed the famous winning strategy that has made him one of the most respected traders in the community. In February 2014, he made $150,000 and continued to profit from trading — just enough to retire from his day job and drop out of his Master’s Degree program at the age of 25.
Max believes that psychology is the key to a trader’s success or failure. He prioritizes the minimization of stress and emotions while trading by making it as fun as possible. He popularized hashtags #TraderNap , #TraderLifestyle, #GettingPaid, #TraderProblems and, of course, #BigMacs.
Read more about Madaz story on his website.
Max during a vacation on Hawaii
Hi Max! Thank you for agreeing to this interview. How are you?
Thanks, glad to be invited. I’m doing great. Any day when you manage to extract $6,000 from the stock market and move it straight to your trading account is what I’d call a good day. *laughs*
Is it something you earn on average per day?
It’s a little bit above average. I’m happy with it.
You’ve been trading for 7 years or even more. Do you think something in your trading approach has changed by now?
Absolutely, because the market is a changing environment. It never really stays constant. Something new always comes up, and as traders we need to grow with that, we need to mature with the changing market. If we fail to do that and we fail to adapt, we can lose everything. You have to keep up with the times.
For example, technology is a very fast-paced environment, and programming in 2001 is not the same as programming in 2018. It has changed so much, and trading is the same way because there are many algos that operate in the trading space, and they change and evolve. They are part of technology. As technology gets better, algos get better too. I definitely did notice several changes with a lot of the algos, and they are getting a lot faster. There are also these high net worth hedge funds that have a lot of money, and they will invest in better algos. Therefore, it is up to us as traders to understand that these environments are always going to get more difficult, and we have to adapt to them.
It is important to you because you do scalping, right?
Yes. From my perspective, with scalping and algos getting a lot faster, I almost have to avoid certain situations where I feel the algos have completely taken away this part of the game and they are just way too fast. Overall, it is about adapting, and, thankfully, I’ve been able to do it well enough, and that is why I’m still in the game. If you are not able to adapt, you will not survive. It’s as simple as that.
Do you think high-frequency trading will replace common traders (retail traders)?
I would not say that they will replace them, but I think they will make the game more difficult because obviously when it comes to high-frequency traders, their goal is to make money. So in a long run, the only retail trailers that will survive are the ones that are able to adapt quickly enough to a changing environment.
Max’s Home Setup
What do you think about cryptocurrencies? Have you personally traded it or invested in any of those?
I’ve had many friends who invested in them. Besides, you can notice that nowadays, even the mailman or a cashier at the grocery store knows about cryptocurrency. The ironic thing about it is that I’ve never invested in it. The reason to that is because, if you’ve been around markets long enough, you will understand that every single time something gets too big, too fast, you know a bubble is mostly to come. Therefore, once I started realizing that, it kind of turned me off a bit, but I follow it until this day, and I hear about it nonstop from my friends.
When did you hear about Bitcoin for the first time? How did you react?
Well, from a technological standpoint, I think it’s groundbreaking technology. Obviously, digital currency is something that is very innovative, something that has many applications, but from a valuation standpoint, it felt like it just got too big too fast for its own good. That is the problem. However, cryptocurrency is a great innovation, and I did not ignore it. I had an interest in the technology and finding out about it, and I definitely followed it. I guess you could even say I indirectly traded cryptocurrencies by trading the stocks related to blockchain and cryptocurrency. For example, the main three ones that I recall were RIOT, DPW, and MARA.
In one of your interviews, you mentioned your friend who bought BP at the bottom and made quite good money. Do you watch out for similar dips to buy?
Sure. It is the major component of my strategy. I wait for a big dip on any stock, provided that they still respect the technicals, even on stocks like Netflix or Amazon, which are great companies for my long-term account. However, from a short-term “scalping” timeframe, that is basically what my strategy really is: just waiting for the dip.
What does a word “trader” mean to you?
Trader to me is somebody who is very good at recognizing patterns, somebody who understands how to be emotionally composed and be confident. To expand on that, I feel like, the reason why the whole trading thing resonates with me so much is that it’s also applicable to real life. Therefore, if I’m a successful trader and I want to start a business, those same qualities that I picked up from trading I’m going to carry over. Overall, I feel trading just teaches you about lots of qualities you need to succeed in life in general.
Do you have your own business around trading?
I currently have a website madazmoney.com. There is a lot of really good free content for new and experienced traders. They can come to observe and learn from my experiences that I share there. There are lots of videos, blog posts, and beyond. Eventually, I’ll probably expand this website to have more interactive features and content for the trading community.
In term of business, how do you make money from it?
I am an affiliate of a few trading services that I personally use myself and feel would be beneficial to others. Anyone who comes to my website can sign up for a broker or trading software and get a discount through me. It is all a win-win situation for everyone. Besides, I’m a big fan of passive income, investing in things like real estate, or a startup company. I feel like when you put your money to work for you while you are sleeping, then you are truly maximizing your financial potential.
Looking forward into future, where do you envision yourself? Do you think about that?
Of course. I think I enjoy trading too much to quit it ever completely. The thrill of making money from recognizing patterns and being quick both mentally and physically is something that will forever fascinate me. You have to do what you love, and I definitely love trading, so I will probably always keep doing that in some aspect. However, if I get to a point where I am extremely comfortable, and a lot of my passive income streams are working for me very well, I will probably just start traveling and enjoying my life.
