This is interview where each forex trader or stock trader can learn a lot.In his book named as Naked Trader, the author Robbie Burns allows the reader get into his life for one day to know how he became a successful trader. He lives in London and worked from home with the help of his laptop.As he worked from home, he did not bother about dressing before trading, from where he gave the name.
He has developed a trading plan in such an efficient manner that Robbie can easily spend few hours regularly reading papers, settling for a coffee in a café that he owned once and also have a sunbathe. When I took his interview, he closed a small positionin B Sky B to earn $1,200 gain, topped the pointin Dialight and noticed open postsin alternate networks and FTSE short.
How he does this?
Burns started working as a journalist. He did not like to work under a boss and made an escape plan. Robbie created several streams by which he could earn lots of income, including a distributor for the Telecom Plus and created a Buffy. Another stream of income was trading. He started to become serious in 1999. After two years, he left journalism and started working for himself. He was smart and intelligent. He found that trading is unstable, so he started a café for generating a cash flow.
Explain his naked trading plan?
Burn’s important plan is similar to the other popular private traders living in this world. It is developed on the idea of purchasing strong stocks that move up. It is created on the idea of purchasing powerful stocks-stocks that move up. He is very patient. He does not do day trading and is always prepared to hold the stocks for several months or years if they move in a right direction.
One of the important advantagesis that he does not sit in front of his computer the whole day. He has a flexibility to visit a gym and also goes to a coffee shop for a coffee. In the form of a scan of trading on the online site displays, Burns is very disciplined and talented at keeping the losses smaller than the gains. Another thing that plays a vital role in success is the capabilityto play dual sides of market by shorting indices and stocks.
The trading philosophy of Burn has been explained in the books written by him. Burns is an accessible and extremely clear writer. While reading his books, you will come across various tips and indicators that every traders should avoid.
Burn answered some of the questions asked by Ben Power of YTE.
• You have made an astonishing trading life, which permits you to trade effectively. Can you tell me how you came into the world of trading?
Answer: I had earned a lot of money before I began with Buffy, The Slayer. Also, I was creating a reasonable amount which together made me confident to leave all my jobs in 2001.
• I would like to know more about trading to earn a living, an aspiration of several traders. What do individuals need in relation to infrastructure, mainly start-up capital?
I think people who are fresher’s in the world of trading should consider the realistic target to be nearly 20 per cent profit on the capital in the initial year. I believe today’s traders are too casual and they believe that earning money through trading is really an easy task. This happens rarely
• You trade from your home-sometimes even naked! Can you explain theset up of trading in a detailed manner and also the technologies that you use?
Most of the people get dissatisfiedafter seeing myworking desk. They think that my desk will be filled with whizzy technologies and screens but it is not so. You will find a computer which is surrounded by teas, chocolate wrappers and a toast. You might be surprised to know that I even do not own a cell phone.
• Can you give some tips by which people can earn their living by earning huge profits from trading?
Make money from downside with the shorts. You can also utilize spread betting and contracts for dissimilarityand exchange traded money for that purpose.
• You have various streams for earning income like teaching, writing, books and many more. Would you suggest the future traders to develop other streams of income like you did?
It is really a must. The reason behind this is, if you do not do so you will get attracted to the bank gains too early. On the other hand, if oneearns some sort of income, which is enough for paying bills, one can become relaxed and allow the trades to breathe.
• One among the various barriers in trading is costs, brokerage fees, data sources, slippage and many more. Can you give sometips by which one can minimize the costs?
I personally feel that there is no need to spend a large amount of money. I had just paid for the level 2, real time costs and news feed. Combined, it does not cost over $500 per year.
• What are the things that attracted you towards the markets?
I was not good at placing bet on horses so I searched for an alternate choiceand invented the trading market. I think I found it really attractive at the time of dotcom boom.
• Can you explain your learning procedure a bit? Have you tried several strategies?
Yes and still I keep on learning them. The market adapts and changes so I need to keep on doing the same things. For instance, the market moves in a fast manner. I had Reuters terminal at free of cost with me when I worked so I got the knowledge by noticing the markets.
• Do you believe that the traders need a special talent for trading?
I think one needs to have a proper discipline. Some individuals struggle as they are unable to reduce the loser’s fat.
• Most of the full time traders do day trading, do you support them?
No. Most of the firms that I had visited recently say that the people who do day trading generally lose. There are just few who actually win.
• How would you like to explain your own trading style? Momentum Trading or Intermediate term trading.
I have shares for two years three months with an occasional holding longer than that. At the same time, I also do some type of short term trades by using the spread betting in particular. I earn money by these methods if the market goes down.
• How do you search for strong stocks?
The fifty two week breakouts are considered to be my favorite. But I always keep a noteon news and go through the reports of the company regularly and take a note of powerful stocks. Spread betters are used for overtrade which is not regarded to be good and you should not be cautious while using leverage and make sure that you do not use large number of them or else you could finishspending more than what you have earned.
