For the next interview in the StockTickr Interview Series (RSS feed), I spoke with Dan Mirkin. Dan is one of the co-founders of Trade-Ideas, the popular real time alerting software. Dan is a veteran of the trading industry having spent time in a variety of areas from scalping to startups.
In this interview Dan talks about the lessons he’s learned over the years, how he lost an entire account when he started out, and about the Holy Grail of trading (hint: be a good loser!). Read on for the entire interview.
StockTickr: Tell us a little about yourself, Dan.
Dan: I am 35 years old and I live in Carlsbad, California with my wife. Carlsbad is a beach city just north of San Diego. I am originally from Houston Texas, and went to school at the University of Texas in Austin. I graduated in 1994 with a degree in Business Administration. I am one of the founders of Trade Ideas, which is a software firm focusing on providing real-time situation analysis and opportunity detection for traders around the world. Managing Trade Ideas is what I do full time.
StockTickr: How did you get started trading stocks?
Dan: The main reason I got into the business was because my close friend from UT, Steven Geduld, was a market maker at his family firm of Herzog Heini, and Geduld. His father told me about the “SOES” bandits who were causing havoc in the markets and making a killing. He also told me that Austin was a hot spot for SOES traders. I looked into in and found two firms that were interesting, one was Block Trading and the other was Cornerstone Securities. I pooled some funds with friends and we all set off to learn how to be SOES bandits at Cornerstone. They had very successful traders there and I was excited to get going.
StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?
Dan: The learning curve was tough to say the least. When I started trading NASDAQ stocks there was no order entry systems around. You had to shout orders to a broker who then typed the orders into a NASDAQ Workstation. There was no easy money, and very little in the way of analytics tools to help find opportunities. We blew through our initial 20K investment in under 3 weeks, it was very painful. I had to go back to the drawing board. After taking some time off, to regroup, started trading again, but this time at Block Trading. It was there that I met Philip Berber who just started working on CyberTrader in a one room office at the back of the Austin Block Trading floor. I had a lot of interaction with Philip and tested most of the first release features of Cybertrader. That is where I got the taste for software development which eventually led me to starting Trade Ideas.
StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?
Dan: I became very well versed in the dynamics of the NASDAQ and how the day trading game worked. I also realized that in order for me to stay in the game I really had to focus more on money management. Don’t lose big, a phrase that one hears often, and one that has to be the foundation of any trader’s career. The single lesson I learned to become successful in trading was that in order to be a winner I had to be a great loser.
StockTickr: Describe your style of trading. How long do you typically hold stocks?
Dan: When I started I only traded for quarters and eighths, but as I got better I realized that there was much more to it. It was right around the time that the market started to have very big moves in stocks like DELL, INTC, CSCO etc.
StockTickr: What’s your exit strategy for winning and losing trades?
Dan: The key to success for me was not just scalping in and out but being able to get into stocks that trended for a long time. If it starts to run, let it run, but if it goes against you a percentage or dollar amount that you determine is unacceptable you get out and look for something else.
StockTickr: What 3 books do you recommend traders read?
StockTickr: What is your typical R value per trade? i.e. what % of your portfolio do you risk with each trade?
Dan: I don’t have a typical R value per trade. Part of the art of trading is having a feel for when to take profits and when to keep holding. It all varies depending on the current market.
StockTickr: What technical indicators could you not live without?
Dan: I am not a big fan of technical indicators in the current form, because I believe most were made before technology got to the point where it is today. Almost any indicator can be looked at in completely opposite directions. Example being RSI, is it overbought or just trending higher? It depends. I prefer to make decisions based on visualization of support and resistance on charts. Trade Ideas software revolves much more around helping traders find set ups visually instead of just focusing on indicators.
StockTickr: What type of charts do you use? Bar, line, candle, etc?
Dan: Personally I like Candles. In fact our software makes analysis using a proprietary candlestick method that we developed internally.
StockTickr: How do you think the market has changed over the last several years? How have you adapted?
Dan: When I started trading, one could make a living just working the dynamics of the SOES and Selectnet systems. Those days are long gone. Now you have to understand the charts and get a feel for the tape. Trade Ideas software is what helps me adapt by pointing me in the right direction for the types of situations that I am looking for. I do not have to wait until a certain stock does one thing cause I am watching everything and as soon as a set up meets my criteria I am alerted to it in real-time.
StockTickr: Do you backtest?
Dan: I do some backtesting to just get a feel if I am moving in the right direction or not. However you can spend a lot of time chasing the Holy Grail, when there is none. In trading the Holy Grail is your ability to manage losses well.
StockTickr: What advice can you offer traders who are just starting out?
Dan: Make sure that first and foremost you are adequately capitalized. If you plan on using trading money to pay bills, be prepared to lose your shirt. Get ready to learn a lot about yourself.
StockTickr: What do you like best about trading?
Dan: Probably the best thing about trading is the freedom and the lifestyle. It is a bug that once it bites you, it is very hard to get unbitten.
StockTickr: Thanks, Dan!
Stay tuned – there are several interviews on the way. You can subscribe to these interviews via RSS feed.
- Bruce Brotnov
- Eric Cahoon
- Ugly from Uglychart.com
- Alan Farley
- Declan Fallon
- Smita Sadana
- Bill Cara
- Van K. Tharp – Free autographed copies of Van’s book still available! Get yours now!
- Brett Steenbarger
- Eyal Maoz
- 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!