Market Warriors

7/26/2019 Market Warriors

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TitleMarket Warriors

Coordinator

Diana Qin

Cover

Ainoa Carceller

All rights reserved


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JIM ROGERS JOS ANTNIO MADRIGALTOM DORSEY YASUJI YAMANAKA PAULO PINTO

STEEN JAKOBSEN JASON WANGKE HLIO OLIVEIRA

MARKETWARRIORS


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O N T E N T S

ACKNOWLEDGEMENTS

PROLOGUE

JIM ROGERS

JOS ANTNIO MADRIGAL

TOM DORSEY

YASUJI YAMANAKA

PAULO PINTO

STEEN JAKOBSEN

JASON WANGKE

HLIO OLIVEIRA

GLOSSARY


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ACKNOWLEDGEMENTS

any thanks to the traders and investors who graciously agreed to be interviewedwhilst donating their share of the book rights to AMI (Assistncia MdicaInternacional).

Despite demanding schedules, everyone was forthcoming and generouslyaccommodating.


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PROLOGUE

I write the introduction of this book, the price of gold, silver, oil and the stock markets continue to dly. The volatility of the XXI century is the new norm in the markets, movements of 1 or 2% are no

nsidered volatile.

ver have we had so much market information, thanks to the internet and TV channels; neverhad so many experts commenting on these swings. Today, the market is up because of an ECFed) statement and the experts claim the future is bright, yet tomorrow the market may be

d different experts will claim the economy is going nowhere because of political risk. I do notople have the patience anymore to listen to these experts explain the markets day after day.

is is the reason we decided to interview great traders and investors, so they could explain wh

ht plan, if any, is, and to help the rest of us to navigate confidently during the uncertain ead.

s their plan that you can see here. It is their ideas of how the market evolved and what you hto follow the markets. We interviewed people in Europe, USA, South America, China and J interviewed day traders, cycle traders, long-term investors and frontier investors. From divonly looked for one thing: honesty. They all recognize that they do not fight against market

ainst themselves. They are market warr iors.

todays world, everyone wants easy money, quick money, but honest people know that market so cooperative.

m Dorsey and Jos Antnio are drawn toward stocks that have already gone up; one folloative strength, the other looking for new highs. This type of strategy can perform strongly dnstant market environments, but can become unstuck at major inflection points, when tecgimes change.

m Rogers does not try to time the market. He makes a choice and sticks with it. He also pref

k where no one is looking. Because of this, he says he is too often too early on his trades, bue to hold stocks indefinitely.

lio Oliveira is a fantastic day trader, a man with the IQ of a genius, able to transform two mthe markets into an eternity. We had the most fantastic time with him, learning about hiories. According to Hlio, prices are not random. There is an underlying order to all markece action. According to him, great trading can be learned, but one must understand and act als for trading. We were present at one of his rare one-day real time seminars where he tradeney and a real account. Hlio takes his chances in the prevailing market, trading his own cpressure of the moment, but for those lucky enough to be able to be there at the seminar, w

e opportunity it is to see a professional trader at work. Hlios approach to trading is the sa


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approach to life. He likes things at full speed, he is a city animal, he likes the stress the stylhnology available. When asked if he would like to trade from the beach the answer was, He finds the slower pace a problem.

ulo Pinto is the opposite. He has progressed to the point where he wants simplicity. Fewer an fewer decisions, less stress, and at the same time, allow him to concentrate on factors, su

erage profit per trade, win/loss ratio, and trade efficiency.

riously, both Paulo Pinto and Steen Jakobsen think these are worrying times for the pornagers competing to win and maintain the worlds richest customers. As stock exchanges aworld enjoy a sustained rise after a bear market crisis, wealthy individuals are recoveringshock of seeing paper fortunes destroyed and are reassessing the performance of their fina

oviders. Clients will forgive bad judgement mistakes, but they will never forgive bad faithficulty, according to them, is how likely is it that the optimism, prevailing at this moment ind supported by many reports, while cheering that the crisis is over or at least getting that wayn this be correct when the recovery in employment is non-existent?

en is gentle and sharply dressed, he is suave and slender, and his style is refined almost effortoomed. Steen is one of the 10 most cited economists, so fundamentals are very much his breater. However, his views always seem different to those of the establishment. As he wrote onomist, So how can it be that stock markets are hitting multi-year highs while employmting historic lows? In a real bull market, everyone partakes in the upside - but those who have acentral bank funding drive this market and the economy. In short, they are detached from r

ke a David Copperfield stage act, it is a grand illusion.

cause we are in a grand illusion and because we are in unusual times, it is interesting to sese very experienced traders and investors see the evolution of the markets, what ki

thodology or system they use, how good is their understanding of the markets and how theyir trades.

ost investors go from one method of trading to another, from one popular advisory servother, and from one kind of charting software to another, searching for the perfect way to genning trades. I hope that this book will help you put everything together. One of the conclusio

from these interviews is that professionals stay with their systems long enough to let them mselves. The second conclusion is that they never make it too complex.

suji Yamanaka realized that he was an outstanding trader when he developed mechanical trtems. Chinese Jason Wangke found that having a solid understanding of the fundamentals ave him a much better hedge. Warren Buffet is the guru of his investing religion.

other important conclusion is that every investor should learn from his trading experiences, some you can learn the exact style that suits you.

s important to realize that even great traders like those in this book do not always win on de. What they do is to maximize their particular strengths. None of them are ins

disciplined, unstable anxious or fearful, but all of them have a great respect for what losses ca


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ave also asked what they consider to be the most important tool for trading and realized tham, the answer would have changed over the years, which means that the reality of the marke

anged.

lio Oliveira was adamant when asked how we go about determining whether a system or metlistic. Unlike in the 90s where it was important to have access to the latest computer modtems, today access to those are impossible not because the best trading models are complicate

cause access to light speed technology is expensive and only accessible to few banks and nds.

r Hlio, misconceptions about trading are plentiful because it is a foreign profession toople. According to him trading can be as demanding as practising surgery because of otional demands. Trading seriously requires serious effort, and it is not an occupation to beas a retirement activity. Many people have the silly idea that, because they bought and sold cks and made money, they can go into trading. Trading with this idea in mind could be astly mistake. What separates Hlio from the pack in this cutthroat industry is his obsessiorfection.

r Paulo Pinto trading is a lonely occupation even when people surround you. Trading faroverts. It takes a special person to do it on a daily basis. Yasuji Yamanaka confirms thatople are not that psychologically independent. Again, Hlio Oliveira gave a very clear examat it means to be psychologically independent: You cannot trade well if your spouse thinkgambling or if she is afraid of you losing money when you are going through a losing stre

der needs to force himself intellectually to override counterproductive emotions.

hen asked what he likes most about trading, Tom Dorsey said that he enjoys every aspect of tracause trading is his passion.

m Rogers is a legend, but he does not consider himself a trader. He is a long-term investor wry critical view about politicians and central bankers. When asked why, he says that central

giving their friends and favourite banks access to almost unlimited amounts of money at no rates of interest to buy assets like bonds and stocks and expensive real estate, while ord

mericans are not getting the money. Under the excuse that they print money to stimulaonomy, the reality is that they are not stimulating the real economy and because the debtggeringly high, he is worried about the near future and believes the economy will have a recepart of a cyclical trend.

vertheless, trading is still one of the last frontiers of opportunity in our economy. It is one w places where someone with a relatively small investment can still become a millionaire.

is is the other reason we interviewed these great traders and investors - to learn the secret ofccess. From the interviews, we can learn from these market warr iors, hear their fascinating std then discover the secret formula, as many believe it exists.

e formulated a set of questions that served as the basis of our interviews. We focused our att

what it was that made them start in this business, how they learned to trade and what was thetheir first trades. We decided to interview different traders and investors with dif


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ilosophies because different philosophies imply different approaches to r isk.

hope this book sparks further curiosity and forges future market warriors.


