All Entries Tagged With: "Trader Interview"

The Self-Education of a Speculator

March 20, 2012 at 10:28 am

As a full-time trader, I don’t have a typical job.  I have a 5-second commute to my home office.  I wear t-shirts to work!  There is no boss standing over my shoulder, and the actual trading hours require a relatively brief daily commitment (6.5 hours) as compared to other occupations.  And I’m thankful for all of it.

The market closes at 3pm for me, offering lots of time to tend to other things – if I so desire.  However, my desire is to succeed at trading for the long haul, which means I have lofty goals.  In turn, I’m not the type to walk away when the closing bell rings.  I work at it every day to improve and educate myself on an ongoing basis.  I have to stay sharp.

That means I’m reading books, blogs, spending considerable time working the charts in search of what’s working best right now, and of course reviewing my own trades in order to continue learning.

Because successful trading is so much about finding a style that fits your own personality, it is only fitting to investigate what styles exist.  An energetic and impatient person may want to become a scalper, looking to day trade quick moves within a short timeframe.  A laid-back trader may prefer a less-intense style like swing trading, taking positions to hold for days or weeks.  There are many approaches to the market, and finding your own style can come as a result of identifying with the style of another trader.

Raising Your Awareness

The road to expertise isn’t a short one, particularly in trading.  I’ve been at this long enough to be considered an expert, yet there are still plenty of days where I’m reminded that I sure don’t know it all!  Trading will humble you like that, but that’s part of it.  Regardless, here are some ways for you to get educated as you further not only your knowledge but your trading career in the process.

Books.

I’ve read a couple hundred of them on trading, and while there’s plenty of worthless paper out there, you can still find some great ones with timeless lessons.  I think it’s important to continually seek out information, whether it’s new and applicable now or just a lesson to be reminded of (before the market does it for me!).  Your self-motivation will help you improve, so dig through the classics for starters.  Mark up the margins, underline the parts which resonate with you, and return to them often.

I particularly like the Market Wizards books by Jack Schwager.  He profiles traders in all kinds of markets (bonds, equities, options, futures, mutual funds) and of all timeframes.  Yet despite their differences, all are highly successful.  The interview format he utilizes gets you in the minds of these great traders, offering countless lessons.  (I regularly visit TraderInterviews for the exact same reason).  Every good trader trades in accordance with their personality, as we all should.

The newest book I would highly suggest is One Good Trade, which is the best trading book I’ve read in a long time.  Bella covers it all and overlays his lessons with a variety of trading characters (based on real people), which helps drive the lessons home that trading is all about performance, adaptation, learning, and having the right mentality.  Once I started it, I couldn’t set it down, and I’ve re-read it since.

Blogs.

Reading posts like this one can’t help but to expand your knowledge and open your mind up to some new possibilities.  There are countless blogs on trading, but there are some good ones.  Hunt for those which offer whatever it is you’re lacking….encouragement, psychological lessons, trade reviews, sector snapshots, news on industry developments, interviews, trading videos, etc.

If you’re willing to get honest with yourself and figure out what you’re lacking, you can find some blogs to visit regularly as resources.  Just be sure they’re written by traders, honest, and not wasting your time, as there’s no shortage of distractions out there that won’t help you grow at all.

Results.

If you don’t track your own trades, start yesterday!  You can record your trading via screen-capture software, but even a journal or simply a grid outlining entries, exits, holding times, patterns, trade context and objectives will shed more light on your trading than you can imagine.  As you collect results, start to compile them.  I did this for the first few years of my trading, until I really understood what I was doing, and it helped me assess my strengths and weaknesses.  Monthly, I’d review my results and calculate statistics which gave me plenty to work on.

You just can’t argue with data!  Getting mixed results? It may be time to make an adjustment.  Figure out how your wins and losses stack up against each other, as that’s a great starting point.  Over time as you endure periods of profits and pain, you have stats to compare against and you can more readily see when something is out of line.

Premium Services.

I’d be leaving a huge part of the mix out if I ignored premium services in the education process.  Early on, I subscribed to a number of sites while I figured out my own style.  Once I got to the point where I had my own opinion, I knew I had learned enough to need them no more.

