Trader Talk: The Inside Scoop

Trader Talk: The Inside Scoop

Michael DiRuzzo is my name but I’m also known as “@ZozoStockWatch” or “ZoZo.” I
have been trading for over 15 years now as a momentum, swing, and day trader.
My site is ZoZoStockWatch.com https://www.zozostockwatch.com/
The “@ZozoStockWatch” Twitter and Stocktwits handle comes from my high school
football days when I was called “Zo”.

l got the bug to get into the chef business long ago, so I went to culinary school and
became a career chef. After burning out in kitchens along with a waning passion for
food, I decided to get involved in trading. I hold an Associates degree in Accounting
and trades individual securities, ETF’s and inverse ETF’s on the Nasdaq and NYSE
markets.

What first influenced my interest in the stock market?

“I would have to say my Uncle Joe. He used to pick me up during the summer to give my
folks a break from the kids for 2 weeks. I remember driving up to Brewster, NY to spend
time with his family and he would have the radio on WCBS NY station, and he would
listen to the business reports closely. As he was driving, I remember he always wanted
to know what AT&T was priced at. He worked there and had stock in the company.
I would listen during the drive and would ask him questions. He would talk about
investing and companies. This was back in the 70’s. He would talk about profits,
earnings and the stock market. He would talk about dividends and how companies paid
money out to you if you owned shares. He used to have me watch ‘The Louis Rukeyser
show’… https://en.wikipedia.org/wiki/Louis_Rukeyser I was always fascinated with the
intro with the ticker tape sounds, and by the folks sitting around that big wooden table
talking business.

“Each day I wake up with enthusiasm and love what I do. I treat trading like a job that I have a passion for, but I keep in control. Being a new trader was stressful. I punished myself, did whatever it took to follow rules and drilled them into my head.”

What methods/strategies have you pursued that have failed for you in the past as
a trader?

“My biggest failures came from buying stocks ahead of earnings. I was new to trading,
and would read the reports. I would listen to the news about the company and think I
had the earnings plays figured out. Of course, I would hit on some but then lose on
others. This strategy failed more than it produced, so it had to be abandoned. When I
think about it now – it was just pure gambling. There wasn’t any real chart work
involved; it was just a guessing game.

When/what was your “ah-ha” moment? What was the breakthrough?

“Changing my mental frame of mind from swing trading to day trading by paying myself
as a stock moved in my favor was a big moment. As a swing trader coming into day
trading (that was a tough transition), was an ‘ah-ha’ moment in my thought process.
When I could see and understand the trade for myself; that made all the difference for
me.

I was investing in the 90’s in the dotcom companies such as DELL, INTC and MSFT
and making good money swing trading. It was incredible what stocks were doing. The
moves they would have were incredible, but then things changed. When you’re living
something, you never think of the worst. Most folks are positive thinkers, and during that
time it seemed, ‘boy, this investing is great.’ You buy these stocks they have great
stories of the future, so hold onto them.

Of course when you get complacent when investing, you have to really watch out. The
tide soon turned and the party was over. I didn’t get completely wiped out like many did,
but it was a big lesson learned about stock trading. Greed kills you, or it teaches you a
valuable lesson. You have to be emotionally detached and methodical.

So the ‘ah-ha’ moment came when I started taking some gains off the table by paying myself. Selling some of the positions, and then holding some. I started to also look at charts. I had a computer with a couple of monitors (you know, those old, huge ones.) That lead me to something called day-trading; make money each day in the market. I was working back then and couldn’t do it full-time, so I put it to the side but always in the back of my mind. Who doesn’t want to work for themselves and be the master of their own fate?

So around 2004, I took some time for myself and started day-trading. I joined services,
chatrooms and immersed myself into trading. Man, what a mistake that was (following
someone blindly.) They were nothing like the service I have created for traders. I did
this off and on for about 3 years. You can imagine, the beating I took. I didn’t realize it
at the time, but for the money I was losing, I was gaining it back in experience. I was
paying my ‘tuition,’ as they say.