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JIM ROGERS

hen talking to successful people, we often wonder, how intelligent are they? How did they get nacle of their profession? What talents do they possess? What separates them from everyone

m Rogers is different from everyone else and is praised as being one of the smartest investoroften says, I am not smart enough to know this or that. How high will gold go? I am not

ough to know that. What gold stocks should we buy? I do not buy gold stocks because I aart enough. He will probably respond, I have judgement, which I gained with hard worperience.

rn in Baltimore, Maryland USA, with the name James Beeland Rogers. He is the living legeinvestment world with a clear vision of the future, easily recognized by statements like t

rbes: The stock brokers are going to drive taxis; the smart ones will drive tractors so therk for the smart farmers. The farmers are going to drive Lamborghinis. With 70 years ow, this international investor is based in Singapore, and is Chairman of Rogers Holdings, anator of the Rogers International Commodities Index (RICI).

is a specialist in Commodities and Asian markets, advising Russian VTB capital agricvision and Leopard Capital in the Sri Lanka Fund.

m Rogers started in Wall Street in 1964 with Dominick & Dominick, one of the oldest finvices institutions funded in 1870. Later in 1973, Rogers co-founded, with George Soro

mous Quantum Fund, which in 10 years gained 4200% while the SP500 advanced 47% in theriod. In 1980, Jim decided to retire, at the age of 37.

m Rogers has a bachelors degree in History from Yale University and a second BA degrilosophy, Politics and Economics from Oxford University. He is the author of the following b

Hot Commodities: How Anyone Can Invest Profitably in the Wor lds best market. 2004Investment Biker: Around the World with Jim Rogers. The result of 160.000 km across sixcontinents on a motorcycle and recorded in the Guinness Book of Wor ld Records. 1995Adventure Capitalist: The Ultimate Road Trip. Another Guinness World Record set forjourneying through 116 countries, covering 245.000 km. 2003A Bull in China: Investing Profitability in the Wor lds Greatest Market. 2007A Gift to my Children: A Father s Lessons for Life and Investing. 2009

m Rogers is married to Paige Parker and has 2 daughters, Hilton Augusta and Beeland Anders


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m, how did you start in financial markets? At what age and why?ell I didnt know anything about markets but I had a summer job while studying in 1964, workin

Wall Street firm Dominick & Dominick. I didnt know anything about it except that I liked thy much, he gave me a job and I fell in love with the markets. I thought it was wonderful, I arked hard, followed what was going on in the world and here was a chance to pursue wharted to be my passion, while they were paying me a lot to understand the world... it was wonde

ved it.

d you start to make it right from the beginning?s, I guess I did what I was supposed to do right, because you know they hired me and theying me back, yes, I guess I did what I was supposed to do, but as I say, I started it off not knything, but they hired me and kept hiring me and here I am.

is was before 1970, right? Because you started the Quantum fund in 1973 with George Sm I correct?ell, yes, we started Quantum Fund in 73 but after my first job I went to serve in the armaduated and got to Wall Street, again joining investment bank Arnhold and S. Bleichroeder w

rked with George Soros.

hat made you start this Quantum Fund with George Soros? How did this idea start?ell, we were managing a fund already at that company, but then they changed some regulatioashington and we couldnt manage the fund for the company any more. So we just took theshore, or part of the fund, and started managing on our own what was the first truly global m

dge fund.

e fund was a tremendous success. Have you always been a winner as a fund manager?

s, we had a good record; we did very well from the beginning.

elieve the fund made gains of 4200% in about 10 years while the SP500 only raged 47% iriod. What was the secret or the recipe for success you had in those days?ell, it was a lot of hard work, finding the right investments and investing in them. We invested g and the short sides. We invested all over the world. We invested in stocks, bonds, curre

mmodities, and we also borrowed a lot of money, used a lot of leverage in those days. Levereat if you get it right. Its a disaster if you get it wrong. Fortunately, we got it right.

as it fortunate or was it because you had an edge compared with other people in the marke edge was that we got it right, we did a lot of research and we knew what we were doing andedge was an enormous amount of homework, and thats what I can say.

as it all based on fundamentals?s, yes, thats all we knew. We used to look at the charts just a little bit. I would look at the cha what was going on with companies in the street. I did it more as a way to educate myself n make decisions. George used them a little more, but we were basically using fundamentals.

seems that the markets have changed a great deal since those days. Where would you sayey have changed the most?


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wouldnt say that markets have changed. The world has changed. We have more information,tware than we used to. We all know whats going on. We are getting more exposed t

cumulated knowledge of the past, what has been going on for a couple of hundred years thegraphs, through phones, through radio and TV. We have been getting more and owledgeable for a long time. So, I dont think markets have changed, its a lot more informerything happens a lot faster now, thats one change, but the judgement required to do it right hanged.

u still have to get it right even if we get lots of information faster, we need to get it d the other thing of course is that the markets are a lot bigger. When I started, in 196st summer on Wall Street, a big day on the New Yor k Stock Exchange was 3 millio n sd now 3 million shares and even a lot mor e than that is one trade before breakfast. Srkets are much bigger much more widespread than in those days, but apart from that same people trying to buy and sell based on what they know and people still m

dgements based on hot tips and bad information, even though there are not many png successful at investing. None of that has changed.

e you st ill an active trader?, no, I am not a very good customer for brokers now. I make one trade a quarter, I do not

ry much at all; I am not a trader at all. I am not good at it; I dont even try to make shordes.

ve you had bad periods in the markets in your career?ad bad periods of course, periods when I didnt do anything right. I guess everybody has, I ow. So far, I have been able to succeed, I can still pay my bills and I can get it right enough rkets so I can still pay my bills (laughing).

hen one goes through these bad periods, is there anything that you have to change in ordback to winning trades?not really, I just continue trying to figure out what or where I can find another investmen

uld be right. I guess I probably should try to figure out specific changes, but I guess I am too l

hat defines you as an investor?ell, I guess the main difference is that I always go to places where people are not investing. Thain difference. I look at the areas where nobody goes and most people just follow what everye is doing. I rarely do that. I try to find things that are new, that are cheap, where change is

ce. Most people try to follow the crowd, it is easier to follow the crowd as everybody knowsfer thinking my own way.

basically, apart from being a pioneer investor, you have never had any rules for trading?u its just hard working on the fundamentals, either countries or companies, and no sphniques normally used by traders.s, thats correct. Everything you said is correct.

w is a typical day for you now? What do you do the moment you wake up until you go to

u go around the world, you travel a lot, and you speak in a lot of different places. Is nd always thinking about investments and opportunities?


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ell, I dont think too much about investments. I have got two little girls. I try to spend as muchpossible with them. I wake up in the morning, usually at 6 oclock. I have to take one daugh

hool at 7am, then the other at 8am. We have breakfast together, I come back, I go to the gym; Iym in my house. I exercise for a couple of hours. I work on my computer while I exercise, ma bicycle that I use. Then I pick one daughter up at 11 oclock and then the other at 1 oclockch with them, then the rest of the day depends on what I have, meetings or work from

mputer. Sometimes I follow the markets but mainly I am an observer of everything arounht I have dinner together with my family.

you dont follow the markets during the day now, but it was much different at the beginyour career?those days, you know, markets were my life, 24 hours a day, 7 days a week. We had t

mpanies, talk to managements and also trade. But now I have got everything on my mind. Ile more experienced. So I know a little more about markets and its easier for me to cisions. That does not mean better decisions, but its easier to make decisions now.

hy is it easier to make decisions now?ell, I now know, for instance, some things, for example, the system in the West is not workiy it is supposed to work. When people get into trouble, competent people take over the aese days central banks and governments step in to save everybody instead of letting the syan itself and that is why recession lasts longer. When I see something happening in a country for me to decide if I should make any investments in that country or not. When I wasn

perienced, I didnt know a lot of things about this. I had to learn, I had to do a lot more resw, for instance, I see Myanmar opening up and I know what to do. I know the things happen

yanmar are going to be good for investors. But now I know because I have 40 years of expere first time something like that happened, in the old days, I didnt even recognize it. I had to dresearch and home work to see.

