How a 24-year-old stock trader who made $8 million is trading in 2022

  • In 2017, Jack Kellogg started day trading at the age of 19.
  • This year, he has made slight adjustments to his strategy to remain profitable during bear market rallies.
  • He says every trader should find their own strategy and use others’ approaches as a guide.

In 2017, Jack Kellogg started day trading at the age of 19. He was finishing high school and watching his friends go off to college. Without solid plans, he began to worry about what was next for him.

He had heard about stock trading from a friend and became interested in it. Kellogg’s goal was to find a way to be financially comfortable outside of a 9-to-5 salary or job. However, his first attempts fell through after working as a valet, depositing 7,500 $ of his earnings in a trading account and lost a few hundred dollars.

Kellogg decided to take a step back and try his luck with the paper business. He also invested in an online educational stock trading platform taught by Timothy Sykes, a business professor and former penny stock trader known for claiming to turn his bar mitzvah cash gift into over a million dollars. earning dollars.

In 2020, he finally started reaping the rewards of his efforts. Kellogg’s tax returns, seen by Insider, showed he reported more than $8 million in day trading earnings in 2020 and 2021. His big earnings started in 2020 when he had a total income of $1.6 million. In 2021, this amount grew to a total income of $6.5 million.

Its earnings took off alongside the raging bull market that has engulfed most of the past two years. He found that he was profitable on two-thirds of his trades. In a previous interview with Insider, Kellogg shared six key things he does when setting up a winning trade.

This year has not been so easy for traders. Kellogg began to notice a negative stock market trend in November and December. In January, he suffered a loss of $100,000. Since the start of the year, its win-loss ratio has also fallen to 50%. The negative trend prompted him to slow down and rethink his strategy, he said.

His first adjustment was to lower his profit expectations. Instead of aiming to beat his previous years, he was aiming to earn $1-2 million for the year. So far, he is on track to achieve his goal. Year-to-date, he has unrealized earnings of more than $1 million, according to his monthly Cobra brokerage statements. In August alone, he made over $280,000 in winnings.

“I think a lot of people who pushed themselves to do better in 2022 than in 2021 probably gave back 50% or more of their profits, unfortunately, because the market was tough,” Kellogg said.

He continued: “And I felt like in 2020 and 2021, 90% of people were making money. And now I feel like, in this market, it’s like 10% people were making money because you have to be more selective. You have to take profits faster. And people were trained to hold out in 2020 and 2021 because every dip was bought and it kept going up more and more.

In July, Kellogg either stopped using some of its strategies or readjusted them slightly to navigate the bear market rallies it is currently trading.

6 adjustments he made

Instead of immediately snapping a full position, Kellogg moves into a trade while moving his stop loss higher. But this year, he is more cautious when moving in a position. In the past, he could continue to move in a trade even after seeing the stock price increase by 10%. Now it stops adding once the price has increased by 1% to 3%.

It takes profits sooner. Once Kellogg is up about 3%, he exits the trade. In the past, he’d been much more forgiving when he was in office, sometimes keeping stock throughout the day. The high trading volume dampened it.

“Even if the stocks that I’ve been in for a long time had a big drop, it would just be like an additional opportunity for me,” Kellogg said of his previous strategy. “But in this market, you want to get out before that big drop even happens.”

He doesn’t constantly buy the dips anymore. If it does, it’s after a multi-day sell-off, when the market was down between three and seven days, he said. This is because not all dips are redeemed during this bear market.

On September 7, Kellogg attempted to buy the Globalstar, Inc. (GSAT) drop after the stock price hit $3 intraday. He entered his position at $2.28 per share, but the stock never rebounded. He exited his position at the stock price of $2.22. During the 2021 bull market, a stock like this could have garnered more attention and rallied all the way up to $5, he said.

“Usually a good sign for me is when you start seeing everyone bearish. When you see the fearmongers come out and say the market is going to crash 80% or whatever, that’s that’s usually when it’s a good place to bounce back,” Kellogg said.

For example, he recalls observing seven red trading days in a row between August 26 and September 6. The S&P 500 plunged about 7% during this period. Eventually, it was followed by a four-day bounce before the stock market continued its downward trend.

Ideally, he sticks to trading during the first hour the market is open when volatility is at its peak.. In the previous two years, it has seen volatility throughout the day and stocks may maintain their trends for longer, he said. This year, there is less action.

“Volatility is highest at the open and close, but I’ve noticed even more in this market because there are far fewer traders,” Kellogg said.

For much of August, he traded stocks of popular memes such as AMC (AMC), GameStop (GME) and Bed Bath & Beyond (BBBY) as they saw some rallies.

He’s more cautious when it comes to tracking flare-ups. His previous strategy relied heavily on trading breakout patterns, which is when a stock’s price breaks out of its support or resistance levels with increased volume. Kellogg has often taken a long position after a stock has broken through its resistance level.

He says this approach seemed to work for him about 60% to 80% of the time in 2021. This year, this strategy only worked about 10% to 20% of the time. Now he uses the S&P 500 to help him assess whether a breakout is worth trading.

“If the S&P 500 goes up and we have a breakout, the odds of it working out are much higher than if the market goes down,” Kellogg said.

He thinks the flip side of this strategy, which is shorting a breakout, would now work better. However, he doesn’t take this approach because he doesn’t want to change his mindset in a way that could impact his long-term performance. Instead, it makes fewer transactions.

“I don’t want my thesis to change or not trust breakouts or even get shortened in breakouts. I want to be able to make this transition to buying breakouts again quickly because breakouts will work just fine a once that bear market is over and we start to go back up,” Kellogg said. “So I save my mentality and my strategy to always be aggressive when I think the time is right.”

He normally looks at headlines to see why a stock’s price may rise. But news that moves the market doesn’t matter as much in an environment of short rallies. Therefore, it is less focused on why a stock moves.

For Jack, these slight tweaks worked. However, he noted that not everyone will succeed by following the exact same strategies. He regularly talks to other top traders to find out what they are up to. But he only uses their strategies as a guide. If he tries to mimic their exact steps, he’s going to be wrong, he said. This is because he does not have enough conviction in their processes and may not be comfortable with their risk management styles.

“I’ll end up chopping, verses when I follow myself and understand and know what to expect. Even if I don’t have such good commercial execution, my mental execution will be much better,” Kellogg said. .

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