40 Years Of Trading Wisdom In 20 Minutes Lessons From Jim Roppel

What separates a great trader from everybody else? Today, Jim Role, hedge fun manager, takes on the Trader Line quickfire gauntlet to answer exactly that question. 30 important trading topics, fast answers, and we’re looking for five golden nuggets. Answers so good, they’re worth putting up on your wall. For every golden nugget, Trailerine will donate $250 to charity. And if this video gets a thousand likes, we will double everything. Let’s see how much trading wisdom we can pull out of one interview. And we are giving you guys the option to choose two additional golden nuggets, each worth an additional $250 to charity. So follow along and comment below your favorite answer or quote, and let’s dive in. Jim, are you ready?

This is crazy. Let’s do it. Let’s do it. First question, when did you first start trading, and how many years did it take you to become profitable? I started in 1985 and it probably took uh five to seven years from there. Were they painful? Uh I didn’t have a lot of money to lose but so yeah I guess for sure I think the pain came in a lot more when I started to get more serious money and I then I screwed it up like the later years of the learning curve were really painful like really painful like throw up in the garbage can. What was your best trade ever in those early years? Uh there was a oh my god JD Edwards was a great stock and then Broadcom I was kind of established a little bit then but Broadcom was the bedrock of the whole my war chest that that that put me into a different zone. How much did you make on that trade? A million. Nice. What was the biggest dollar loss you took ever and what did it teach you in a single day? I think I lost 22 million in a day. 25 million. Uh I could really couldn’t really add it up. And what did it teach me? That no matter how evolved you are, you will make mistakes. Uh, and I consistently am always too bullish at the top and I’m too bullish at the bottom. I’m just a total trend follower. All right, I’m going to give you that first golden nugget. So, we’re at one out of five. Nice. I think we’re always learning. We’re always evolving. How much do you size a high conviction idea? 20. Like really high. 22%. Like that’s like and it’s got to be really liquid. It’s it’s it’s it’s it’s existentially threatening o over that. Nice. What is the longest time you’ve been out of the market without placing a single trade? Uh when the 2000 top occurred, I probably stayed out uh for almost a year. Uh Morgan Stanley did not appreciate me with $150 million in money market for that. like they’re like, “Yeah, they hated that.” If you could only trade one setup for the rest of your career, what would it be and why? Cup and handles are probably the most dependable for me. Uh, high tight flags are the biggest upside, man. Come on. I asked you for one. Choose one. Okay. Breakaway gaps. There we go. On big volume. Yes. Nice. And if you could only use one screen the rest of your life, what would it be? RS. What about RS? Uh, highest RS. Leading. Well, uh, our only one it would be RS. It’s just the most valuable. It’s You can’t have a stock that’s going to be an absolute monster without high RS or or the new high list. You said one screen, one list. What does relative strength mean? What does RS mean? It’s an absolute leader. It’s It’s just strong. It’s It’s where you want to be. It It means that’s where you want to be. It’s a like a divining rod. It points you right to the leader. What is your favorite technical indicator? RS. So, the RS line. Yes. Perfect. What are you looking for in the RS line? Uh, leading. So, breaking out before price. Yes. Perfect. I’m going to give you that second golden nugget. I had to lead you into that one, but I’m giving you two two out of five here. Um, what historical stock should every trader go back and study? Uh, Bethlehem Steel. Why? Uh, it’s just classic. Um, and I think it proves that historically patterns repeat going back as far as you can go. Um, I’m sure if you uh charted Egyptian cotton futures markets a thousand years ago, it would they would have the same patterns. What was the key setup of Bethlehem steel? Was it high flag? It was the first Was it the first high flag? And it when it broke 400, right? Yep. I mean, okay. The law of large numbers like I call it the Livermore large number theory. It just works. And that like Bitcoin at 100,000 didn’t work. It only went to like 125. But big round numbers, what are the top three books every trader should read? You have I mean Bill’s book, How Legendary Traders Made Millions cuz I’m in it and John Boy’s a star reminiscences. I’ll give you a bonus one. Give you one bonus. The first market wizards like everybody in this is a real legend market wizard. Which of those four should they start with? Oh, five. Darvis’s book and you have to start with Darvis’s book. Cool. And that’s how to make how I made million two million in the market. And he traded Bethlehem, I believe, right? Or was that before? That was maybe before his time. Yep. Um, what are the most important concepts you had to learn to become profitable? Number one, cutting losses. It’s like in the early stages, people don’t want to take losses. Uh, that’s it. Like that’s the rookie. That’s the basis. If you just got that right and you threw darts at a a paper, you would probably make money. And what how does 357 relate to that? Uh that’s an evolved measure because I don’t want to take 7% losses like I don’t wait for 7% anymore. Uh and I’m when you’re dealing in larger size, you can’t just come to market with a huge block. You could, but you’re going to push it down a lot. Uh I don’t want to risk more than half of a percent. So I want to, you know, of your portfolio. Exactly. So 357 is 3% below entry, 5% below entry, 7%. A third, a third, a third. You dump 100,000 shares. You sell 33,000 down three, 33,000 down five. And I’m never I’m never around 7% anymore, unless it uh gaps down. And there’s the only way to prevent a big loss is to take these small losses when you’ve got them. The first loss is the best loss. All right, I’m