34-year-old finds financial freedom through day trading and uses it to build a $10k/mo fintech product

34-year-old Rich Watson found financial freedom thanks to a left hook that broke his jaw while he sat at a red light.

During his recovery, he started day trading and after making some big gains, he built a social investing app called NVSTly. A couple of years later, it’s bringing in $10k/mo.

I caught up with him because I wanted to understand his trading strategies. He did not disappoint.

A taste for risk

Rich got a taste for risk on the playground in 4th grade when he gambled his lunch money playing marbles and quarters. That taste never left, but these days, he satisfies it with extreme sports and day trading. And the latter is a passion that led him to build NVSTly, a social investing platform doing about $10k/mo.

It takes up most of his time, but it hasn’t yet provided a substantial income, so the rest of Rich's time is spent investing and day trading in the stock and crypto markets. This currently provides the bulk of his income.

To say Rich knows a thing or two about investing is an understatement so let’s dive into his investing habits first.

Investment goals

Currently, Rich withdraws most of his investment profits each month, only leaving a small amount of the profit in his account to keep it growing and providing additional investment power. He tries to bring home an average of $12k/mo from investing and day trading, though some months are better than others.

He aims for a 20% profit target on every trade, meaning that if he buys or shorts $1k worth of stock shares, he wants to close out his position and take profits when it's around $1.2k.

Strategic risk in trading

With his craving for recklessness and risk partially sated by surfing and motocross, Rich likes to “channel a more strategic and calculated approach to risks in my startup and day trading.”

So he uses risk management to minimize losses. This involves diversification via a 10% rule, where he won't allocate more than 10% of his trading balance to a single position. He says it’s higher than most traders would recommend but it works for him.

He also tries to trade safer, even if it means leaving profits on the table.

That means setting a take-profit order to close half his position at 10% gains, plus another take-profit to close 80% of what’s left at 20% gains. Then, on the small portion that remains, he sets a stop-loss order to close out if it drops back down to the 10% profit range. That way, even if he doesn’t achieve maximum gains on that last part of his position, it’s still profitable.

Finally, he’ll use a 10-20% stop-loss overall, so if a trade doesn't go as expected, he only loses what he planned to make. He can then recover that on the next trade, though that’s never the intention — he has a rule to never enter a position trying to make up for a loss.

There's a lot of psychology involved in day trading.

Trading stock options

According to Rich, hitting 20% is challenging with stock shares alone when scalping or day trading, as positions are only held for short periods of time — minutes or hours. So he trades stock options, which are more volatile and can easily achieve 20% or more in under an hour.

He trades $SPY options because of their liquidity. He says they’re one of the most liquid options available, resulting in low bid-ask spreads, which is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept.

$SPY options also offer 0DTE (zero days to expiration) contracts, whereas most stocks only offer weekly options contracts with expiration dates on Fridays. 0DTE options are also more appealing to him because they offer even tighter bid-ask spreads and are significantly cheaper in price.

Promising investment opportunities

To keep himself on top of his game, Rich stays abreast of news and analyzes long-term trends, particularly in sectors poised for exponential growth, like AI and EVs. Lately, he’s been interested in semiconductor and lithium-related companies, as they are emerging trends.

He favors companies known for innovation, for obvious reasons. Tesla, Nvidia, Microsoft, Apple, Meta, and Taiwan Semiconductor comprise a substantial portion of his portfolio.

He says Tesla ($TSLA) is a solid long-term investment with its work in EVs, AI, and robotics. He likes Nvidia ($NVDA) because they are the dominant player in AI chips. Taiwan Semiconductor ($TSMC) is one of the top semiconductor companies.

And he’s keeping his eye peeled for emerging companies involved in these technologies so that he can get in early. He’s not opposed to dabbling in IPOs.

He doesn’t like biotech, as he says there’s too much risk. And he doesn’t take meme stocks seriously, though he did invest a bit in GameStop, primarily for engagement and content purposes.

Technical analysis principles

Rich uses standard technical indicators such as EMAs (exponential moving averages), simple MAs (moving averages), and VWAP (volume-weighted average price). And he relies on support and resistance levels.

A support level is where the price tends to stop falling and bounce back up, while a resistance level is where the price tends to stop rising and bounce back down. There can be multiple support and resistance levels.