, as an investor, you put your money before the crowd. You are not typicalntrarian, you just follow your inst incts and you are a good observer of whats goindifferent countries, is that correct?s not just my instinct. Its based on a lot of experience. I have been doing this for a long timeyears. If you are a farmer you are not going to know there is a crisis in Greece, because peop busy going to work every day to make money.

hat do you see now in Myanmar that attracts you to this market?

m going to say, accumulated experience, after over 45 years of doing this and travelling mes in most of these countries. In Myanmar, in 1962, Burma as it was called then, wahest country in Asia. They then closed it off. They threw the foreigners out and ovelowing 50 years they became the poorest country in Asia. But now Myanmar has deciden up, let in the foreigners, try to attract capital, try to develop markets and develop expyanmar is a country o f 60 to 70 million people, a big population, huge natural resources aucated and disciplined cheap labour force. Whats more, its neighbours are China, Indiailand. So, its in the right place with all the right ingredients and they are opening up t as China did in the late 1970s. I have the experience to understand that now, that thi

untry regaining former power but its only starting on that road. You know, 40 years uldnt have had the experience and I would have had to have done a lot of research and l


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gging and checking and trying to find answers. I probably wouldnt have known where d look 40 years ago but now I recognize these things because I have seen them before.

, its very important to be an investor that remembers past experiences in the market anforget to learn from these past experiences, right?my case, yes. History is a very good teacher and history repeats itself. You asked wferent now? I dont think the markets are so different. Markets are still pretty much the hats different is technology; that is whats different. We all have computers and things likeich we didnt have 45 years ago. It was nothing like this 45 years ago; everything was bephone or on paper. Thats all changed now.

you still trade on the long side and short side or are you more focused on specific coune Myanmar?till invest all over the world. I still invest both the long side and the short side. It depends on wng on in the World. I dont say Ive got to do this or that. My investments are dictated by w

ppening in the Wor ld.

u must have rules for the long side or the short side when you invest. What are the rult you out of a position either to take a profit or to stop a loss? Do you have rules for that, if conditions change, I just change my mind and if I am short, I cover and if I am long, I nt have any rules. Perhaps I should, but I dont.

u never had rules then?, no, some of my friends, you know they have things like if it goes down 12 percent they get t goes against them 12 percent they reverse. I wish I had some of those rules sometimes but I ve.

ould you say that the markets are always right?. I would say the markets are always wrong. No, no, they are always wrong its just someties a little while for people to understand the markets are wrong. Everybody has to figure orket somehow, but I dont know, people get carried away with their emotions. Markets, contrpular belief, rarely look forward because of either last years news or yesterdays news. Youlook forward, not back and I think markets look back.

hat would you say is the error you tend to repeat most often, if any?m always too early. I still try to refrain myself but I know I am always too early, so I still try

mething about that. When I decide to make a decision, I decide well I better wait a while buually still too early, on both the long side and the short side. I always assume that everybody kat I know but unfortunately, most of the time, they dont.

cause you are too early, do you get frightened with the position you have on the wrongnot ever?m always worried but I dont pay close enough attention to really know most of the time. Youont sit and look at my portfolio. I make a decision; I stay with it until I think that the worlanged. Sometimes, yes, I am aware of whats going on in my portfolio but I dont sit and che

ces every day, sometimes I dont check prices even once a month. That part doesnt scare mescared when I see things going against me quickly and I try to re-examine my position, but I


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and look at my portfolio, I sit and look at the reasons that made me take that position. You set believe in predicting short-term moves or price fluctuations, I prefer to focus on longowth trends and that is what needs to be examined.

hen have you had more success in trading? Was it at the beginning? Is it now? Was it durecific period? Was it a specific environment that made you more money? Can you explain iwas clearly the 70s, thats when I was working 24 hours a day, 7 days a week at this. I was ormous leverage and doing it all the time. Going around visiting companies and the usual nd managers do. Since then, remember I retired when I was 37; I have spent a lot more timeher things like travelling. I drove 400,000 km around the world, writing, and now much morth my children and other things. Now with my experience and my money I have different inteparticular my little gir ls.

ould you say that the 70s were good years to make money or success came only because oorts that you were putt ing into your work?, no, of course they were good for that. But it was not a particular good period. Anybodynts to spend time and energy can always make money in the markets. Always, if you can domework and figure out whats going on. Understanding whats going on is the most impng. Identifying change equates with making smart investment decisions and growing wealth.

hy would you say there are so many losers in the market? What is the reason for that? Wuld you recommend to these people?ats always been the case. It cant be changed. It has always been the case because most people sed on hope or emotion and that is why most of them lose money. They dont do their homeey think its easy and they just fly around, I mean they just jump around making investments,re tomorrow there. Its very difficult; a very, very, difficult way to make money but most pnk its easy. They read in the newspaper about people making fortunes in the market, they don

newspaper about the millions who lose money in the market. So people think its easy and theyow how hard it is. They dont do the necessary work or they dont have the necessary ability. I me people are good at making money, with different strategies some with algorithms somemplicated formulas some with charts. I am not, but even those, most of them dont get itcause they dont know enough or they are not willing to do enough work or they do not undeanges in the markets or they let their emotions get the best of them. I wish it was easy to make mthe markets. Its not and it has never been and probably never will be.

would you say that, for any newcomer in the market in the 21stcentury that it is going

re difficult or easier for them to be successful?s going to be the same. It has always been the same. Whether 200 years ago or 30 years agow most people lost money. Most people had access to the same information, some had accre information than others and thats exactly the case now. It really doesnt matter if a hu

ople can go into the same room and hear the same thing. Only 3 or 4 percent are going to comd make the right decision. Judgement, no matter how much the world has changed, no mattech technology has changed; judgement has not changed. You still have to have good judgem

u are going to make success of anything whether its music, art, politics, law, anythingdgement that counts.

ould that be your advice for any investor, to have judgement, along with hard work? W


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uld be your advice to any new investor in the market?ertainly would advise people to have judgement but you know you just cant go down to thed buy it. I dont know how you get it, I really dont. I personally got it from experience and fof work and a lot of reading. So to most investors I would suggest they spend a lot of time re

d researching and doing homework before they earn that judgement. It will probably comeperience but I wish there was an easier way to get it, I wish I could sell a pill to give you judgd I would be very rich. What I suggest to people is to do a lot of reading and research, studytory and study some economics and see how these things play and get experience; if theyve natural judgement that would lead to them being able to judge. Also, although expensuld make sense to put aside some money, to lose some money first because thats the way to l

u have gone a few times around the World. Do you still have a dream that needs to be fulhave you fulfilled all your dreams?

y dream now is my little girls; my main focus now is these two gir ls, for the future. Thats myportant task, trying to prepare them for their lives and teach them as much as I can.

epare them for their lives, how do you foresee the future? What is your vision of thintury?ell, we have moved to Singapore in Asia because that is where I believe the future will be. re are enormous changes taking place in Asia which may be compared to Britain in 1807, btain emerged as a world power and compared with the US in 1907, when America was o

rge of becoming the greatest success of the 20thcentury. Asia is the place to be in the 21st cey little girls speak mandarin. I think that is a skill that I can give them, to know Asia and theyeak perfect mandarin. There are other things I would like them to know as well but thats the

language, a knowledge which many other people dont have. You see, China has had recuriods of greatness three or four times in the last few thousand years. Britain was great oncehcentury was great for the USA but the 21st century may see Chinas growth reign suprem

y one day lead the world.


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JOS ANTNIO MADRIGAL

Antonio Madrigal Hornos was born in Valencia, Spain in 1975 and is the oldest of three brd sisters. His interest in the stock market began when he was 17 years old, and he has worked rld of finance for all of his adult life. He has worked in various firms, including Emerging

d Silver Line. He started managing capital at DIF Broker, where he is currently the Head of Sta JP Fund.


