Afraid To Trade

(interview with Afraid To Trade)

How did you get the name Afraidtotrade?

Initially, it was just a catchy phrase I came up with that was sort of humorous but also captured the vast number of people who were literally "afraid of trading" because of significant loss or the high risk. It was a way for me to combine my background in Pspchology with my interest and analysis in the Markets as I began to write publicly and the name has stuck. It's designed to attract those who trade from a fear mentality rather than a greed one which is perhaps far more common in newer traders.

Your site's focus seems to be themed towards overcoming fear. Was this your biggest objective when you first started trading? If so, did you overcome it?

Actually, no, my biggest obstacle was Greed, Overconfidence, and Lack of Knowledge/Experience. I had a stellar initial entry in the market and was successful, but looking back it was just Beginner's Luck. Eventually, I overplayed my hand and was dealt a staggering loss which set up the "fear cycle" of over-conservatism, etc. It took quite some time and it's still a struggle, knowing how much the market can both give you and take from you, but I would say I overcame fear through knowledge, networking with other traders, research, experience, and staying committed - never giving up. I knew I had initial success and so that was motivating for me to work through the fear.

Have you found that overcoming fear is an ongoing issue for traders?

Yes, it typically holds people back from their potential. We must balance Fear and Greed at all times - Overconfidence with Uncertainty. Most people look only at Reward/Profit until they're burned - then they hyper-focus on how much they can lose.

What is the best way to deal with trading on emotion?

Breathe deeply. Realize that the emotions will pass and are temporary. Keep a stop-watch and document them if needed - realize that the fear in a trade is temporary. Write free-flowing journal after any major experiences. Keep focused on the Market. Focus on objective Stops and Targets & take both when hit.

How long have you been blogging?

February, 2007

What got you started blogging?

I'd been keeping a private website for friends/family who suggested I make it public. When I started trading full-time, I felt so much isolation of trading all day without human contact - which made me overfocus on the market. The blog was initially a way for me to formalize my strategies and provide a flow of creative thought to reach out to others perhaps who had experienced similar things as I did and share experiences together.

What is the focus of your blog, i.e. how does it set you apart from the other bloggers out there?

I place a large emphasis on education/explanation/examples which is designed to build the reader's awareness and thus confidence through seeing certain patterns and structures repeated. I try to teach readers "how to fish" rather than "give them fish." I tend to focus on larger picture concepts of Inter-market Relationships to keep the smaller picture in focus, which provides content for both short and long-term traders. Furthermore, it's not a personal trading journal but is more of a collective resource of information. I also emphasize addressing emotions in trading and have a specific section for overcoming fear.

What is it you hope a reader will come away with when they visit your blog?

I hope they'll realize they're not alone and that, with time and effort, most can become a profitable trader, and perhaps have a healthier respect for the market in the process. Also,

• Knowledge that emotions are part of trading and skills to handle them
• Realization that Price Structure/Patterns and the "Big Picture" are more important than Indicators and that there is no magic formula in the market.
• A general way to view the various markets into a coherent structure and how they relate

Do you like to be edgy in your posts and try and stir up some controversy?

I tend to avoid controversy at all times and focus on objective education and ideas. I stay out of political discussions or name-calling and tend to focus more on building up other sites and referring readers to additional quality resources rather than tear others down.

What do you think about bloggers who have this kind of approach?

Revealing my answer here would stir up controversy!

Do you think it being edgy gives you a boost in subscribers?

After the first year, I learned that traffic wasn't my #1 goal but that the quality of experience/reader was.

When did you start to trade?

My interest started around 1998 when my team won a highs school Stock Picking Contest which got me into company evaluation and stock selection. That didn't work in 2001 and I turned to Technical Analysis around 2001/2002 and did quite well in 2003's recovery year using rudimentary technical analysis methods that later became more complex.

What is your favorite instrument to trade (stocks, options, forex, futures, bonds, etc.)

