Introduction

In our recent interview, we had the opportunity to sit down with Sam Shames, VP of Options at Simpler Trading. During our conversation, we gained insight into his personal life, lessons learned throughout his trading journey, and his advice for new traders. Sam has been through various market conditions, including the 2008 financial crisis and the Covid-related flash crash in 2020. He is a seasoned professional who demonstrates the importance of hard work and dedication in trading.

To listen to the interview, click below!

1 Minute Recap 

• Sam started trading stocks in college during the 2007 financial crisis and transitioned to options trading in the last five years.
• Sam sees money as a big game and has always been competitive, viewing trading as the ultimate game of psychology for every trader.
• Discipline is crucial to becoming a successful trader, and following a trading plan is a key component of discipline.
• Sam recommends taking a top-down approach and understanding the macro picture before making short-term trades.
• Emotions can lead to a lack of discipline, so traders should fully understand the risk before taking a trade and be prepared to face unsolved traumas.
• Sam advises aspiring traders to embrace the difficulty and be prepared to work hard, as the market is composed of sharks and killers that would be winning Nobel Prizes if they weren’t on Wall Street.

Personal Background

To get to know Sam better, we asked him what he would be doing if he wasn’t a trader. Surprisingly, he mentioned that he has always been interested in writing, specifically writing for shows like The Simpsons. If Sam wasn’t trading, he would be writing his own screenplays or trying to join a comedy show to showcase his creativity.

When asked what he does for a living, Sam replied that he trades stocks, although most people need clarification on the specifics of options or futures trading. While Sam’s family was initially hesitant about his trading career due to the risks involved, they have become supportive after seeing his success over time. Having a strong support network has been instrumental in his journey to becoming a successful trader.

Sam’s interest in trading began with his fascination with finance. He has always viewed money as a game, and he believes that money only exists in our minds. This mindset has helped him control his emotions when he sees digits on the screen. For Sam, the market is the ultimate game of psychology for traders. Identifying pain points for each side of the chart has allowed him to view trading as a big game.

Trading Journey

Like most successful traders, Sam’s trading journey was not linear. He started trading mostly stocks during his college years in 2007, a turbulent time for the market. Sam did not have a mentor but instead chose to dive into the chaos and learn as he went. He transitioned from equities to leveraged ETFs, then futures, and has focused solely on options trading over the past five years. One of the reasons Sam has found a home in options trading is the flexibility it offers. While his trading style has remained relatively consistent, the ability to use options to make money in various market conditions has allowed him to grow as a trader.

Sam’s Big Loss

As Sam was learning to trade, his career’s low point had happened early. He recalled starting with a $25,000 account and was able to grow that to $35,000 within a couple of months. After the early success, his confidence caused him to be oversized on some losing trades and blow nearly half the account in a single day. He was still in college at this point and skipped class to make the trades that became so devastating. After sitting in his dorm, he had that moment where he realized that this was going to be a lot harder than he initially anticipated. Sam had to ask himself if he wanted to keep going or quit and work at Subway. Even after a heartbreaking loss, the answer was easy for Sam as he planned to learn from his mistakes and continue to develop as a trader. None of the big winners and big losers in his trading career have stuck with him as much as the losses from that day. In reality, being at his lowest point the velocity created at that time was vital to reaching the next level. 

Trading Advice

As a trader, Sam Shames has learned many valuable lessons over the years, which have helped him become the successful trader he is today. One of the most important lessons he has learned is the importance of discipline. For Sam, discipline is the most significant difference between a profitable and a non-profitable trader. He believes discipline should be seen everywhere in trading, but most importantly, in following a trading plan.

Sam stresses the importance of taking a top-down approach to trading. This approach has allowed him to use the macro picture to help paint the micro picture for his shorter-term trades. By looking at the Nasdaq to better understand the larger index first, he can get confirmation that the index, sector, and stock all look the same without any divergence.

As Sam was learning to trade, he had to overcome a major obstacle: the discipline aspect of trading. Returning to viewing the market as a game, Sam realized that he needed to have the ultimate patience and discipline to be successful. This realization helped him become a better trader, and he believes that it is one of the most important aspects of becoming a successful trader.

Markets And Emotions

Another key factor that can lead to a lack of discipline in trading is emotions, and they are heightened in trading. Sam recommends handling emotions by fully understanding the risk before taking a trade. You have to ask yourself if everything goes wrong, am I okay with losing it all? Traders tend to become more emotional as the fear or anxiety of losing money goes beyond their emotional capacity. Sam compares sizing into a trade to a hammer, that once it starts to pick up steam, it becomes harder to control. Sometimes even having a larger size can equate to smaller profits, due to not being able to hold onto a winning trade with that size.