Off the charts: today I wanted to talk less about trading and more about your personality as a successful trader, your hobbies, aspirations, and ambitions. You once even wanted to be a rock star, right? Do you still have that dream?
Well, I still have a room with 6 guitars. It is just a music room. There is a keyboard in there, 6 guitars, bass guitars, a microphone. You can come to my house and just jam. There were games back in the day called Rock Band, Guitar Hero. I used to joke with my friends and tell them “why play ‘Rock Band’ when you can come over to my house and play ‘Real Band instead’. *laughs*
Enjoying playing soccer, favorite sport
What about soccer? I heard you are a Liverpool FC fan. How did that happen?
Well, my mother is very international, she speaks 7 languages, and she introduced me to soccer in 1994. That is when the World Cup took place in the US, and that is when I got into it. I just fell in love with the game. I started playing in school. It became a religion to me. I have not missed a single World Cup match since 1994. I have not let school, work, even the final exam get in my way. I literally took my laptop to the final exam and watched the match while taking the exam.
That is how of a hardcore fan I am. As for Liverpool, I feel like the British Premier League is the most interesting league in the world. They got so many different teams, and a different team can win it every year. The reason I went with Liverpool was that I was a huge Steve Gerrard fan. Besides, I really liked the team when they had Fernando Torres. They were amazing in the Champions League. Who can forget that memorable night in Istanbul against AC Milan in 2005?
Going back to trading, I want to ask you if you believe in trading signals, groups, and chat rooms.
For me, I feel it is good to trade with a group just so you have the sense of comradery because trading can be difficult from an emotional standpoint, and you might want to have a discussion with somebody. Overall, I’m a proponent of keeping that group fairly small, since a large group might be overwhelming and get too noisy.
“Max’s main approach to trading is taking high percentage scalp setups for fast profits particularly at the opening bell. He popularized strategies such as the washout long, panic pop short, and the halt and resume washout long, of which he has lots of free content demonstrating these strategies at work via his YouTube channel.”
What rituals help you to stay with the clear head during your trading sessions?
I’m actually a big fan of meditation, and I do it every day for at least 30 minutes. It really helps purge your mind of negativity, which helps greatly on days where things aren’t exactly going your way. There is also another thing that is called a “trader nap.” It was initially a joke, but it caught on and people started making it a thing. What I usually do is trade the opening bill the first one or two hours, then after a certain point, the volume or the liquidity starts to get really low, and the charts start to go flat line, they don’t really have the range or the volatility anymore.
At this point, I feel the edge is gone and it’s no longer worthwhile to keep trading and I’m better off going back to bed at this point, hence the “trader nap”. As soon as the market starts picking up again, I will come back. Obviously, it started as a joke, but it actually is quite effective.
“Has a #TraderNap saved your ass from a potential blow up before?”
You mentioned that you use VWAP as the only indicator. Is it still the case?
Yes, VWAP is the only actual indicator that I use. For me, technical indicators are only valid if there are a lot of people who are using them. If there are many people that are using them to make trades—to place their stop losses, to enter a trade, exit a trade—that is when I feel that this technical indicator becomes more valid. VWAP, in the space that I trade, is a very popular technical indicator. The reason why I stayed away from some of the other indicators is that I don’t like the delayed reaction they give. Besides, I don’t like a hundred things on my chart. I just stick to support and resistance, volume, and volatility.
You also look at market depth, right?
Absolutely. That is the main thing that I’m looking at. Probably 90% of the time, if not more, I’m looking at market depth. That is what helps you see beyond what is on the surface. It gives you the extra dimension. I feel like that is how you can see where the stock is gonna go.
Didn’t you come up with some original scalping methods? How did it happen?
It is something that I do, and that is the reason why I’ve been trading as long as I have. I feel like these opportunities are very high percentage trades. Basically, a washout long is when a stock just suddenly drops really hard, and the reason why it works is that a lot of these algos would try to correct that drop. Once the stock drops, it is going to hit a certain level and it bounces back up. For the panic pop shorts, it is the same thing but on the short side. That is pretty much what I do all day long but on a micro level. It might be a 20-30 cent washout or a
20-30 cent panic pop. It does not sound like much, but if you are doing that 20-30 times over the course of the day, it adds up.
Max aka Madaz as a speaker at TradeIdeas Summit. October 2018
How does the community react to your YouTube videos, for example? Do they communicate with you directly?
Yes! I try my best to respond on Twitter, but it gets pretty overwhelming. I probably get over a 100 emails, Twitter dm’s, comments on YouTube, Instagram dm’s and comments a day. It is difficult, but the reaction from the people out there has been very heartwarming, and that is the reason why I keep creating content. I feel there are many people that find it useful, people that learned and implemented a lot of the stuff that I’ve mentioned, and it’s a rewarding feeling.
Why Madaz? What is the meaning behind this nickname?
Originally, it was supposed to be a “Mad Asian Footballer,” and a lot of people did not understand what it was, and they just started calling me Madaz, which sounds cool to me. It is short and simple, just like I am. Besides, it is unique and sounds good, so I went with it since 2011, and it’s stuck with me until now.
Where to find Max:
- My strategy is waiting for the big dip or “washout” on the long side or big pop or “panic pop” on the short side
- I stick to support and resistance, volume, and volatility
- 90% of the time I’m looking at the market depth
- “Trader nap” started as a joke but turned into a helpful (non-)activity after the first couple of hours of trading
- I’m a big fan of meditation to purge my mind of negativity, and I do it every day for at least 30 minutes