I've traded them all except bonds but I have gravitated now to intraday futures trading while running a hedged-style swing strategy using stocks and ETFs with occasional option strategies, particularly credit spreads.

What is your favorite strategy to trade?

I most enjoy the hedged-swing strategy because it allows me to play stocks and sectors - as well as markets - against each other but I often don't have the patience to let those strategies play out, preferring instead to take advantage of quick intraday movement which led me to ETFs then to Futures, particularly Dow-Mini. I focus mainly on trading the Dow-Mini and Mini-Gold on the 5-min charts each morning and will continue that until the volatility subsides a bit and I can raise my timeframes back higher.

What time frame do you like to trade?

I analyze them all but I trade most frequently off the 5-min charts and Daily Charts.

For someone new coming into the markets, what steps would you recommend they use to get started?

Read as much as you can. You won't actually ?learn' what you read until you put it into practice and find out what works specifically for you but you really need to have a broad awareness of how different trading strategies and set-ups work and then narrow down into specifics. Despite all you're told - there really are hundreds of ways to make money in the market but so few retail traders actually do for a variety of reasons. Hand-annotate your charts and keep a journal of "ideal trade set-ups" to build experience

What is the biggest stumbling block you see for most beginner traders, i.e. where do you see them making the biggest mistakes?

Overconfidence after initial success. Trying to overlay too many indicators Seeing trading as a "get rich quick" scheme and treating it as such - no work Not willing to put in the work and research/time commitment needed. Trying to do too much at once.

In today's trading environment, where do you see the biggest opportunities for traders?

Possibly in Commodities if we find a bottom soon. The leverage of futures can lead to explosive gains or disastrous losses. The Equities Markets should calm down their volatility which should allow for slightly longer holding times and a return to swing trading opportunities.

What do you see in store for the markets in 09?

We may see a decent sized counter-rally back to the upside that could eventually take us above or around 1,100 on the S&P but that by the end of the year if not probably sooner, we will have broken beneath the November 2008 lows. This analysis is based on Elliott Wave Interpretation with a bit of fundamental analysis awareness. The Market will bottom ahead of the Economy, but that both most likely still have further downside.

For me, I tend to focus on the next probable ?swing' in the market and try to avoid long-term forecasting. It's a lot easier to manage risk when you're looking right in front of you than two or more years into the future! Most of my trading is quite short-term in nature.

If a turnaround, when do you see that happening?

There's quite a fair chance we'll go above 1,000 to 1,100 on the S&P 500 early on in the year, but the odds still seem to favor lower prices yet to come.

Many Elliott Wave analysts agree we're completing Wave 3 down which began May 2008 but that would assume we have a 4th Wave Up yet to come and then a large-scale 5th Wave Down also to come, which would complete the ABC Corrective Pattern that began in 2000.

Also, on the day of this interview, the Jobless Report announced Unemployment Rate reached 7.2%, a 15-year high. Many analysts are predicting it will go to 9% or higher before we find a bottom. All these unemployed workers will not be spending money to stimulate the economy which could lead to further lay-offs and company bankruptcies. Further, the Fed has done about all it can do in terms of cutting rates and easing capital. Also, what could be on the horizon is a Credit Card Default ?crisis,' or the "Sub-Prime Mortgage" Crisis hitting "Prime" mortgage holders, further weakening the economy amid many other fundamental reasons as well.

If not a turnaround in 09, when?

We're probably looking for 2010 for a stock market and then economy finally bottom. I don't think this will turn into a Depression at all, but it could be a difficult Recession.

Do you use technical analysis?

That's the main focus of my work.

What are your favorite technical indicators?

My favorite indicators are:

• 20 and 50 period EMA
• 200 period SMA
• Bollinger Bands
• The "3/10 Oscillator," a sort of MACD Derivative
• Elliott Wave Principle
• Fibonacci Retracements and Projections
• Selected Gann Analysis
• Price Structure itself