Veteran Wall Street Trader Reveals Strategies Used At Stock Exchanges
Summary
TLDRIn this insightful video, veteran trader Richie Nasso shares his 40-year journey on the New York Stock Exchange floor, emphasizing the importance of understanding market algorithms, risk management, and trader psychology. He reveals the significance of stop orders in successful trades and offers practical advice on scaling trades and managing emotions. Richie's experiences highlight the necessity of preparation, discipline, and the reality that trading is a marathon, not a sprint, debunking the myth of get-rich-quick schemes in the stock market.
Takeaways
- 🤖 Algorithms dominate the stock market, not big institutional players or hedge funds.
- 🚀 Richie Nasso started as a runner making $60 a week and became one of the most powerful traders on the New York Stock Exchange.
- 💼 Nasso's initial business was trading IBM, which at one point constituted 19.78% of the S&P 500.
- 🌐 Nasso opened offices in London and Switzerland, trading for some of the largest institutions in the world.
- 📈 He executed the first program trade in the history of the NYSE, involving 10 million shares.
- 🎓 Nasso's educational background is high school only, emphasizing the importance of intuition and experience over formal education in trading.
- 🛠 Nasso's routine involved early mornings, connecting with European clients, and constant study of market conditions.
- 📊 Emphasis on the importance of understanding technicals, emotions, psychology, and the role of algorithms in market movements.
- 🔁 Nasso recommends against single entry trades due to their risk, suggesting traders should scale into their positions.
- 🚨 He warns of the manipulative tactics by market makers who can see order flow and stop losses, advising traders to be aware and act contrarily.
- 💡 Nasso's final advice is to manage risk, study diligently, and approach trading as a marathon, not a sprint, with no shortcuts to success.
Q & A
What is the main point the speaker emphasizes about the control of the stock market?
-The speaker emphasizes that algorithms, not big institutional players or hedge funds, control the stock market by creating liquidity and volatility at premium and discount levels.
What was Richie Nasso's initial role when he first started at the New York Stock Exchange?
-Richie Nasso started as a runner at the New York Stock Exchange, making $60 a week.
What stock did Richie Nasso begin his trading career with?
-Richie Nasso began his trading career with IBM, which at the time constituted 19.78% of the S&P 500.
How did Richie Nasso's trading business evolve over the years?
-Richie Nasso's trading business evolved from trading one stock, IBM, to controlling 30% of the daily volume and building up a clientele that included major institutions and corporations.
What was the significance of April 19th, 1983, in Richie Nasso's career?
-April 19th, 1983, was significant in Richie Nasso's career because he executed the first program trade orders in the history of the New York Stock Exchange, involving 10 million shares.
What is Richie Nasso's educational background in finance?
-Richie Nasso does not have a formal educational background in finance; he has a high school education and attributes his success to his gut feel and experience in trading.
What is Richie Nasso's advice for traders regarding managing emotions and psychology in trading?
-Richie Nasso advises traders to stay centered and focused, to think like a criminal to avoid being swayed by emotions, and to understand the market makers' tactics to not be taken advantage of.
What trading strategy does Richie Nasso suggest for new traders in the stock market?
-Richie Nasso suggests that new traders should study charts, technicals, emotions, and psychology, and emphasizes the importance of understanding algorithms' role in controlling the market.
What does Richie Nasso recommend for traders dealing with large orders and managing risk?
-Richie Nasso recommends not putting all eggs in one basket and using a scaling system for entering trades to manage risk effectively, rather than relying on single entry trades.
How does Richie Nasso approach taking profits in his trades?
-Richie Nasso likes to take 75% of his profits off the table while keeping the other 25% to let it run, using trailing stop orders to manage the remaining position.
What is Richie Nasso's view on day trading in the current market environment?
-Richie Nasso believes that day trading is the way to be in the current volatile market environment, as it allows for capital to be kept moving and managed effectively.
What is Richie Nasso's final advice to traders watching the video?
-Richie Nasso's final advice is to limit risk, put in the necessary work to prepare, and understand that trading is a marathon, not a sprint, with no get-rich-quick schemes.
