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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 21 March 2007 Table of Contents (1) Quote on the Price of Success (2) Interview - Michael Milligan from United States (3) Asia Trader and Investor Convention - Singapore (14 and 15 April 2007) (4) Technical Analysis full day workshop - Singapore (28 April) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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? 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Remember, there is no such thing as a silly question so visit, sign up and ask a question. Visit http://www.trading-plan.com/trading_forum.html for more information. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -- 1 -- Quote on the Price of Success “I know the price of success: dedication, hard work, and an unremitting devotion to the things you want to see happen.” Frank Lloyd Wright (1867 - 1959) -- 2 -- Interview - Michael Milligan from United States * 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 trading style is that of a swing trader/trend trader. I am willing to take a hedged position and wait several weeks to give the trade time to work. I will also roll traders for several weeks/months as long as the trade is going my way. I only trade futures and options on futures. I have been actively in the markets for the last 20 years. I am a college professor at California State University Fullerton. I enjoy write/ speaking and teaching trading and trading strategies. 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? I first entered the industry as a broker. This was my job and I wanted to make a lot of money. As I learned more about the business my goals was to become my biggest client. Q. What are some of your good and bad memories of your early trading days? I can still remember my first big winner. I made $70,000 in one day. At the time my total account value was $100,000. My first bad memory, which turned out to be a great lesson was being up $40,000 the first half hour of the trading day only to get to cocky and go home down $70,000 by the end of the day. That was an $110,000 intraday swing. Q. How would you describe a couple of your biggest mistakes in your early trading days? Not have a clear understanding of risk management. I relied on stop-loss to much. Stop-losses are not risk management. Couple this with the more money I made the more reckless I became. Q. Looking back to the beginning, in the face of the usual challenges, what motivated or inspired you to learn to trade well? I am an ex-athlete. I have always been driven to be the best I can be. I wanted to learn everything I could about investing and making money. Twenty years later I am still driven by the same passion as my first year. I feel like there is so much that I still have to learn. Q. On reflection, was there a single moment in time or situation that ultimately had the greatest influence on your trading? I had been a broker for several years, before I started my hedge fund. I had been trading for about three months when on a Friday I took home all my trades. I spread my trades out on the living room floor and spent the whole weekend analyzing my trades. At the time I was using three trading strategies. After the weekend I realized that two of the strategies were constantly losing money. The third strategy worked about 70% of the time. I also noticed that I was closing these trades out to soon. The trades never gave me a reason to sell; I only sold because of my fears of losing money. If I had only done the third strategy and held on the trades longer my funds returns would have been 3 times higher. From that point on my funds performance took off and I never looked back. * 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? I use a combination of both. I like for my fundamental and technical analysis to give me the same reading. If they are conflicting I tend to not do the trade or make the recommendation. 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)? I do not have a written plan any more. I have been trading for so long that my plan is in grained in my head. I am a very discipline trader. I have several key indicators that I focus on. If I do not see what I want I do not make the trade or recommendation. I have no problem sitting in cash on the side lines until I find a trade(s) I like. 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? I think that my trading approach is very simple, but clients tell me it is not. I think that clients find it complicated because many do not have the basic understanding of trading principles. I think that plans should be simple. The problem is not the plan, it is the discipline to stay with the plan. 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? Just write down everything that you trade, why you choose the trade and were you successful? Once you have this written go back and analysis what worked and what did not work. Be honest with yourself. The key to long term successful trading is to figure out who you are and what works for that individual. * Trading Mindset * Q. Equally, profits and losses can have a significant psychological impact on traders. How do you deal with them? I learned a long time ago that these trades to not know each other. I analysis everything I do to see why it did or did not work. I try to learn from my past experiences then I move on. In sports you learn to stay in the moment and not to beat yourself up. I never get to high nor do I get to low. 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? 1. YOU WILL LOSE MONEY! Does the thought of being wrong in a trade bother you? If it does this is not for you. 2. No matter how much money you have trade like you only have $10,000. There is a learning curve. If after you get thru this time period and you still have your $10,000 then you were successful and 3. Treat this like a business. Leave your emotions at the door. Your emotions will lose you more money then anything else. 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 Q. Is trading as difficult as many people appear to make it seem? Trading is not difficult. What is difficult is the discipline and commitment that trading requires. Q. What are the 5 most important character traits of successful traders? Please feel free to briefly explain them. 1. Discipline- the ability to sick to your plan and strategy. 2. Vision – the ability to see what is there, not what you want it to be. 3. Eliminate the Noise – everyone has an opinion. Traders have to learn how not to trade by consensus. 4. Critique – the ability critique your strengths and weaknesses. I try to always use my strengths and develop my weaknesses. 5. Open minded – realizing that you do not know it all and you have to be a student of your craft. 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 believe trading is a lonely experience. I believe that over time you can develop trading buddies, but only after you have defined who you are and how you trade. If you have too many buddies early in your trading career you will find yourself trading their ideas and ways instead of your own. As a trader you must identify who and what you are. 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 is losing interest in the markets. I am at a point in my career that I pretty much know what the outcome is going to be and making money is not the goal any more. The goal is to be intellectually challenged. 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 do not experience self doubt. I have a process for trading. I know that if I do A, B & C; then the outcome is going to be either D or F. No guess work or second doubts. 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? I learned a long time ago to ask myself if I am doing this trade out of emotion or logic. If the answer comes back out of emotions, then I re-evaluate the trade. There have been times when I have left the office and trades because emotions were too high. In my experiences this usually is at its worst when I have a significant profit in a trade. Q. If you experience a large profitable trade, do you reward yourself in any way? Not major. I might treat myself to a nice meal or something for the kids. I am always guarding myself against extreme highs and lows. The nature of our business is that we make and lose money. Q. In your entire trading career, what are the biggest lessons you’ve learnt and how did you learn them? I found that my biggest losses usually came after my biggest winners. I tended to get a little cocky and also take more risk. I guess I am older and wiser. 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 cannot say that I would do anything differently. I believe that every thing in life is a lesson. I have learned more from my mistakes then my winners. The whole experience has been wonderful and I am still learning. About Mike: Mike Milligan, CTA, lives in the United States and is the founder of Quantified Systems, a futures research firm. Mike is also a finance professor at California State University Fullerton. Prior to teaching, Mike work on Wall Street for twenty years. He founded a private equity hedge fund, Charter Court Corporation, where he was head trader. Mike was head of research for EDX and Associates, a market maker for options on the Pacific Stock Exchange. For more information on Quantified Systems, go to the website www.quantifiedsystems.com -- 3 -- Asia Trader and Investor Convention - Singapore (14 and 15 April 2007) I will be presenting two 30 minute seminars at the Asia Trader and Investor Convention, to be held at the Suntec City Convention Centre in Singapore on 14 and 15 April 2007. Other speakers include Daryl Guppy, Joe DiNapoli, Ray Barros, Brent Penfold, Don Schellenberg, Mark Laudi and William Wermine. My topic will be Developing your Trading Plan and further details are available by visiting http://www.theatic.net/ -- 4 -- Technical Analysis full day workshop - Singapore (28 April) Amongst many other things, throughout this course I will be passing on to you all of the things I look for when entering trades. For the price of S$168 for the whole day, if you don't think this is the best value trading course you have ever attended, then I will like to know what is. This workshop last year sold out so don't hesitate for too long ... bookings and further details are available by contacting Dickson Yap on +65 9788 8141 or dicksonyap@dpr-intl.com ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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