Interview with TraderAM

February 2nd, 2009

For the next interview in the StockTickr Interview Series (RSS feed), I spoke with TraderAM. TraderAM is an independant day trader who has an interesting style of trading and posts all his trades on his blog. Feel free to ask him questions in the comments section below.

Read on for a great interview and learn more about how Amarjit trades, the types of setups he’s looking for, and how he got started trading.

StockTickr: Tell us a little about yourself, TraderAM.

TraderAM: Born in the UK and have lived most of my life here apart from a 3 year stint in Canada. On the education front, I did a University degree in Biochemistry, I didn’t follow that thru as a career and went into the IT and Computer Industry instead. Pretty much most of my working life has been in IT Software development which I still do currently as full time employment. Enjoy golf, science fiction, marine aquarium hobby and family life.

StockTickr: How did you get started trading stocks?

TraderAM: I became interested in the stock market while at University when I went on some general information seminars. But it was only later (1999-2000) when I had an opportunity to actually think about trading for real. As you know this was the time of the tech boom and IMO it was also the start of online trading coming to the fore. These two factors combined to produce the incredible market conditions we experienced. Looking back, I was not really “trading”. I didn’t look at charts or consider stops and losses, I was just jumping on the momentum bandwagon like everyone else and making lots of money which all seemed so easy..lol.. The buzz of trading during this time and the desire to learn more about how the markets work, got me hooked.

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

TraderAM: By nature, I’m not an aggressive trader, so I haven’t really blown a big account as such. In fact I probably missed out on the biggest gains in the tech boom as they occurred after I had moved most of my money out of the trading account for mortgage and car etc. The remaining 15% or so, I naively believed that I could build up again quite easily. Then came the tech crash and so I suppose you could say I “lost my shirt” as that disappeared quite rapidly.

StockTickr: Do you trade for a living now?

TraderAM: No. I still have my full time job. But being around computers all day, the flexibility of working hours and also the fact that the US market is open 2:30pm to 9:00pm UK time means that I can normally trade on most days.

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

TraderAM: You have to find both a strategy plus a timeframe which makes you comfortable and you have to stick with it to allow it a chance to work.

StockTickr: Do you keep a journal and do you consider good record keeping essential to your success?

TraderAM: Yes and Yes. It is only by doing this that you can judge your performance, see if the strategy is underperforming and see if you are deviating from your trading plan.

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

TraderAM: I trade off the 15min chart, using primarily candlestick price action setups on stocks which have gapped. I am looking for setups such as range breakouts, price action at s/r levels and pullbacks in trends alongside staying on right side of the general market. I am always aiming to hold part of my position until end of the day as that way I can catch the most of a move if a stock starts to trend.

I owe some thanks to TraderX as my strategy is based on his with some of my own modifications added to it.

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

TraderAM: Whenever I enter a trade based on a candle setup, my initial stop is usually at the opposite end of that candle. I move my stop to breakeven once I am up 1R. In terms of exits, it varies depending on market conditions, but generally I take partial profits at Fib Ext levels, 1R, 2R , $1 gain (whichever one seems more appropriate) and the rest I exit at the end of the day if it is still open.

StockTickr: What 3 books do you recommend traders read?

TraderAM:

Market Wizards Trading in the Zone Technical Analysis of the Financial Markets

StockTickr: Other than your own, what are your 3 favorite blogs?

TraderAM: The blogs I read (see my blog for links) are all very good and I try to visit them most days if I have time. But if pushed to name 3, these would be (no particular order):

StockTickr: Do you think one day computers will make better traders than humans and has that day come already?

TraderAM: A quick answer might be yes as they would be better than humans at performing mechanical tasks since no emotions are involved (e.g. obey stop losses, let profits run etc). However I would say no. Any computer system will have been designed by a human initially and as such has some human ‘influence’ already built in. The market is driven by greed and fear and as long as humans are involved it will always be so, any computer system will have an impossible task of trying to find order in this mass. I hope that is the case anyway, as computers are pretty boring beasts.

StockTickr: What technical indicators could you not live without?

TraderAM: I trade more off price action rather than indicators per se. However the ones I do use are: ema, CCI, volume,atr. More as supporting factors rather than decision makers.

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

TraderAM: Hard to say over that timeframe as I have only followed the markets day in day out for last couple of years when I started trading “properly” with a definite trading plan. At a basic level they are still driven by the same forces (supply and demand) so from that point of view they haven’t changed. In terms of character: the market for most of 2007 and 2008 was not moving as much as say in Tech Boom days, so that is one aspect. All that changed in last quarter of last year when volatility came back big time. In terms of adapting during this time, I have forced myself to trade less, be more critical of my chart patterns and try to only take the very best looking setups.

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

TraderAM: Yes, Backtested then paper traded before going ‘live’. I also continue this going forward and backtest any modifications to my strategies and any new setups that I build.

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

TraderAM: Learn about Money Management so you don’t lose your shirt. Learn discipline so that you can stick to your trading plan to give it a chance to work. Keep in mind that you only need to be successful 50-60% of the time to make decent profits. Don’t take a strategy from any blog/forum and expect it to work. You have to work at it yourself and better still try to take the best bits of it and add things which you have found in your own study of the markets. It is inherently human that when you have built something yourself, you will have more confidence in it and will be more likely to stick with it.

Unfortunately, trading is going to be painful, there will be days when the market kicks you and then kicks you some more when you are down. If you know that from the outset then you can steel yourself to it. The key is to just take it but stay in the game over the long term (hence money management) until you become more successful. Remember, it is a marathon not a sprint.

StockTickr: What do you like best about trading?

TraderAM: The buzz and satisfaction you get from good trades which you have executed to plan and kept your discipline. Also freedom that it gives you to enjoy other things in life, when you can do it fulltime successfully (which I hope to do at some point in future).

StockTickr: When did you start your blog and what prompted you to do so?

TraderAM: I started my blog at start of 2008. A lot of my trading ideas and best info has come from free blogs and forums despite the many books and courses I have been on. So in a similar fashion, I wanted to pass this on to any new traders who happen to want to read my rantings. Another reason was the hope that more experienced traders would read it and pass on their valuable insights which would help and improve my own trading. I like to think I have achieved both of those objectives.

StockTickr: Thanks for your time, TraderAM.

TraderAM: Thanks, Dave.

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

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!

1 Comment »

  1. Dinosaur Trader Said,

    February 2, 2009 @ 9:41 pm

    Thanks for the shout, Amarjit. Great interview!

    -DT

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