Here at TheStockBandit, we offer a nightly stock pick service outlining my own trading plan for tomorrow, which some use to generate trade ideas and others use as a learning tool to see why I plan to take each trade (since each are explained).

We also offer stock trading courses in a video-on-demand format.  The trading courses explain everything I know about trading, making them an incredibly valuable resource to return to over and over (depending upon current conditions in the market), helping traders see a huge variety of trade types and which kinds of market conditions are well-suited to those plays.

And while I’m certainly proud of and stand behind what we offer, there are plenty of others to choose from which are produced by legit people with a lot to teach you.  If you want to accelerate your learning curve and truly build your skill set, let someone help you who has done it.

You Get What You Give

If trading is your job or a part-time endeavor you’re passionate about, recognize that your level of effort in the growth process is going to be reflected in the results you get.  Be willing to apply yourself regularly as you learn more about not only the market, but yourself.

Staying educated and keeping a learning mindset is going to eliminate mistakes as well as some big disadvantages you currently face if you’re halfway new at this.  As you make that a habit over time, it’s going to continue to pay off in a number of ways.  Become a complete trader and commit to educating yourself.  You won’t regret it.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or get our free newsletter to keep up!

15 Questions & Answers

August 24, 2010 at 10:48 am

My recent live interview with Charles Kirk generated quite a few questions. A number of them we were able to address during the chat, but many went unanswered.

If you were in attendance and didn’t get your question answered, look for it below. But even if you weren’t there, hopefully you’ll find this useful to observe.  I’m also happy to answer questions via the comments section below, so feel free to post yours there!

Here are 15 unanswered questions from the session:

1. Kevin: Jeff, what timeframe do you normally use in your charts, and do you let the bar close before entering a trade?

• Thanks for your question Kevin.  I focus on the daily charts for swing trades, and the 3-minute charts for day trades.  I don’t wait for the bar to close before entering a trade.  That might save me an occasional failed signal, but I feel it will cost me many other trades which work right from the start, so for me it’s worth taking my entries as they signal.

2. Ryan: Do you have any execution techniques that you like to use?

• Hi Ryan! I like to keep things really simple, so I use basic stops for entries and exiting losing trades.  That way, once a level has been crossed, a market order is generated immediately and I’m in (or out of) the trade.  I’ve tried to get cute in the past with more complicated orders or execution techniques, but in the end it made me no more money and often cost me opportunity (buying breakouts with a limit order, for example, as the stock never looks back). When I’m booking profits, I’ll use limit orders at my targets and let the stock come up and hit me, but that’s the only time I utilize them.

3. Moe: How can you scan the market for setups or make trades when the market is so volatile and so driven by daily events and emotions?

• Yes Moe, it truly is a news-driven environment right now, and it might be that way for a while.  I think the key is recognizing that I’m not trying to get in front of any news or predict what news may come along.  Instead, I’m looking to put capital at risk when there’s an expected reward, and in order to do that I need to be hitting the charts regularly.  Training your eye to do that will always leave you with opportunity, whereas waiting for emotions to settle could leave you sidelined possibly forever.  Remember, that emotion and volatility brings with it opportunity.  On the flip side, a trendless market with nothing but uncertainty brings with it very little opportunity.  Keep looking for trades, and keep your capital moving.

4. Guest: What sectors are you finding most of your trades these days?

• Hello and thanks for your question.  In terms of swing trades, I’ve traded many sectors and there really has been no consistency there to speak of.  When the right patterns emerge, I take the trades.  In terms of day trading though, I’ve focused frequently on the ags, financials, and energy names quite a bit in recent weeks, as they’ve been in play regularly.

5. Jon: Isn’t the general rule of thumb that in a correlation study, most of the correlation comes from selection, then overall market, so what we are looking for in trading is the small fraction which lead the pack on a given day which will then beat just trading the index ETF’s?

• Hi Jon, the recent discussion of being in a highly-correlated market (to the S&P 500, for example) carries with it some weight, yes.  And I do agree that what we’re after is to locate leaders and trade them instead of the ETF’s.  Keep in mind though that there will always be outliers which exhibit extreme strength or weakness, and those carry with them some real potential for good trades.  So, seek out momentum whenever possible, and you should find far better bang for your buck vs. the ETF’s.

