Trading Interviews

Michael Milligan

The trades never gave me a reason to sell; I only sold because of my fears of losing money. If I had only done the third strategy and held on the trades longer my funds returns would have been 3 times higher. From that point on my funds performance took off and I never looked back.

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)?

My trading style is that of a swing trader/trend trader. I am willing to take a hedged position and wait several weeks to give the trade time to work. I will also roll traders for several weeks/months as long as the trade is going my way. I only trade futures and options on futures. I have been actively in the markets for the last 20 years. I am a college professor at California State University Fullerton. I enjoy write/ speaking and teaching trading and trading strategies.

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 first entered the industry as a broker. This was my job and I wanted to make a lot of money. As I learned more about the business my goals was to become my biggest client.

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

I can still remember my first big winner. I made $70,000 in one day. At the time my total account value was $100,000. My first bad memory, which turned out to be a great lesson was being up $40,000 the first half hour of the trading day only to get to cocky and go home down $70,000 by the end of the day. That was an $110,000 intraday swing.

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

Not having a clear understanding of risk management. I relied on stop-loss to much. Stop-losses are not risk management. Couple this with the more money I made the more reckless I became.

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

I am an ex-athlete. I have always been driven to be the best I can be. I wanted to learn everything I could about investing and making money. Twenty years later I am still driven by the same passion as my first year. I feel like there is so much that I still have to learn.

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

I had been a broker for several years, before I started my hedge fund. I had been trading for about three months when on a Friday I took home all my trades. I spread my trades out on the living room floor and spent the whole weekend analyzing my trades. At the time I was using three trading strategies. After the weekend I realized that two of the strategies were constantly losing money. The third strategy worked about 70% of the time. I also noticed that I was closing these trades out to soon. The trades never gave me a reason to sell; I only sold because of my fears of losing money. If I had only done the third strategy and held on the trades longer my funds returns would have been 3 times higher. From that point on my funds performance took off and I never looked back.

Read more from Mike in the Trading Plan section …

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