Interview with Frank Dilernia
** Trading Mindset ** Q. Equally, profits and losses can have a significant psychological impact on traders. How do you deal with them? I have a plan, and I know losses are part of the game. The only time I get angry is; not with the market but with myself when I don’t follow the plan. 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. Build a plan, starting from what you want out of trading and how it fits in with your lifestyle, and how much are you prepared to lose. 2. After the plan, then stick to the strategy and discipline of cutting losses and letting winners complete the objective daily targets or other timeframe goals. 3. Trading is all about support and resistance and trend identification. Trade with the trend and never against it and understand it’s a numbers game. 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? Exactly the same Q. Is trading as difficult as many people appear to make it seem? Depends which market and style you are talking about, but if you are talking about day trading, then damn right it’s hard! And anyone who say’s it isn’t must be kidding themselves. Q. What are the 5 most important character traits of successful traders? Please feel free to briefly explain them. 1. Experience. 2. Understanding the Markets and the ability to chart read effectively. 3. Always believe that every time you place a trade you’ll be a winner. Otherwise you’ll end up in a state of fear with every open position. 4. The ability to stick to the plan and never deviate from the original objective rule. 5. Understanding that short-term trading is a numbers game, and if you have the right system with the right profit;loss ratio, then over time you should end up a winner. 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? Trading is such a soulless job, it can be frustrating, and especially in a market like Australia, which can often be boring. That is why I got into writing a book in the first place, to fill the void. Now I write a Daily report and keep in contact with a number of trader’s, and I visit and contribute to forums. It is often a good idea after a winning trade to take the day off and not look at the market again until the next day. 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? Pulling the trigger isn’t the problem, but following the trend and holding the position longer than normal is my worse weakness, especially when it’s following my model of expectation. I think that it’s a hang over from earlier trading experiences. However, that is why I moved into longer tern holding strategies on equities, so I wouldn’t miss major UP trends. 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 don’t have self-doubt because I understand that trading is a numbers game, and those numbers over a period of time will be in my favour. I understand that losses will occur but I simple move onto the next trade. 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 never get emotional before a trade, I have a plan and follow it. However I’d be lying to say I didn’t get nervous or anxious once in the trade, I just don’t think it possible to separate that especially if you have had 4 losses in a row. Q. If you experience a large profitable trade, do you reward yourself in any way? I don’t necessarily go out and buy something, I just make sure that my short-term trading provides for my lifestyle and I get to take 4 weeks off a year Q. In your entire trading career, what are the biggest lessons you’ve learnt and how did you learn them? I biggest lesson I learnt was that you can become wealthy by being involved in the stock market, but that wealth can only be achieved by investing in the long term and hold stocks and continue the accumulate stocks. I learnt that there are no quick-rich schemes when trading. Technically, I biggest lesson I learn was understanding the markets using a number of different timeframes, especially monthly and Quarterly cycles, and then developing a trading model that was not subjective, which could be used on any stock or global market. Q. To finish off, if you were to start trading all over again now, what would you do differently to what you did originally? One student of mine never traded futures before, he was a 20 year old with a lack of technical understanding and little history of the market. He was wet behind the ears. Within 6 months he turned 20k into 100k trading futures, and two years later he is a successful trader and does very well for himself. The Moral of the story, if I started all over again I would find a mentor or coach and be guided along until I could stand on my own two feet, not try and do it all on my own. I think starting pre-internet and when technical analysis wasn’t so popular made it much harder … I think traders starting nowadays with all the free information found on the net makes it much easier.
Frank is a short-term systems Trader on the SPI, DOW, and ES, as well as being a medium term (3-6 months) leverage trader on stocks. He is the author of two books: "Analytical Market Trading 'a window into the Future'" (2003) and "The Trader Trading 'Principles of successful trading'" (2007). He is the developer of a multi-timeframe trading model for all global and derivative markets, which can also be used on equities, that he calls the Dilernia Model, as well as being a developer of trading systems for Index futures. (intra-day and EOD) Every day, he writes the Dilernia Report:- Daily trading report on the SPI ,DOW, and ES, which can be found at www.thetradertrading.blogspot.com Return to the Index of Interviews ... |
