Interview With Steve From NoBrainerTrades.com

There are times in the past where I felt as though I might have been better off hanging around for a longer period of time, but overall, no.  At some point I would have wanted to make the transition regardless and once you make it through the growing pains it does indeed get easier.  There are initial apprehensions, struggles with finding a streamline approach to business operations, marketing and fundraising, etc., but they go away with time as with any other new skill.  As these things dissipate you start to focus on scalability and simply moving forward, tweaking the way the motor runs, etc.  It’s no different than any other business.

Also, more specific, but I joined the company when it was in a heavy development phase.  When I started there were roughly 350 people working for the place; when I left, just shy of  500.  And of course the bigger it got, the more corporate, more bureaucratic, etc., things that generally aren’t on my favorites list in terms of my work.

“Trading for a living” is one of every trader’s dream, so what does it take to fulfill this goal?

More than hard work.  It is falling into a comfortable routine that’s constantly shifting.  While it might sound like an oxymoron, trading for a living can’t be a struggle, it just has to be a regular job.  You have to be comfortable with the boundaries you set and be able to feel no pressure while you’re focusing on what matters most: performance.  Most traders that attempt to go full time usually do too early as they lack “trader maturity” as I like to call it.  They haven’t gotten over the hump of rookie mistakes or simply lack crucial knowledge that their competition already knows.

A full-time trader needs to be well-rounded.  They should be able to navigate around a conversation about inflation and debt just as easily as support and resistance levels, and not from a 10 or 50% level.  They have to know their market inside and out.  A lot of educational materials made commonplace to the retail crowd simply skirt this issue, providing many people with a false confidence that tends to lead them down the wrong path.  I regularly tell beginner traders to dig, dig, and dig some more until they truly understand the implication of everything that hits the wires.  Few do this, and subsequently see only a portion of the picture.  But eventually, it clicks.

Through most of my writings you will almost always find one underlying theme: to put in material effort or more simply, don’t half-ass it.  The money is real and the potential is huge, so do it the right way.  Most people half-ass it.

Traders get paid to trade, analysts get paid to write.  The only analysis that matters is the one that forecasts the market.

There is a big distinction between analytical work that can, for instance, tear apart an economic environment and say “this is defunct, so it’s probably going down” versus the analysis that says “this is defunct, but the market is going to trade it higher because that’s the way the crowd reacts”, and follows suit.  I could write an entire article about the pitfalls of analysts, but many, if not most, fall into the category of chasing the market or fading at inappropriate times.  Even some that have been writing for years still do this, so I am very weary of reading anyone’s opinion for any other reason than novelty or a heads up on something I might have overlooked.

Do you know any retail trader who is successfully trading full time but does not have a financial background?

I know several.  My financial background came in handy when it came to actual fund management and marketing, but not necessarily trading, believe it or not.  While you can pick up and learn as many things that you can at a bank or a hedge fund, there are unquestionably a vast majority of people that work at these places that could never trade successfully.  Traders at these places are few in numbers compared to the infrastructure that supports them.  Just like anywhere else, I have seen traders come and go, following the same mistakes you find any retail trader complaining about.  Muli-million dollar portfolio managers are going to be writing about the same aches and pains in their trade logs that a novice will.

So bottom line, having a professional financial background is far from a golden key.  The principles of trading are simply unchanged in this sense.  People are people and there is only so much information out there; some delve deeper than others and they tend to be the ones that prevail.

I don’t necessarily marry myself to a certain timeframe, but I do look at smaller ones as larger ones very frequently mask key levels.  While my blog has a decent amount of technical information on it now, there is still a great deal of information missing in terms of what I actually look at. Unfortunately my best explanation for any of this would be to just sit with me and watch; it is sometimes hard for me to explain everything fully.  I use weekly all the way down to one minute charts, sometimes I’ll even use tick charts. But a chart is a chart, just make sure you’re seeing everything of relevance.  Don’t ignore a larger or smaller timeframe when there could be something very crucial hidden there, unseen from the chart (larger timeframe) you’re looking at.

Always be aware of your surroundings, because the person that’s ready to drain your P&L is.