He likes to enter a position when the price either bounces off these levels or breaks through them, and then close the position when it either reaches the next level or triggers his take-profit or stop-loss orders.

Investing in the pillars or cryptocurrency

Let’s talk about crypto. Rich focuses on Bitcoin and Ethereum. He has had a significant position in Bitcoin since its $20k range.

He says Bitcoin and Ethereum are the pillars of cryptocurrency, and the ups and downs they experience during bull and bear markets are great for swing and long-term trading.

Plus ETFs are even being approved for Bitcoin, with Ethereum ETFs in the works as well.

He generally avoids altcoins because they’re risky. Too many scams and “rug pulls”. And he warns investors to be wary of any traders pumping these coins up, as they’re likely “holding the bag.”

All that said, he has engaged in short-term plays with meme coins like DOGE, PEPE, and GMEonSOL.

When I do crypto trading, I’m always on the lookout for newly listed coins on exchanges because they have great upside potential. I wouldn’t recommend meme coins to new traders, but if you identify them early, there is money to be made. Just make sure to take profits when you can, as they can tank quickly.

Investment gains in 2024

Rich has done well this year with his investments. He says indices like the S&P 500 and Nasdaq Composite have been on an uptrend, and he has taken solid profits from positions that he entered with recent price dips.

As an example, he got a large Bitcoin position last October when the price was around $26,000, and he’s been taking profits on it since December, when he closed a quarter of his position for almost 70% returns. He recently closed out the remaining position with returns of up to 160%, averaging roughly 100% on the entire investment.

That was his best investment so far this year. He also made a “handsome amount” on Nvidia ($NVDA) options after learning about Nancy Pelosi's disclosure of call options, which was her biggest stock purchase in recent years. He has more than doubled his investment on that.

Overall, he has had an average increase of 120% on his investment account in addition to his day-trading earnings. He’s hoping for 150% over the next few months. Then he’ll sell.

I predict we might see a bear market begin in the fourth quarter of this year, so I'll be looking to liquidate more of my positions entered this year.

Investing for beginners

His suggestion to new investors is to start with ETFs. He says it’s safest to invest in ETFs like $SPY, $QQQ, $IVV, $VOO, $VTI, and $VUG. And some of these ETFs, such as $SPY and $IVV, track the S&P 500 index, so it’s essentially the same as investing in the S&P 500.

And some advice, in his words:

• Don't invest or trade with what you can't afford to lose.

• Have a solid reason for your investment, it shouldn't be because Elon Musk tweeted about it or you see it trending on social media. Is the company a leader in their sector? Does their stock chart pattern match the S&P500 or Nasdaq index? Are they innovating and continuously creating products that consumers want or need? These are some questions to ask yourself.

• Do not day trade if you don't have a strategy. Learn a strategy and practice it. You don't need to trade with your actual capital to learn, most brokerages offer "paper trading" or a feature to simulate trades.

• If you're doing it to get rich quick, go invest in a startup you believe to be the next unicorn. You'll have better chances. It requires a lot of capital to make a lot of money.

• Take advantage of your 401k if you’re employed. I am not, but I invest 2-5% of my monthly profits into my 401k, which I manage.

• Stay up to date on Nancy Pelosi's disclosures of her stock positions. She is the best performing politician in the stock market. Her Nvidia position alone is up over 200% in the past six months.

Social investing product revenue

Enough about investments, let’s talk about his product, NVSTly.

Since it’s a social platform, Rich has been focusing on helping his users to make money — not on making money himself. He’s aware that he needs to bring in more revenue, but he believes that will come if his users are given their desired experience.

Here’s what NVSTly is bringing in monthly:

• Total NVSTly revenue: $8.8k-10.35k

• Revenue from subscriptions: $7k MRR

• Revenue from white-labeling subscriptions: $550 MRR

• Revenue from partnerships: $1k-$2k

• Revenue from paid posts: $250-$800

As the founder of a social investing app and a prominent figure in a large trading community, Rich is frequently asked about his earnings, portfolio, and ultimately, if he’s as “rich” as his name would imply. He doesn’t answer them because they can create false expectations for those who are interested in trading.

I’m not a millionaire. And while that title sounds appealing, it's not my primary motivation. I enjoy my lifestyle, and compared to how I grew up, it’s enough for me. I'm content with it.

