|“I think the mental challenge was likely one of the motivational aspects behind starting to trade but at the back of my mind it is the knowledge that this is a skill, that once developed can be taken anywhere and used.“|
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 trade a number of accounts and use different styles. In some accounts I am more aggressive while in others I am not really a trader but an investor. I like to buy strength and that can be from a stock making a new high or from a stock which is recovering. I have been trading since 1982 and mainly trade stocks with some options mainly from a covered call point of view. I have read over 30 trading books and am now reading more motivational and psychology books. When I have the time I work on my stock trading website which can be used by beginner and intermediate traders to get a better understanding on how to use technical analysis to trade stocks and options.
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?
Yes, I think this would be a safe bet. I started out in 1982 right after I got my first job. I always wanted to trade so I took the time to learn. Many people at worked played the market so there was a social aspect to it as well. I think the mental challenge was likely one of the motivational aspects behind starting to trade but at the back of my mind it is the knowledge that this is a skill, that once developed can be taken anywhere and used.
Q. What are some of your good and bad memories of your early trading days?
In the early days, for my first couple of trades I felt that if the old timers gave me a stock market trading tip and I bought the stock it would immediately go up. It generally didn’t. I remember wanting to buy some puts at the start of the bull market in 1982. Amazingly my broker talked me out of it. I also remember selling 10 naked calls but once the broker realized I had no money in my account he quickly closed out the trade at a small profit. About a week later the company was taken over and the stock went up significantly which would have put me in about $10,000 of debt. Glad he sold me out.
On the good side, I felt strongly that Magna a struggling auto parts company would go somewhere and picked up 600 shares averaging around $4. I wanted more but had no more cash. I ended up selling in the mid 30’s that was my first big win. The stock eventually went to over 100 so while I was happy with the win I could have done much better. Once you have a win like that and can see the potential you really want to develop the skills required to trade successfully.
Q. How would you describe a couple of your biggest mistakes in your early trading days?
My biggest mistakes come from not selling when I know I should. As they say, the first loss is the best. I have held a number of stocks to bankruptcy which has not helped my account balance. Luckily, I have not done that for a while. Not really knowing what I was doing was also a main contributor to my early losses. Also, I love to write programs for my stock market screener. These programs find the last big winner and some of them are good at finding the next one. But it is quite difficult to trade and get good at 50 different methods of trading. Now I realize this and am starting to trade only a few select methods.
Q. Looking back to the beginning, in the face of the usual challenges, what motivated or inspired you to learn to trade well?
I know that trading can be a very lucrative way to make money for those who master it. There is a line in Reminiscences of a Stock Operator which states “Millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance”. And like anything, the more you practice, the better you get. So I know and can see that as I begin to understand the game more and more it does become easier.
Q. On reflection, was there a single moment in time or situation that ultimately had the greatest influence on your trading?
When I was in my early teens I can remember looking at the stock page and seeing a stock where the bid was 1 cent and the asked was 3 cents. I did not know what that meant at the time but I figured if my dad could just buy at 1 cent and sell at 3 cents we would be rich pretty quickly. Dad never acted on my sure bet. My dad traded/invested a bit but was never successful. He ended up totally dissatisfied with the markets and would only buy Guaranteed Investment Certificate (GICs). I think part of me wants to prove that trading in stocks is not that risky provided your stock trading education is reasonable and you act in the appropriate way.