For the next interview in the StockTickr Interview Series (RSS feed), I interviewed Zoomie who posts his trades over at Move the Markets. Zoomie trades with a style similar to mine, so I’m always checking his trades to see what he found that I wasn’t able to.
Zoomie is a retired fighter pilot, which certainly adds to the already diverse backgrounds of the interviewees in this series. In his first answer, Zoomie jokingly implies that he’s paying me to conduct this interview, which, of course, is a joke. (Just setting the record straight.)
Read on for more about Zoomie and his views of the markets, how a career as a fighter pilot helped him be a better trader, and his methodology on a trade “proving him right.”
StockTickr: Tell us a little about yourself, Zoomie.
Zoomie: First off, thank you for asking me for an interview! I must say that I consider myself to be a trader-in-process. I hope I can help others with some lessons and insights I have learned through wise and generous professional traders. I looked at the list of your interviewees, and then glanced over at some their books on my bookshelf. Wow. I can’t believe you’re only charging me $500 to do this .
I’m a thirty-nine-year-old, retired F/A-18 fighter pilot. I have a wonderful family- two smart, beautiful daughters and two handsome, brilliant sons. My partner, Kendra, has supported my decision to trade full-time, and I thank her for my success. I enjoy cooking, and I go to the gym every afternoon. That staves off my temptation to trade late in the afternoons . I love wakeboarding and snowboarding. Hopefully trading can help me become a ski-bum. We currently reside in Mexico.
StockTickr: How did you get started trading stocks?
Zoomie: I needed money for flying lessons in 1986. What better way to make a quick buck than buy some call options? I quickly turned $1,200 into $800. In 1994 I set up a mutual fund account and discovered the power of compound interest. A couple of years later, a squadron mate of mine introduced me to a stock chart. A penny stock was going up to three dollars. It didn’t. I started investing in my own stock picks in time to ride the internet bubble up… then down. After I lost all of my 700% gains in a year, I headed for the library. I found Marty Swartz’s book, Pit Bull, and I knew I wanted to become a real trader. I digested every investment book I could get my hands on. An S&P 500 futures trader showed me some of the ropes. I daytraded with him for three months, but I lacked the knowledge to go it alone. Maoxian rescued me two years ago. Discovering his website turned me away from my (at the time unreachable) dream of being a futures trader. I started to trade dummy plays with stocks instead of trading futures on his advice.
StockTickr: Most traders have a horror story about losing their shirt when they first started trading. What’s yours?
Zoomie: Before discovering stop losses, I was trading S&P 500 e-minis. I was up $600.00 in ten minutes, then down $650.00 the next ten minutes. It wasn’t my shirt, but it was more than 20% of my trading account. You know my pain threshold now.
StockTickr: Do you trade for a living now?
Zoomie: Ask me again in a few months.
StockTickr: What single lesson did you learn along the way that has helped you the most in your trading?
Zoomie: ALWAYS place a stop loss IN the market. Figure out a bailing point before entering the trade.
StockTickr: Describe your style of trading. How long do you typically hold stocks?
Zoomie: I’m currently a day trader. I trade gap plays with above average volume. All of my plays come from thirty and fifteen minute charts so that I have time to pick the best set-ups. I try to trade like Trader-X. He is mostly responsible for me becoming a profitable trader. I owe him big.
StockTickr: What’s your exit strategy for winning and losing trades?
Zoomie: I wait for my target to sell winning trades using Fibonacci extensions and previous swing highs/lows on the daily chart. I sell all at once since I am not good at taking partial wins. In the past I sold way too early. Taking profits at a select R amount never worked for me, either. I don’t understand how anyone can make money selling partials at R1. When you risk that amount to begin with, you are in a losing proposition. The chart is used to trade – not the profit/loss column.
For exiting losing trades, I raise/lower my stop at obvious pivot points and break even. That being said, I rarely raise my stop above break even. I try to let the chart tell me when to exit if it is before my target. A shooting red star in an uptrend is one example. Waiting for the candle’s close is the most important indicator to prove the trade correct.
