Saturday morning 9am, London Zone 1: 30-40 keen attendees get together to listen to a 4-hour talk by Tom Hougaard. The talk had been organized courtesy of ETX Capital.
For the benefit of people reading this blog, I listed the main points that I got out of the presentation. Although most of the content of the presentation was not new material to me, I nevertheless found the presentation helpful to get my brain into working gear and to make me question some of my existing knowledge, as well as give me some new ideas and perspectives. Tom seems to be an experienced and successful traders and is a refreshing and entertaining speaker!
When seminars such as these are offered on a complimentary basis 20-30 minutes from your front door, then one should take advantage of it!! (and hence why I also feel I should forward on some of the shared knowledge!)
(I had explored a live trading room in which Tom is involved, ome years ago. I wrote a bit about him in October 2014.) Tom’s website is tradertom. Here are some of the points (not in any particular order) – to somebody willing to engage in a lot of studies, each of the points highlight various areas that could be explored in detail:
- Mindset is more important than the trading strategy
- Issues facing traders have not changed since the time of Jesse Livermore (more than 100 years ago)
- A individual can be given a winning strategy and still fail to produce profitable results
- Tom Hougaard was initially inspired to be a trader after reading Liars Poker when he was 19 years old – he has now been in the industry for 17 years
- To become a good trader, one needs to be good at losing
- Shift from fear of giving back gains and hoping to recover from a losing trade to ‘hoping for more gains on a winning trade and fear of losing more on a losing trade’
- Concepts of ‘cheap’ and ‘expensive’ don’t exist in the financial markets – indicators showing overbought/oversold conditions are misleading – whilst working at JP Morgan, Tom was taught never to go against the trend
- Indicators are of limited value – because they are all a derivative of time and price – though they are often used as they provide comfort, support and guidance to traders and the indicators seem to simplify trading
- Importance of dedicated practise – usage of chess as an example – and strong correlation between hours of dedicated practice and chess ranking points – for aspiring traders, this comes to pattern recognition
- Steve Nison – author on candlestick patterns – published two key books – apparently doesn’t actually trade himself
- It seems the Dow is a favorite instrument of Tom’s
- “Swim with the whale, not the little fish” – how do the big players look at the charts
- Tom’s trading techniques – Opening Price principle (click on this Investopedia link for a brief outline – cf Larry Pesavento), Trending Day principles, Extended Bar
- Lengthy discussion on statistical analysis of price action – e.g. session timings when highs/lows are reached, up/down days
- Big fan of pattern recognition
Points that i personally found it insightful and will work with in the future:
- Sample Sizing
- FXCM analysed 43 million trades taken by 25,000 active clients – 62% win rate but average loser was bigger than average winner – thus on the whole clients were losing money
- Attempting to gain insights from analysing a single trader’s account is probably less helpful – presumably in the same manner that back-testing or forward-testing using small sample sizes are likely to produce misleading insights.
- “In the act of 1 there is randomness. In a batch of 100, order is restored.”
- How many ways are there to go long in an established uptrend? We did some brainstorming on this – my two pence – out of all those options – how many approaches can be rigidly back-tested?
- It seems Tom continues to attend seminars for ongoing learning despite a successful trader
- Concept of ‘trigger bar’
- Concept of ‘extended bar’ – cf. Paul Tudor-Jones
- For his mentoring students, Tom encourages students to review the 5M charts of three instruments at the end of each day – to print them out and write detailed comments on the charts – where they would go long/short, where the stops would be, where they would add on – rigidly completing this on a daily basis will aid in a trader’s progression
- Tom highly rates visualization techniques – and says that these have signficantly helped his progression as a trader (for example the ability to go long in an established uptrend)
- Stop Loss – should be where the market shows that the analysis was wrong – my two pence – I am not sure whether I agree – it could simply be a case that other market participants have deliberately pushed price beyond a certain level before then proving that the analysis was correct
- Opening Range Breakout Technique
Finally there were other ideas and thoughts triggered by the presentation that I won’t be sharing because I’d rather keep them to myself and discuss them in detail with some of my trading buddies and colleagues.
Thanks a bunch to Tom Hougaard and ETX Capital for the organization that went into the seminar!!