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w did you start off in the financial markets?hink in the same way as most people, from a conversation between two wealthy gentlemenerheard before I turned 18. They talked about how much money they had made and lost anckly you could make a profit on the stock market. I was a teenager and I started to investigavements of the market prices that I was passionate about.

what age did you start to operate and how long was it until you actually made contacte market?hen I was 17 years of age I had no money with which to invest, neither did anyone in my fter studying and reading everything about finance that I could get my hands on, I applied for en though it was only answering the phones for a very small salary. It was there, at a youngt I made my big discovery. The markets were more difficult than I had originally thwever, instead of giving up it made me stronger because I had a lot to learn.e first few years were difficult but there were people who believed in me and it wasnt long urted to see the fruits of my work. A few years later when I was 23, my big contract, the type terators desire, arrived. From that moment, I was in the big league with an in-depth knowled

market and of myself. The results started to arrive, and with them, a higher level of knowled

w have the markets changed since you started?depends on your point of view. From the perspective of someone looking at the past 100 yearrkets act in the same way as they always have -euphoria and depression.

om the perspective of the advance in technology, markets are completely different nowadaysones I started out in 20 years ago when bearing in mind the beginning of computers an

ernet. In the year 1993, mobile phones didnt even exist. Nowadays, one can carry out transacthe market, directly from their mobile phones.

u have dedicated your life to the stock market for 20 years; did you make a profit fromginning?, absolutely not, but I had a big advantage. I observed that everyone manipulated everyonm their sub consciousness. When someone bought, the person next to him bought as well, a

dnt want to miss out. And this happened with everyone. Many of them made a loss so I foundow of opportunity. I would do exactly the opposite. If they bought, I sold, if they sold, I bourked for a couple of years until I lost this advantage that was basically a feeling of the market

ooked back at it.

w long did it take for you to turn into a constant profit maker in the stock market?hen I started to trade more substantial amounts of money, things got more complicated. I hcover what the investor behind the charts did. I was lucky in the first two years the time eded for completing the strategy that I use nowadays.

hat things did you have to change in order to become successful?ad to learn to win the battle with myself. During the first few years on stock market flocovered that no one took the blame themselves, everyone had someone else to blame; journ

alysts, bank directors, etc. Everyone blamed someone else for their mistakes. I discovered thaeself who wins or loses; who always wants to be right and doesnt accept losing. This meanen an investor made a profit it was small because they were scared. And when they made a


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s largely because they were hopeful that their shares would go up in value.r me, this was a great advantage. I had to silence the voice inside me and develop a strategy wult being independence.

y ego liked to pat myself on the back when I was successful and hide it when I made a loss. Ierything to silence this voice and what really helped me was Buddhism. To pay attention er feelings and to try and control them, that was the biggest change.the other hand, the more you pay attention to your ego, the more you operate in the short term. Ignego helped me to expand my operative side and instead of using daily graphics, I started to use the w

even monthly ones.e results arrived later, but they always arrived.

you make a profit every year?s, although I have had some years with only one digit, many with two and also one with threed bad weeks, even some difficult months consecutively. However, if you do things correctlults always go back to how they should be.

hat markets have you operated in?ave operated in practically all of the markets in the world, although there are some restricti

me countries in which it isnt possible to operate in. Nowadays, using the internet, it is just asbuy a share in Germany as it is in Australia. But, mainly I have operated in the Spanish, Frman and also American stock markets.

which markets do you operate in nowadays?manage a Hedge Fund that invests mainly in the American stock market, in reality 70% hasvested there. The remaining 30% I invest in which ever country looks interesting and has intercks. You can say that I only operate with the best shares that exist in each country.

ould you change markets in the future?ont see why, now that I currently have access to nearly all countries. Maybe one day I will mifferent fund, exclusive to a certain country, and I will have to change. However, at the mom

ve access to any listed share on a worldwide level.

es your method work with any asset or just one?y method works with the equity market. I have to say that its unlikely that I would be in anyet. You see, in the equity market I can spend a bit less than 10% of the life of a share investedr me, this is really important, to spend a certain amount of time on a share. While the method

icates that I have to stay in the same position, I need to be that time with that share.nsidering that a share has an average life span of 20 years, I would only be invested for a couars in it, the rest of the time will be spent on other shares that comply with the methodology.the same way there are shares in which I havent invested in and others with a shorter histore invested in for longer. On average, my methodology will be invested in the stocks for les% of their existence.

e you more in favour of diversification or do you prefer to concentrate your investmene shares that you are familiar with?

course, I operate with all the shares that are available to me. In this moment, there are mor0,000 shares in the world, available to any investor.


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ter selecting the best of each group, diversifying is one of the most important premises thartfolio manager needs in order for its capital to increase constantly.diversify through different countries, different currencies, different shares depending oatility, the timing, the type of entry, the direction, expected amount of profit and especial

cle of each share.my point of view, good diversification helps to obtain more solid profits, and above all, reduk level of the portfolio.

hat type of charts do you use to operate?ell known charts with bars OHLC, (Open, High, Low, Close), are the usual charts I follow. Inarts, you can find all the information required. They are the most traditional charts and alsst popular ones, I believe.chnology and knowledge have enabled many more charts to be created, but what is importat I need in order to operate and the most basic charts have all the information I need. I dony I should complicate things more.

which time-frame do you operate?work with long term charts, as these trends are easy to see in weekly and monthly charts. culating risks and rewards in the different time frames, I discovered that the best data is obtainlong term as long as your portfolio and your management system allows you this.

hat characteristics are important for being a good trader?tience. I think this has made a difference for me. Few investors have the patience to stick with months or even years in shares that make and keep making a profit. In Spain, I have taught

n 3,000 investors and the main thing I have taught them is to have the patience to continue wicks even if they show big profit in the portfolio for however long they last.

s important to know that when a share has made, for example, 100% profit, the numbers quickour favour each minimum added gain in the share multiplies the profit in that particular stock

res an example to help us understand: If you buy a share at 100 and it rises in value by 100ue is 200. This is when our results in this share are going to multiply. Now, if this share riue another 50%, its value will go up to 300, but in our portfolio will have gone up 100% mo

w, the share has increased by 200% and your patience has paid off.

important to let the profits flow, the more the better, for our portfolios.

hich is the most important, and why?well as being patient, it is important to be disciplined too. Discipline makes us follow rules

d again and doesnt give us the opportunity to change.

hen one has a complete methodology, he should have the discipline to carry it out whatevrket does and whatever upcoming event there is. He should stick to his rules as long thodology indicates that he should.

hat is essential in order to be excellent in the stock market?u have to have an iron will and take control of your feelings and know how to control them in


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ment. The markets make us fight with ourselves and only after this can we fight with the me have to be completely sure of the transactions we carry out and leave everything else to ond, of course, be capable of doing things correctly and independently of what our minds want.

hat are your principles in negotiating?ying shares at new highs when they are more expensive than ever. This gives me a great advanta

meone very powerful is investing in this share and probably has more knowledge than me on thects of the stock.ce I have selected the shares that have made new highs, I make a selection of the ones thatatility adaptable to what I need and levels of profitability that I need in my portfolio. It isportant that the stock has a wave cycle that doesnt have too much correlation with other stockin my portfolio. Having all the stocks with the same correlation would mean that when one s

ivated, all of them would be at the same time.

there anything else that should be emphasised?r me, correlation is a really important factor. If many of the stocks in the portfolio have therrelation and something occurs to trigger the stops, all of them would be activated.m always interested in looking for stocks that are going up in value when the index is not doime. With such stocks, it helps to make a portfolio rising regularly. This is a great advantage.

hat is a typical day for you when carrying out transactions? What do you do from the mou get up until you go to bed?nly meet with my traders on Fridays and we talk about how the week has gone and we prepaming week. We are interested in looking for good stocks that balance out the portfolio perth the stocks we already have.wadays, with technology, it is much easier to do this. There are programmes where you can

details for what you want and the programme searches through the whole database.

ogrammes are on the internet and are pretty much exact.

w many transactions do you carry out in a day, week, month or year?the close of business on a Friday, we introduce orders in the systems, which are valid for the the week. There will be days when none of the transactions go though and others when fifough. Its something we dont worry about because we do not try to anticipate any events thacur in the market.

w sure are you of your transactions?

arly 65% of our transactions are winning ones, but the fabulous transactions where the big mn be made, it only happens maybe in 20% of them. Thats to say that out of every ten transactiour of them we make a loss, in four of them we make a profit that covers the loss and in only tm we expect important gains.

hat reward/risk do you look for in transactions?e always look for the most possible, even though theres only 2 in 10 that give us the risk mul10. Only in these is there a real profit to be made. This is why its really important, for me,winning transactions flow.

