For the next interview in the StockTickr Interview Series (RSS feed), I interviewed Will Fisher from dummyspots.com, a part time trader who posts some very insightful articles on his site. Here are a couple examples: Other People’s Money and It Ain’t So Easy.
Read on for more about who Will is, how he got started trading, and what trading styles he uses. Also, post questions to Will in the comments of this post and he’ll swing by and answer them. I continue to be pleased to see the useful discussion in the comments of the last two interviews: Tom C. and Jason of Mercado de Estocástica. I’m sure there’s something I forgot to ask Will, so ask it in the comments!
StockTickr: Tell us a little about yourself, Will.
Will: I’m a 39 year-old divorced father of three unbelievably wonderful daughters. I currently live in Northwest Louisiana near the Shreveport/Bossier City area. My full-time job is as a hospital pharmacist.
StockTickr: How did you get started trading stocks?
Will: A friend introduced me to “Mr. Dow and Mr. Jones” in the 80s. I still remember him going on and on in 1990-91 about these hot stocks he was planning to hold because they were “gonna go places.” His stocks were Cisco and Oracle. He taught me what a bid and ask were, and that you were buying stock from another person, not the company! He and I have long since lost touch, but I remember his working 364 days one year, and six days of each week were 12-hour shifts. I sure hope he held onto those stocks and got filthy rich- he deserves it.
StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?
Will: Mine is less of a horror story than it is one of impatience and despair. I never lost a huge amount of money, because I never had that much to lose. I spent about 5 years sending a little money at a time to the broker, then trading it away. I didn’t understand the importance of adequate capitalization and of getting your personal finances in order before attempting to trade. Trading small lots (or worse, options like I did), where the commissions and spreads really eat into your returns, and trading with borrowed money are two mistakes that will virtually guarantee your failure, no matter how technically savvy you are. The risk on each trade is just simply too large a percentage of your overall account.
StockTickr: Do you trade for a living now?
Will: Not at this time. Since I’m “lucky” enough to have to work weekends at my regular job, I have one weekday off each week. I trade on that day, plus any days that I work late shifts, which gives me another 1-2 mornings a week. My first financial priority is providing security (and health insurance) for my daughters, so I’m planning to transition into full-time trading very gradually, perhaps over the next 5-10 years. Also I buy $5 in Powerball tickets about every 6 weeks, which I expect to shorten that timeframe considerably.
StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?
Will: Patience. A close friend who’s in AA once told me one of their sayings is something like, “God doesn’t operate on your clock.” One could say the same thing about the stock market, or a particular trade. Rushing, obsessing over every tick (unless you’re a scalper), getting too anxious, worrying you’re going to miss out… they’ll all cause you to lose you money. One of the most difficult things for me to do even today is to respect my plan, and my stops, and let the market come to me. By the way, for any singe middle-aged men out there, this lesson also applies to relationships!
StockTickr: Describe your style of trading. How long do you typically hold stocks?
Will: I have two major styles: first, I daytrade using 5min to 30min bars, and am weaning myself more and more to the 30s as of this writing. On those trades, I look for setups in the morning (always starting with opening gaps), enter trades by 1300 EST, and never hold longer than the end of the day.
I also do quite a bit of swing trading, where I scan daily bars and volume each evening for potential entries the next day. These trades usually last 2-10 days, occasionally going longer if the stock is behaving really well and doesn’t hit my trailing stop. On these trades, I’m looking for breaks or failures of breaks from a cleary-defined range, topping/bottoming candlesticks with huge volume (preferably highest volume in the last 3-6 months, the longer the better), or minor pullbacks on diminishing volume within a larger strong trend (as preached and practiced by Dave Landry, my swing-trade hero).
StockTickr: What’s your exit strategy for winning and losing trades?
Will: I never enter any position without an initial protective stop. If it’s hit, I’m out, no second-guessing, no regrets. Those are my losing trades.
If the stock “goes my way,” I immediately begin trailing my stop. I work more on my stop-trailing methods than I do on my trade entries, because I think the stop methods are more important to my profitability. Right now my methods vary depending on the trade, and can be as simple as using the low of the previous bar or two as a stop, or a little more complex, like taking 20% of the difference between the previous stop level and any “higher high,” and adding that amount to the previous stop.
If a trade I’m in is clearly coming into a strong area of resistance (for instance, a daytrade approaching the day’s highs), I’ll take at least half the position off just under that resistance. More often than not, it increases my average gain for the entire trade.
Finally, on my swing trades, I often use a variation of another technique I learned from Dave Landry. He suggests covering half your initial position at a gain equal to your initial risk, or “1R.” I set my stops extremely tight (small “R”), so I’ll usually cover half my position at “2R.”
StockTickr: What 3 books do you recommend traders read?
- Methods of a Wall Street Master by Victor Sperandeo
- Fooled by Randomness by Nassim Taleb
- The Book on the Taboo Against Knowing Who You Are by Alan Watts
StockTickr: Other than your own, what are your 3 favorite sites?
- Trader Mike, for the depth of content in much of Michael’s (and now Michelle’s) writings and, via Mike’s links lists, its function as a gateway to a huge amount of trading wisdom.
- Mercado de Estocastica, for his clear explanations of what he was thinking and what went right/wrong with each trade he posts.
- Dan’s Data, where I can always learn something new, laugh, and be reminded that the most important axiom of blogging is to be yourself.
StockTickr: What is your typical R value per trade? i.e. what % of your portfolio do you risk with each trade?