This number can vary greatly.  To make it easy I can categorize my trades into two separate categories: long term and short term.  Short term trades are most frequently flat at the end of the session, and of these I’m usually taking anywhere from zero to six per day, and that’s a ballpark number.  Longer term, “position” trades are squeezed off when the time comes; it would be hard to put a number on this, but on average we’re talking probably about the same numbers, but on a weekly, not daily basis.

Short term trades can be held for a handful of minutes to a couple of days, depending on the situation.  If my conviction level is high enough that follow-through is going to prevail, I’ll likely clip some of the P&L and let the rest ride for whatever target I’m seeking…usually a more conservative one.  I don’t beat myself up over “this could have gone a lot further”, etc.  That’s what the long term trades are for.  There are open anywhere from several days to at most, a month to several months.  It would be rare of me to leave these open for any longer, but it happens.

Actually I fall into both categories.  I use varying levels of risk based on simple and standard value calculations to take exposure in long-term as well as short-term positions.  My trades begin, almost always, with the direction based on words read from the wires and me knowing how the market is likely to react.  This fundamental premise sets the mode for everything that follows.  Reduced exposure is taken on longer-term positions, higher on shorter term, and both get bumped up if I see the opportunity to take on more risk is appropriate.  There is nothing wrong, in my opinion, to listening to your own expertise if your conviction level is extremely high.  Just make sure this is the case.  I know when mine is just due to the amount of time I have been doing this, but newer traders are likely to work from false pretenses.

It’s only dangerous if you’re risking the bread money, in any circumstance.

With so many approaches to trading and the number of ways to be creative I don’t see why it wouldn’t be possible while having a day job; you’re just going to get less trades, if you’re doing it properly.

I find value in Fibonacci numbers, but by definition Elliot wave shifts based on varying levels to forecast price.  It is great when it works but hell breaks loose when it doesn’t.  The major issue I see with Elliot Wave is that certain patterns present themselves, but they are being taken for face value, and when they don’t, you “shift” the setup for next one.  This follows the same flawed logic of many standard price patterns, such as head and shoulders, etc.  What happens when the neckline gets broken, and price retraces? It happens a lot, and people that follow this kind of logic can get caught unexpectedly by unwanted circumstance.  Better to just follow conventional methods, as always.

There are only a handful that I have read with a lot of interest, and they all encompass the idea of what others are thinking: Alchemy of Finance, in which Soros discusses his portfolio management process, Market Wizards, which interviews well-known traders, or a newer one, Trend Following, which follows a similar premise. None of the technical books have ever served me practical value, with the exception of one by Tom DeMark.  And it wasn’t the strategy he taught but rather the way of thinking about price that hit me, as “it’s okay to think otherwise”. His unconventional methods basically taught me to let go and forget about what other people tell you – he developed all of these methods through observation alone, as I have now most of mine.

There were two months several years ago that had me ripping my hair out – the worst of worst that any trader wants to be in.  When I first started working for myself, I followed a very standard routine.  I used a big risk reward ratio, simply because it was a very effective method in which I was comfortable, as it is to this day.  When you’re starting off on this kind of level, though, you can’t afford to make many mistakes.  I had been doing very well for quite a while, but for whatever reason nothing seemed to click.  Every trade I took either seemed to get wiped out or just fall off the map in terms of where I was entering. I started to question everything, which is perhaps one of the worst positions to be in as a trader.  But I stuck with it and eventually, it worked out….but not without me losing a few hairs in the process.

And your best experience?

Call me a pessimist but I can’t ever remember jumping through the hoops with the exception of when I first started out, and was getting into a very good groove.  It is that excitement of doing something new, and doing it well.

My spike base pattern or just liquidity gaps, which I just posted an article about today.

I’m always going to have the interest, so probably not.  Even if I stopped doing it professionally I would still probably keep going in some form.  There are other things in life I want to dedicate more time to down the line, for sure, so maybe at some point I would just shift some of my efforts elsewhere.

No surprise I’m really into computers and like design in general….I was one of the art geeks in high school and enjoy looking through books or sites on architecture or just other forms of design.  I love the outdoors, fishing, etc.  I like staying active as much as I can….not trying to get old too quickly here.

Get your sleep, don’t stress and don’t half ass it. <- That’s ten words, twelve if you rip apart the compounds.

And if I may add, the NBT motto: “Take the easy ones, and don’t do anything stupid in the meantime”.

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