StockTickr: What 3 books do you recommend traders read?
- Phantom of the Pits by Arthur Simpson
- Japanese Candlestick Charting Techniques by Steve Nison
- Technical Analysis of Stock Trends by Edwards and Magee
StockTickr: What are your 3 favorite sites?
StockTickr: What is your typical R value per trade? i.e. what % of your portfolio do you risk with each trade?
Zoomie: I am trading 0.7% of my account. I’ll kick that figure up a notch to 1% soon.
StockTickr: What technical indicators could you not live without?
Zoomie: Candlesticks, Volume, Chart Patterns and 5 EMA.
StockTickr: How do you think the market has changed over the last several years? How have you adapted?
Zoomie: I’ve only been daytrading full-time for seventeen months. I’m sure my approach has changed more than market nuances during that time.
StockTickr: Do you backtest and if not, how do you instill belief in your system?
Zoomie: Kendra used to roll her eyes when I said I had backtesting to do. I’d be in my office for days. The process of backtesting helped me gain experience in looking at charts and understanding probabilities. While I no longer backtest, I often review my trades (and all of the blog charts I can find).
StockTickr: What advice can you offer traders who are just starting out?
Zoomie: Listen to successful traders and FOLLOW their advice.
StockTickr: What do you like best about trading?
Zoomie: I like figuring out how people’s emotions will affect the market. Newbie traders need to realize that every market transaction means someone’s losing or making money. Trading is possible because people are predictable.
StockTickr: You say you’ve gotten a lot out of Phantom of the Pits. What do you think are the main points you’ve gotten out of that book?
Zoomie: Minimize losses, let winners run and be disciplined. They are not clichés. Here are his three rules:
- In a losing game such as trading, we shall start against the majority and assume we are wrong until proven correct! (We do not assume we are correct until proven wrong.) Positions established must be reduced and removed until or unless the market proves the position correct! (We allow the market to verify correct positions.)
- Press your winners correctly without exception.
- We shall go against the majority and assume the market is not always correct (those times being when liquidity is poor). At those times we shall question all signals and wait for future signals for positioning.
- We shall use the converse of poor liquidity and remove our existing positions when extreme liquidity takes place in two steps and within three days of extreme high volume. Half of our position shall be removed immediately the following day after an extreme high-volume day. The other half of our existing position shall be removed within two additional days. We shall wait for further signals in those cases for future positioning.
StockTickr: You are an ex-pilot. What, i f anything, did that experience do to prepare you for trading?
Zoomie: When training to become a fighter pilot, I listened to my instructors and learned from them. I had to memorize specific maneuvers for every possible situation. After flying each mission, there was a debriefing. I had to review the good and bad aspects of the flight in order to improve. As a trader, I’m constantly assessing my positions and acting according to plan. The plan is developed by examining past charts.
StockTickr: You talk about a trade “proving you right”. Can you elaborate on that? If it goes 0.1R in your favor, is that proof? If it drops below your opening price, are you wrong again?
Zoomie: It all depends on the trade. These examples may help:
If a long breakout trade takes off immediately to more than R1.0 and retraces to my entry, I will generally close the position. If it doesn’t retrace to my entry and CLOSES green, it’s generally proving itself. In my selected timeframe, the price action is meeting my expectations, and I am in a winning trade. I adjust my stop accordingly. Again, all trades are different.
Say I choose an long entry that goes to R0.1, retraces below my entry, and then CLOSES green at R 0.1. The trade is still proving correct at the CLOSE of the candle. The price action is different than in the above example, but my expectations are still being met. Each type of trade will have its own characteristics. For example a reversal will play out differently than a breakout play. Learning to respond to and manage each one is just a matter of experience.
StockTickr: Thanks for your time, Zoomie!
Zoomie: Sure, Dave!
Stay tuned – there are several interviews on the way. You can subscribe to these interviews via RSS feed.
- Trader Gav
- Will Fisher
- 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!