Outlines
🚀 Introduction to Stock Market Algorithms and Trading with Richie Nasso
The video script opens with an introduction to the influence of algorithms on the stock market, suggesting a need for a criminal-like mindset to navigate its complexities. The speaker is positioned at the New York Stock Exchange, setting the stage for an interview with Richie Nasso, a 40-year veteran trader. The summary highlights the speaker's intent to explore Richie's background, his journey in the stock market, and the evolution of trading. It also previews the valuable insights on risk management, trading strategies, and trader psychology that Richie is expected to share.
🏆 Richie Nasso's Trading Experience and Market Control
This paragraph delves into Richie Nasso's illustrious trading career, emphasizing his rise from a $60-a-week runner to one of the most powerful traders on the New York Stock Exchange floor. It underscores his specialization in trading IBM, which once constituted a significant portion of the S&P 500. Richie's narrative includes his experience with the first program trade in NYSE history and his remarkable ability to manage large volumes of stock on behalf of major institutions. His educational background is revealed as being limited to high school, with his success attributed to a keen intuition developed through a life of gambling.
📈 The Discipline of Trading and the Role of Algorithms
The focus shifts to the rigorous routine and preparation necessary for success in trading. Richie Nasso discusses the importance of understanding order flow and the absence of shortcuts in the trading business. He reiterates the dominance of algorithms in controlling market movements, explaining how they create liquidity at premium and discount levels. The summary also touches on Richie's trading strategies, particularly his approach to buying against collapsing technical areas, which contrasts the common tendency to follow the market's trend.
💼 Personal Trading Strategies and Dealing with Market Volatility
Richie Nasso shares his current trading focus on the ES future market, highlighting the importance of liquidity and the impact of stock market movements on future markets. He discusses his personal trading methods, including his preference for trading in large volumes and his avoidance of small retail transactions. The paragraph also addresses the psychological aspect of trading, with Richie advising viewers to stay centered and to think like a criminal to outsmart market manipulations, particularly around stop orders.
🛠 Risk Management and the Art of Scaling Entries in Trading
This section emphasizes the critical role of risk management in trading, with Richie Nasso advocating for a personalized approach based on individual tolerance and market conditions. He warns against the dangers of single entry trades and suggests scaling into positions to manage risk effectively. Richie also talks about his profit-taking strategy, which involves securing a portion of profits while allowing the remainder to ride the market's momentum, using trailing stop orders to lock in gains without missing out on potential upside.
🌐 Final Thoughts on Trading, Investing, and the Importance of Preparation
In the concluding paragraph, Richie Nasso reinforces the message of limiting risk and exposure, urging traders to invest time in preparation and study. He likens trading to a marathon rather than a sprint, dismissing the idea of get-rich-quick schemes. Richie's final advice is to approach the market methodically, with an understanding that success comes from consistent effort and learning from experienced traders.
Mindmap
Keywords
💡Algorithms
💡Stock Market
💡Risk Management
💡Trading Strategies
💡Technical Analysis
💡Psychology
💡Floor Broker
💡Stop Orders
💡Day Trading
💡Liquidity
💡Volatility
💡Futures Market
Highlights
Algorithms control the stock market, not institutional players or hedge funds.
Richie Nasso, a 40-year veteran trader, shares his experience on the New York Stock Exchange floor.
Nasso's trading career started as a runner making $60 a week and evolved into being a powerful trader.
He traded IBM, which accounted for 19.78% of the S&P 500, a significant market influence.
Nasso executed the first program trade in NYSE history involving 10 million shares.
His educational background is high school with no formal finance education, emphasizing the importance of gut feel and adaptability.
Nasso's routine involved early mornings, connecting with European clients, and studying market conditions worldwide.
He emphasizes the importance of preparation, with no shortcuts in trading.
Nasso recommends studying charts, technicals, emotions, and psychology for success in trading.
Market makers do see order flow and stop losses, and they use this information to their advantage.
Participating against stop orders can be a successful trading strategy.