I was to close these trades earlier, my results would be much more regular, even probably


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ving the patience and discipline to let these good trades continue is what makes the risks/rein my favour.

w much do you risk in each transaction? Do you do it using a percentage or a linear methe risk has been getting smaller over time. When I first started, I risked 2% per transaction whmaximum an investor should risk when they are starting trading. Today, I do not risk in anyre than 0.05%, which doesnt seem very much. However, when your portfolio has more thaurities, reducing the risk of each transaction gives you an enormous advantage. If you

rrectly diversified and selected your securities well, its the market that should do the rest.

you use technical or fundamental analysis or a mixture of both?nly use technical analysis. Im one of those who think that if a large fund or a great investormation from a fundamental analysis which indicates a security should rise in value, they wy it and they would keep it in their portfolios. This, in turn, would make the listed value rists where I would enter.

eave the fundamental analysis for those who really understand it and Im not just referring ck analysis. Im referring also to the market analysis in general, the macro and micro econointerest rates, all of it is certainly important, but not for me.

e technical analysis and fundamental analysis related in any moment?ont think so. I think that technical analysis magnifies whatever fundamental informatown. If the company is going well and its shares rise in value, they will probably risere than they should do. In the same way, when a security is negatively affected by fundam

alysis, this too is magnified by technical analysis. This isnt good or bad, it simply meanre is an opportunity and we can take advantage o f it.

you agree with the statement that technical analysis works because everyone uses it?haha, yes that could be right.

you use historic data to make decisions on trading?course, I use the whole history of a share. In fact, I dont buy a share until it has broken its hh. If, at any moment, the share is worth more than ever, it means that it is rising in value and

s an upward trend. This is indisputable, Dow said so in 1896. The long term trend is upward,ugh when any share breaks its record value, the long term, medium term and the short termll, at least in that particular moment.

nly invest in clearly defined trends and when a share is at its highest high, there is absoluteubt.

aring in mind that the economy is cyclical, do you think we can learn from past situationsre, as human beings we are only a product of our past, markets too. He who doesnt learn fromstakes will only make them again in the future. Learning from the past will help us to be befuture.

hat does a feeling of the markets mean to you?

have discovered in which situations I can make money in the markets and forget how evee does it. To know when to invest, and much more importantly, when not to invest. For m


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ing anything is sometimes doing a lot.owing when to invest and when not to invest is, for me, a feeling of the markets.

es having experience help you to predict possible movements in the market?ell, no one can predict what the markets will do in the next few minutes, days or monthsexpected event could happen that could change any predictions, natural disasters, wars, attemertake a government, etc.my opinion, we play with probabilities; and thats it. Knowing what the market will do in the t my job.

you use a trend analysis strategy or a counter trend strategy?nly use trend analysis. I always operate in favour of the trend. I will never again sell a share ts maximum or buy a stock that is at its minimum value. Its much easier to operate using tren

n you explain what needs to happen in order to make you pay attention to the share youading in?hat I said earlier, most importantly, that the share is at its highest high. From this moment onth the group of investors that really interest me; the profit makers and I want to be with them.

n you explain what would have to happen in order for you to open a long position?stly, that the share is at the highest high, secondly, that it has a wave size that will give me t of advantage, thirdly, that it has good profit making potential and fourthly, that it isnt too schart pattern to other stocks that I already have in my portfolio.

n you explain what would have to happen to make you close a long position?it drops to my stop level, probably below the previous cycle, where I always put a small seer, depending on the size of the position.

you also enter into shorts with downward trends?s, I look for shares that are cheaper than ever and when this happens, they are all making a

any people dont care if they are at 10 or 2. They want to sell them at least at the price they bm at, which was probably higher. Whats more, many people are happy to buy at this price beviously, they think they are cheap.

hat would have to happen in order for you to open a short position?e share would have to be cheaper than ever in its history, it would have to have a wave siz

uld give me an advantage, it would have to be suitably profitable and not too similar in itstern compared to other low value shares that I may have in my portfolio. In essence, the salong term but practically the opposite, apart from the fact that profitability in short positio

ch more limited in my system, which makes me much more cautious.

hat would have to happen to make you close a short position?her that it would reach its objective which was decided at the entry or that the stop wou

ggered because of a change in direction.

you ever accumulate positions when you are already in a position? When?ncrease positions for necessity of the strategy. I mean, I wouldnt do it if I could make onl


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ry into that particular stock. When you manage orders, there are times when, executions arertial or liquidity is low and we may take a week to invest in a security, buying a bit every dayu reach the amount you require.

the 20 years that youve been a professional operator, have the markets changed?man nature hasnt changed and we still operate the same in markets. Euphoria and depressionspeed with which we carry out transactions has changed. Nowadays, you can divide a second

llion parts in order to carry out high-speed transactions. The internet has revolutionised thimputers are getting more and more powerful. They are capable of doing many things in just cond.erefore, yes, markets have changed, but not the way in which new investors act.

a result of this, have you changed the way in which you operate?, I operate today in the same way I did 15 years ago, although it is true that computers help us the search for our ideal stocks and institutional investors with large servers are capable of nsactions in milliseconds. This doesnt affect me as I operate in medium and long term.nderstand that short term traders have been having a difficult time in these last few years, andl probably have even more difficulties in the future.

you think that financial markets, and the way in which they move, are logical?mpletely logical. They couldnt be any other way. They are life itself.

hat do you think is the mistake that youve repeated most?ving the markets an importance that they dont have. In the beginning, I was always watchinws about the country in which I was trading, also about the companies, in particular, the ones vesting in, and anything that could affect my portfolio. I also wasted a lot of time thinking aboasons why the stock in my por tfolio would move one way or another.

day, all this has changed. I keep away from financial news completely; in this way, Intaminated by what others want me to know.

ave discovered that however bad the world is, even if WW3 starts, there will still be businesl increase in value, for example, pharmaceuticals, oil or even arms, who knows. Now, rry about investing in stocks regardless of what others say. I have seen countries in extreme

d in these countries; some stocks manage to rise without stopping.

there any other error you have detected?s, even though it is related to the previous one. Before, if the stock market fell, I woupressed and if it rose, I would be happy. Its been years since that has happened to me becaus

m aware that the stock market goes up and down every day, and probably will spend 50% of thing up and 50% of the time going down.

anyone is affected by what the stock market does, and they have 40 years left to live, they sow that 20 of those are going to be bitter and sad. Seriously, its really not worth being affectIt may sound strange, but the more you distance yourself from the stock market, the more c

u will see everything.


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hat has been your wisest move through a result of using your methodology?ere have been times when, for example, at the end of the 90s, with the technology bubble I maget some shares in companies like Dell, Yahoo and Microsoft and profitability was more00%.

the years 2005, 2006 and 2007 I had shares in my portfolio that had a profitability of more0%.

hat has been your biggest mistake, caused by using your methodology?dont think there have been mistakes, only normal happenings in the market. For exammember 6th May 2010 in the American stock market; a flash crash caused some shares to f% in just a few seconds. I had shares that suffered a major depreciation, with the stops ggered much lower than was expected and in two of them the stop was executed at almost zero

ave also been negatively affected by some gaps that have caused me to lose more than dicted. However, all of these things are normal in the world of financial markets.

you think diversification is essential?course, its the basis for having even greater profits.

so, any time we may have a losing streak, it helps to make it less dramatic

w do you diversify?iversify in different markets, different countries, in shares with different currencies, sharesferent waves, different profit making potential, different wave size, different wave shape,ferent directions. Also, I try to invest in different sectors.

r people who want to start investing in the stock market.

hy do you think the percentage of people who lose money on the stock market is so high?s very simple. Everyday new people start and open new accounts with new brokers. These pvest money without having a game plan, a strategy. When you invest in financial markets, yovesting against the best investors in the world. You should never forget this.hink that many people invest without knowledge and above all, without experience. If they dediar to learning, they would have much more chance of being successful. I wouldnt recomyone to start until they have a methodology from A to Z. Only in this way can you carry out aen the conditions are cor rect.

uld a novice investor be successful from the beginning?course, but they should still train and study and study and continue studying until they hthodology that gives them an advantage. Read everything about this topic.is the same as a good medical student who studies for years and then puts his knowledgeactice. Prepare yourself over one year or more than one if necessary and then trading thrket will do the rest.

hats the ideal age for trading well in the markets?hink that any age can be good, although obviously the older, we are the more responsibiliti

ve, which means we have to be responsible in order to make a profit. Today, I dont take theks as I did 5 or 10 years ago. As we get older, we get more scared of losing.


