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Interview with Joe DiNapoli - Part 2
** 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’m primarily a technically based trader but I consider fundamentals. My technical based trading plan is about 70% non-judgmental and 30% judgmental. I’ve organized myself this way because it is the most effective approach I can find. 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 use three trading plans, which are similar, but fit specific needs depending upon my mind set, the time frame, and type of the market that I’m trading. These plans are succinct and definite. They contain about five major steps. There is no need for me to break them down into more details as I know internally the requirements of each step that’s involved. 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 would rate my approach as a 3 or a 4 in terms of difficulty and a 9 in terms of effectiveness. Analysts can have complex approaches. It helps them to sell newsletters. Traders need to pull the trigger, therefore they need a straightforward approach. In my teaching, I see over-complexity as one of the biggest reasons for failure. It’s the old story about having three watches and therefore never knowing what time it is. 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? It seems like what you’re asking me about in this question is backwards since by its very nature you must have a plan to understand the basics of trading… or anything else. If a person is inherently disorganized, they better learn basic organizational skills before attempting to trade or they won’t last very long. Let’s take something simple like driving to work. There’s a plan, written or not. Dress, find the key to the car…open the garage door. What does a disorganized person do, pound on the steering wheel because the car won’t start without a key? Get organized or do something that requires less organization. It is that simple. One of the comments that I consistently get from people who study Trading with DiNapoli Levels is that it is a highly organized book with a defined trading plan. All of this seems obvious to me and I was actually surprised to hear these comments. Read more from Joe in the Trading Mindset section ... Return to the Index of Interviews ...
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