Nasso's personal trading now focuses on the ES future market for its liquidity and relevance to stock market movements.
Emotional control is crucial; Nasso suggests thinking like a criminal to stay ahead of emotional trading traps.
Risk management is key, with no set parameters as it's relative to individual tolerance and market conditions.
Avoid single entry trades; instead, use a scaling system to manage risk and average entry points.
Nasso advises taking 75% of profits early and trailing the rest with stop orders for potential further gains.
Day trading is Nasso's recommended approach in the current volatile market, favoring active management over buy-and-hold strategies.
He warns against get-rich-quick schemes and emphasizes the importance of methodical preparation and study.
Transcripts
the first thing you really need to know
and understand is that the
algorithms control the stock market the
algorithms think you have to think like
a criminal is that H the stock market
works okay please tell well I'm not
saying everybody's a criminal don't get
me in trouble but what I am and I'll
give you a real secret about this place
down here in the day okay one of the
most successful trades out of any trade
that has ever taken place in this
building I am here at a New York Stock
Exchange today right here on the balcony
today I'm going to visit a 40-year
veteran trader who used to work on the
floor of the New York Stock Exchange
over the last few decades this Trader
has worked at several major Financial
organizations and witness the evolution
of trading join me today to meet Richie
nasso in this video you're going to
learn how he got into the New York Stock
Exchange his background and career
through the evolution of trading his
experience working here at a New York
Stock Exchange Pro tips about risk
management trading strategies including
entries and exits for Traders today and
even more tips about risk management
Trader psychology and discipline so
please join me today and make sure to
smash the like button and that's
[Music]
go what's up Traders I'm here in the New
York Stock Exchange with Richie nasso
hey Richie how are you today wonderful
Shay thank you so much for having me
thank you if you could tell audience
briefly uh what kind of Trader are you
and what did you used to do here on the
New York Stock Exchange oh my God uh I
mean coming back here brings out
memories that you can't even imagine uh
I walked into this building as a as a
runner uh making $60 a week and uh got
myself into an area where I will humbly
say uh I was one of the most powerful
Traders down here I started my business
trading One stock and that was IBM IBM
just one stock One stock in the
beginning and to put that in perspective
uh IBM was
19.78% of the S&P 500 yeah today's
biggest component is Apple at
4.78% so my customers uh we controlled
from One customer yeah who happened to
be Stevie Cohen the owner of the Mets
from one customer I built that up to 30%
of the volume a day and the most
important stock emotionally and every
other way that you can imagine and the
trading experience from that yeah is
incredible and how many years were you
working on the floor here well I mean I
started on the floor and I I'm almost
embarrassed to say this in
1965 making $60 a week you know and so I
spent I was here to 2,000 okay and uh
you know in between that I started two
broker dealers open up an office in
London open up an office in Switzerland
and C to in I did not have a retail
client and C to the largest institutions
in the world and what was the largest
order you executed in one day oh my god
well I executed the first program trade
orders in the history of the New York
Stock Exchange and there was uh 10
million shares involved in that oh wow
at April 19th 1983 if you want to put
that in perspective wow okay uh you know
I had 5 million shares of every S&P name
to buy Market on close and of course the
other side of the trade added up to
almost 10 million shares oh and what
what what's your education background
did you have any former education in um
in finance I guess no I was just a kid
that grew up in a very tough
neighborhood in New York City and uh had
a you know gambled on anything my whole
life basically so my my background is
high school I graduated high school and
and that's it that's the end of my
background my gut feel yeah and how my
how my being took to the gambling aspect
of this place was extremely important
yeah to be able to be
ambidextrous and have 10 or 20 orders in
my hand at every different level um
really played out very very well for me
as crazy and as basic basic as it may s
it was extremely important for what I
developed yeah tell us a little bit
about what your routine was like working
as a floor broker here I uh when I had
my European offices I started I I left
my home at like 6:00 a.m. in the morning
came here uh got went to my office I had
an office right now right across the
street and started reaching out to my
European clients and and do it what what
what business owners do with their
clients and then you know studied a
financial study what's going on study