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w much should someone who is just starting out risk?little as possible, and dont think the commissions are responsible for the risk you are tau should never risk more than 2% of your capital, given that, the more you lose, the ficult it is to recover those losses.

res an example; if someone has a loss of 10%, they will need more than 11% in order to getwhere they were. In the same way, if they lose 20%, they will need 25%. If someone loses 50%uld need to make a profit of 100% just to enable them to get back to where they were. If this p

s 100 and they lose 50%, they will now have 50. For them to have 100 again, they would hke a profit of 100% because if it is only 50%, they would only end up with 75.

w long would it take a newcomer to the markets to start to make a profit?s the same as asking, how long it would take for a beginner cyclist to become the coampion. It depends; there are people who could do it in just over a year and others who wouldee or four years and others a whole lifetime.

hat advice would you give to someone who wants to enter the world of analysis?at they have patience, that they bear in mind that the markets wont end tomorrow, that theyay and they will still exist in one hundred years. That they prepare themselves as much as po

d dont rush to invest money and when they do start, that they learn from themselves and hntrol their deepest impulses. That they manage the risks well and above all that they use rules th0% logical. That they forget the maximum of the indicators, oscillators, averages and everye but use the price, as any indicator needs the price in order to work. Get ahead of any inding the price, and remember something really simple; if more bars are going up than going dre is an upward trend; on the other hand, if more bars are going down than up, there is a downnd.

hat personal values does a newcomer to the markets need to have in order to beccessful?u need to have your feet on the ground and know who youre up against. The markets are sce you understand them but very complex if you dont. At the same time, you need to accepything can happen tomorrow, and that anything could happen just a minute after makiestment.king control of our impulses is a fundamental pillar and for this, I find Buddhism really hevices to the world of investing are scared when they make a profit, they quickly collect their

d they are hopeful when they lose even if they are losing nearly everything. Its really importrn to change these concepts; to be scared when you make a loss and be hopeful when you mofit that will make you gain even more.

w should a trader diversify so that he will have more chances of being successful?should buy shares that are different in many ways. He could buy in different countries and diftors. If I invest in an American bank and a European bank, this would not be diversifying well

o are related.u can diversify in different markets that use the same currency but in different sectors.

hat should a new trader be willing to risk?


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I said before: the minimum possible. If at any time he loses 25% of his capital that he pulls oesnt lose any more.

hich strategy do you think would be the most worthwhile for a new investor?would recommend long-term investments. Buy shares that are going up in value or that are at

hest and sell them when this ceases to be the case or they make waves in the opposite directiont invest in stocks that are at a standstill.

nd a bit about your private life:w do you balance your private life with operating in the markets? Does it have a good effs, it has a good effect. I never talk about the stock market in my private life. I never loancial markets or listen to economic news. My orders have been placed in the markets and wat they want; its not in my hands.

nancial markets help me to control my internal state and this has really helped me in life. Its show to be my best, not just when investing, but also when Im with my family and friends anmake the most of every moment because things could be really different tomorrow. Finrkets teach you how to adapt, in an astonishing way, to the current truth, the present momenrefore, life as well.

you have a dream?y to make any of my dreams come true. Napoleon Hill said that whatever the mind can cont mind can also achieve. I have had some dreams that I have accomplished and others that I ha.

want to be an excellent friend, a good brother, a son to be proud of, a superb partner and a mher. In essence, I want to learn to be the best I can in all walks of life.

emember reading once that in each of us there is good and bad, happy and sad, faithfufaithful, generous and miserable. Whichever I nurture, I will be. I try to be the best me.

you think you will achieve this?ght for this every day. I try and if I succeed or not, its the others who will have to see it.

finish, is there anything else you would like to say to new investors?s, nothing is impossible. Being successful in financial markets isnt impossible. Its a beautifutake and it will make you a better person, not just in the world of investments. Fight, fight and

d on your journey, dont forget the people you have around you. Enjoy every moment you canm.ery moment is magic if we stop to contemplate. I wish you many magic moments in your lives of happiness and love.you want to, you can.

there any saying about the stock market that you will never forget?Seykota says to always follow the three golden rules:

cut the losses

cut the lossescut the losses.


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TOM DORSEY

m Dorsey is a living legend when it comes to Point & Figure charting, a method of techalysis founded by Charles Dow in the late 1800s. According to Tom Dorsey, the Point & Fthodology is the only proven objective form of analysis that is based on the fundamental la

pply and demand and not on superficial market trends.

omas J. Dorsey, is founder of Dorsey Wright & Associates, an investment advisory firm, ownsdaq, Inc.

is the author of nine books, including Thriving as a broker in the 21st Century, Point & Farting: The essential Application for Forecasting and Tom Dorsey Trading Tips. Point & Farting has been translated into German, Polish, two dialects of Chinese, Hindu, and Japanese.

rsey Wright & Associates offers a web-based technical research platform and the firm has ovelion in assets under advisement, ranging from mutual funds, structured products, to exchange tnds (ETFs). Tom Dorsey is an award-winning speaker, having taught the Point & F

thodology around the world. He is also a former World Record Holder in Power Lifting (50-5oup) and married with three children.


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w did you start in the markets? At what age?arted in the business after college and after 4 years in the Navy. I was 27 years old when I sta

errill Lynch, Pierce, Fenner & Smith. The 1970s decade was a tough one. One of the worst mclines happened in 1973-1974. Many brokers went out of business. All stock got hit and most ct much of what they had in the market. 1978 saw inflation go through the roof. I remember b

y dad an 18% treasury bill. Along with this inflation came a new term for the economic mere in, Stagflation. It was the debut of a company named Bridge Data Systems. It was expensivy for institutions, most brokers had no access to this type of system. In 1981, the pe

mputer made its first appearance but it was still not of much use to the average investor nony people have these newfangled things, investors were not using them.

you feel the markets have changed since you started and if yes, how?t really, apart from technology. Back when I was a broker at Merrill Lynch, Pierce, Fenn

mith, technology included a ticker tape, a pneumatic tube to send and receive the orders we enclients, a Bunker Ramo quote machine that was on a swivel used by four brokers and a new

u stood and read every half hour (as if the news would be of any help to you at all). The Bmo quote machine had a screen about 4 inches square and gave you high, low, close, and las

search reports from the home office were sent down by overnight courier, Federal Express icially begin operations until 1971. We communicated to our clients via mail or phone. Therinternet or online anything. Mutual funds were just beginning to be accepted by the major

uses but we primarily dealt in stocks and bonds. Fixed commissions were deregulated and Chwab entered the playing field in 1974 when the SEC allowed limited discounting. Naturallve been through the Dot Com craze, Technology craze, Cell phone craze. But nothing is newve flash trading, and that is like Day Trading in the 80s. There is virtually nothing new undn. Stocks go up and stocks go down. Bonds go up and bonds go down.

om your career in trading have you always been a winner or did you have bad periods?rly on, I had bad periods simply because I knew NOTHING. I later gravitated towards Optiont made more sense to me, to use options with stocks to adjust the risk reward characteristics de. I still believe that the covered write is the right strategy 68% of the time statisticallrsey, Wright & Associates we have moved to relative strength as the basis for our managle. It has worked well. We now have 4 ETFs, PDP, PIE, PIZ, DWAS, and two mutual fundsof ETFs, DWAFX, DWTFX. I am not just a trader; I am also a por tfolio manager where I ger-term view. I do have a trading account at DIF where I trade everything from commo

rrencies and CFDs.

so at DIF I have what is called, a Model Account which is a separate account designed trsey, Wright Models. I run my serious money in our models. have world stock models and many other ETF models that can be auto-run at DIF Broker. W

erating in the future with this account. I am the architect of the account, determining what mont to populate it with. Once I do this, our computer talks to their computer and when a chade, which always consists of a sell and a buy combined, DIF automatically executes it. I thent message on my phone and an email reporting the transaction. There is no question as to wde took place because the rules of engagement were designed by us. I could manage a total grtfolio from a year long cruise. I also have a Municipal Bond Portfolio and a Global rtfolio. I cover all the bases.


