Insider Information on Professional Trading

An interview on professional trading by traders Stuart McPhee and Ray Barros.

Stuart: The world is going through a bit of mess at the moment with a global economic crisis. How has that affected your own personal trading, what impact does that have?

Ray: Well I have a rule which says if any market instrument I am trading goes mean for three standard deviations for two consecutive days of the average to range then I am automatically out of that instrument. Until one of two things happen: either the instrument goes back to its normal previous ranges or there are enough data points. I need about 45 data points to create a new state of volatility and we are just in flux. I’m bucking out of the markets since October.

I will probably stay out until January. So far we have seen no decrease in the volatility. Increased volatility looks like being a fact of life. If you take that out the next top spot 25 30 which means to me to form a sideways range between $ 25 and 147.

It’s a big range – plenty of opportunity. The key factor is going to be the stock indices. If we have a close below 621 on a monthly basis which I said varies conviction. It’s got to be a bear bar. Not just the close, it’s got to have some sign you know opening on the top and closing on the bottom. If we get that sort of bar then we are correcting 1941 on the Dow to 15,000 on a log scale, 50% to 760 roughly. If the Dow comes back to 760 do you know what that will be to world economy? Scary.

Stuart: Yeah it is pretty scary so it is very much volatility based and right now you are out.

Ray: We had a very good year we turned a gross fee we had 38.5 net to take about 30% of net profits.

Stuart: I mean this is 2008 we are talking and we are talking major world indices that lost 50% and you are still.

Ray: We are up in the average hit down 20%.So it’s been a very good year for us.

Stuart: Fantastic okay we will finish off then. Let’s say you had a close friend or member of your family come to you and say I really like what you do and I like the lifestyle of professional trading you have. What’s the number one of piece of advice you can give if I want to start trading myself?

Ray: Okay, I would say that if you are thinking that you can trade with very little effort, very little money and no discipline forget it. What you see out there you know I said earlier on that you were luckier now because lot of good people are trying to help, but you’ve got the same old junk that’s out there promising the world with no effort.

To me trading is one of the most difficult professions in the world because you are constantly challenging your emotions and what you want to do emotionally and what trading needs you to do. You know we run from pain and we walk towards pleasure. You do that for trading that means you are going to let your losses your run. So if you have that attitude, forget it. If you are prepared to work if you prepare to take maybe two to three years to get some decent money maybe take seven or eight years to master the profession if you have got that approach it’s the greatest profession in the world. I wouldn’t do anything else.

Stuart: I hope that’s helped you gain an insight into a man who has been in the markets for many, many years and has a great deal of experience in professional trading. Ray thanks very much.

Ray: Thank you sir.