From his Colorado Springs office with a beautiful view of mountains in the distance, Peter Brandt spent some time with the StockTwits community this week to share some of the insights he has earned in the trenches.
Peter’s bread & butter is old school technical and price analysis. He shared his thoughts on this, as well as changes in the trading landscape over his 35 year ride through some frequently turbulent trading periods. Enjoy…..
gtlackey: Any key differences between how equity charts and commodity futures charts act in general? ie, overshoots, respect Trendline better, etc.
PeterLBrandt: Equity vs. commodity charts: Most chart patterns fail and morph into something different. Patterns are more reliable in stocks.
ppearlman: Who were your major influences when you began trading?
PeterLBrandt: Richard W. Schacker, Robert Edwards, John Magee (all dead then) and a grain trader with Cargil named Dan Markey.
ppearlman: which left behind the best writings to review in your opinion?
PeterLBrandt: I am a chartist — so Richard W Schabacker, the father of classical pattern trading.
chicagosean: You only follow prices, correct? Fundamentals never factor into your trading ideas?
PeterLBrandt: I can’t say I never consider fundamentals. But charts give me the signals and set ups. I look at fundamentals in unorthodox ways.
TomSchiavone: Do you consider yourself a trendfollower in the way the Richard Dennis turtletrader guys where?
PeterLBrandt: No, not exactly. I follow trends based on completed patterns, not with any trend measuring device or metric. I respect the Turtles.
thong: In your opinion, how does the boom in quant trading affect technical day or swing traders? Negatively or positively?
PeterLBrandt: Hugely important question . Yes, yes, yes, Quant trading and HFC has changed it all. See http://bit.ly/jpWhZy. Also see http://bit.ly/ecvicF.
chicagosean: Did fundamentals ever enter the equation for you during your analysis of Silver recently during its big up/down move?
PeterLBrandt: Only to the degree that in one week more than 8 years of supply exchanged hands. Huge fundamental factor. Distribution.
1nvestor: what is your morning prep like, routine, etc? Thanks.
PeterLBrandt: I wake up, let the dog out and make coffee. I do all my prep in the afternoon before between 3 and 4 PM — enter orders then.
blackbetty: What one piece of advice would you give to someone just starting out with trading?
PeterLBrandt: Risk little, expect to pay a tuition. Risk little, risk little, expect to get banged around. Expect to learn by mistakes.
dannycoffman: Do you have any academic articles, journals or books you’d recommend for a beginner/intermediate?
PeterLBrandt: Not much into reading books on markets. Edwards and Magee. Market Wizards best possible read for everyone.
pointsnfigures: How are you handling extreme volatility brought on by transition to a thin electronic HFT market?
PeterLBrandt: Playing stops looser. Risking less per trade — about 30 to 50 basis points. Only looking at closing prices.
harmongreg: How has trading off technicals changed for you in last 20yrs, reliability, some patterns more than others, better some mkts?
PeterLBrandt: Patterns have become less reliable. I like patterns that are more than 10 to 13 weeks long with horizontal boundary.
mattrixDOTinfo: I’ve read your book; it’s wonderful. How do I strengthen my long-term view? I need to shakeout short-term tendencies.
PeterLBrandt: Stop watching the markets. Use open orders.
Lightman: Do you think that the growth of social media & news driven trading has created challenges for technical charting applications?
PeterLBrandt: Short term yes. Long term no way.
pointsnfigures: how are you dealing with the intense volatility in futures markets caused by electronic and HFT trading? Less size on bid/ask and wider?
PeterLBrandt: Wider stops, lower leverage, only watching closing price charts.
TomSchiavone: Were you ever on the floor at CBOT? Or have you always been an “upstairs” or electronic trader?
PeterLBrandt: I was on the floor trading the Sept Dec Corn spread and barge rates. Went upstairs for good for a sugar move in 1980.
allstarcharts: I’ve noticed through your work that you frequently use traditional chart patterns. Have you noticed more false moves in more recent years than earlier in your career? less? the same?
PeterLBrandt: False moves — all the time. False moves usually result in one pattern morphing into an other pattern. False moves, and drawdowns, are the bain of my existence.
kjepeneter: trading a few options for the first time. . .treasuring your point of view. Thanks so much for sharing. Generous!
