25 Questions Answered By A Professional Trader And Investment Strategist
We had a full-time trader answer questions live for the StockTwits, Inc. Community on all things trading. Here is what he had to say.
Serge Berger has been an active trader since 1998. During his career, he has been a financial analyst, dealt in fixed income instruments and $JPM, and was a proprietary trade in equities, equity options, and futures. Having had exposure to a range of different asset classes allowed him to identify which asset classes and strategies best fit his goals of achieving consistent profits. He is the founder of TheSteadyTrader.com and created a trading methodology which divides the markets into different timeframes and characters allowing him to more clearly and without emotions determine which strategies to apply in which situations. What follows is a recap of our Q&A. For the full transcript please GO HERE.
What is your favorite candlestick pattern? Where do you look for it(reversal/trend/etc) and can you show an example? — michaelbozzello
Michael, my favorite candlestick pattern is what I refer to as a ‘bullish reversal’ or a ‘bearish reversal. It’s an exhaustion selling/buying followed by strong buying/selling like in $AMD below.
What is your thoughts about AMD? Thanks, Jon — glassmoney
That depends on one’s time frame, but semiconductor stocks as a group remain trending nicely. I like to buy the dip.
As an analyst (in the past), I’m curious… how much effort does an analyst put into each company they follow? — Jayhead13
That depends on the company of course, the larger and more complex a company the more analysis it needs. $AAPL for example, is a large and important company and will thus likely need more analysis than a smaller one.
What is your favorite asset class to trade and why (futures, options, common etc)? — scheplick
I like stocks and ETFs, but do play global markets as well. Stocks have defined trading hours each day, which is very helpful. FX and futures trade nearly round the clock, which is actually a disadvantage for most traders mentally.
How do you choose your stops when trading options and what is your favorite option strategy? — mojoman
The simpler the better. I like both directional call and put spreads and for income I sell lots of credit spreads. In my eye its important to have multiple options strategies depending on market environment, but they have to be simple complex options strategies that can quickly lead to a confused mind and excuse making.
Whats the best advice you could give to a speculative trader attempting play the market defensively? — HalfBaked_Trades
My best advice is to realize that like any worthwhile en-devour trading takes time to learn. First goal has to be to stop losing money trading. Only once you learn that can you think of making money. There are no short cuts. It takes years to get good at trading. Anyone saying different is lying.
What’s your best advice for experienced traders who want to become independent and trade full time? — mojoman
It takes time, and likely much more time than you think to get profitable. Each market environment is unique and the market does not trade linearly. Of utmost importance is to keep perspective on the different time frames. For example, a day trade is not an investment. Also, if one can’t pay living expenses than trading has to be put on hold. Markets don’t give linear returns. Anyone saying so does not understand them. Patience and practice is crucial.
Do you agree with the following? Chart analysis is a lot off the time wrong. Why? — helixia
Most ‘chartists’ often times ignore or confuse different time frames. Understand markets in multiple time frames. The barrier to technical analysis is very low, hence we see lots of poor technical analysis. It takes years to learn.
What keeps you motivated to keep trading when some of your portfolios took a loss? — GoldBenjamins
Great question. Trading is not easy and returns are not linear. Understanding this is key. Losses are part of trading. You can’t only have winners just like you can’t make every putt in golf. There are no short cuts in trading, it takes hard work, just like anything else worth getting good at also. Understand that some trades simply won’t work out. No one is doing it to you personally. It’s just part of it.
Can trading stocks be an alternative for a teenager to getting a part-time job? — bea1Rhyme
Absolutely not. Anyone selling a trading approach for beginners as an alternative to a job is doing had business. Trading takes time to learn. Many days trading shops and educators try to make you believe its easy money. It’s not. Trading is very lucrative once you get it down, but it won’t happen overnight. Playing in the NBA also takes time.
Do you have an “ideal” market environment for your trading methodology? — Lonesome
Markets constantly ebb and flow and we must be able to deal with all environments. However, that is different to saying that one must trade in every market environment. My ‘swing trading’ approach also includes an income strategy.
How do you deal with frustration, self-doubt, and other emotional aspects of trading? What is your daily process? — balanced_trader
Fear and greed are human emotions that act out in a bad way for us in trading. The vast majority of traders don’t have a plan, much less a process they can trust. The best traders have a simple and repeatable process they use each day and week. Frustration is a result of lack of process. Find a process, it’s existentially important to success as a trader
How long did it take for you to really get trading down? — irey11
It takes years. After 5 years, I knew something. After 10 years, more. Now after 20 years, I am still learning. There are no short cuts. It takes time to learn. I am just telling you the truth. Don’t believe any get-rich quick hype.
What do you think the probability of a greater than 5% correction in the markets before September? — alexsimonelis
Very high, 5% ‘pullbacks’ occur several times each year.
Are you trading crypto-currencies at all? — macrochartfreak
I do not trade those currently. I like more developed markets that don’t have erratic behavior.
What was the real turning point for your trading? If you could start over what would you do different? — michaelbozzello
I don’t believe there is a one-day ‘aha moment.’ It all takes time. Understanding the markets over time means you constantly paint a picture of the market environment. You learn from each environment: bull, bear, and choppy.
Currently, many active traders have never seen a bear market. That is scary and will cause much pain eventually.
What are most effective methods of spotting strength in different commodity classes? Like money flow/crop yield etc. Do you prefer trading commodities using futures contracts or options? Thanks in advance! — DeathCubeA
I rarely trade commodities unless its trend following or macro. FX and commodities in my mind are difficult to trade
What separates the pros from the rest? What did it take for you to reach that next level in your career? — ccioli90
A real pro realizes the market does not give linear returns. He/she can move in and out of trades with no emotions.
Can you please explain dividing markets into time-frames/characters? novel idea to me and would love to know more. — pluscbow
Multi time frame analysis is what pros do. Few retail traders do.
What do you think of algo trading and should that be illegal? Is it unfair for ordinary traders? — rohanan
I don’t think it really affects retail traders, certainly not multi day/week/month time frames
How do you find a trade? What timeframe do you use? — mhnv
I start at the big picture level, broad risk-on or risk-off feel of the market. I then work down from indices to sectors. Finally, I arrive at single stocks or options. It’s a repeatable process. I respect all-time frames and trade mostly multi-day/week/month. That’s where success odds are highest.
What are the 3 charts/indicators you look at first in the morning to understand the overall trend of the market. — Rafa2013
I look at stock futures, oil and gold, 10 year bonds, European stocks, and a few currency pairs to get a feel.
Do you think that the tech sector is in a bubble? — necer149
I don’t think large cap tech is a bubble, but those stocks are stretched at the moment.
Thank you all very much for the great questions! Download my Free e-book to learn my process: www.thesteadytrader.com/stocktwits
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I am the Community Manager for StockTwits. Follow me @michaelbozzello.