gonna give another golden nugget, but I’m gonna be very restrictive at the last two, Jim. So you got to earn them. So let’s go. Um, do you get excited by bare markets and corrections? Why? Because opportunity. It just it’s breeding building opportunity. I mean, it I I will be upset because like I haven’t made any money for six months or three months or whatever, but the weekend will come and I’ll go, “Oh my god, this is this the rubber band is stretching and it’s going to release that energy and you know, you make a ton of money early and late in cycles. The middle’s that that Yeah, that’s what I love. So, the the market correction is almost a setup. You’ll look for cup and handles. Cup and handles. You don’t get cup and handles when the market’s going straight up. You’re lucky to get a flat base. There you go. Which traders influence your style the most? Well, Bill Livermore. Um I the concept of what Draen Miller is trying to do. He’s modernday. Uh Peter Brandt is huge. Um, and then some just people that I know around who’ve uh they’re unknown but very very successful. And if you had to describe your edge in a few sentences, what would it be? I’m bullish most of the time and the market’s going up most of the time. My strength is also my weakness. I’m a massive sitter. I’ll build a huge position and I will just sit as much as possible. And then the double-edged sword is I often almost always take them over the top. You’re never going to get up 400%, 500%. Without doing things that would be detrimental if the stock completely topped. So, and as you evolve, you learn to manage those positions better. What did Livermore say about sitting? The big money’s in the sitting. Absolutely. You can’t It’s really difficult to trade your way to millions of dollars uh $4,000 at a time. You can build a war chest, four, five, $10,000 in a trade, but if you really want to level up massively, you need to make 100,000 in a trade, a million in a trade, and then later, you know, really big numbers. How do you spot high potential themes in the market? Well, in the with the old when you stay with the old chart book, you’d see them bottoming kind of like uh uh what’s doing circle’s doing it right now. Uh group moves are established and when you it was way easier with the chart book. you’d see way early and then they would evolve. But group moves coming together, starting to build the right sides of bases, that’s what you’re looking for. And you would often find a single leader that was stronger than all the rest that were bubbling up. And that’s the one you want to go for. That’s the one you wanted yet. We already covered this maybe, but what is your favorite riskmanagement rule? Position size. Because even if you screw up and you somehow don’t get out at 357, as long as your size isn’t too big, you’re going to live to fight another day. That was the number one line in my recent report. No matter what, you always want to stay in the game. What is your favorite sell rule? Uh selling into climax taps cuz I’m killing it. There you go. What are some of the biggest mistakes you think new traders often make? Overtrade. Way overtrade. aren’t selective enough, don’t cut losses. Um, those right there, I mean, if you get that down, you’re evolved a little bit. How do you prevent overtrading? Is there is there a psychological thing you do? Is there something you think about to say, “All right, this trade is actually worth putting on.” Getting selective. Yeah. You know, you don’t swing at every pitch. You know, Sean Dunston, Chicago Cub, he was like, you know, swinging in the dirt at things. That’s what I think new new traders that want to trade. It’s like you get a brand new car, you want to drive it. You open a brokerage account, well, I got to trade. That’s a loser. So, be Tai Cobb. Don’t be that that Cub player. Wait for that magic high percentage uh pitch coming your way that meets all their criteria. Um, how does the general market impact your trading? A lot. Like the environment we’re in now. It’s a back off the accelerator minute. When the market’s in gear and you have all the MAs aligned, it’s easy to make money and you know it and the problems occur when the market gets difficult. The MAs are not in aligned or you’re in a bare market and you keep hitting the accelerator. And that’s it’s so obvious when the market’s really good. It’s ambivalent right now. You’re not sure if it’s bear or bull, but when people keep trading in these markets that are difficult, it’s just it chews you alive. It’s a little war of attrition. Little nicks. Nice. And what what are the most important principle uh principles for achieving big returns? Shooting for those triple digits, you know, high double digits. Knowing yourself and what your size what’s your max size in a normal base building period that you can deal with. And then I I I cannot overstate discipline and consistently disciplined for long long periods. That if you that’s the hardest part right there. Do you buy and sell based on technicals, fundamentals, or a mixture of both? A mixture of both. The technicals lead me to the name generally early and then I learn the fundamentals later. It’s unless it’s a name that has had a run before or a false start before, I don’t know the fundamentals right away. So technicals initially and for the sell is it is it both fundamentals and technicals? No, it’s almost always that the stock is going to tap technically before the fundamentals are going to sour. And what does it look like for a stock to roll over on you? It depends. There’s multiple like there’s long building taps like with really uh m mature companies and then there’s just complete breakdowns of immature uh non-durable fundamentals. They’ll just they just blow up and they you never hear from them again. I’m going to give you one more golden nugget for that because I think that that’s a good nuance there between the mature stocks and the the the newer faster ones. Um, how do you control draw downs so that you can compound over time versus just in a new uptrend making back what you lost prior? It depends on my mental fitness. I will let a draw down go longer than