Trading, Trading and More Trading!

Site Administrator | March 17, 2012

Responsive image

Trader Talk 3.16.12

Randy Sarrow –

Mark –

Steve Thompson –

Tell us a little about your trading strategy and why you have chosen to focus on that particular method?

Randy – I started trading like everyone else, a long time ago, via discretion.  I had very mixed results for quite a while.  When I got set up with Trade Station, I started tinkering and got pretty good.  I developed a mechanical strategy that worked pretty well.  That kind of got me where I am today.

Steve – I’m in some ways, an old guy that went around a lot of blocks to get back to the beginning.  My trading started as hedging.  It took a really long time for me to look at trading as a profit center.  As I was creating an asset, at the end of the day, you have to sell it and create a profit, so that was really my focus.

What specific changes did you make in your trading methodology that allowed you to trade full-time?

Steve – For me it took realizing that I could not control the market, that as a successful business guy, that spent a lot of years influencing his environment, I had to really get outside of myself and my job then became how to react and use the market to my benefit, as opposed to how to change it.

Randy – There were several changes.  I’m sure every trader has experienced over trading and revenge trading.  The biggest change I made was mastering myself with discipline.  Setting trading goals was the big one for me.  And stopping trading when there is a reasonable profit.  I think most traders really get this wrong about what a reasonable profit it and how much money they should shoot for.  They have a set dollar amount in mind that they want to achieve.

Mark – That’s a good question, again, I’ve been trading for more than 20 years.  Basically it was developing a program, so I could have exact entry and exit numbers.  I know without a doubt that if the market does this, this is what my reaction needs to be to it.  I was behind the curve, so I used some of my strategy that I learned on the floor.  By doing that, I was able to build an algorithm.

What risk control methods, have been most critical to your consistent success?

Mark – People believe that they know exactly where the market is going or what the market is doing.  I’ve implemented a catastrophic stop loss, when I am wrong, I just throw in the towel, and know that over quite a few trading days, I can make up that loss.

Randy – Well the answer to this partly has to do with the previous question, and that is setting daily goals.  Its one thing to have a daily profit goal, its another thing to have a daily loss limit and be able to accept that.  That was even more difficult to keep my discipline.  I base it off of my account size.  My trading goal is a very modest 2%.  I think the hardest thing for me was to stop trading when I had a losing day, and resist the urge to try to make my money back.

Steve – Its really an interesting combination of what Randy and mark have said.  The first is patience, waiting on the market to show you something that you think gives you a higher probability of your success.  Or that the concept of how much can you really afford to lose.  I started trading where I honestly could trade a couple hundred DAX contracts in a day.  That’s a lot of risk.  The two components are risk analysis.  Whatever your business is, you have a business plan.  The patience to enter and willingness to get out are the two components to success.

Randy – How do you approach changing market cycles or news events as a systems trader?  Our automated trading strategy has a built in news filter.  It grabs the news from one of the forex sights, so in your chart, a window will open, and it will show all of the pending news events for the entire week.  The news will be categorized by high, medium, or low impact and by country/currency.  So it’s a great tool to have, I can’t tell you how many times, I’ve been trading and an announcement came, and sometimes it works for you and sometimes it goes against you.

Mark – Has your trading style in the e-mini SP changed this year with the grind higher type of market we have seen?

The way that we trade, because of the market and how it moves, whether I’m taking a long position or short position.  The entire market is going to benefit.

Steve – What about trading the early morning market is so appealing to you?

Trading the German market, the Dax, in the early morning is part of my trading discipline.  I like the early bird because I like the interaction and the conflict between the European cash markets and the US markets.  I find so much opportunity to make money during the European time frame, I can’t trade 24 hours a day, I tend to like trading off of Europe.  I find it wonderful to watch the Global markets and news come together on a daily basis.

To view this recording in its entirety, please click the following link:  Free Trading Education

To join us for our next event on Using Order Flow to spot High Frequency Programs, please CLICK HERE


The TradingPub
“Trade, Talk, Learn – Cheers to Success”
Follow us on twitter

Risk Disclaimer: Past performance is not indicative of future results. Futures trading involves substantial financial risk. Views of guest commentators do not represent those of Article intended for educational purposes only and not meant in anyway as a solicitation to buy or sell certain securities. Please consult your personal financial adviser before using this information for your own trading purposes.