6. Sam: Do you ever trade options?

• Hey Sam, I do trade them on occasion.  In longer-term accounts, I’ll short puts to establish long positions, then sell calls to collect premium.  I don’t do a lot though in terms of directional trading with options.  Occasionally when a stock looks to be very high risk, such as BP recently, I’d rather hold options overnight than common, simply to have defined, limited risk.  The rest of the time, I’d rather have the shares for the greater liquidity, less slippage, and more flexibility to trade extended hours or pre-market (if necessary).

7. Tom: Do you hold stocks into their earnings report or do you only trade following the report?

• Hi Tom, actually I never want to hold a stock into an earnings announcement.  Being a technical trader, it’s important for me that I can use the price action to determine both my entries and exits.  That’s technical.  When it comes to an earnings announcement, we’re talking about a major fundamental event, and since those usually happen outside market hours, I can’t control my risk.  The stock is so likely to gap big after that news that I might have no shot at closing the trade at my planned exit.  The excitement of potential ‘free money’ lures many traders into acting on their hunch, but it’s simply a coin toss and I am not about that with my trading.  So, I want to stay responsible and only take trades where I expect to be able to manage my risk appropriately.

8. Frenchy: What is your favorite ETF you like to trade?

• Hi Frenchy.  When it comes to the main index ETF’s, I like the usual SPY, QQQQ, and IWM.  Typically I’ll avoid DIA since it’s only 30 stocks, and that can complicate matters more.  In terms of leveraged ETF’s, I’ll go with SSO/SDS, QLD/QID, and TWM/UWM.  Those are double exposure, and while there are some triple exposure ETF’s out there, I find the 2x levered funds are enough to provide nice moves.

9. Leon: Do you believe a high volume move to the downside can be a reversal signal?

• Hello Leon, that’s a good question.  The short answer is yes, but it depends on how it happens.  A stock which has been in a parabolic uptrend will sometimes signal exhaustion in this manner, reversing to the downside on heavy volume.  Often, that’s followed by additional weakness.  However, a stock that’s range-bound which sees a high-volume decline on a given day may see no downside follow through.  So it can happen, but I’d be careful not to put a blanket statement across all high-volume selloffs that they’re reversal signals.

10. Jon: Do you feel price follows volume, or volume follows price?

• Hi Jon, this is a real chicken-and-the-egg topic, and there are cases of both.  For example, consider a stock in a pattern like a bull flag.  Price is consolidating, but one day edges toward upper resistance on heavy volume.  That will many times signal an impending breakout, so volume in that case tends to lead the way.  In other cases, price begins to gain momentum, and as the stock gets more attention, the volume naturally increases (following the move in price).  See CAGC in recent weeks for an example of this.  So it can happen either way.  Nonetheless, I care the most about price, so if I’m seeing volume kick in ahead of a breakout, for example, I’ll still want to see price confirm that before I look to make an entry.  That keeps me sidelined until I believe a real move is starting.  Just remember, price is of utmost importance.  If you’re on the wrong side of a move, it doesn’t matter if the volume is heavy or not, it’s still going to hurt!

11. Ryan: Do you have any interesting research projects in the works?

• Hi Ryan, actually I just recently completed a huge project with the creation of the Advanced Trading Course over at TheStockBandit University. That was a major project and I put everything I know into that course, so I don’t plan to do any other big projects for a while.

12. Layne: What indicators do you like to use?  Certain ones in certain markets?

• That’s a great question Layne.  I should say right up front I don’t rely on any indicators across the board, and actually utilize them rather infrequently.  However, there are times when they can help in the trading process, so I’ll put them on the chart when it’s appropriate.  A moving average, for example, is really only helpful in a trending market.  I just put out a post explaining how and when to use moving averages.  I will sometimes add ATR to my chart to see just how much (or how little) movement there’s been lately, and that’s another one which has been helpful for me.  If anything, the ATR value lets me know when there’s just not enough movement to offer real potential relative to the risk I’d be taking.

