Excerpt from an interview with one of the most successful scalpers.
How did you first become interested in trading?
In graduate school, I did a bit of research on commodity markets.. I wanted to trade, but I didn't have the funds to buy a place. IN 1982 year I found out, that a trading place on the exchange can be rented, that's where I started.
You have always wanted to trade as a private trader and nothing else?
Yes.
How did you learn to trade?
By lot at a time. I always had my own opinion. I stood idle all day on the site and worked out my point of view. When I found myself right, it stimulated me, even if I did not conduct transactions. So when I was trading, then from the experience of his daily six-hour observation of the market he knew, that I will almost certainly be right. The same scenarios were constantly unfolding before my eyes.
Do you mean market patterns or specific actions of traders?
Both. Market patterns have been consistently repeated, and the players in the market stubbornly did the same. It only remained to take advantage of this.
How were your first months? You made a profit from the start?
Think, that I've never been in the red by more than 19 Ticks. Means, one might say, that I started well.
You came to the site without preparation. What saved you from mistakes?
I worked hard - every day from opening to closing, six hours a day.
But you had no experience at all, to lean on.
And he is not needed. No education is required for this job. The smarter you are, the harder it is for you. The more you know, so much the worse for you.
What with your trading style - and this is scalping - you expect to get, opening a deal?
Get as much as possible. used to, that the profit from the transaction was whole points, and sometimes - only 1 straight. You never know in advance. Need to watch the market, feel it and, if you have the right position, just follow him.
Probably, the duration of your trades is very, very short?
I try to shorten the duration.
It's about minutes?
Yes, or even about seconds. It's just less risk. The main goal remains unchanged: reduce risk.
By style, you've always been a scalper?
My style has evolved from pure scalping to combining scalping with positional speculation.
What is the share of your positional trades in relation to scalping trades today??
She is small, less 10 Percent.
Means, you still have basically the same trading style today, where did we start?
Quite right.
You are using any technical data?
Yes, I'm using charts.
If according to the charts you are oriented in a bullish direction, then whether you will necessarily scalp up?
Not necessary. I will open a position according to my initial assessment, but I will rebuild, as soon as something convinces me.
You haven't had losing months?
Was, one or two.
But not two in a row?
Not, never.
What is the percentage of those, who stayed on the site after five years of trading, in relation to the losers and those who left the market?
Less left 20 Percent. But this is a rough estimate, in fact, there may be even fewer.
And what is the percentage of those, who managed to earn and save at least two million dollars?
One percent.
In other words, this is a very small part of traders.
Yes, everything is the same here, as in any other business. How many people will become president of General Motors?
Did you know, than this 1 percentage is different from the rest 99?
I know. Firstly, It's hard work. Persistence. You need to love what you do. Besides, in our business you need to be absolutely indifferent to money. Can't trade for money.
You mean, that you keep the position, while you like her? That is, you will not have such a thought.: “On this deal, I’m losing 1 million dollars, but I could buy a beautiful house for him ". And you will not evaluate your position in terms of reality..
That's it. Although most do otherwise.
I guess, it can be reformulated like this: you need to have almost absolute fearlessness.
Right.
Is it typical for successful traders: they are less fearful, than losers?
Yes.
Will you be able to evaluate a newcomer on the site and say, will he succeed or not?
Can.
What will tell you, that this is a loser?
The biggest sign of a failure is lack of hard work.. Most newbies believe, that the odds of winning and losing for any trade are equal 50/50. They don't think about more. They are not collected, don't follow the factors, which influence the market. You can see it in their eyes - like a wall in front of them.
Do you mean fundamental factors?
Not, I'm talking about paying attention to the behavior of other markets, such as the Dow Jones or gold. About observing traders in the hall.
And graphic models?
I mean them too.
In other words, they are not careful enough. Stand on the site, trying here or there to grab a deal, but do not absorb everything, what's going on around them.
Right. Besides, their costs are usually too high. They can't wait long enough, to understand what is happening. After all, here, as in any other job, "If you suffer for a long time, something will work out". The point is only, how much to afford to stand on the site before making a deal.
do you really think so?
well, the average person may not be a millionaire trader, but if it takes five years here, then he will certainly understand, what is what. No work can be started without it, to feel insecure for the first six months.
You succeeded.
Yes, but I started out as a one-lot trader. And I really didn't feel confident in this business, because I was obliged to make money.
When did you believe, what will you succeed?
Interest Ask. You can't really be sure in this business., because at any moment you can very quickly pull everything down. I trade by the principle: "He who lives by the sword and will perish by the sword". There is always a chance of hitting a market prong in a large position., going against you at the price limit. On the other hand, I have no doubt, that I can enter any market in the world and earn.
How often do you have losing days?
One losing day in ten.
Has this relationship changed over time?
It persists for a long time.
What, In your opinion, ordinary nonprofessional traders do it wrong?
They trade too much. They are not selective enough in their deals.. Noticing the market movement, they want to start trading immediately. As a result, it turns out, that they are more likely to impose deals on the market, instead of patiently waiting for his favor. Patience is an important quality, which many lack.
We must wait for the right deal?