PeterLBrandt: In 30 years I have never traded a single options contract. Ever. Stocks, ETFs futures forex.
Lightman: RE: your answer on options – conscious exclusion and if so, why?
PeterLBrandt: Selling options is too risky — 50 yr flood. Buying options is giving money away on time decay.
pointsnfigures: What do you think of ending 60/40 tax treatment? Think it will change?
PeterLBrandt: I dont think it should happen, but it will. Elected officials are mostly idiots, except for Tom Coburn R-OK. For the IRS, I am a trader, so all my gains and losses are treated as operating.
chicagosean: I once ran a trendfollowing fund. Sitting through drawdowns is the hardest part. Do you have any tricks to keep you focused?
PeterLBrandt: Drawdowns tips: Kick the dog, kick your wife, take up skydiving without a parachute.
pointsnfigures: charts don’t hold in volatile markets, chartists got crushed in late 2008.
PeterLBrandt: I had a GREAT year in 2008, especially during the bear phase. GREAT chart tops.
pointsnfigures: Don’t you think forex goes random walk, charts seem meaningless?
PeterLBrandt: Possibly, really great question. I will do a post on this soon. Random possibilities create trends that are interesting.
TomSchiavone: Do you only trade US futures markets? Or are you open to anything worldwide?
PeterLBrandt: I have traded tapioca in the barge market in Asia. YES.
Lightman: Do you assess existing trades on a daily basis given they seem to have long time frames?
PeterLBrandt: Short answer is that I watch a market on the same time frame that I based my trade. Mixing and matching does not work for me.
pointsnfigures: How many trades are you doing per day?
PeterLBrandt: I figure I will trade 10 to 15 times per month — I would like to reduce the number to 8 to 10.
pointsnfigures: So you are trading some size!
PeterLBrandt: No, I trade light. Generally one to two contracts per $100,000.
thong: In theory, technical analysis works on anything with supply & demand – and enough liquidity. What are your thoughts on TA in new asset classes?
PeterLBrandt: If volume is high enough TA should work — but of course most of my trades are losers — 35 to 65 win loss ratio.
pointsnfigures: Do you prefer to be alone, or with people. Or hooked up virtually with a box?
PeterLBrandt: I am a loner. Just me, my dog and my conflicted thoughts will do fine.
allstarcharts: In your opinion, do false moves come more frequently since computer charting began? less false moves, or about the same?
PeterLBrandt: Computer exchanges, day trading, HFT, quants have all changed the game.
pointsnfigures: I find the transition from floor to screen interesting. I used to trade 1000-5000 contracts per day. No way now.
PeterLBrandt: Short term trading would kill me. I would be a net loser if I made decisions during the active trading day.
MRBosley: when do I pull the ripcord on my shorts? Bumpy ride – have to think debt deal puts a bid under this market.
PeterLBrandt: Always use a stop. Risk only 50 BP per trade. Then pulling rip cord not a question.
thong: I think as long as you swing big on the wins, and only take jabs on losses, it all works out?
PeterLBrandt: What makes it work for me is that I get real heavy on 2 or 3 trades per year. Most my profits come from 5% of my trades.
jcal: Do you use news sources proven objective about sentiment volatility? Any scales you watch, for sizing your risk/trades?
PeterLBrandt: Not really. I am not systematic on measuring volatility.
pointsnfigures: So your strategy is pick two points, in and out, and ignore noise. When it hits, it hits, if stopped out, no big whup?
PeterLBrandt: Bingo. I have my stop and I have my target, although I will let 1/2 of position run through target. Not a believer in trailing stops. They ruin any spreadsheet calculation on risk protocol control. No big whup, except I hate losses as much as the next guy. But, they happen. Net bottom line over time only thing matters.
Xiphos_Trading: I love your old school charting methodologies. You’re a must follow for any aspiring chartists out there.
PeterLBrandt: Thanks for the compliment. I am old school and drive a 17 year old truck with 250,000 miles. I dress with fashion by Costco.
Follow Peter Brandt on StockTwits: @PeterLBrandt.
Compiled by Sean McLaughlin: Editor & Curator, StockTwits (@chicagosean)
StockTwits® is an open, community-powered idea and information service for investments. Users can eavesdrop on traders and investors, or contribute to the conversation and build their reputation as savvy market wizards. The service takes financial related data and structures it by stock, user, reputation, etc. More »