For the fifth interview in the StockTickr Interview Series (RSS feed), we spoke with Eyal Maoz, a part time trader who lives in New Zealand. We discovered Eyal when we were reading TraderMike’s blog. Eyal is an active StockTickr user (see his watchlist here) and authors a popular blog on trading.
Read on to find out who Eyal is, how he trades, and his advice for newcomers to the trading world.
StockTickr: Tell us a little about yourself.
Eyal: I’m 32 years old. Originally from Israel and have been living in New Zealand for the past year after spending 8 years in Asia. I am an IT project manager by profession and an amateur trader. When I say amateur I mean it in the French sense of the word, as someone who has a passion and love of the subject.
StockTickr: How did you get started trading stocks?
Eyal: My first trade was a purchase of a speculative option on a recommendation from a co-worker back in 1994. Needless to say that resulted in a loss. I then got sucked into studies and totally forgot about stocks and financial markets. I got interested in financial markets again when I was in Singapore and did an MBA in Finance hoping to work in the industry. That didn’t work out as I graduated in late 2000. Timing can be everything in life. Anyways as I graduated I moved to Hong Kong and was sent to the US (Minneapolis, MN) for a few months and that’s when I opened my first brokerage account with Ameritrade and started ‘tradevesting’, yeah exactly how it sounds, I didn’t really know what I was doing but I was hooked. I lost 25% of a very small account I had when I then decided I need to start learning. I read everything I could lay my hands on in terms of swind trading which is what I thought would work for me. I swing-traded for a while with mixed success but when I was back in Hong Kong it was almost impossible to continue doing that because of time zone so I swtiched to Forex. That was pretty disasterous as I used overly large positions which meant I couldn’t stick to my system and missed a couple of big moves. I then abandoned forex and trading all together due to some personal relationship reasons, that was in 2002. Then in mid 2004 I was reading this business/management/leadership book called: The Naked Leader. And a sentence grabbed me, it was a question along the lines of: If you knew you would not fail, what would you do? And the answer that popped into my mind immediately without any thinking was: ‘trading, of course’. And that’s when I started putting more serious effort into day trading.
StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?
Eyal: That would have to be my forex trading experience as I lost about 30% of my account which was quite traumatic. That experience emphasized in me the need for strict money management and made it easy for me later on to always adhere to position size and stops.
StockTickr: Do you trade for a living now?
Eyal: No. I trade part time. I don’t feel I am sufficiently capitalized to go full time. Maybe in the future.
StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?
Eyal: I think the number one lesson which many beginners may not be aware of is: it doesn’t matter how well positioned you are in terms of psychology, capitalization, trading tools and other stuff if you don’t have a trading system with an edge which is suitable for you. The rest of the items are important but without a suitable edge they won’t get you anywhere.
StockTickr: How did you settle on your current trading strategy you’re using now?
Eyal: I was looking for something that I could see is working. For both my intraday and longer term trading I’ve learned a lot from MaoXian. My intraday trading is very very closely shaped after Maoxian’s dummy style and the longer term trading takes inspiration from various stuff I’ve read on his excellent blog.
This last one reminded me of an interesting thought that came to me some time back. Many books and ‘gurus’ out there advise to find a system and adapt it to yourself. This is the last thing I would advise a beginner to do. As a beginner all you are likely to do is ruin the system. My advice would be to try and trade a system as is first, make sure you understand it inside out and have accummulated significant experience before trying to add or remove things.
StockTickr: How long do you typically hold stocks?
Eyal: I trade both intraday and longer term. Intraday is typicaly measured in hours and longer term can be days to weeks.
StockTickr: What’s your exit strategy for winning and losing trades?
Eyal: Losing trades exit is easy, it’s predefined in advance based on chart reading, basically some resistance/support or swing low/high. Winning trades are tougher and is more of an art, I try to not have profit targets and instead just trail in some way. There’s no perfect exit, it’s something that you get a feel for over time and just to do ok on average as you’ll never get it always right.
StockTickr: How do you use StockTickr?
StockTickr: How do you tag your stocks in StockTickr?
Eyal: I started out by just tagging with different ideas but it made it difficult to see what was really going on. I now use 2 or 3 tags just based on the “systems” I trade and it seems to work better.
StockTickr: What 3 books do you recommend traders read?
- Van Tharp’s Trade Your Way to Financial Freedom
- Steve Nison’s Japanese Candlestick Charting as a general technical analysis book
Can’t think of any other book which is really useful, there are a lot of good entertainment ones though like Pit Bull.
StockTickr: Other than your own, what are your 3 favorite blogs?
StockTickr: What is your typical R value per trade? i.e. what % of your portfolio do you risk with each trade?
Eyal: I use a very low R value per trade. less than 1%. That’s something I’m looking to work on increasing this year.
StockTickr: What technical indicators could you not live without?
Eyal: I don’t really use technical indicators as such. I prefer to rely on price action, volume and chart reading.
StockTickr: Do you backtest?
Eyal: Yes, I do. You have to do some form of backtesting. But of course it’s a double-edge sword. There are a lot of potential pitfalls when it comes to backtesting such as the obvious curve-fitting, ignoring transaction costs, data quality, forward-looking indicators, drawdowns and tradeability of the system, outliers and many others.
StockTickr: What advice can you offer traders who are just starting out?
Eyal: Trade small, trade as often as you can, pick a system you think will suit you and trade it for a while, take detailed notes, evaluate your performance and thought processes often.
StockTickr: What do you like best about trading?
Eyal: The challenge. The promise of freedom. The money 🙂
StockTickr: When did you start your blog and what prompted you to do so?
Eyal: I started blogging in 2001 but it was a general blog about life and my boring job 😉 It was mainly a means to stay in touch with friends and family spread around the globe. I restarted blogging about trading as means to keep track of my thoughts, progress and general items of interest. Another reason I enjoy blogging these days is the blogging community that has formed up and is nice to be a part of it.
StockTickr: Thanks, Eyal!
Stay tuned – there are several interviews on the way. You can subscribe to these interviews via RSS feed.
Previous interviews in the StockTickr Interview Series:
- Gary B. Smith, the Chartman
- Nusair Bawla (alibawla on StockTickr)
- Dave Landry, Swing Trader
- Jeff White, the Stock Bandit
Do you have suggestions for other traders you’d like to see an interview with? Let us know!