Right. I bet, that most traders, probably, go to a profitable level after the first five trades. This profit seems to them free. But then they forget, what did you earn on the first deals, because they waited a long time, before you tell yourself: “It's time to buy, we have seen the same market behavior so many times ”. And they were right. And then they suddenly start doing deals hourly.. Then they lose on several trades and inevitably face the question, how to take losses. They started with profits, but, without even having time to blink an eye, found themselves with their. Now they hesitate, pondering, when to exit the market. But the market does not hesitate and goes further and further by the minute.. Now they are already losing and understanding, what, selling immediately, will lose 1000 Doll. They do not want to part with 1000 Doll., because at their main job they receive 500 Doll. in Week. And they suddenly start thinking about money.
You start thinking about money and you're done?
Yes, this is usually the case with non-professionals.
How do you personally deal with losses?
Exiting the deal.
Quickly?
If I can. My strength is in great patience, and I'm waiting. Considering the deal a losing one, I'm waiting for the optimal, from my point of view, moment to dismount. I try to close and reverse the position.
Means, If you feel, that you don't like the deal anymore, then you will not leave it, without waiting for the right moment?
Right, but i will get out of the deal.
Suppose, what do you do it in the market, which turned into a one way street. At what point you just have to admit defeat?
It depends on whether, how far the market has advanced against my position. If far away, then at some point you just have to give up. Days like this happen, maybe, three or four times a year, and you just have to fold positions.
But usually you feel, when is it time to act?
Yes, because it has happened before.
However, if the trade is not yet very unprofitable, it's usually better to wait, when the market moves slightly in your direction, and try to sell on the rise or buy on the decline, than just pouring everything out in a hurry and indiscriminately. Correct?
Yes.
Can this be attributed to the essential elements of your trading style??
Yes. You can't give up right away. Many traders, having a losing position, rush to close it just because, that they were brought up like that. Perfectly, such traders will always be near you. But if they have a little patience, you would say to yourself: "Yes, it's a losing trade, but, may be, instead of immediately leaving at 7, I'll sweat for another minute and be able to sell at 10 ".
But, may be, they close positions simply because, that they want to end their suffering? They endure a little more, and they would be better. Is not it?
Right. They give up too quickly. More often, if you don't give up, you can turn "five billion" losses into "two billion".
The scale of your operations has clearly grown dramatically compared to, how did you start. Did it complicate the trade?
Yes, have to adapt: change buying and selling techniques, as the market is constantly changing slightly.
What do charts give you?
Key points, such as weekly highs and lows, midpoints of corrections and areas of consolidation.
You use charts for short-term trading or long-term market analysis?
For short-term trading.
How short-term?
The shorter, all the better. The faster you withdraw profit, the less the risk.
Are you using fundamental factors?
Is always, when important fundamental data comes out, i use them.
You use fundamental data indirectly, watching the market reaction to new information. Is not it?
So. But I also try to be the first to play on new fundamental data.. I know in advance, what to do depending on, what will be this or that indicator, and therefore usually have the advantage of the first.
You try to stay ahead of the crowd and usually win.. Correct?
Yes.
What role does luck play in trading??
Trading is like any other job. Lucky that, who works hard, investing your time and energy. I'm lucky, that my first 100-lot sale was successful. But why am I lucky? Because I stood on the site for more than six months, developing and honing a sense of the market. When the opportunity came, I didn't hesitate.
Luck comes at a price.
Right.
Are there those, who, not being good traders, got ahead thanks to, that they were lucky enough to make a couple of big deals in the right direction? Is it possible to succeed only through luck??
Not, maybe not for long. According to my estimates, if you last a year, then you will continue to trade, but it's not easy.
Are there such traders, whose opinion you take into account, respecting their work?
Yes, certainly. They are my indicators.
Means, this is part of your trading method. For example, if good trader X is short and you are going to sell - …
That, means, I'm right.
And if he buys?
Then you will think about it. Maybe, it's better to abstain from the deal altogether.
Do you know traders, who are unlucky due to overly unshakable conceit?
I know.
Is a willingness to give up on your own mind contributing to your success??
Certainly. You have to adapt to your success. When you make tons of money, you suddenly start to feel infallible. You forget about, that they owe their innocence to all those little things, which you tracked. As soon as you start to consider yourself the smartest, you immediately get it in the nose.
That is, it makes no difference, your idea or not. Only victories and defeats are taken into account. And where the idea came from - it doesn't matter?
Right.
Does a good trader need to be very self-confident?
Actually, The best traders, vice versa, distinguished by humility. To be the best, self-confidence is needed, but only in the sense of believing in yourself. You can't let your ego interfere with a losing trade., you need to humble your pride and close yourself.
You keep on working, because you like it?
Yes. Hope, that this will continue to be the case.
Maybe, most important is Baldwin's assertion that, that trade cannot be viewed as a means of satisfying material needs. Money for him is just a settlement tool. Most traders, vice versa, tend to assess their losses and profits in the context of consumption, what prevents them from making adequate trading decisions.
Another interesting statement by Baldwin is at odds with conventional wisdom.: “Don't rush to close a losing trade, but rather wait for the right moment ". Similar advice, it would seem that, challenges most trading advice. After all, the main guarantee of trading success is to immediately stop losses.! I doubt, that Baldwin is against this rule. Think, he means, which is often the worst of all to fold a position during a strong counter price movement. Baldwin claims, what, holding on a little longer, you can get more favorable conditions for exit. Certainly, this approach can only be recommended for disciplined traders: the, who can follow a risk management strategy.
