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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 24 January 2007 Table of Contents (1) Quote on Action (2) Interview - Bill Wermine from KL, Malaysia (3) Coming Soon - Trading Interviews ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ RSS Feed Stay up to date with all that is happening at Trading Plan, by subscribing to our 'Trading Blog' (no email address necessary). I am continually adding content and every update of this site is announced here, including minor content updates, page additions, and product releases. So stay plugged in by subscribing to this site's RSS feed. Copy and paste the address below into your RSS reader to receive the Trading Plan RSS feed... http://www.trading-plan.com/Trading-Plan.xml Not sure what RSS is? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Previous Issues Only just joined the mailing list? That's OK - you can read all of the previous issues of the Trading-Plan ezine. 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Visit http://www.trading-plan.com/trading_forum.html for more information. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -- 1 -- Quote on Action “Action is the foundational key to all success.” Pablo Picasso (1881 - 1973) -- 2 -- Interview - Bill Wermine from KL, Malaysia * Background Info / Introduction * Q. Can you please start by making a few comments about yourself to include your trading style and what products you trade, your experience in years, and what other things of a trading nature take your time on a regular basis (e.g. writing trading books/contributing to forums/coaching/speaking engagements)? My style is investment trading on a long term of quality fundamental shares with good technical up trends and paying solid dividends. Trade Malaysian and US shares. For US markets I swing trade on a 5 to 10 day time frame. 30 years experience. Also conduct trading workshops and speak at investment conferences. Written 3 books on markets. Including How You Can Get Rich Trading- 48 Tips and How You Can Get Rich Swing Trading, Q. It is fair to say that most people are initially attracted to trading by money. Is this what initially attracted you or was it something else? Yes money is the blood of life, it is a good living and fits with my lifestyle which includes taking regular holidays and working from home. Q. What are some of your good and bad memories of your early trading days? Margin calls, over losses and bankruptcy. Q. How would you describe a couple of your biggest mistakes in your early trading days? Refused to cut losses on a Soybean trade- ego got involved, traded a scenario rather than the price. Refused to admit mistakes and averaged the losing trade. Q. Looking back to the beginning, in the face of the usual challenges, what motivated or inspired you to learn to trade well? Money and freedom are the motivators. The alternatives are worse and that is working for some idiot or running a traditional business with all the headaches. Q. On reflection, was there a single moment in time or situation that ultimately had the greatest influence on your trading? Taking the 5 volume Van Tharp course on Psychology of Trading with audio tapes in 1990. It helped me develop a trading plan that fitted me and gave me the tools to control. My ego. Also taking the Silva course which helped my focus and discipline. * Trading Plan * Q. We could spend days comparing technical and fundamental analysis, and many traders tend to favour one and dismiss the other – do you prefer one over the other? Do you use a combination of both? Briefly, why? Use a combination of both. Fundamentals for many shares in the KLSE are not fully discounted in price as compared to matured markets which gives an edge to those with access to quality, independent fundamental analysts. Technicals - I find useful for timing and risk management. Q. Do you have written trading plan detailing your approach? How would you describe it (e.g. long/short, detailed/broad, complete/work in progress)? Yes, my plan is short and simple for my investment trading. It has a goal and the means to reach the goal which is 20 % return for mine and the managed accounts. Q. On a scale of 1 (simple) – 10 (complex), how would you rate your trading approach(es)? Do you have any comments on the simplicity or otherwise of them? 1 is my style. I find simple is best. Complications lead to confusion and confusion leads to losses. Q. Many traders acknowledge that having a trading plan is a key to success – it is essential. Yet, most people don’t know where to start to begin writing one, even though they understand the basics of trading. What would be your advice to someone stuck in this situation? Attend my seminar or someone who can professionally advise on creating one. Just like if you are sick- go to a qualified doctor- don’t try to treat your self. The fee you pay from a course will save you time and money in the long run. * Trading Mindset * Q. Equally, profits and losses can have a significant psychological impact on traders. How do you deal with them? They are a part of our business. Try not to get exited about profits or upset about losses. Just accept them and move on to the next trade. Just work your edge like a casino. I give my trade plans to a dealer with risk and profit taking levels. The dealer executes profits or losses and that allows me to be detached from the trading process (For my fund management business) Last year I had more losses than wins but my returns were positive. I have confidence in my method through extensive back testing that my losses are relatively small and manageable so I mentally accept them while profits in some