• Several traders are too frightened while considering the purchase of stocks that hitsfifty two week highs. What will you say about it?
They are possibly hitting high as they are doing in a proper manner, so they can most often move further. If you get at the top position, you could prepare astop defeat and leaveif it began to move down.
• What are the screens that you would notice regularly?
I notice volume screens and the shares that moveup regularly.
• How do you handle the watch list of powerful stocks?
I hold on one list which can be described as a shortlist of the ones that I like really and want to make an entry on another. I also maintain a listingof “keep noticing” stocks for any type of action stocks.
• Can we discuss a bit about the fundamentals? When you notice at the reports of a company what are the things that you look for?
It’s quite simple. I love raising gains and mainly to rise a dividend. That indicates confidence. Alongwith reports, you should also look for a confident statement which plays an important role.
• Do you hate companies that have large numbers of debts?
Yes, I generally keep myself away from companies that have huge debt. One thing that I do not like is the company busting on me.
• Do you prefer using any type of special criteria, like for example, p/e ratios?
No. I do not like purchasing companies when the market cap is over fifteen times gain.
aYou said that you viewedthe charts but you never used them for exits and entries. When one looks ate the chart is there any special thing that has to be kept in mind like any kind of cost action- that marks the stock for attention?
I considered just a moving trend or for short, a progressively falling trend.
• When do you exactly decide to enter into trading?
I utilize “Level 2” to find the positions of the best market makers and how the several sellers and purchasers are present there.
• Just imagine that a stock hits a fresh fifty two week moreafter a powerful run up. I know youprefer the basics and it moves up on the purchaser list. Are you waiting for it to come downor just get into it?
I always try to calculate it, then check order book, which generally makes me decide that whether I should purchase or just sit. It is also dependent on the conditions of the standard market. I prefer waiting if I see the market tanking.
• Do you use breakouts or chart points for the entry purpose?
No, I just prefer using resistance and support.
• How to find the profit target?
I start by looking for nearly 20 per cent. When I reach there, I see at it again. If all things move in a proper way, I remain with it. If I do something wrong and if the share starts falling in a quick manner, they say “I am out”
• Just imagine you have purchased the stock whichstarts falling in an immediate manner. Which is the point where you admit that you are not right and sell out?
I admit in very quickly. I do not like to lose over ten per cent.
• Seeing at the past trades, you are really good at limiting loses, but riding the winners.
Yes, there are times when I hold to the winner for several years. Telecom Plus will be a perfect example which is brought at about 105p.
• From where did you purchase a conviction for holding for a long time period?
I could not see any type of question marks, so I kept adding and holding a dividend of near about six per cent.
• You also love to pyramid up: purchasing winners repeatedly. Where do you search for new purchasing points?
It is generally found during the moving up to another statement. If shares are running ahead of time, it is considered as a good indication.
• Can we notice at the example of a specific trade, Devro? When did you find it a possible purchase on the screen?
This was from a fifty two week breakout.
• Whatare the things that you like about the basics?
Rising dividends and profits makes the sausage casing. Most of the people purchase sausages even during a recession.
• If you find that a broader market is not so strong, but the stock acts in a strong manner and you prefer its basics, do you still purchase it or prefer waiting for the improvement of a market?
I would preferably wait for some moment. This will make some sense because in the falling market all the things can be easily marked.
• As far as risk management is concerned, how will one find that how much share to purchase?
I generally start with nearly $5000 and then purchase more as it rises. Generally, I do not have over $50,000 in a single stock.
• Do you use margin?
Yes, I do generally on the spread betting and CFDs. I always remain cautious and make sure that I do not overdo it.
• Your recent book is about spread betting. Could you please explain the advantages of utilizing the spread betting?
It is free from tax. The main advantage is to dobetting on things moving down, for making money during your bad times. I can also trade AIM stocks at free of cost. Or else I would liketo pay the tax on several gains.
• Is there any type of pitfalls?
Yes, there is. Spread betters are forced to overtrade, which is not proper and you should be cautiousabout not to using large number of leverage providers or else you will owe them more than you have purchased. According to law, they can utilize.
• What are the things that trigger an entry?
The things that are mainly responsible in triggering an entry are a repeated downtrend and place an order about the book sellers in force.
• Can you suggest any type of trading books?
Psychology is significant, so I love the book written by Jason Zweig. It examines why one makes decisions about trading and why you think it to besimple to prove them wrong.
• I believe you are a simple guy. Do you follow any special things to remain centered and balanced?
An important thing that you should always keep in mind is that do not consider money to be everything. I do not have any type of debt and have plenty of money in my bank. If one fine day I find that my bank balance is zero, I think I will remain ok. For clearing the head, I prefer swimming regularly.
• You have achieved success in a competitive field. To whom would you dedicate your success?
I preferto remain disciplined and calm, but make sure that I do not become greedy. I do not prefer adding money to a market.
• Finally, what are the things that can help the traders achieve success?
The most important thing is to avoid the rotten things so that you can achieve success in trading.