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Interview with Mark Kelly
** Trading Mindset ** Q. Equally, profits and losses can have a significant psychological impact on traders. How do you deal with them? Large profits used to turn me into a financial wizard. I new everything and I had the Midas touch. I generally turned around and lost all of my profits quickly after I made them. Now a profit is nice but I generally try not to let my guard down and am cautious with the won money. Once I see that a stock is turning, I position myself to get out at a reasonable level but every once in a while, I miss and end up with a large loss. It is just part of trading and I am always working on it. Earlier in my trading, large losses would really upset me but now I generally sell before any loss becomes too large. 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? In no particular order, I would talk to her about
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? People who are very successful at one venture may not be successful at another. I would want him to identify why he was successful and what he expected to get out of trading. I would also want to discuss money management and trading time frames to get an understanding on his plans and thinking. Q. Is trading as difficult as many people appear to make it seem? I do not think trading is difficult, what is difficult is the discipline it takes to get it correct. Just like exercise and eating correctly, they are not difficult, any one can do them, but most don’t as it takes discipline. Q. What are the 5 most important character traits of successful traders? Please feel free to briefly explain them. In no particular order:
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? One of the reasons I do not think I would day trade is because I do not think I could sit in front of the computer all day and watch the screens. As I work full time I enter most of my trades with buy stops and sell many with sell stops. If you lengthen out the time frame you trade you can leave the computer and do other things, thus removing the solitude from trading. 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? Following up on buys and sells I see. Many times I identify a trade or know that I should sell a stock but get involved with family or work and forget about the trade. Days later I may remember and if it was a buy it is not a big deal but if it was a sell well, I have taken on a loss which could have been avoided. I also keep thinking every trade is going to be a big winner and likely need to be happy with small wins and if one turns into a big win then great. If not then a lot of little wins ends up as a big win. 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 have losing times but know I can trade profitably so long term I am not concerned. Every once in awhile, I look at a chart and think there is no way there is any useful information in this chart and why am I doing this. But then I remember that not all charts are as valuable as others and move on to another stock. The problem then becomes loving a stock with a chart that is difficult to interpret. 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 still think every stock I buy is going to go up 10 fold so I am always excited about initiating a new trade. However, I generally do not buy unless I have a clear exit strategy which keeps me focused as far as getting out. However, once in a trade I have a hard time moving up stops and am generally not happy with break even situations. I am much better at emotional control now than I was in the earlier days. Q. If you experience a large profitable trade, do you reward yourself in any way? No. Q. In your entire trading career, what are the biggest lessons you’ve learnt and how did you learn them? The biggest lesson I have learnt is that the stock market really doesn’t care who you are or if you just acquired a stock. The stocks direction is not going to change because you just bought the stock. Also, I have seen so many instances of stocks moving before information becomes public or at least wide spread that it is obvious that there are people who know more than others. If you just follow them you will do alright. 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 would get better educated at the start by buying a couple of stock trading courses and reading good books on stock trading. I do not think I read a good group of trading books until I had been trading for about 15 years. This is one of the reasons I put a number of book reviews on my website so others could find good books early. Initially, I generally read books with good titles but which were not that informative. I would also try and get some level of coaching through a course or seminar preferably given by someone who traded for a living. Next, I would devise a plan and finally, I would really stick to good money management principles and never ride a stock to the bottom.
Mark has been trading stocks and options since 1982. His thoughts and theories are summarized on his website, where the focus is that once educated in the art of stock trading, profits are easier to come by. Return to the Index of Interviews ...
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