Trader Profile Story 02: Steven Dux
At 19, I entered the market using my tuition fees, making a staggering $17 million in a single week.
The protagonist I want to share today is the undisputed superstar of the trading circle—Steven Dux. You may have heard of this post-95 Chinese trader's legendary story: In 2022, he made over $6 million in a single day by shorting DWAC stock, and his total profit that week reached a staggering $17 million!
He did not come from an elite Wall Street background; the story begins with a 19-year-old international student: stepping into the market with only $25,000 in tuition, with the initial intention of alleviating the burden on his family. No one expected that six months later, he would achieve stable profits, with his account skyrocketing from $27,000 to $900,000 in the first year, and reaching over $2.7 million in the second year! Now, he is a market-validated top short-term trader, focusing on small-cap stocks, adept at combining psychology and statistical analysis, with discipline that is truly exceptional.
The following are highlights from the interview, revealing his trading philosophy and core methods:
Q: How did you start your trading journey? Did you even dare to use your tuition as capital?
A: At 19, in my freshman year, my family was under great financial pressure (my parents divorced). As an international student with an F1 visa, I was limited in working off-campus, and on-campus jobs paid only $6-7 per hour, which was really not enough.
I see the potential in trading to 'use small funds for high returns'—even returns of 1000% or even 10000%, though the risks are extremely high, it's worth a try.
So I used the $25,000 I had saved for tuition to enter the market. Lucky for me, my first trade made $10,000, but I lost 50% in the following weeks, which was my 'market tuition'.
Q: You went from losses to stable profits in just 6 months? What’s the secret?
A: I believe the fastest way to learn is to study others' mistakes! The pitfalls others have encountered are likely pitfalls I will encounter in the future. Therefore, I never watch others flaunt their profits; I only focus on studying their losing trades and failed cases.
For example, analyzing the losing trades of well-known traders like Gurtaani and Investors Underground to understand where they went wrong—was it a mistake in increasing their positions, or was it a misjudgment of resistance levels?
Combining trading psychology (understanding why opponents make mistakes) and statistics (validating the effectiveness of patterns) allowed me to quickly find the path to profitability.
Q: What is your core strategy? I heard you mainly short small-cap stocks?
A: That's right, I focus on short selling (selling high and buying back low for the difference), with the core being 'statistical-driven':
- Model classification: Classify stocks strictly by market cap (around $300 million), size of circulating shares, price change (preferably 100%-170%), trading volume, etc., only trading specific patterns (for example, this year's expertise is in the 'first down day' pattern).
- Identify 'retail limits': Calculate daily trading volume × average price. When the amount reaches the threshold that retail investors can influence, it indicates that the stock may have peaked, which is the ideal shorting point (this tactic is very unique).
- Beware of 'false resistance': Many people consider high historical trading volume areas as resistance levels, but if that area has a small circulation (for example, only 3 million shares), the so-called '50 million resistance' is just an illusion, and the stock can easily break through. This has helped me avoid many traps.
- Blacklist: Biotech stocks! Statistics show I lose every time I trade this type of stock, so I decisively exclude them.
Q: How do you manage trading frequency and position size? I heard you take heavy positions?
A: The frequency is extremely low! When the market is bad, I might not trade for a week; when the market is good, I only trade 1-4 times a week, never participating in intraday noise, only trading A+ level patterns.
Position management is a lifeline:
- Win rate determines position size: For patterns with a 70%-90% high win rate, I dare to take heavy positions (I once had a single position of $17 million).
- Entry/Exit: Simple and direct! Enter at one price level, exit at another price level, rarely do multiple operations, avoiding complexity.
- Scale control: The position of a single stock should not exceed 1% of its circulating volume to ensure a smooth exit; large positions will be split into several smaller orders.
Q: What does it feel like to earn $6 million in a day? Does money still mean anything to you?
A: (laughs) To be honest, I'm more focused on 'perfecting the system'. My goal is to capture every theoretical peak or trough of each tracking pattern, maximizing the system's potential to over 85%—but currently, I'm only achieving 30%-37%, which is far from enough.
To me, trading is more like a 'game' that requires constant optimization. Money is important, but it is not the primary driving force.
Q: How do you avoid overtrading? (A must-read for beginners!)
A: I have made foolish mistakes too! My golden rule is: precisely define your high-win-rate patterns, calculate their average profit per trade, and the frequency with which they occur each year, to estimate the total expected profit from this pattern in a year.
Every morning, I first check this 'annual expected profit' number—it reminds me that as long as I keep doing the right thing, I can steadily earn that money, effectively suppressing the impulse to trade randomly for small profits.
Q: What is your daily life like? What do you do outside of trading?
A: I wake up at 5:30 AM (West Coast time) every morning to scan stocks. If I haven't found any trading opportunities that meet my standards by 11:30 AM (2:30 PM Eastern Time), I completely stop, never watching the market.
The rest of the time? I play games madly! I was a top player in (StarCraft II) and once made it to the top 64 in the world championship. The reaction speed trained in esports (like quickly borrowing shares to cover positions), psychological game ability (predicting opponent strategies), and pressure resistance greatly helped my trading.
Q: What are your bigger goals for the future? I heard you want to start a hedge fund?
A: Yes, the hedge fund is the next 'level of the game'. Once the market environment returns to the state of 2021, I see the potential to manage larger funds and achieve an annual return of $200 million.
Although trading with other people's money (investor funds) means the rules will be different, and the fee structure (management fees + performance sharing) may not be as comfortable as it is now, it will be a whole new challenge and experience.
Essentially, it's still about 'perfecting the system', but on a larger scale. Additionally... I can tell people in the future, 'I was a hedge fund manager'; it sounds pretty cool, doesn't it?
Steven Dux's story is filled with comebacks, wisdom, and extreme discipline. He proves through personal experience that trading is never gambling but a science that requires deep research, counter-intuitive thinking, and strong execution, as well as an art. His insight on 'studying mistakes' may just be the growth key that all traders should remember.