It seemed after the 90’s the markets had changed. Stocks gave nice gains but they
could really hurt you with fluctuations. So that is when I became a day trader, and took
money from the markets. The ‘ah-ha’ moment came in those years by not just following
someone blindly, but seeing what was on the chart for myself. Like why was this guy
always taking the high of day break when the stock had been basing for 20 min before
and then got back up to the high of day? So the ‘ah-ha’ moment came when I wasn’t
just a chaser any longer, but started picking my own entry spots. I played stocks into
earnings, but didn’t hold through earnings. I didn’t over-trade like I had been doing in
those services I had joined that were pumping out plays so quickly, they would make
your head spin. Like a fool, in the beginning, I tried to play them all – ouch!

By becoming selective, becoming a hunter looking for setups that I liked, this created
that ‘ah-ha’ moment. It took 3 yrs to get there.”

How would you best describe your trading style?

“Momentum, swing, and day trader.
I trade 2-minute, 5-minute, 15-min 60 min and daily charts
I use base breaks, mostly flags. I’m very big on support and resistance.

My trading style now is patient – I don’t always have to be in a trade. I like to swing
trade and day trade. Now, I am very much in control of my emotions. I will take a loss
quickly, and not think twice because I keep them small. I go at each day as a business,
a job. I trade stocks in the news, that are going to have earnings that day after the
close, or have reported earnings that morning.

I trade stocks that are in play that have had moves and volume that week. I like to trade
and be done within the first 2 to 3 hours of the day.

I take parts of positions off as the stock moves in my favor, typically selling in 1/3 or
1/2’s increments.

I play levels – I look at charts to find the area this stock must get above or close to, that
will make shorts cover or where people will want to get in. I line my charts and watch
those levels. I look at candle action, watching for topping tails or bottoming tails on the
charts to get clues as to what levels are important on the time-frame I’m looking at.
At times, my goal is to evolve a day trade into a swing trade. Meaning, if I get in a stock
that takes a nice move in my favor, I’ll attempt to hold and swing the trade since I have
a cushion to try to extend the gain. However, this is after I have sold off some of the
positions.”

I won’t get crushed with my trading style any longer. My service is all about not
taking major losses. I teach Defense first on all trades. Be a Defensive Trader…..

What key rules do you apply to your own trading?

1. You must be in control
2. Don’t just follow someone blindly
3. Anything can happen
4. You don’t need to know what is going to happen next in order to make money.
5. An edge is nothing more than an indication of a higher probability of one thing
happening over another.
6. Every moment in the market is unique.”

 

EACH DAY WE START AT ZERO

Link for the Blog Article

Trading has become “Boring”

Link for the Blog Article

What do you look for in the stocks that you trade?

“I want stocks with volume and liquidity. I mostly trade individual names and look for
relative strength in sectors, and generally trade to the long side in my trading.
I want a stock with recent news or a sector in favor for that day. I’m looking for
consolidation and a level that I feel puts bulls or bears in control of that individual stock,
such as a base break up or down. I look for the level that puts the buyers or sellers in
control of that stock and lean my trade to get the move up or down.”

What do you feel sets the great traders apart from the rest?

“There is no such thing as a ‘great trader.’ If you start thinking that way, the market will
hurt you. If you start thinking you’re the greatest thing since sliced bread, you will soon
be humbled.

You must stay in control and stick to the position size you’re comfortable with. Take a
trade because you understand it. Sure, it may have been put on your radar by a
chatroom or twitter, but you must do your own work on that stock. On a 5 min, daily,
whatever time-frames you trade, make that trade your own. Take a trade and be able to
explain it to yourself, or as if someone was watching you and asking you questions.
With that said, in my opinion the best traders are set apart as someone that puts the
work in by looking at the market hours before it opens or the night before. Someone that
treats it as a job and not gambling.

Someone who when understanding the trade, takes correct position size and can
become mechanical in selling into gains, or taking small losses if the trade goes against
you.

‘Don’t let any one trade make you or break you’

What is your risk management approach?

