Trading Interview with Mark Kelly

Interview with Mark Kelly

"It takes seconds to read a stock graph and hours to read and try to understand a company’s annual report and the sector that it is in."

** 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 generally use technical analysis. I believe that that the people who know what is going on price the stock correctly and I just follow them. It takes seconds to read a stock graph and hours to read and try to understand a company’s annual report and the sector that it is in. Recently, I received a letter from a company which I own stock in and they said they did not give out an annual report because by the time I got it, it would be out of date. Large organizations spend millions trying to identify what is going on, I just try to follow them.

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)?

At one time I wrote up a trading plan, which was about 1/3 of a page long and details one of the systems I use to get in, money management, risk and when to get out. I do not follow it religiously but generally follow the concepts.

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 use pretty basic systems likely in the 2 to 3 range. Generally I just use the charts, consolidation areas, treadline breakouts and moving averages.

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?

I would advise them to look at the four basic parts of trading. Identify what to buy, when to buy, how much to buy and when to sell. Put one simple line for each part and you should have a basic trading system. For instance, I buy stocks breaking out of a consolidation area in strong sectors. I will risk 2% of my capital and set my initial sell stop just below the consolidation area. As the stock moves up I will move my sell stop up with the 30 day moving average.

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