When asked what kept him going after being at the lowest point in his career, Sam had a simple answer – he knew he could do it. Also, he knew the reason for failure was a lack of discipline, and if he could overcome that, then he would be where he wanted to be. The simple answer to the bad trade was he was oversized and needed to get out when he should have. Sam could identify the problem and look at it with confidence that he could fix it. After digesting the loss, Sam became eager to practice his lessons. It was back to the drawing board, but he vowed a disciplined trading plan this time.

Embrace The Struggle to Become a Great Trader

Traders should embrace the difficulty and refrain from getting caught up in misconceptions that trading is easy. Sam advises that a single indicator will not be the magic ticket to success. Come to the game ready to work. Wall Street is composed of sharks and killers that would be winning Nobel Prizes if they weren’t on Wall Street. You are going against the biggest and best brains on the planet when it comes to finance. The market is the best psychologist, and you cannot lie to it. The market will reveal everything about you as a person and trader. Any unsolved trauma, the market will make you face it. This experience will be challenging, but put in the work, and it will be worth it.

Sam has come a long way since his college days of trading mostly stock equity back in 2007. Starting with equities, he transitioned to leveraged ETFs, then futures, and has focused purely on options over the last five years. One of the biggest reasons Sam has found a home with options trading is the flexibility that comes with options. He has kept a relatively similar trading style, but the ability to use options to make money when the stock goes up, up slow, up fast, down, down slowly, down quickly, or even sideways has allowed Sam to grow into the trader that he is today.

Once you have established a plan and trading strategy, Sam advises sticking to it and avoiding the temptation to deviate from the plan. It can be easy to get caught up in emotions and make impulsive decisions, but having a clear plan and strategy can help to avoid this. Sam also recommends regularly reviewing and adjusting the plan as necessary based on market conditions and performance.

The Importance of Risk Management 

Another key lesson that Sam has learned throughout his trading journey is the importance of risk management. He emphasizes that traders need to have a solid understanding of their risk tolerance and develop a risk management plan accordingly. This includes setting stop-loss orders and managing position sizes to minimize potential losses. Sam acknowledges that losses are an inevitable part of trading, but managing risk effectively can help to minimize their impact and preserve capital for future trades.

In addition to risk management, Sam stresses the importance of continuous learning and education for traders. He emphasizes the need to stay up-to-date with market trends and developments and stay informed about new trading strategies and techniques. Sam himself is constantly learning and refining his own trading strategies and encourages others to do the same.

When it comes to advise for aspiring traders, Sam emphasizes the need for patience, discipline, and persistence. Trading can be a challenging and emotional journey, but Sam believes that with hard work and dedication, anyone can become a successful trader. He encourages new traders to start with a clear plan and strategy and to stick with it through the ups and downs of the market.

Overall, Sam’s journey as a trader has taught him valuable lessons about the importance of discipline, risk management, and continuous learning. His advice for traders is to embrace the challenge and commit to a plan and strategy that works for them. With the right mindset and approach, anyone can achieve success in the world of trading.

Having A Strong Support System Helps

Another important factor to consider when it comes to achieving success in trading, according to Sam, is having a strong support system. This includes both emotional support from friends and family, as well as educational support from mentors or trading communities. Sam attributes a lot of his success to having mentors who were able to provide guidance and share their own experiences with him. He also stresses the importance of being part of a trading community where you can connect with other traders, share ideas, and learn from each other’s successes and failures.

In terms of the current market environment, Sam acknowledges that it has been a challenging time for traders, especially with the recent volatility caused by the COVID-19 pandemic. However, he believes that these uncertain times also present opportunities for those who are willing to put in the work and adapt to changing market conditions. He advises traders to stay disciplined and stick to their trading plans, even when things get tough.

Sam’s Final Words

As the interview draws to a close, Sam leaves us with some final words of wisdom for aspiring traders. He emphasizes the importance of being patient, disciplined, and dedicated to the craft. He reminds us that trading is a long-term game, and that success doesn’t happen overnight. It takes time, effort, and a willingness to learn and adapt. Sam’s journey is a testament to this, as he has worked hard over the years to develop his skills and become the successful trader he is today.

Conclusion

In conclusion, our interview with Sam Shames provides valuable insights and lessons for traders of all levels. From his early struggles with discipline to his success with options trading, Sam’s journey is a reminder that anyone can achieve success in trading with the right mindset, dedication, and support. We thank Sam for taking the time to share his story with us and wish him continued success in his trading career.

To learn more from Sam Shames, consider joining his weekly market update called This Week In The Markets.