Interview with Michelle B.

October 30th, 2006

For the next interview in the StockTickr Interview Series (RSS feed), I interviewed Michelle, a daytrader that is now posting on TraderMike‘s site.

Michelle started popping up on various sites posting some of the most insightful comments on trading. It was clear from her comments that she was no beginner in the markets. She’s now posting some great articles like this gem. Here’s another great article that picks apart one of her trades.

Read on for more about how Michelle got started trading, her early trials and tribulations, and why she thinks there are so few female traders. Michelle has offered to answer questions in the comments of this post, so ask away!

(Also check out today’s episode of WallStrip on HOG.)

StockTickr: Tell us a little about yourself, Michelle.

Michelle: Recently, TraderMike contacted me after reading some of my comments at various trading blogs, and I took that opportunity to suggest the possibility of my contributing to his site, to which he very graciously agreed. I find writing posts and responding to comments very interesting, demanding, and fun.

I am presently living with my husband, a computer historian, in the southeast of France, and trading full time for a living. I am originally from New York City, and I worked as a bibliographic control technician at New York University Law School Library, as a potter, as a director for a small Historical Society in the Northwest, and as an administrator for two American software companies, one in the north of England, and then at another one near London. I have an undergraduate degree in Communications from New York University and took several courses in Library Science on the graduate level. I have also studied nursing with a fair amount of emphasis on psychiatry, and worked at various Manhattan doctors’ offices as a doctor’s assistant.

StockTickr: How did you get started trading stocks?

Michelle: Roughly around ten years ago, my British husband and I decided that he would accept a job in France. He suggested I consider actively trading instead of looking for a job since my French language skills were poor at that time. He told me the goal was to compound the account–make gains, plow those gains back, make more gains, and then plow those gains back, etc. Though I hardly knew any French, I knew absolutely nothing about the stock market. I thought a stock was something in which you boiled a chicken, some carrots, and a bay leaf.

StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?

Michelle: I allowed a long trade in BBH to decrease my account balance by 7% in one hour because I did not honor my stop loss. My account was halved following the September 11 attacks–one of my positions was a margined long in an airline parts supplier. But, the real horror was my account stayed flat for a very long time. I would make gains, give them right back, make them again, and then give them back, ad nauseam–not quite what my husband had in mind.

StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?

Michelle: I needed to read The Disciplined Trader by Mark Douglas until I understood it completely. I have just finished reading it for the tenth time, and since I still do not completely understand his approach, I will be reading it again down the road.

StockTickr: Describe your style of trading. How long do you typically hold stocks?

Michelle: I daytrade mostly, and usually hold positions no longer than a few hours. Sometimes I will hold an ETF position overnight or longer. A common focus in my trading style is to short buyer-exhausted stocks and to buy seller-exhausted stocks. These reversal trades have a very high probability of being profitable, but they require a fair amount of skill.

StockTickr: What’s your exit strategy for winning and losing trades?

Michelle: My stop loss is a certain percentage of my capital I am willing to risk, never exceeding 1%. If I have paper profits matching the amount I am willing to risk, I won’t give back more than 30%. Otherwise, I let my target be reached.

StockTickr: What 3 books do you recommend traders read?

Michelle:

The Disciplined Trader: Developing Winning Attitudes How Charts Can Help You in the Stock Market Reminiscences of a Stock Operator Illustrated (Marketplace Book)

StockTickr: What are your 3 favorite sites?

Wall Street Warrior, Le Mercado de Estocastica, Brett Steenbarger.

StockTickr: What is your typical R value per trade? i.e. what % of your portfolio do you risk with each trade?

Michelle: I never risk more than 1% of my account balance.

StockTickr: What technical indicators could you not live without?

Michelle: The 20, 50, and 200 simple moving averages.

StockTickr: How do you think the market has changed over the last several years? How have you adapted?

Michelle: The market is still giving out clear supply and demand signals. During the low-volume summer months, I am more on guard for the skewing of these signals because of program trading. For that reason I tend to trade small cap, little known stocks that the big money doesn’t care about.

StockTickr: Do you backtest and if not, how do you instill a strong belief in your trading system?

Michelle: I do not backtest. I instill a strong belief in me, in my ability to perceive and execute opportunity according to my risk parameters by consistently doing it. I am always on guard to identify any emotionality on my part which can dangerously push the limits of my skill level. If it surfaces, I back off until I get it under control. One clue for emotionality getting the upper hand is my using the expression POS to describe the stock I am trading. Simply noting that, and then referring to the stock by its symbol usually puts a wrench in my emotional wheels.

