Interview with Toni Hansen

July 30th, 2007

For the next interview in the StockTickr Interview Series (RSS feed), I spoke with Toni Hansen a trading coach and mentor.

Toni writes frequent market updates on her trading blog, where she is quick to admit mistakes, something I respect.

Read on for more about Toni Hansen, how she’s never read a trading book from start to finish, and how she uses her trading journal to backtest. Submit your questions in the comments and I’ll see if Toni can answer them.


StockTickr: Tell us a little about yourself, Toni.

Toni: Well, to start with, my name is Toni Hansen. I live in Sarasota, Florida and I got here via a U-Haul… Ok, that probably isn’t what you meant though! Well, first things first… I’m a full time trader who happens to also teach market analysis to other traders. I’ve been trading for nearly 10 years now, before which time I had worked for the Office of the State Archaeologist in Iowa and had originally intended on a career in that field. I became side-tracked though when introduced to online trading and investing.

After having become uninspired by my broker’s rather sub-par results on my investment account, I had decided to take things into my own hands. I originally began by holding stocks up to a few days or weeks at a time, playing mainly daily setups, but have long since expanded into daytrading and now also trade the EMini futures contracts in addition to trading stocks on multiple time frames.

Shortly after I began trading full time and had quit working in the field of archaeology, I began keeping a free website at http://www.swingtrader.net where another trader and I would post our evening scan results and various musing about the market and the educational tidbits we picked up along the way.

Before long, one of the major market education sites on the web at that time approached us, stating how a number of their members were frequenting our site and they wondered if we would be interested in writing a swingtrading newsletter for them. Since we were already essentially doing this and it seemed like a good way to bring in extra income that would help offset the emotional hurdles of relying purely on our own trading for our living expenses, we agreed. Due to its popularity, we were soon invited to host a chatroom for the site, which was a nice way to socialize with other traders as well as create the necessity to be able to explain each and every action we took in the market.

Eventually we parted ways with that site and went on our own. Over time I found that running a for fee room was incredibly draining and was showing a negative effect on my trading since I was often missing my setups and constantly distracted by keeping the room active all day. So, I’ve now moved on and am focusing more on creating educational material which dispenses the same knowledge as I have taught over the years in the real time setting and work more on a one-on-one basis with individual clients.

I am often asked why it is that I bother to teach if I can trade. Well, the main thing is that had I not agreed to do that site early on, I probably still would not be trading today. Teaching forced me to be able to explain each and every thing I was looking at and why it was important. Even today, by working with individual traders, I learn a great deal and am constantly improving because I am forced to look at the reasons behind my clients’ decisions and to explain to them where they are on track versus where they need to modify their system and what they should be focusing on based upon their own personality and style. By working within their mindset I’m then able to identify nuances in their own trading and styles that I can use to my advantage. It forces me to put into words things which I had taken for granted, but had never really given much thought to before. The result is that it reinforces my ideas and builds confidence in my system. I strongly recommend all traders work with newer traders when possible.

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

Toni: You know, I guess I must be rather unusual in this regard, since I’ve often been asked this question, but really cannot think of anything that really had that type of affect. Perhaps it is because I am incredibly conservative and have never really put myself into a place that would create the circumstances for such devastation. I’ve certainly had stocks that have gapped a great deal against me overnight, but I managed to keep my shirt.

I guess the worst horror stories, in terms of what has affected me the most in my trading, come more from mistakes in orders. On Friday for instance, I had updated one of my platforms and did not realize that my setting for offsetting an open position had been lost. The result was that since I had closed partials in a position, when I closed the rest of the trade I actually ended up with contracts the other direction, which would have not been bad since I had nailed the high by a tick. The problem was all I saw was that I was now short and had assumed I had simply messed up the order, so when I went and closed that right I then ended up long again! Note how I had said I had nailed the highs by a tick… Well… I am used to reacting very quickly in terms of placing orders and simply didn’t realize that my order had not functioned as it had in the past by only closing what I had open. So, since I didn’t have my P/L up, I didn’t realize that I was now long even as the market was plummeting! Yikes! When I take a loss because I stopped out on something, it does not faze me. This is because I know my odds and the pros and cons heading into a trade, but when something just sidelines me like that I find it harder to get past and it can affect my trading for at least several days, if not longer, since it creates hesitation, which is bad when you are daytrading or scalping!