“Usually no more than 100 to 200 per trade (depending what 100 to 200 is to your
account.) Some I can give a bit more room, but that’s usually enough to tell me I’m
wrong. Either get out and play it again, or move on to another stock.
Don’t let your ego get in the way of a trade. When I go into a trade, if it takes out that
level I’m looking for, I expect it to follow through. If I don’t get that, I become defensive
on the name and give it some room to trade, but not a whole lot. I can’t remember the
last time I took a full stop out. It comes over time in trading – you have a ‘market sense’
that you build through experience, so you know when you’re wrong, you feel it.
Let’s say I take 1000 shares of something. I’m selling if I get the move I want, in
increments. Now depending on the time of day, this can vary. Is it my first trade of the
day? A late morning trade? Am I up for the day? Am I down for the day?

If I’m playing a small stock, no way am I taking a hit of -.20 cents. Usually about .05 to
.10 is plenty of room to know if I’m wrong. Larger stocks you have to give a bit more
space; like a FB usually i have a .25 stop, but always adjust my position size
accordingly to the stock I’m trading, the time of day, or how my day is going.”

What trading moments make you the most proud?

I started trading in a service around 2004 and was losing money, but stuck with it. I had
bought the lifetime membership, but was losing so would have to go back to work to
make more money to trade. I kept studying day trading and would keep watching the
videos on trading whatever I could find I got the idea in about 2007 that I was going to
put my own trades in the room.

I used to post trades like ‘@@@XYZ long at 12.00 stop 11.89 @@@’ just to get them
noticed. Well at first this wasn’t cool (laughing)… but these were trades that I had
looked over and felt ‘hey this looks good to me and I think it is a go’… they started
working, and folks liked them. The owner of the service asked if I wanted to be a room
MOD (moderator.) I was pretty proud then.

Traders in the service were saying they ‘learned from Zozo, from the things he uses in
his trading.’ That made me feel really proud.

After 10 years of doing that, The Tradexchange reached out to me, and I became a
contributor. Another very proud moment. They helped me with logistics and the backend
of running the service which has been a huge help.

When I turn a trader around who is losing money, these are proud moments.

The most upset?

“My worst years were 2004 – 2007. I was more of a ‘gambler’ in my trading. I had the
day trader bug; big bets and poor control. My trading improved after 2007, as I treated
my trading more as a business and became more selective. I took the gambling out of
trading by staying away from earnings plays prior to the report. Once I did that, my
trading improved.”

What books, websites, or other resources would you recommend to those
wanting to broaden their trading knowledge?

“The book I’d recommend is ‘Trading in the Zone’ by Mark Douglas

What advice can you offer readers regarding position sizing?

“I think there is a saying that goes: If you’re screaming ‘oh my gosh,’ nail-biting or
begging for mercy, your position size may be too big. Or if you find yourself saying
‘please let me get this money back and I’ll never do this again,’ then the size you’re
trading may be a bit too large.

You don’t have to play large position size to make a living in the stock market.

I see in social media where folks proclaiming that they traded 50k shares on something. I’m
sure they’re doing it, and when it works, it is great, but most don’t tell you about the losers and how it feels when it doesn’t work.

The average trader doesn’t need more than 1k shares to make a decent living in the market. A new trader should trade just 300 to 500 shares and just try to be green each day.”

A lot of traders plateau and have trouble evolving beyond this level. What advice
can you give to them?

“To improve is to change; To be Perfect is to Change often.” ~ Winston Churchill

I love that quote.

The market is always changing, but if you stick to your core rules and maintain control,
you will keep surviving the market.

Additionally, its okay to try new services if you’re in a rut. Always keep learning and
trying to improve. If you don’t like trading gap plays in the morning and that’s what is
hurting you, then stop playing them. Wait until after 10 am (ET) to trade or trade off a 15
min chart for entries.

The core rules will remain: stay in control, keep in mind anything can happen, and
protect capital always.”

Now that you have developed into a successful and profitable trader, what are
you doing to better your skill?

“I think what helps me the most now is finding trades for others. As odd as that may
sound, it’s a lot of pressure each day by putting out trading calls. It makes me more
conscious of what I’m looking at before I call it within the service. Also, during the heat
of the trade, I may not be able to explain but later if they have questions, I gladly go
through it with them and educate.

