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Interview with Ray Barros - Part 3
** Trading Mindset ** Q. Equally, profits and losses can have a significant psychological impact on traders. How do you deal with them? I have tools to ensure I maintain my equilibrium: meditation, bio-feedback, journaling and ‘taking a break’ after consecutive wins or losses. 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. Determine her outcomes – why does she want to trade to determine if trading will meet her outcomes. 2. Determine if she understands the commitment she needs to make to succeed; for example is she aware that 80% to 90% loss money? 3. Determine if she has the time to commit to her success. 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? Yes Q. Is trading as difficult as many people appear to make it seem? Well trading is easy in that the steps to success are well laid out; it’s difficult in that the steps we need to take our contrary to human nature. For example, to succeed we need to accept that trading is a probability game; but human nature is uncomfortable with ambiguity and yearns for certainty. Q. What are the 5 most important character traits of successful traders? Please feel free to briefly explain them. Honesty 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? Yes trading is lonely. I manage it by teaching and increasing the range of my social contacts that way 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 greatest strength is my greatest weakness: I have a natural feel for market direction. But when I take a trade without defining the exit conditions, I inevitably lose more money than I should. I manage it – but that is not to say I have mastered it. You could liken it to a reformed alcoholic: he is always a 'recovering alcoholic'. 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? Whenever I have self-doubts, I take time off trading. 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 don’t believe being emotionless is desirable even if possible. Modern neurologists like Antonio D’Amasio, show that humans make the best decisions with their emotions; the trick is to manage them and not let them hijack our reason. I manage my emotions because I have almost total self-trust to make the best decision possible in the circumstance. This allows me to focus on the information the market is providing. If the market does something other than my preferred scenario, I usually have contingent plans. In this regard, I find the ideas of Scenario Planning very useful. Q. If you experience a large profitable trade, do you reward yourself in any way? I reward my self based on monthly and quarterly benchmarks. A windfall trade usually means I take a break from trading – to ensure my now grossly inflated ego does not lead to dollar damage (grin). Q. In your entire trading career, what are the biggest lessons you’ve learnt and how did you learn them? All my lessons were big – I leant them by losing money and slowly learning from my mistakes. 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’d start with a mentor and take a lead from him.
A veteran fund manager, author and educator, Ray Barros has been conducting investment seminars since 1990 in Singapore, Sydney, Shanghai, Tokyo, Taiwan, London, New York and Bombay for Financial majors from the Singapore Stock Exchange to the Sydney Futures Exchange and individuals. He has also been sponsored by exchanges to host web seminars with organizations like CME and the CBOT in the U.S. After coming up with his own winning Barrometrics trading strategy and penning his 2 books, The Nature of Trends and the Ray Wave, his market analyses are regularly sought after by leading media from the Singapore Business Times to CNBC and CNA. Return to the Index of Interviews ...
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