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

Toni: Double check your account and order settings every time you make changes to your trading platform!

Ok, this is probably not the largest lesson though. I would say that lesson would be to accept up front that whenever a new trader is successful right away, it tends to be a fluke. In reality it takes years to really be comfortable with the market and to trust in it to behave in an expected manner and then have the confidence to trade based upon that trust and without an emotional attachment.

StockTickr: Do you see record keeping as a critical part of trading success and how can traders improve upon their trading journals?

Toni: Most definitely, but most traders go about it all wrong! Keeping a spreadsheet of your trades is rather silly in my humble opinion. If you go and look at a spreadsheet of your trades a week or a month later can you remember what the trade looked like and why you took it? Probably not! Instead I feel very strongly that it is important to keep a journal which actually shows a chart of the trades you took and has your entry and exit clearly marked ON THE CHART.

StockTickr: What 3 books do you recommend traders read?

Toni: I’ve honestly never read a trading book from start to finish that really impacted how I trade. In fact, I’ve rarely read a trading book from start to finish period. This is not to say that there are not brilliant traders out there that have written books whom I respect, but I still tend to read history and fiction in my free time.

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

Toni: Trading large size without having a grasp of what the best style of trading is which suits their personality. If you can’t make money consistently risking $20, how on earth can you honestly expect to risking $200 a trade?

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

Toni: I don’t believe that market has changed much over the last several years. The patterns and market type that we are seeing now in the indices on the daily, weekly, and even monthly time frames are the same trends and development patterns that are seen over and over on the smaller intraday time frames. The only difference is the scale. While I have learned more about the markets over the years, the basics have not changed at all and my system is just an expansion of the one I used when I first began trading.

One thing that has changed is the technological and industry-related aspects of trading. For instance, it used to cost me $50 in and out, no matter how many shares I was trading, just in commissions alone. After 6 months of trading, the account I shared with my partner was down 20%, but when we broke it down, we discovered that the entire loss was on commissions alone! It is now much easier to reason with new traders to start small, since they can literally pay only a dollar for anything up to 100 shares to take a trade. A disadvantage of beginning to trade in the FOREX or futures market is that you are still subject to much more substantial risk per trade and cannot really control that risk as well per trade.

StockTickr: Do you recommend backtesting and if not, how do traders instill belief in their system?

Toni: The only backtesting I do is reviewing my trading journal to compare current market conditions to those I have seen in the past. I don’t think it’s possible to create an accurate, automated system for backtesting.

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

Toni: Be reasonable. Don’t expect to open a $5,000 account, for instance, and assume that you are going to be able to immediately earn your living trading. Even with initial success, consistency is another matter completely, and it takes time to understand the nuances of market development, even when you do have a mentor assisting you in cutting that learning curve.

Additionally, don’t shell out to buy those $10,000 educational packages you see on tv. Most of the information they peddle can be picked up for free by just scanning the internet! Take time to actually research any mentor or educational site you plan on using and don’t pay them a dime until you have decided that they really do know what they are talking about.

Finally, don’t take for granted the emotional aspects of trading. Those whom I see have the most difficult time are traders who have quit their full-time job, have young children at home, and a spouse that works full time, whom, even though they may have been supportive to begin with, is quickly beginning to think that playing around on the computer all day is not a real job. The pressure to succeed, and to do so quickly, can be overwhelming. This is not to say it’s impossible, but a supportive spouse and a less-hectic lifestyle are huge advantages.

StockTickr: Thanks for taking the time for this, Toni.

Toni: Sure, Dave!

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

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