As a mentor, I do videos for folks on the indicators I use. This helps to hone my skills
and gives me another opportunity to revisit my thought process and reinforces my
methodology.”

ZoZoStockWatch YouTube Channel
https://www.youtube.com/user/Landm19/featured?view_as=subscriber

How I set up my Trading Zozo’s Charts What I have on my Charts

How to use VWAP


“I also write so that I can help mentor others. I do it so that they can avoid the
mistakes that I made when I was a new trader.

Stop Trading to recover
Link for Blog Post

Any habits or methods that you use that others might think is unorthodox?

I start my trading day at 5:30 am each day. Not sure if that’s unorthodox, but I like to
work into my trading day slowly. Reading and looking at charts. It works for me. I like
the quiet of the morning to prepare for the day ahead. I start putting info into
ZoZoStockWatch.com around 6:30 am et around this time and start absorbing
information while looking at what I may trade and call for the service.”

For those who are just beginning to get their feet wet, what advice would you give or
direction would you point them?

“Let’s see, I haven’t been new for a long time so this may be a tough one for me. Let me
start off this way:

To me charts are the most important thing. So you need great charts. I like/love TC2000
charts – I have the Gold membership with real-time everything. I’m involved in

TheTradeXchange, and in my opinion you will need a service like this. Since TX is the
most reasonably priced one, why not start here? I’m all about keeping costs down for
new traders, any trader for that matter.

If you are going to day trade and swing trade, keep 2 separate accounts for them if you
can.

Expect long hours. You must think like an entrepreneur; this is your business and you
must keep costs down. You have no boss watching over you telling you what to do. You
have to be the boss to get yourself up each day to do the work. It is up to you to take
the trade or pass on the trade – be selective.

Keep your losers small. Check that ego. Even if you think it was supposed to work and it
didn’t, move on. You might have another opportunity if you are able to maintain
self-control.

You are a new trader. You’re supposed to have losing trades in the beginning, because
you’re still trying to discover what type of trader you are. When you first start, don’t try to
make a living off of trading. You’re a student who is learning. Don’t take big share size.
Keep a job at night and trade during the day.

By keeping a job, you take pressure off yourself, which is a must. Control is the biggest issue. Try to find out what trader you want to be and learn all you can while you have a paycheck coming in. This is not a get rich quick game. This is a job, a business and you want to keep treating it as such.

When you first start looking at charts, start with no indicators, no moving averages.
Watch candles and volume. Keep it simple and watch the action. Draw lines of support
and resistance.”

Zozo recommends the following links:

Support and Resistance
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:support
_and_resistance

A trader’s Guide to using fractals
https://www.investopedia.com/articles/trading/06/fractals.asp

Any advice for those traders who are already successful?

“Listen, everyone has to make a living and if you are a successful trader, the best thing
you can do is help someone who is starting out or going through a tough time. I understand time is money, and life is expensive but let’s keep services reasonable. If you want to run a service for trading or mentoring, don’t overcharge. Make a service
that can help others at a reasonable price. I see so many services that charge huge amounts and give traders and Wall Street a bad reputation. ‘That guy charges 500/month for his service makes money off his subs.’ Let’s keep it reasonable out there
for traders. That is my goal Yes, we have to pay the bills, but we can do it and offer a reasonable price for members. If you re successful, the greatest reward can be in helping others at a reasonable price.”

What would you like your “legacy” as a trader to be?

“My Dad passed away and it was very sad. Turns out, you find out a lot about a guy after he passes, funny how that works. He did a lot of helpful things for folks and they appreciated it. So in trading, I would like to be the guy that helped a lot of folks. I love when I can show someone an indicator that may help them or turn their ship around. Or
be apart of a service that gives value to many. Something that is respected and useful.

As a trader, if they say ‘he took the time’ that would be awesome.”
Email ZoZoStockWatchinc@gmail.com
Follow on Twitter @ZoZoStockWatch
Follow on Stocktwits @ZoZoStockWatch
My Website https://www.zozostockwatch.com/