cases are open ended. The secret is to keep losses small. Q. Isabelle, 36 is a mother of two children and stays at home with them during the day. Her husband works full time and his salary meets all their financial obligations comfortably. Isabelle arranges an appointment with you to discuss trading – she has never traded before but knows you can help her get started with some initial guidance. What will be the 3 most important things you tell her in the appointment? What are your trading objectives ? What is your mandate/ risk level- would you be willing to come to my traders club meeting and meet our fellow traders to see what might fit with you ? Q. Jack, 58 is a very successful business owner who wants to start trading as he slowly moves into retirement and away from work. He has arranged a similar appointment to Isabelle – would your advice to him be identical to Isabelle’s or different? Identical as when he meets and networks with fellow traders he can find a method that fits him. Q. Is trading as difficult as many people appear to make it seem? Trading is very simple if you follow a plan and run your venture as a business. Q. What are the 5 most important character traits of successful traders? Please feel free to briefly explain them. Humbleness, acceptance, being a follower, avoid giving opinions of what the market may or may not do. In fact, I listened to an executive of Man Hedge Funds who spoke on CNBC. The interviewer asked him his opinion about the Euro- up or down versus the dollar- He said I have no idea- we follow the market and if our trade doesn’t work we reverse. The executive refused to be drawn into making a forecast, he said our focus is on risk management not forecasting. Q. Trading can be a very solitary existence – especially in the early days when you are learning, and often feel as though you have no idea what you are doing. Do you find trading a lonely experience? Does this sit well with you? If not, how do you deal with the loneliness? I manage funds for an asset management company and run a traders network so loneliness is not a problem. In my early days I was a share broker in a busy office environment so trading has never been a lonely thing for me- my feeling is for me, I work better with like minded individuals- especially with those who can contribute to my knowledge so my advice is to choose well those who you deal and make friends with. Q. What would be or has been your most significant weakness in trading? Have you learned to overcome it or do you continue to work on it? My biggest weakness has been my ego - I have found that having a trading plan and delegating its execution to a dealer is my best way to keep ego out of the process. Q. Assuming you are now consistently profitable, do you still have times when you experience self doubt over your ability to trade? If yes, how does this make you feel and how do you overcome it? I have no doubt in my ability, I am certain of my methods. They have earned me a good living and continue to do so. Q. Ideally, we would like to be emotionless when we trade – we would certainly make more sound trading decisions more often. How do you control your emotions when assessing potential trading opportunities or open positions? Do you get very emotional at times? My plan keeps my emotions out of the process. We are human beings and emotions are part of us so all we can do is control them and a plan created and back tested allows me to be detached from the process and accept what the market gives me or takes from me. I suppose it is like a battle hardened soldier who goes into battle. He has no fear of death. He accepts that he might be blown up but he soldiers on and does his job. Good military training- you were a military man and know more about this than me- mentally programs a soldier to face death without letting emotions get in the way of doing his job which is to kill the enemy. Q. If you experience a large profitable trade, do you reward yourself in any way? No - winning is part of the process and we should accept and not get overjoyed. In fact I recommend traders read Nassar Talebs book- Fooled by Randomness which describes why we should never get overjoyed by winning or depressed by losses. He says it better than me. Q. In your entire trading career, what are the biggest lessons you’ve learnt and how did you learn them? Pain is a great teacher and I have had my share. Facing clients who you have lost their money which I was responsible for their losses was my biggest lesson and resolved me to find a better way. Q. To finish off, if you were to start trading all over again now, what would you do differently to what you did originally? I would attend workshops by professional traders who offered coaching services and find one who fitted with my objectives. When I started I followed the crowd, tips listed to opinions, had no knowledge of charting, jumped in and out of the market like a jackrabbit. About Bill: Bill Wermine lives in Kuala Lumpur, Malaysia and has been involved in markets for over 30 years as a broker, fund manager, trader and author. Please visit his website at www.tradethetruth.com -- 3 -- Coming Soon - Trading Interviews Over the last month or so, I have been receiving suggestions from you of questions to ask high profile traders. I am happy to report that these questions have been compiled and the first of many traders planned, have already received their interviews and are responding to them. I am confident they will provide powerful insight into the minds of successful traders and will be beneficial for all of us. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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