I should when I’m not in A+ shape. You know, history like you don’t want to suffer like that before. And as you get experience, you start to learn how they fail together and the the progression of a deteriorating market. Like we’re in the early stages of a deteriorating market right now, possibly. Yeah. How do you trade differently when you’ve got a cushion on the year versus no cushion? Totally different. I’m super tight and you know uh when I’m not up for the year or god forbid I’m in a hole, I am totally riskadverse. When I have cushion, I’m playing against that cushion and now I’m like a lot of people back off when I’m up 30, 40, 50%. I take bigger positions and that’s why when the market tops I have too much I’m uh too I’m too big. you you have to play against your cushion. Yeah. What are the most important rules and principles so that someone can trade not just wealth for a period but actually compound over decades and really build wealth? You you just like you led to it before. You have to control your draw down. Okay. So you I love the calendar. It starts kind of a fresh uh session. Yeah. So over and over again you you draw that line in the sand. It’s it goes to this. A lot of people make a lot of money and a lot of people give it back. You have to stop and recognize this is a lot huge performance. I’m not giving it back. Even if you have to pull the rip cord on P&L, just it hasn’t quite broken the 50-day yet or there’s been no blowups or no climax, don’t give it back. I think those rules are more more shorter term traders will act like that. Uh I’m a long-term trend trader and I tend to that I told you already that’s my shortcoming. I stick around too long. Yep. What is the magic elixir for a high potential stock? For a big winning stock, a true market leader, the highest possible earnings growth with the highest possible liquidity. You want a combination of both. That is going to be your leading stock in the market most cases. Palanteer was an example. It’s was super liquid. Oddly though, it didn’t attract the institutions like I thought it would. You know, it it it was an anomaly. It had two or three institutions, but the normal big dogs were not all over it. Do you prefer buying strength or buying weakness? I I almost I never buy weakness. How do you spot re real breakouts? Is it volume, new highs? What separates a likely successful breakout from one that fails quickly? The tectonic shift tsunami of volume. I love you, Webbby, but volume matters, man. Uh, what do you do if a stock shakes you out but then sets right back up again? I’ve learned from Bill that the shakeout plus three is just imperative. You you have to employ it. It’s an expectation breaker and I learned that from not participating. I’d buy an like an a um a send communications. I was shaking out an after hours. I was shaking out an Apple in after hours. You you only do that a few times. That that that is so painful. Like I think I had a 500 lot of Ascend. I can’t remember if I made or lost money on it. And one of like 3,000%. You remember that? Yep. What is your favorite trading quote if you’ve got one? The big money’s in the sitting. It really is. Uh I think cutting losses is more important, but my favorite quote is the sitting. Livermore just has so many epic quotes. What is your favorite non-trading quote that can’t apply? Is there one from a president that comes to mind? We were talking about this earlier. Pass Teddy Teddy Roosevelt, man in the arena. Oh my god, that is epic. I love that. Um, I like the quote from Dune about fear. I’ll let it pass over me and through me and when it’s gone I’ll turn around and and I will uh I will be a I’m mis paraphrasing it but the quote from Dune about fear. Fear is the mind killer. Fear is the opposite of being an optimist. How can you tell if a stock is high potential? What will what will be the tells? It’s going to have tripledigit sales and earnings. But there are stocks with triple digit sales and earnings that don’t blossom. It’s the power which with they emerge from a base coupled with the possible the it’s pretty difficult to have crummy earnings and be a absolute monster. Now stocks will look ahead but generally you’re going to have some clues on sales and earnings. They’ll be expanding a little bit but then you get the earnings surprise in the gap in the morning like it’s totally out of the blue. Yep. What do you think most growth stock traders nowadays forget about can slim or just you know what O’Neal taught prior uptrend institutional sponsorship you just no one talks about that I’ll give you the last golden nugget for that so it looks like you pass the goallet you’ve got one more question if you had one piece of advice for a new trader what would it be resist the temptation to run you’re inexperienced you’re most likely to make your biggest mistakes early and you don’t need to fail so brutally to make an absolute fortune over a long period of time. Don’t jog. I’m not saying crawl or, you know, be lazy, take risks, but start off and learn. Just say, “Look, I’m I’m on a I’m on a 40-year journey here, and I’m gonna take a year or two, and I’m gonna trade, and I’m gonna learn. I’m not even trying to make money. If I make money, great. But I want to make the mistakes now so when I get my first million that I don’t blow that up. Like the worst thing you could do is inherit from your parents a bunch of money and go in there and lose half of it or or all of it. You don’t want you want to learn. If you’re inexperienced, you need to make the mistakes and learn from touching that hot burner. Perfect. Well, Jim, I think you passed. Let us know how how you think he did in the comments. And also, if you’ve got two bonus golden nuggets, drop them down below. we’ll pick the top two and go ahead and do that bonus donation. Um, and let us know if you think Jim passed as well if he gave satisfactory answers. Um, but Jim, thanks for your time, man. Um, appreciate it. Thanks for being my guinea pig on this new format. Hope you enjoyed it and uh, we’ll see you guys in the next one. Drop a like down below so we double all the donations to charity. Take care.