what's going on around the world yeah I
mean this is a business where you have
to prepare it doesn't really matter what
level you're at folks from a retail
Trader there are no shortcuts in this
business you have to learn and you have
to put in a time to learn or else you
know it is a too difficult of a
situation and too difficult to beat this
market and then what do you do after the
open till close you know what I do is
concentrate on the order flow I was is
entrusted with millions of shares of
stock at my discretion from the likes of
Vanguard to the likes of the IBM company
itself for their corporate repurchase
order and so I would watch the
technicals on the big board that's
displayed right there that's the only
thing we had no Bloomberg machines no
nothing you didn't have the Bloomberg
terminal back then no no okay Bloomberg
I we nobody knew what Bloomberg was
except a very rich person for Traders
watching this video right now now if
they want to eventually do what you did
as a floor broker here on the New York
Stock Exchange what do you recommend
them to do what study like how should
they work to get here I mean you know
there's not one factor involved in
learning this business okay you you you
know you need to study charts you need
to know technicals uh you need to know
emotions you need to know
psychology I mean uh and you the first
thing you really need to know and
understand is that the
algorithms control the stock market the
algorithms not the big institutional
players not the huge hedge funds not
anybody it's the algorithms that control
the market what do I mean by that well
it's very very simple you have premium
in a market on a day-to-day basis
premium level and you have discount
levels and if the market is moving up
towards a premium level yeah the
algorithms are going to go to that area
oh I see to create liquidity okay
conversely speaking if the market is
coming down and the direction is lower
the algorithms are going to go they're
going to go to that discount area and
they're going to create liquidity oh and
they're going to create volatility to
get the fractions moving you know some
of the biggest trades are failed
breakdowns I hope I'm not getting too
technical oh that's okay some of the big
some of the big viewers need to learn
this some of the biggest trades that I
make is buying against technical areas
that are collapsing yeah that's when you
should be buying and everybody else
they're pushing out of the marketplace
sorry you my Lamborghini how dare you I
touched on Lamborghini I'm sorry you got
to be against the grain in the stock
market today okay you you don't want to
short a failed breakdown in a technical
area you know want to buy a break out in
a technical area you want to do the
opposite in those particular areas I
mean that may be too technical I'm sorry
if it is but that to me if you
understand if you hear what I'm saying
and think about what I'm saying it will
help you down the line dramatically
thanks for sharing so much tips a lot of
technicals with our um audience watching
this so how does that relate to how you
are personally trading today are you
using more technicals and what kind of
asset classes are you Trading nowadays
yeah I mean I trade the es future Market
only I I've traded uh billions seriously
billions of shares of stock I I I just
don't see the value in buying 500 shares
of Microsoft at
$330 a share to try to make 50 cents
that's not what I do that's not the way
I think this Market should be navigated
I mean I have different accounts but I I
I don't trade some accounts I just have
you know income stuff in and blah blah
blah but I trade the es future Market on
a day-to-day basis only I RAR have
positions going out at night sometimes I
do depending oh okay last night I did
okay last night I did I was I told you
earlier I was long S&P micro contracts 5
of them only because of the huge sell
off yesterday yeah and you know I get up
this morning got dressed to come here
and meet you and before I did I hit sale
sold I see up 11 and A4 handle
it was a quick 250 bucks and that's it I
paid for my trip in by car okay but
anyway I trade the future Market only I
think it's a place to be especially for
younger younger not younger so to speak
but traders who are starting out and
trying to learn this business uh the es
future Market be becomes incredibly
liquid uh uh you know you can trade the
the main contract the mini contract it's
called for
$225,000 a contract yeah or you can
trade the micro contract for about 45
50,000 a contract and air liquid or the
NASDAQ futures which a little bit Wilder
uh or the ym which is a little bit
Wilder but the future markets provide
liquidity and nothing can happen in the
stock market without affecting the
future markets and how do you help the
Traders you trade with whether it's
futures or any asset class how would you
recommend traders to deal with
psychology and managing their emotions
yeah
uh emotions are a whole deal you need to
stay centered stay centered you know uh
if you get yourself in trouble and
everybody does and whether you're long
