Trading Interviews

Lionel Silva

While most people focus almost exclusively on when and what to buy (timers and stock selection), I put more emphasis on when to sell and how much to commit to a position (exits and position management).

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 have been investing and trading since I was a teenager (late 1960’s). My focus has always been on capital preservation (”staying in the game”), then returns. In other words, I focus on risk first, then reward.

This focus quickly led me to study and implement asset allocation, into different asset classes and within asset class. From early on I deployed my money into precious metals, collectibles, treasury bonds, foreign currency and equities (stocks and mutual funds).

Later as my portfolio grew larger I diversified further by entering into commodities (futures), options (on stocks, indexes and futures), real estate, active businesses, oil and gas. Much of what I learned about asset allocation came from the Oxford Club (lifetime member), somewhat from the AAII, and most recently from Loral Langemeier at Live Out Loud (Loral’s Big Table #20). In this blog, I focus on equities but will describe asset allocation too, since that has been key to my success. I have never had a calendar year loss greater than 10%, mostly due to my asset allocation strategy and capital preservation focus. That dates back to the late 1960’s!

For stocks and funds, the key systems I have used are Value Line, Morningstar, Telechart, Omnitrader and VectorVest. VectorVest is my current favorite.

Depending on my planned holding period, etc., I use some fundamental analysis. I like undervalued stocks if I am planning on holding for a while. In the past I used much more technical analysis than now. I have built many market timing systems, over different time periods. I helped Brian incorporate some of my timing experience into the stock trading systems he developed.

While most people focus almost exclusively on when and what to buy (timers and stock selection), I put more emphasis on when to sell and how much to commit to a position (exits and position management). My approach in these areas is heavily influenced by the work of Dr. Van K. Tharp and Charles LeBleau. These advanced techniques used by professional traders have been applied to the stock trading systems featured here.

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?

I’m both an trader and investor. Capital preservation and wealth generation are my primary goals, and what has driven me. I attribute much of my style to my German upbringing: save, invest for the future, frugality, etc. My mother gets all the credit

Q. What are some of your good and bad memories of your early trading days?

Focusing on trading: A memorable trade was when I was in my twenties doing OEX options I believe. I made enough money to make a sizable down payment on a car for my girlfriend. Now that paid dividends for a while. Bad memories: my continued quest to learn how to trade Forex successfully

Q. How would you describe a couple of your biggest mistakes in your early trading days?

None really stick with me. I have never lost much on an annual basis. Of course I have had losing trades, but those are always part of trading. I guess my worst mistake was last month. I have been experimenting with how to hedge my iron condors. My hedge worked really well last October, but in March I lost all my YTD profits with it. So my hedge worked against me. My lesson is that I need to have a trading plan for my hedge too, not just the primary instruments.

Q. Looking back to the beginning, in the face of the usual challenges, what motivated or inspired you to learn to trade well?

Improve my returns and sleep better at night.

Q. On reflection, was there a single moment in time or situation that ultimately had the greatest influence on your trading?

Not Really.

Read more from Lionel in the Trading Plan section …

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