13. Jake: What are the setups that you look for on the chart before buying and selling?

• Hi Jake, first I’m going to look for the presence of a trend.  If there isn’t one, I’ll take a completely different approach in terms of what types of patterns I’ll look for.  If there is a trend, then I’ll be watching for continuation setups like flag patterns, pennant patterns, and triangle patterns.  And along with the price patterns, it’s important that the volume activity is confirming the price action, so I monitor that closely as well.  Taking note of the rhythm of a trend is another key element, as it helps me gauge whether I should focus more on breakout patterns or utilizing pullbacks to get on board.  There are a ton of ways to skin the market cat, but I’ve found it most effective to adjust to the environment you’re in rather than forcing one particular style at all times.

14. Ryan: Do you see the growing awareness and popularity of ‘technical analysis’ translating into an easier market to trade in the future, or a more unpredictable one as more retail money uses the same methods?

• Hello Ryan, another excellent question.  Technical Analysis 101 has certainly become more embraced by retail traders than it was even a few years ago, but my response to that is somewhat complicated.  First of all, I don’t think there’s a uniform usage of technical analysis methods across retail traders.  Take 10 traders and ask them to define a particular pattern, or ask when they should use a particular indicator, and you’re likely to get a variety of answers.  So that’s one issue I think that keeps everyone from seeing the exact same patterns or acting on them at the exact same time.  Another issue is a bit more vague, which is the program trading we’ve seen such a growing amount of in recent years.  Computer algorithms are likely preventing some patterns from fully maturing, or the institutional money heavily fades a breakout, causing many retail traders with tight stops to dump shares, only to see the stock head right back up.  So it can be pretty tricky out there, and for those reasons, I do not think the rise of Technical Analysis has resulted in an easier market to trade.  Bottom line is, ‘they’ will never make it easy.  You and I have to keep paying attention to what’s working and what isn’t, and do more of that which is working!

15. Guest: Have there been any patterns you’re finding that are working well in this environment?

• Thanks for your question, and yes there are.  I’ve focused more on trading the rising and falling wedges, as well as the “tilted” trend line breaks (like ascending or descending trend line breaks) for swing trading. For day trading, I’ve looked more for those exhaustion moves where news has caused an overreaction and the stock needs to come back in, so those are the ones I’d say have been most profitable to me in recent months. I also detail the most profitable one in the Advanced Trading Course.  The key is to remember that what’s working well right now will eventually morph into something else, so we have to stay on our toes and be willing (and able) to adjust when conditions deem it necessary.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Are you following me on Twitter yet?

Interview Archive with Charles Kirk

July 30, 2010 at 2:20 pm

Today’s live interview with Charles Kirk of The Kirk Report was a lot of fun, and I hope you were able to join us for the discussion.

Chat Archive with Charles Kirk

August 7, 2009 at 12:01 pm

Today’s live chat with Charles Kirk of The Kirk Report was a lot of fun, and I hope you were able to join us for the discussion.

For those of you who were unable to attend, I’ve embedded the chat transcript below so that you can review the conversation sometime over the weekend. Hope you find it helpful!

Thanks for stopping by and I’ll see you here soon with more. Until then…

Trade Like a Bandit!

Jeff White

Are you following me on Twitter yet?

Trader Interview With Jeff White

April 26, 2009 at 10:25 am

First of all, welcome to those of you who have arrived from TraderInterviews.com!  There are literally hundreds of trading articles here published over the years to sort through, so spend as much time here as you’d like and come back often.

To those of you who are regulars here, I am honored to have been asked for another interview from Tim Bourquin from Trader Interviews.  That’s a site I’ve frequently visited over the years to tune in for excellent podcast-style audio interviews with top traders.  I’ve learned quite a bit there, and it’s one very useful place to study not only the methods but also the mindsets of traders who are finding success in today’s markets.

They do an excellent job of locating traders across various markets with a wide range of styles, which provides a great resource for any trader who wants to stay sharp & continue learning.

Here’s the direct link to my interview, which runs 40 minutes.  You can listen on the site or download the MP3 and put it on your iPod if you want it on the go.

Enjoy the interview & I hope your trading week is a great one!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]