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hat did you have to do in order to become a winner? Was there anything in particular youchange?

mply learn an operating system I could embrace and understand, that was Point & Figure Che next step was to just listen to what the market was telling me. The management of our ETFparately Managed Accounts are all Rules Based. We have taken the human emotion totally equation. Many years ago we found that emotion was creeping into our decision making pro

was severely affecting performance. Once we realized this we immediately went to a rules ogram and it has been clear sailing since then.

hat markets do you trade and what markets have you traded in your career?ade all markets. I trade all commodity markets, all international markets. At Dorsey, Wriglow all countries that have an exchange. We are just as adept at Indonesia as we are at theerything we do in any country comes from the same basis of Point & Figure Analysis articular, Relative Strength. I also trade all bond markets through DIF. Mostly I take mycommendations from Paulo Pinto the COO of DIF who is very up on the world bond markets.

you think you will change markets in the future or believe you will keep trading the samence the wor ld is open to me, I will continue to trade the wor ld. However, there are some pitfs. The whole wor ld is not politically stable. I experienced a bad situation while I was investypt. I was investing in our Egyptian Stock Model. One day before the revolution, our sggested that cash had over taken the Egyptian Model. I immediately tried to sell but could noyone to answer the phone at the bank I was dealing with. My broker ultimately turned up in abia 7 days after the revolution. The lesson cost me some profits but was well worth the tuitl not invest directly in Egypt any more.

have no problem with revolutions, these happen somewhere in the wor ld every day. Itswering the phone at banks that is intolerable. I will use Exchange Traded Funds that trade

S. exchanges to invest in Egypt from now on even though our models outperform the ETFs. always a lesson to be learned when investing worldwide. You never know everything.

erestingly enough my best profits in 2007 came from the Russian spinoff of Georgia. I Gookerage firms in Georgia and came up with one in the capital city. The exchange was onlyee days a week and only traded six stocks. Bank of Georgia was one of them. So since I wan

vest in the country the best bet was Bank of Georgia. It ultimately was listed on the Lchange and provided a great profit. It was none too soon as a year or so later Russia inorgia. This is what makes it interesting to invest worldwide. My motto is The Wor ld Is Op

siness; never get stuck only investing in your own backyard.

hat is the methodology you use to trade? Are you active in your trading? Are you considhort term or long-term trader?m a position trader for lack of a better term. Most of what I do is rules based. We have laidthe rules that must be followed and in fact, its exactly what we would be doing by hand if wtime. There is no computer algorithm from MIT or any of this. Its the same thing we did byyears ago only we have taken the human emotion out of the equation. Relative str

mparisons are what we use for the management of our ETFs and Funds. For trading purposes

cus more on the individual issue but for portfolio management I use our models, which aomatically driven, Rules Based.


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hat would you say is your main characteristic as a trader? What defines you?hat defines me is simply the Point & Figure method of analysis and nothing else. I do not ything else to creep into my thought process. We are world class at this method and leave thothers. We are strictly defined by this method. I am also well versed in Options Strategy hveloped and managed an Options/Derivatives Strategy Department for a major brokerage S. for nine years. Options are part of thought process at all times. Although I am not an oder, I do use options to adjust risk reward characteristics of some of the positions I might ho run for myself a Covered Writing portfolio as neutral strategies are warranted 68% of thetistically.

hat would you say would be the most important characteristic a trader should have and wder to succeed in the markets?trader should have discipline, control of leverage, and no preconceived ideas. Most disastding happen when a trader over leverages a position. Above all settle on one methodologow it well. If you find it works for you, continue to move forward with it. Dont jump arounnt mix methods of analysis. It will only serve to confuse and you will never be able to learnur mistakes. This is what I call an Operating System that must be firmly put in your mind bu trade. No computer can operate without an operating system, like Windows 7. For me itsFigure Analysis.

n you explain what the rules are, if any, for your trading?general, our modelling system will push to the top of the places where I should be lookindes, whether they are asset classes, sectors, or individual commodities or stocks. Say, agricuoducts are the play. I can either try to select one or two of those to trade looking at the charn buy our commodity model and let it auto manage or I can buy an ETF that is made r iculture products. There are many ways to do this. The most important is to determine wh

ll do if things go right and what you will do if things go wrong. Then stick to the program. problem selling a position for a loss. My focus is on the portfolio value. Losses are a naturathe process.

w is a typical day? What do you do from the moment you wake up until you go to bed?e moment I wake up in the morning my mind goes to what has taken place in the marketsht. Each day for me is like waking up to Christmas morning as a child might view it. I am

th anticipation and expectation. I know this day will be different from yesterday. There wportunities for profits and opportunities to fine-tune what I already own. If the day is slow,

ensively. I read, in articles each day, the equivalent of a normal sized book. I never read at would not be cor roborated by my charts and in that a theme begins to be formed. If I rndamental article and the chart is negative, I defer to the chart no matter how compelling the fundamentals might be. I can be wiped out waiting for the fundamentals to play out. Like righe of the biggest themes in investing is the downward trend in oil production wor ldwide. Then in effect since the 1980s. But there appears to be a war breaking out in the Middle East ght present some long opportunities.

w many trades would you say you do a week and what is the ratio of good trades to

ades?all depends. I am not a trader as a business; I am an investment advisor, money manage


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earch provider to professionals. My investing is for long term, however whenever the chardel suggests a change, I make it, no matter how long I have held the position. My trad

nfined to DIF platform. Take, for instance, I am now long Feeder Cattle, Coffee, short Golng on ETF of Spain as a totally contrary play. I have a covered writing por tfolio . I am aazed when I watch that por tfolio generate profits on the short options as well as the long sto

ve seeing time premium evaporate and collect in cash in my account. My weeks vary on tradwould say average five a week with some weeks nothing.

you have an expectation of gains per trade in relation to your stop?e risk reward must always be a minimum two positive to one loss. Often it only requires ack in the stock to make this minimum but it must be adhered to. Generally buying on pull-bults in a good risk/reward relationship.

w much money do you put at risk in each trade, and is this part of your money managees?ften put half a million on any given trade. I might use CFDS and buy 1000 shares of Applede but at the same time in my covered writing portfolio I might own 1000 shares with in-the-mls sold against the position. One is nothing but a gamble and the other is a calculated trade leverage is controlled. One is adrenaline rush while the other is adrenaline reduction. I ac

ve watching the covered writes come home so to speak.

you use technical analysis or fundamental analysis? What do you look for in particulything?e strictly use Point & Figure Technical Analysis. This is all that is needed, as its simply a ld organized way to record the battle between supply and demand. In the end, a stock must reacint before its price changes. Fundamentals might be all right for long term but someone onc

We are all dead in the long run. News on stocks is unimportant, how the stock reacts to the n

that is important. Fundamental analysis is a game Wall Street plays to sell research and it wyone with a degree in Finance from a University only knows fundamental analysis. Buearch has nothing to do with whether the stock will rise or fall. In 2008 there were

ndamentally sound stocks that collapsed. There were no technically sound stocks that collal signals accumulated, trends were broken and relative strengths turned negative. It was allanyone who chose to watch.

you use more than one technique, are they related somehow?o not use anything but Point & Figure on a technical basis. I do feel there is only one more th

ocess that is valid in investing, and that is Statistics 101, or the normal distribution. This is options business was derived in 1900 in Paris, France.

you use historical data in order to take decisions?solutely, it helps to see how particular stocks reacted to particular news, events, or cycles. Bre important to pay attention to the here and now. When we create a model that is rules base

ed to back test with Point in Time testing to see how the strategy fares in all types of marketsquires going back about 25 years to get a picture of how the model will work.

king into consideration that there are cycles in the economy can we learn from the past?s, The Past is a Prologue.