StockTickr: What advice can you offer traders who are just starting out?

Michelle: To read The Disciplined Trader until you no longer get a headache from it, until the virtuously circular, redundant language rings clear as a bell.

StockTickr: What is the most common but easily correctable mistake you see traders make?

Michelle: Traders are often totally unaware of, or unwilling to control emotions, making it impossible to work at consciously channeling those controlled emotions into a focused edge. These traders, misguided and exhausted by such an emotional agenda, cannot identify, refine, and hone a methodology while consistently following a defined risk management approach. They are too wound up to let the market teach them. Their skill level remains poor, and they are no match for their competitors. The solution is to read The Disciplined Trader by Mark Douglas.

StockTickr: Why do you think there are so few female traders?

Michelle: Female traders are still pretty scarce on the trading floors and in investment banks because that was the way it was for a long time, and the inertia of that status quo still hangs heavily on Wall Street. As far as if there are less female online traders, that is hard to say. How do you count the people who trade from the privacy of their homes, and then break down that number according to gender? I, myself, have never been included in a survey.

Most traders cannot consistently accumulate profits. The successful ones are successful regardless of their gender. Online trading is the great equalizer for both genders, but especially for female traders as they do not have to put up with gender prejudices that are still practiced on Wall Street.

StockTickr: What do you like best about trading?

Michelle: It continually makes me a better person, calmer and more rational. You can’t say that for most jobs.

StockTickr: Thanks, Michelle!

Michelle: Sure, Dave.

Stay tuned – there are several interviews on the way. You can subscribe to these interviews via RSS feed.

Become a better trader by using the StockTickr Pro Trading Journal – figure out what’s working and not working in your trading.

Previous interviews in the StockTickr Interview Series (RSS feed):

Do you have suggestions for other traders you’d like to see an interview with? Let us know!

16 Comments

  1. Fernando Azambuja Said,

    October 30, 2006 @ 5:27 pm

    Just a question to Michelle (if possible): how hard is it to open an account from a foreign country (to the US)?

  2. Fernando Azambuja Said,

    October 30, 2006 @ 5:42 pm

    Actually, I just realized that it’d be a bit troublesome for Michelle to answer my question here, so I’ll just try and ask her at TraderMike’s blog.

    Great interview by the way.

  3. David Said,

    October 30, 2006 @ 6:43 pm

    Fascinating background. Do any skills acquired in Michelle’s previous careers get used in her trading? Also would be interested in knowing what tools she relies on for her trading style – including platform, etc.

    Great interview!

  4. Michelle B Said,

    October 31, 2006 @ 12:50 am

    Fernando,

    About 6 years ago when I tried to open up a CyberTrader account, I could not, because I am not an American resident (I do not know if that is still true). However, I know American brokers like etrade (which now has a very decent advanced trading platform), have branches in several European countries, like England and France. And perhaps for those, all you need is to be a member of the EU. Then there are international brokers like Internaxx and International brokers which allow non-Americans to trade on the American market. I know of an European who had a regular American brokerage account set up by the American company for which he was working, and he was able to transfer that easily to an American online brokerage.

  5. Michelle B Said,

    October 31, 2006 @ 1:02 am

    David,

    I copied and pasted this from my response to a comment to one of my posts at TraderMike’s:

    There are many online brokers that fit the bill for the needs of a daytrader, the platform is usually referred to as an advanced trading platform (atp).

    You want the following at a minimum: streaming intra 1,3,5,15,30, and hourly charts, ECN access, clickable ordering and order entry defaults (to execute as quickly as possible), realtime account balance and realtime portfolio, advanced ordering features like trailing stop and bracketted order (stop loss and target order goes in at the same time), high/low ticker, and premarket top gainers and losers scan, TOS (Time of Sales), Level II quotes.

    Less important (to me that is), sound alerts, ability to annotate charts with trendlines, etc, and notes, and streaming news. I actually prefer to use clear plastic rulers across my screen to note trendlines!

    Brokers can have different requirements for margin, minimum account balance, etc. All brokers have technical problems from time to time.

    I can’t say that I consciously resort to skills that previous jobs gave me. However, the fact that I did hop around, job and countrywise meant that I was very curious and open to learning to new knowledge and skills. If I was going to pin one trait or skill on why I stuck with trading until it worked, was that I knew that previously I learned different job skills, so I could with this one also. And fortunately, I did not run out of time or money until I did, because trading was the toughest one.