and it's you're getting killed or
whether you're short and you're getting
killed whatever it is yeah you can get
yourself out of it you can get yourself
out of it but if you're not focused if
you're not centered yeah it's going to
be very difficult think you have to
think like a criminal a criminal is that
how the stock market works okay please
tell I'm not saying everybody a criminal
don't get me in trouble but what I am
but what I am saying is you have to
think like a criminal okay because if
you think like a criminal the emotions
will not get the best of you if you can
figure out what they're trying to do to
make you emotional I see all right what
they're trying to do to make you
emotional all right you're going to be
way ahead of the game so I have a
question for you so there's um there's a
lot of saying online retail Traders
saying that oh the market makers you
know are there they see your order flow
they see uh your stop losses and they
they intentionally take you out and then
swipe the swipe it back up is that true
or not 100% okay 100% And that's part of
the thinking you does anybody know
whether that's the case no but can you
see the reaction from these levels and
know that is true yes and I'll give you
a real secret about this place down here
in the day okay one of the most
successful trades out of any trade that
has ever taken place in this building is
when stop orders are touched off people
are protecting themselves they don't
want to lose money where is the biggest
most successful trade I would venture in
this place over the years is when you
participate against stop orders so if
the stop orders are touched off and they
have to sell down you want to buy that
every time or if the or if the stop
orders are on the way
you want toell that time you want to be
on the
other so what you just said
is what you just said it's 100% accurate
and sometimes in our proprietary charts
yeah it will touch it off and we have a
certain sound associated with it and
when it ERS St T got taken out and when
you hear
that close your eyes and buy them or
close your eyes and sell them oh okay
that's a secret strategy right there
yeah it I'm telling you that's
proprietary stuff where is it based on
folks it's based on what I learned here
as a kid that's where it's B based on
this is a real uh Wall Street and New
York Stock Exchange uh experience here
and uh this is enough these are like
some really really juicy tips um okay so
any other tips that you have for Traders
watching this how should they get
started let's say they're a brand new
Trader they're navigating the markets
today how what kind of tips do you have
for them yeah have to be able to manage
your risk okay you really have to be
able to manage your risk so people ask
me all the time well how do you manage
risk what are your
parameters there are no parameters it's
relative to the situation the market is
is a chameleon it changes colors by the
second so there is no way but
everybody's tolerance is different
everybody's Market uh bank account or or
Market or um investment account is
different and so it's all relative to
what your tolerance is and you need to
know you need to know your personality I
see every Trader that's starting out
needs to understand their personality
cuz it's going to come through and it's
going to be the difference between you
winning or losing when you're risking
your own capital I see kind of
understand what their own risk tolerance
is like right let's say I can only take
$100 risk I should trade differently
than someone who risk like 10,000 that's
it exactly and and I'll say something
something else okay don't put all your
eggs in one basket on a particular trade
yeah single entry trades will kill you
oh okay because if you're trading think
about that let me just say it again
single entry trades will kill you is cuz
everybody buy a low for the day and feel
comfortable no so you have to have a
little more ammunition if you're too
early on the trade to bring your average
down
I see okay you okay single entry trades
will hurt you every time so it sounds
like you're recommending our traders to
have use a entry system where they scale
into Trad slowly to build a decent
average let say around the level you
were looking at absolutely yeah so my
level this morning I don't know where it
is right now my level this morning was
uh
4366 it broke that level oh okay it
broke that level but let's just say and
I'm looking at it in hindsight now folks
I put these signals out there last night
so you know but
4366 so let's just say as an example of
what we're talking about you buy 4366
wonderful it's a it's a very major
technical support area in the market
okay but now wait a minute um I'm a
little early okay there some other
people selling and they're knocking it
down number two I will not not average
down down a handle or two okay you got
to spread it out so you bring your price
you bring your point you bring your
price down you can't bring your price
down if you're trading a future Market
or anything by a small amount you got to
spread out where your second entry is or
else you use the first entry and play it