Will: I shoot for 1%, but vary from 0.5%-1.5% depending on the specifics of the trade (risk vs. price of stock, volatility), “quality” of the setup, the overall market conditions, and often, what the nearest round number of shares is. I’d like to mention that I only count cold, hard, paid-for cash in my account when making risk calculations, although I’ll use excess money (margin, etc) to risk the correct amount of that “core” money when necessary, for example when I have a trade on a high-priced stock with an extremely tight stop and therefore must purchase a large dollar value of stock to achieve the correct risk.
StockTickr: What technical indicators could you not live without?
Will: I mostly use just price and volume now. I spent years learning, deconstructing and using every indicator I could get my hands on, and even invented a few of my own (like a moving average of the angle of a triangle formed by plotting price, volume and time on a 3-D spreadsheet). Eventually, I came to know them all for what they are- just derivatives of price and volume, and the farther removed you get, the less useful they are in real life, and the easier to use them to talk yourself into seeing something that isn’t there.
I’ll still throw a moving average on an intraday chart to help clarify the picture, or use RSI as a filter in some of my end-of-day scans, but I don’t use any indicators for entries or exits, just price, volume and the related support and resistance.
StockTickr: What broker do you use? (We use and are very happy with Cybertrader, by the way)
Will: Ameritrade (now TDAmeritrade) for the last five or six years. Their commission schedule is about as cheap as I can get with my trading style, and it’s combined with instant execution, frequent price improvement on my trades (which more than offsets others’ cheaper commissions), free streaming time and sales, free level II, free Advanced Analyzer (used to be BigEasy Investor), free MedVed Quotetracker integrated with my trading platform, and more. I currently use no separate (subscription) software at all, which also saves quite a bit of money.
StockTickr: How do you think the market has changed over the last several years? How have you adapted?
Will: The relative lack of volatility in the market the last few years has made it more difficult for “just anyone” to throw money at it and make an easy return, which has significantly reduced the decibel level around the water cooler, and I’ve enjoyed the respite. This has come during the period where my own trading has become more focused and disciplined, and I imagine I have the slower-moving market, in part, to thank for that.
StockTickr: Do you backtest? If not, why not and how do you instill belief in your system?
Will: When I traded off of technical indicators, I’d backtest “ad infinitum.” Whether it’s due to my temperament or what, I don’t know, but the backtesting would never translate into consistent real-time returns.
In my swing trading, if I’m eyeing a high-volume bottoming or topping formation, I’ll scan back a couple of years and see how that particular stock has acted in the past when a similar formation occured, so in that respect, I still backtest.
However, in many of my swing trades and most of my daytrades, I’m using setups which I’ve identified in real-time, or have noted on other blogs (thanks guys!), and have refined bit by bit as I’ve traded them, to the point where I’m very confident that when I see such a setup, I know how to trade it. So I guess you could say these setups are “time-tested,” even if they’re not “backtested.”
StockTickr: What advice can you offer traders who are just starting out?
Will: By all means, follow the market, read, study and practice. But before you send one penny to the broker, first get your own financial house in order. Pay off the credit cards, pay down the car note and the mortgage to where you’re comfortably “in the black.” Set some savings aside for emergencies. Be certain that your family’s taken care of. THEN get adequately capitalized ($5000-10,000 of money you can afford to lose– wait as long as it takes to build it up) and start trading, slowly and patiently, and record, review and pick apart every single trade after you take it- you are your own best teacher. Give yourself three to five years AFTER you start trading to become profitable, as if you were starting a “real” business (you are!).
Never stop looking inward. The tagline for my website used to be, “The Market is as Severe and Instructive a Sensei as You’ll Ever Find,” and it’s true. Trading will reflect your weaknesses and shortcomings back to you in stark, brutal honesty, and often in your own blood. It’s one of the most intense opportunities for personal growth you’ll encounter in this life, and if you look at it as such and not as a way to “get rich,” you’ll be well on the way to “true” riches.
StockTickr: What do you like best about trading?
Will: The autonomy. It’s all on you. No one else to take the blame when you mess up, no one to steal the glory when you shine. YOU are the rate-limiting step, or to paraphrase Seinfeld, the master of your domain. I think trading attracts doggedly-independent individuals for that reason.
StockTickr: When did you start your blog and what prompted you to do so?
Will: I started dummyspots.com in late 2005. I’d had years and years of repeating various diatribes to different people when they asked me what I thought, and finally started writing the stuff on my (personal) website so I could just give them a URL and say, “look here for what I think.” Eventually the stock-related posting overtook the individual- and family-related posting like weeds in a flower garden, so I deleted all of it off of the personal site and started fresh with dummyspots.
StockTickr: Thanks, Will!
Will: Sure, Dave.
Stay tuned – there are several interviews on the way. You can subscribe to these interviews via RSS feed.
- Tom C.
- Michelle B.
- Elliot Dole
- Jon Tait, the Fickle Trader
- Bill Rempel
- Adam Warner
- Roger Nusbaum
- Dave Johnson
- J.C., the NYSE Scalper
- Brian Shannon, AlphaTrends
- Jamie, Wall St. Warrior
- Howard Lindzon
- Kernan of TRADEthemove.com
- Richard Todd
- Andy Swan
- Steve Nison of Candlestick Charts
- Dan Mirkin from Trade-Ideas
- Bruce Brotnov
- Eric Cahoon
- Ugly from Uglychart.com
- Alan Farley
- Declan Fallon
- Smita Sadana
- Bill Cara
- Van K. Tharp
- 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!