Other income and holdings

Here’s a look at the rest of his income and holdings:

• Profits from investing/day trading: ~$12k/mo

• Passive income apps on his Raspberry Pi (Honeygain and EarnApp): “Enough to cover a bar tab every few months”

• Founder pay: $400-$500/mo

• Savings: Low six figures

• Checking: $50k

• 401k: $100k

• Day-trading funds: $20k

• Brokerage portfolio: $50k

• Emergency fund: $8k (cold wallet with USDT, USDC, BTC, and ETH)

Once NVSTly’s revenue grows enough to justify focusing fully on the product, he’ll slow down with day trading. At that point, he'll still invest, but less aggressively and with longer-term investments.

Finding the right brokerage

Chase is his bank. Webull is his brokerage.

Originally, he used Thinkorswim, and he says it’s a great platform. But he switched because Webull has a nicer UI. It also offers zero-commission on options trading, whereas Thinkorswim charges $0.65 per contract, which adds up quickly for day traders. He notes, however, that you can contact them to negotiate a lower fee.

He says Webull also offers both margin and cash accounts. Cash accounts allow unlimited trades as long as you have enough settled funds to cover the trade. But you can't short trades with a cash account, so Rich uses a margin account with unlimited trades.

According to Rich, Robinhood is the worst brokerage available. He says it’s appealing to new investors because it’s super simple, but that also makes it restrictive.

And ever since the “shenanigans” of disabling the “Buy” button during the GameStop ($GME) rally, ultimately causing the price to drop and ending the run, he has lost trust. He says they were essentially manipulating the market. And that isn’t their only controversy. So he refuses to use it.

He says more advanced brokers like Webull and Moomoo have a learning curve, but it's worth it for the abundance of features that Robinhood doesn't offer.

Business expenses

Despite having solid revenue, NVSTly has only crossed $1k in profit twice. Most of their costs are low thanks to some cost-saving strategies — free market data by including attribution, running a $50/mo VPS, etc. — but their team is expensive, as they use a revenue-sharing model. He may add earning caps in the near future.

Here are his monthly expenses:

• Total: $7k-$10k

• Contributors: 65-85% of revenue

• Market data: $500

• Computing costs: “Less than a midweek bar tab”

They also allocate 10% of any profits into savings, which they plan to spend on future marketing and advertising efforts. They’ve delayed marketing expenditures until now, as they wanted to avoid bad ratings. But with recent UX improvements, they now feel that the product is in a good place.

Personal expenses

Rich doesn’t do any extravagant spending. Here’s are his monthly expenses:

• Total: $2k-$3k

• Rent: $1,200 with utilities

• Insurance: $200

• Groceries: $350

• Misc: $250-$1250

That’s pretty cheap, considering he lives in Orange County, California.

Here are a few hacks that help him keep his costs down:

• He shares a Netflix plan with his brother.

• He doesn’t wear designer clothes

• He handles his own home maintenance.

• He buys in bulk.

• He takes an extra 10-20 minutes to find the best flight and hotel deals online. He says the savings are usually worth the effort.

• He takes advantage of gas rewards.

• He uses cash-back credit cards.

• He modified a 100 MPG moped with a surfboard rack so he doesn’t have to pay for gas to surf.

Financial freedom

According to Rich, “The ability to live the lifestyle you desire without the stress of financial worries is incredibly liberating.”

In fact, he says that believers in the adage, “Money can't buy happiness”, haven’t experienced financial freedom. Because, while money itself doesn't create happiness, it does provide the means to pursue what makes you happy. And it eliminates a primary source of stress.

He found true financial freedom when he started investing and day trading in 2020, while he was recovering from a road rage incident — someone broke his jaw with a left hook through his open window while he sat at a red light.

Now, he doesn’t stress about finances. But he says that no matter how much you have in the bank, it rarely feels like enough. So he just focuses on living a modest, but fulfilling, lifestyle.

Parting words

Rich knows a lot about investing and it can get pretty complex. Let’s end with something simple.

Make your savings work for you. Whether you allocate them to a high-interest savings account, invest in stocks, ETFs, or index funds, just take action. Don’t let your money sit stagnant. And save consistently, no matter the amount, so that you develop the habit of putting money aside.

You can follow Rich’s journey on X and Discord. Or check out NVSTly.

Please note that the above are opinions. This is meant for informational purposes only. It is not intended to be financial advice.

And if you'd like to be featured as a guest in a future interview for this series, let me know in the comments!