out the way it is I see but don't Bunch
together the second entry okay if you're
early this is the same way with taking
profit as well you know taking profits
what I like to do is I'm right yeah I
would like to put 75% of my profit in
okay I like to take 75% of my profit off
oh okay you scale out off and and I like
to keep the other 25% and let it run up
oh so you Trail it on the way I I Trail
it and then I I follow it with stop
orders and at the end of the day if I'm
right and this is running and it keep
and it's running and I'm feeling real
good I lock in money I make these trades
riskless if I'm right riskless I see
yeah so like if if it does go higher you
make even more money and it doesn't you
have a stop so you don't lose money I
don't lose money and I I could lock in
two or three handles I can lock in an
amount of money again it's according to
you know everybody's perseverance uh you
know maybe maybe they got killed
yesterday and they want to make some
money and put it in a bank you know I
mean it's everybody's different with
that okay but there's certain rules of
money management that you need to adhere
to and you need to have a tolerance for
how much money you're willing to risk on
a trade yeah and that's important so if
you're willing to risk $250 on a trade
fine then protect yourself down $250 but
you need to know this before you make
your initial bet I see because if you
don't sometimes if you don't give it
enough room if you don't give the trade
enough room to develop you know you
could be wrong and right at the same
time I see well like it can you can get
take out you're wrong and then the trade
ends up working your favor exactly your
favor so it's very important to identify
those areas that make you comfortable
but it again you need to give the trader
uh some time to develop some sometimes
you can't just be SC afraid out of it
let's take a step back um I know we
talked a lot about trading what's your
opinion on investing should people
watching this what brand new should they
start with trading or investing what's
your thoughts yeah well look I mean I've
been on both sides of the fence as as I
mentioned i' I've traded literally
billions and billions of shares billions
yeah and right now I think the way to be
and I know people think oh day Traders
day Traders I don't believe that at all
right you know my company is named
lpq limited exposure prevent blowups
which is the one thing every Master
Trader will tell you if you can prevent
blowups you're way ahead of the game
that's why I developed this country this
company I'm a firm believer that day
trading can be conquered I see it I do I
do it every day my partners and I do it
every day my subscribers are off the
charts happy because of the plan we put
in place so I'm saying to you this
Market is very volatile and to try to
learn on the fly with this kind of
action going on and volatility it's very
difficult listen this could change but
as of now and from in a foreseeable
future day trading this Market is the
way to be and that's my opinion so you
you don't believe in uh Buy and Hold or
like long-term
investing I mean you know dividend
paying stocks obviously I'm an owner of
IBM acting very very well the yield is
almost 5% why would they want to buy the
stock market if you can get 5% for
nothing when they and when they're
making you crazy those are some of the
things that I look at I'm saying what do
I want to buy this for what do I want to
buy that for what do I want to buy up
this kind of capital I want to keep the
capital moving and I think that day
trading this Market is the way to do it
in the environment that we're in Richie
do you have any me final messages or
tips for our viewers watching this right
now yeah I mean limit limit your risk
limitate your exposure put in your work
you have to put in your work the putting
in the work prepares you and gives you
the confidence level that you need to to
Really tackle this Market every day so
it it it is not a it is not a Sprint
this is not a Sprint if you want to roll
in this market it's a marathon and you
should be conscious of the fact that
it's methodical don't think that there's
any you know uh getrich quick schemes
here in the stock market it's not but a
lot of young people coming in uh you
know word them M everybody's got
something to say oh I made this oh I
made that you don't know what they made
okay you really don't know but I tell
you that you need to be prepared and you
need to study and there are a lot of
ways you could do it okay but don't
think you're going to come in here and
get rich quick doing do doing this
because they'll chop you up they'll take
you money for sure and and they'll and
Shay you she know that better than most
they'll take you money humbled after all
yeah thank you very much Richie my
pleasure thank you so much I appreciate
it and uh good luck to all you folks out
there thank you for the thank you for
this if you want to see even more of my
interviews with experienced Traders and
fluid Traders check out this playlist
over
here
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