|“‘Simple is Simply Better’ when it comes to employing successful trading strategies. All the neural networks and powerful computers in the world won’t compare to a good, basic and well-researched trading plan.“|
Background Info / Introduction
Q. Can you please start by making a few comments about yourself to include your trading style and what products you trade, your experience in years, and what other things of a trading nature take your time on a regular basis (e.g. writing trading books/contributing to forums/coaching/speaking engagements)?
I am the proprietor of the “Jim Wyckoff on the Markets” analytical, educational and trading advisory service (www.jimwyckoff.com). I am also a technical analyst for Dow Jones Newswires and the senior market analyst with TradingEducation.com, a consultant with the highly respected “Pro Farmer” agricultural advisory service. I was also the head equities analyst at CapitalistEdge.com.
I have spent over 20 years involved with the stock, financial and commodity futures markets. I was a financial journalist with the FWN newswire service for many years, including stints as a reporter on the rough-and-tumble commodity futures trading floors in Chicago and New York. As a journalist, I covered every futures market traded in the U.S., at one time or another.
It didn’t take me long to realize the successful traders in every market—be it pork bellies, Treasury bonds or stock index futures—had a common thread among them: nearly all relied on technical analysis to give them a trading edge.
Not long after he began my career in financial journalism, I began studying technical analysis. I found it fascinating. By studying chart patterns and other technical indicators, I realized the playing field could be leveled between the “professional insiders” in the markets, and traders like himself. How can this be? This is how: Market (or stock) price activity and price history, including volume, is a composite reflection of every news event and-or other fundamental factor known to all traders. Price activity also factors in ideas and speculation about the future prospects, and future news, for the market (or stock).
If an individual trader tried to study and learn all there is to learn about a stock or a futures market, including knowing all the fundamentals that impact, or could impact the stock or commodity, it would be nearly a full-time job. And even if a trader did spend all his time studying a market or stock, he still would not know as much, as soon, as the professional insiders. This is why successful traders employ technical analysis. Importantly, Jim also spends time studying the fundamentals in markets.
I believe traders who have been involved with commodity, financial and stock index futures markets have a trading advantage in today’s stock market environment. This is because the more volatile stock market environment of today is just like the volatile commodity and financial futures markets that have been around for many years. Being a successful trader in volatile markets requires specialized entry and exit strategies, in order to maximize profits. Successful futures traders have been forced to deal with volatility on a routine basis.
Following are just a few of my most important trading tenets:
– Like success at any other job, successful trading requires hard work. There are no short-cuts. Do your homework before initiating any trade.
– Simple trading strategies work the best. I have read the classic technical analysis books and talked face to face with the best trading professionals in the world. Most agree that, as my friend Stewart Taylor says, “Simple is Simply Better” when it comes to employing successful trading strategies. All the neural networks and powerful computers in the world won’t compare to a good, basic and well-researched trading plan. Don’t confuse simple strategies with easy trading. Simple trading methodologies still require a lot of preparation and work.
On the personal front, I was born and raised in Iowa, where I now reside. I have a wonderful wife and two great children. I work hard on the job, but I also play hard after work, as I love adventures. From driving a Jeep across the highest mountain pass in the continental U.S., to summertime speed-boating, to snowmobiling, to extreme winter camping in the Boundary Waters, to hiking in the jungles of South America, I am always up for a new challenge.
Q. It is fair to say that most people are initially attracted to trading by money. Is this what initially attracted you or was it something else?
That’s probably the case. That’s not what got me into the business. I feel fortunate to have been introduced to the fascinating field of markets and trading as a journalist.
Q. What are some of your good and bad memories of your early trading days?
Thinking I knew more than I really did about markets and how they trade and react to events. My best trade I ever made was early in my career, and it actually made the endeavor seem easier that it actually is.
Q. How would you describe a couple of your biggest mistakes in your early trading days?
I put on a copper spread one time, not knowing about the potential for the extreme volatility that a nearby futures contract can exhibit as it nears expiry. I did not get burned, but I surely could have been.
Q. Looking back to the beginning, in the face of the usual challenges, what motivated or inspired you to learn to trade well?
I love learning about markets and trading. My hunger for market knowledge is still insatiable. That desire to continue to absorb market and trading knowledge should be a trait for all traders.
Q. On reflection, was there a single moment in time or situation that ultimately had the greatest influence on your trading?
No, not really. Gradual learning and gaining experience have had the greatest impact on me and my trading success.