When, have you for the first time considered trading as something worth trying?
Well, it was in 1962. I’m an old guy.
Could you describe your first system?
By today’s standards it wasn’t much of a system. We didn’t have computers back then. It was more a strategy than a system. It was based on the market being oversold and in an uptrend as measured by the advanced decline line. That was the strategy that I developed somewhere in the 60s. I wasn’t a futures trader, that was for stocks.
Did you experience periods of hesitation when you wanted to leave trading?
Sure, I still do today. It’s not an easy business to be a successful trader. And there are always doubts and questions. It’s always frustrating to be a trader. Not an easy life.
Was there any memorable experience that determined you to trade further?
What encouraged me was that to most of the traders it looked like easy work. You didn’t have a job, you didn’t have a boss. When I grew up, my dad used to work in an oil refinery. It was a hard, dirty, stinky, sweaty work. I didn’t want to have to live like that. My dad always told me that you have to think with your head, learn to work with your head, your brains. Not with your back like he did. And this looked like an ideal thing. If it goes up, you make money. That sounded like a good deal.
Did you have any external support at this time, such as friends, family, a mentor or a book?
No, not really. Along the way I met a couple of people that gave me some insight into the market. One was Gale Haller. He was very kind, I spent maybe three days with him over a couple of years. Back then you wrote letters, so we exchanged a lot of letters and became friends. He was very inspirational and encouraging. He showed me that it was important to try to assist other people. There was another fellow, Bill Meehan. I paid Bill a lot of money. He came and worked for me, taught me what he knew. He was a member of the Board of Trade. He was very helpful. Other than that I didn’t have anybody to hold my hand. For the first ten years I was holding my own hand. Usually in prayer .
Did you keep any trading journals? Were they really helpful?
I didn’t back then, no. I do now. Wasn’t smart enough to figure that out then.
Did you have a high level of stress when you started?
Probably not, I was too young to understand what I was doing. When you’re young, you’ll do all sorts of stupid things. You drink Red Bull and jump off cliffs. I probably wouldn’t do that at my age now. I didn’t realise what I was getting into, so I didn’t feel as much stress as in the later points of my life. Plus, it was just me. Now, if I do something, there are people all over the world following me, so I have the stress of market and looking like a fool to all these people. It’s a double stress now.
How do you cope with stress today?
I drink a lot . I think you need to put things in perspective. Nobody can be right all the time. I can’t be right all the time, I’ve proven that. The acceptance that this is a very imperfect business and not overbetting, not betting beyond your emotional threshold.
Did you attend any trading seminars or training sessions?
What did you learn from the early phase that benefited you most?
One thing I learned is that most of the stuff that’s out there is junk. At least for me. Things like Fibonacci and Elliott wave, astrology and all these may work. But they didn’t work for me. I had to find something that was compatible with how I thought, how I acted and reacted. That was kind of a breakthrough when you figure out that this doesn’t work, that doesn’t work. It doesn’t work for anyone and for me it didn’t work. That was one thing. I think I was getting into a cadence of pace, I could almost feel back then what the market was doing, where it was going to go, I just sensed it. It’s kind of a unique quality. To learn to be in phase with the market, learning to use stoplosses. When I was young, it was written about me, Paul Tudor Jones called me “Kamikaze Cowboy”, because I bet so huge. I had big up moves and big down moves. I used to not care, I liked getting into a fight, I didn’t care if I lose, I just like to fight. I was pretty much trading the market that way, too. Just had no fear of it.
Your father was a refinery worker and you said that you were determined not to work there. What is the role of motivation or determination in your success?
I think both my mother and my father were very motivational. My mother definitely wanted her children to do things, whatever these things were. And my father made it really clear to us that we should go to college. He worked hard to help his family have a better life. His father helped him to have a better life. It was like he was saying “You’ve got to find a way to live and work that’s better than what I’m doing because my life sucks, my work sucks, it’s hard”. So, there was a lot of motivation from my family to get educated. And to be productive workers. Not to be sponges on society.
What was your first year trading like? Was it profitable?
I can’t even recall. Probably wasn’t profitable or not wildly profitable. I think I went for two or three years of success, failure, success, failure. If on a given day I was ahead, I was ahead. But a few months later I might be a failure again. It was very much like a yoyo.
Did you have a regular job? How did you reconcile trading with this job?
Yes, I did have a job. I did everything I could not to get fired . Because I was paying more attention to the markets than I was working. I have always worked, but didn’t have much of a life. As soon as I got home I would be working on the markets. Then I looked for a job that would give me more freedom to look at the markets more. In 1967 I was finally up and running and able to tell people what I was doing. And they wanted to know. So I started writing a little letter about what I was doing. One of my old college professors always said “Don’t give it away for free”. And I never knew what that meant until everybody wanted my writings. Then I realized what Maxwell said and I decided to give a scholarship in his honour to University of Oregon. This year it will be 10 scholarships in his name. So, I started charging for the newsletter and this was an up period in my life. That started my publishing career.
What books have had the biggest influence on you?
For just the markets, it would be “The Zurich Axioms”. If you go beyond that, the great works of the world, whether it’s the Bible – there are so many lessons about life and cycles in the Bible, books on philosophy. There are so many good market books that I don’t even know where to begin. Books on understanding myself, like my son’s book he has written. I wish I had this thirty or forty years ago. It’s called “The Mental Edge in Trading” by dr Jason Williams. My son is a psychiatrist and he interviewed professional winning traders to see what the personality types were and how they dealt with failure and success. I wish I know what was in that book a long time ago. I suppose “Transactional Analysis” by Eric Berne was a helpful book. There was also a series of books on self-awareness, but I can’t remember the author’s last name. I did a lot of zen Buddhism, zen monasteries in the mountains of California. But the basis of the whole attitude was acceptance of who you are and that it’s an imperfect life. You can’t be addicted to perfection because you’d be frustrated your entire life. So, just accept what’s there.
Which of your books would you recommend to a beginner?
For a stock trader, it would be the first book I ever wrote “Sure Thing Stock Investing”. Most of the things are still alive and working quite well. Then, you can go to another level. Just like in college, you can go to a graduate degree. In commodities I would begin with “How I Made One Million Dollars Trading Commodities Last Year”. In a way it’s inspirational. Here’s a young kid that was able to make a million dollars in a year and didn’t have much money to go with. There are also techniques in the book, but it’s inspirational, to get people interested in this business. My other books get more technical and less inspirational, so that might not mean as much to a beginner.
Taking into account your actual experience, do you have any suggestions for beginners?
Study money management.
Be humble. Because the markets will humble you. Repeatedly .