  6. Fernando Azambuja Said,

    October 31, 2006 @ 2:54 pm

    Thanks for answering, Michelle. I really appreciate it 🙂

  7. David Said,

    November 2, 2006 @ 6:29 am

    Thanks for the thorough response Michelle, I’ll reference this conversation from our blog as well.

  8. Eyal Said,

    November 2, 2006 @ 8:51 pm

    Good interview guys.

    Fernando – there are several brokers who allow opening an account from overseas. I live overseas and have or had accounts with:

    Interactivebrokers (that’s my current broker)
    MB Trading (some countries restricted)
    TradeStation
    Ameritrade
    Datek 🙂

    Good luck.
    Eyal

  9. Michelle B Said,

    November 2, 2006 @ 10:32 pm

    Eyal, thanks.

    Note to Fernando: I incorrectly typed Interactivebrokers as ‘International brokers,’ in my response to your question.

  10. Daniel V Said,

    November 3, 2006 @ 3:34 am

    Thanks a lot Michelle for your posts and insight.

    What trading soft(s) do you use to analize the market?
    Which ones you could not live without?
    If so, how many monitors do you use to daytrade?

    Thanks a lot in advance,

    Daniel V.

  11. Michelle B Said,

    November 3, 2006 @ 5:34 am

    Daniel,

    You are very welcome.

    I use only the ATP (advanced trading platform) that my broker provides (see my reply to David above regarding the minimum features of an ATP that are required for daytrading).

    I used to use several monitors, but now use just one. I can setup many layouts, each one consisting of four pages. However, I use only one layout, and flip through its four pages (see my post ININ, an anatomy of a Friday morning daytrade, at TraderMike’s, regarding my layout setup–all my posts are together via the category Michelle B’s post, on the left of his site).

    I am particularly fond of the low/high ticker–it gives me a feel for the general pulse of the market in realtime, pre, during regular hours, and afterhours. I can determine, since I know most stock symbols, by glancing at it, which sectors are up or down, if the market is perky or sluggish, bearish or bullish, and if any particular stock is tubing or ramping very hard. It took several months or so for me to learn how to use the low/high ticker to my advantage. It can be distracting, especially if it is on the main page or screen, as it is in my case. But I love it, it is the pulsing market for me, keeps me attached and alert to the real market existing outside of my turret.

    The premarket gainer/loser scan is also very important for my style of trading, as I do not keep a watchlist per se. I may keep a few stocks that catch my interest via the low/high ticker on my pages for a few days, but that is about as close as I get to keeping a watchlist.

    In addition to these 2 scans, I browse through sites premarket for news that happen since the close of the previous trading day (it is 10 pm my time when it is 4pm NYC time). These 2 scans and my searching news (check the ININ post for what news sites I check) are how I get fresh trading vehicles each and every day.

  12. Daniel V. Said,

    November 3, 2006 @ 6:08 am

    Thanks a lot for your through post :o)
    I will look more deeply into it trough the days!

    How long do you consider it took you to become at least a basic good trader? from your posts you have been around 10 years (master level?) but from 0 to good enough, how long did it take you?

    Thanks a lot once again,

    Daniel
    Going through the learning process!

  13. Michelle B Said,

    November 3, 2006 @ 6:32 am

    Daniel,

    Those 10 years included some trading done part-time, and also with a fairly small capital base. Roughly, I would say it took about 3 years fulltime to get to the stage where I could say that I was disciplined and skilled enough to have confidence in my abilities to make a life-long career from daytrading. Everyone is different, so I hestitated saying the above, but since you asked so nicely, I did.

  14. Daniel V. Said,

    November 3, 2006 @ 7:13 am

    Thanks a lot Michelle for your insight on the matter 🙂

    Have a nice (and profitable) day,

    Daniel

  15. Genentech (DNA) Example: Longer-Term Trading • dummyspots.com Said,

    November 13, 2006 @ 8:11 pm

    […] Caution: This is total hindsight, and everything’s always easier and clearer in hindsight. But it was very educational for me, and hopefully some other folks will find it of use. I’ve tried to annotate each chart and describe what I see [tips hat to Michelle B.]. […]

  16. QQQQ Swing Short Triggered; StockTickr Interview • dummyspots.com Said,

    November 27, 2006 @ 5:47 pm

    […] Now I’ve just gotta find Michelle B. and bum a few Red Apples off of her. [It’s a little celebration joke about “I don’t smoke, but if I did…” — ed.]   […]

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