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n you define what is to have a feeling of the markets?ving a feeling for the markets is nothing other than being around them for a long time. Iike walking around the same block time and again and ultimately you see things each timlk that you did not see before.

timately, you know that block pretty well. You know that Mrs. Kelly had a major party ricks Day and Mrs. Kwong has a major party on the Chinese New Year. You know the kide their bikes after school and that is generally around 4pm. Its the same with the markevelop a sixth sense for it. Not unlike the old tape readers. That was truly an art.

you believe experience can help predicting market moves?solutely, experience is the same as walking into a bar filled with bikers with tattoos, and Bikeblems on the back of their jacket. You intuitively know this is not a place you need to be to h

er. Trouble could easily be brewing in that bar.

e you a contrarian in the market or do you prefer to follow the crowd?m a contrarian which is why I am long Spain now. No one else in their r ight mind would buyt when the blood began running in the streets of Madrid I stepped up to buy and the chart suppIt has worked so far. But when a trend has been initiated, I always let the trend be my fri

ere were great trading profits to be made in Apple when in 2000 all the brilliant fundamalysts were writing about the death of Apple. All of a sudden, they came out with the iPod. Tre in early and probably out early. But when the trend started, it ran to $700. That is where thney is made, from $30 to $700 not $20 to $25. Bernard Baruch once said he was not interesbottom 20% or the top 20%, he was only interested capturing the 60% in the middle. He also

When you sell a stock make sure the person buying it from you also makes a profit.

n you tell what must happen in order for you to open a long position and do you use the rameters to open a short position?ng positions should have the market going in its favour, the sector in its favour and the stockpporting both. If the market is not supporting prices, long positions will have a difficult tist making money. Conversely, the same is true for short sales. I try to stack all the odds vour. I have to admit I sometimes shoot from the hip and in most cases that doesnt work, jusying the slot machines. You must remember this is the greatest casino mankind has ever creaa kick out of some friends who like to go to Las Vegas and risk a few thousand. Thats no

mpared to being long 10 contracts of Coffee for a trade; that gets your adrenaline flowing.

ver found Las Vegas that interesting other than the shows and the glitz. I like that.

hat should happen in order for you to close a long position and what must happen to clort position?mply stated, my stop must be hit. However, there are times I have found myself over leveragher words, I owned more contracts or stock than I really had an appetite for. When I wake up ddle of the night thinking about the position that is a sign I need to sell down to my sleepingmetimes its hard to overcome human nature and were all human.

it the same to trade long and short positions?nd that I have a temperament to be more long than short in stocks and in commodities, I don


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y bias. In stocks I am most comfortable when I am hedged with options. I have always had aling for covered writing. In selling calls, when I start with your money in my pocket I ha

vantage.

you pyramid your positions? Do you do it when they are winning positions or do you o with losing positions?o both. Although I hate putting good money after bad in a losing posi tion, Ill do it ll back provides a go od entry point. Ill just sell if a position turns technically bad. I

y probability of success is limited at that point. Again, I have no problem selling for ais the portfolio value Im interested in, not necessarily the individual position.Like cu must sometimes give up players to advance.

you consider markets have changed through the years, have you also changed your trale?r me its all the same. As much as we like to think things have changed, they havenefutable law of supply and demand still reigns supreme.

ould you say the markets are always right?s, the markets are always right. We might like to conjure up things to prove the market is not at you think it should do but with respect to the market what is, is.

hat would you say is the error you tend to repeat most often?nd to be impulsive at times. Not a good trait for a professional trader or investor but somet

ve to live with. We all have certain demons we have to overcome.

hen have you had more success trading and what would you say were the causes forccess?

e older I get the better I get. Its all about whiskers. When you are young, you want ithen you are older, you realize things take time. The older I get the less impulsive I am. Ader I get I find it less impor tant to trade a lot. I like position trading where I can put a positid ride it into the sunset when younger traders might have taken a profit and moved on. er leveraged is always the regret. I remember trading BIDU when it was $300. I often use Cd buy 1000 shares a trade. That is a $300,000 position. I wanted to catch it just right and o the sunset. Only it never happens. Invariably it wiggles the wrong way and the pain ge

gh and you close the position only to see it reverse and do what you hoped it would docided one day to cut this volatility monster down to size. I bought only 10 shares to prove a

myself. I forgot I had it and ended up making 100 points on the stock. Over leverage is likood pressure, its the silent killer for traders.

e you a believer in diversifying and what is the scale of your diversification?ke to diversify. This is why I construct por tfolios for investing purposes that are made up odels. The models will have five stocks each in them. This automatically diversifies me rathe

ying one stock, say to represent the Healthcare Industry. Or I buy a model that is made upFs which has over 100 stocks underlying the model. This is the future of investing. At wwwre is a model account platform.

hy do you think there are so many losers in the markets?


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vestors have a tendency to sell at bottoms and buy at tops. This is simply a basic human emhen the pain gets too high they sell, when the elation rises they want to buy. Most investorsver focused on addressing these problems and why should they. They have productive lives ctors, Lawyers, Plumbers and investing is foreign to them. Many treat it as a casino.

hen I was a stockbroker 35 years ago, I was often asked when a client called me: whats hot, w. I knew I had a trader on my hands. Today everyone has to take a risk tolerance test. Guess eryone comes in moderate risk that is until the market goes up and they become aggressive rket goes down and they become risk averse. Welcome to human nature.

you think a newcomer in the markets can have success?rtainly, once he has become a craftsman in some method he finds is best for his personalitectives. Its not unlike Billiards, Bowling, Chess, Checkers, Backgammon or any other games practice and dedication. Most people are better off finding someone who is a professios business that fits their profile. This is really a multilateral question. A book could be writs one question.

w long will someone need in order to be successful in the markets? Do you have any advicw investors?ch person goes at it at his own pace. I have seen some who grasp it rapidly. Its nomplicated. It is important to actually trade real money. Paper trading does nothing but createurage. Real money causes pain and this is instructive.

w do you merge your personal life with trading? Does trading have any effect on rsonal life?hink it does have an effect because you think of it all the time. There are so many variabnsider like War in the Middle East, shortages of commodities, elections, economic cause

ect and on and on. Its a chess match that never ends. I love it.

you have a dream? If yes, do you think you will fulfil this dream?s, my dream is to make it to 75 years old. Thats ten years from now. Then I will dream thake it to 85 never leaving this business.

ything else you would like to say? been a great ride.


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YASUJI YAMANAKA

suji Yamanaka, 52, born in Tokyo and of Japanese nationality, has been in the markets forn 30 years.

is now one of the most popular instructors of Forex in Japan, and is also famous for mvaluation programs for any kind of derivatives and for daily execution probability charts for rrency pairs. He trades his own money along with clients money, some of them being banks.

started his career at Bank of America, where he worked for 15 years in both Tokyo andrk, as Chief Trader then Manager of Proprietary Trading. He then spent 5 years at Nikko Citi

d Banking as Deputy General Manager of Treasury and the last 10 years as a private trader.


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w did you start in the markets? At what age?hen I joined Bank of America, I was assigned to the Forex department as a Forex dealer oeasury division. I was 22 years old.

you feel the markets have changed since you started? If yes, how?e have had an enormous evolution of technology and an increase of market participants, whiculted, in my view, in making the market more stable and with a narrow spread. When I sding at Bank of America in 1982, it was easy to drive the market with smaller amounts likllion or even 50 million dollars sometimes.

om your career in trading have you always been a winner or did you have bad periods?ad a very bad period with continual losses throughout the year, once in Bank of America. Wrked at the bank, my trading tickets (the amounts I was trading) were very big and sometiuld make huge losses (eg, more than $1 million in a week, which in those days were verounts). The reasons for those huge losses were lack of money management, and I canribute the reason to the fact that I was too young, and also because everybody in the market y position was too big for the market. That period was not only bad for trading it was also ba

y health condition. I started to develop an irregular heartbeat each time I became very stressed.ced to change if I wanted to continue, so, I changed my money management and immediatealth condition improved.

hat did you have to do in order to become a winner? Was there anything in particular youchange?I said, I had to apply better money management rules, stop averaging my positions and some

en step away from the market when I was feeling really down.

hat markets do you trade in and what markets have you traded in, in your career?have started trading Forex (both spot and forward), then bonds in Japan also known aspanese Government Bond), also interest rate swap. This is very interesting because I tradedtil 1996. In those days we had a good chance to trade JGB but then interest rates went toading conditions in bonds is really different depending on interest rate levels. Under low ines, the price changes are relatively narrower and it reduces the chance to make money forders.ing back to other instruments that I have traded, there are: Forex options, stocks, particulaerging markets and commodities, mainly metals and oil. Now, after all this, I trade only F

mmodities and the stock market, but mostly Forex.

you think you will change markets in the future or do you believe you will keep tradinme?, I believe I will be trading the same, mostly Forex, because I have a real passion for it. I starteer in trading in December 1982 as a cable (GBP) trader. So I can say that I have spent 30the Forex market and I really like it. There is a saying Once a dealer, always a dealer and fmeans to keep trading the Forex market.

hat is the methodology you use to trade? Are you active in your trading? Are you considhort term or long-term trader?

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Market Warriors