Posts Tagged ‘Book’

Christopher Weaver ‘4 Keys to Profitable Forex Trend Trading’ interview

Wednesday, February 8th, 2012

Forex trader Christopher Weaver talks about his new book ‘4 Keys to Profitable Forex Trend Trading’ with Trading Diary.

1. Who are you?

Christopher Weaver: forex trader and authorI have been around the trading scene for a while. Having never really worked for any large financial institutions, the majority of my trading has been private accounts. I spent a few years writing and delivering trading courses in London for a company that teaches and trains private retails clients how to trade the financial markets. I actually really enjoyed that experience although I haven’t done it for over a year now. I spend a lot of my time now in front of the trading screens and writing books with Harriman House which I really enjoy.

2. What is your new book ‘4 Keys to Profitable Forex Trend Trading’ about?

It’s about learning how to identify solid trends and then trade them profitably. It’s a very practical book and it has over 200 images of charts in it. I felt that it was important to have almost an overload of charts simply because technical analysis is a very “visual” experience. This book helps train the readers mind to instantly identify trading opportunities. It helps the trader develop an instinct for trend trading.

3. Why did you write this book?

I wanted to write a book that had definite and clear trading strategies laid out for the reader. I find a lot of books on Forex trading seem to shy away from doing this and it doesn’t make sense to me. People who read books on trading are normally looking for practical tools that they can apply and implement immediately. In this book “The 4 Keys to Profitable Forex Trend Trading” there are 8 different trend trading strategies that define the entry and exits specifically.

4. Who is your book aimed at?

The book is aimed at individuals who have a basic understanding of trading, for instance they know how to place a trade and understand the basics of a chart, and who want to focus their trading very specifically on trading with the trend and increase their profitability.

5. What in particular interests you about forex rather than other derivatives?

I have always loved the idea that the forex market is a market that is “made of money”. Plus, it is very liquid, and as far as I am concerned, liquidity is always a good thing. I also believe that the forex market provides opportunity for so many different types of trader. It doesn’t matter if you have a short, medium or long term trading style, there is normally something for you to trade.

6. Do you just use technical analysis for your forex trading or do you look at the fundamentals as well?

I believe that it is possible to trade successfully by using only technical analysis. I also believe that by introducing a small amount of fundamental analysis the trader can improve his results dramatically. The non-farm payroll figure that is released monthly in the U.S. is for me, a key fundamental piece of information that I focus on. If the figure is consistent with the current trend of the time frame that I am trading, I see that as an opportunity to potentially enter the market. If it is inconsistent with the trend of the chart that I am analyzing I tend to stay out of the market completely.

7. I often find that by the time I start trading on a trend, the trend is nearly over and reverses. What can I do to identify the trend earlier?

Yes, this is key. Traders, like to “see the trend” before they “trade the trend”. As you say however, by this time it may be too late as the price action is likely to be overextended and ready for a pullback. A basic way that I define a trend is by looking at the relationship of the 50 EMA to the 200 EMA. If the 50 EMA is above the 200 EMA, the trend is up, and if the 50 EMA is below the 200 EMA, the trend is down. The only problem with this is that once the cross of the moving averages takes place there is normally a pull back against the trend which happens. So, if the 50 EMA crosses down through the 200 EMA, I will wait for the price action to come back and test the 50 EMA before I start shorting and vice versa. This is just a general rule. In my book, there are a number of other techniques which I talk about that assist on determining the trend and also the timing of the entry.

8. You have spent extensive time trading forex. Do you have any particularly memorable trades (either good or bad!)?

It’s funny but the first thing that comes to mind is actually a trade that never happened. I got up early one morning at about 5am, which is little bit earlier than normal, because I wanted to see how the USD/CHF had traded overnight. I had been watching this pair closely as it was trending rather strongly and I didn’t want to miss any opportunities. As soon, as I opened my screens up I saw the setup I had been looking for, which was a bounce off of the intraday pivot level. So, I set a sell limit order directly at the price of the pivot. If the price action traded up to the pivot I would be triggered into a short position automatically. I was very excited about this trade as my target was four times that of my risk and so I was hoping this would work out as planned. After I placed my order I turned off my computer and started to get ready for a meeting that I had in London. 2 hours later on the train to London, I checked the price of the USD/CHF and it had already hit my target! The only problem was that the price action never made it up to my entry price – it missed it by one pip! I was therefore never filled on the trade and missed a perfect 4:1 reward to risk trade by just 1 pip. I was certainly disappointed to say the least.


James Sharpe ‘Foreign Exchange: The Complete Deal’ interview

Thursday, January 19th, 2012

James Sharpe has written a new book “Foreign Exchange: The Complete Deal,
A comprehensive guide to the theory and practice of the Forex market”. He talks to Trading Diary about the book and forex trading.

1. Who are you?

Foreign Exchange: The Complete Deal by James SharpeI have been involved in the financial markets since the late 1970s and since this time I have worked for five institutions that have spanned the globe. I have worked in the US and the Middle East where I was responsible for the region and Interbank/Central bank relationships. I have combined the positions of trader and foreign exchange sales but it is in the latter area that I have focused and where I have run a number of desks. I have dealt with practically every corporate sector, including central banks, multinationals and funds and most recently high net worth individuals.

2. What is your new book ‘Foreign Exchange: The Complete Deal’ about?

The book is about providing a clear and thorough explanation of the world of foreign exchange from a practical and theoretical point of view. I have also addressed the policy implications for governments as the management of exchange rates has become integral to economic performance and to the political landscape.

3. Why did you write this book?

I wrote this book on foreign exchange to shed light on a topic which is often sidelined and misunderstood and which also has a profound influence on our lives. I also wished to show that managing foreign exchange exposures is relatively simple once the associated jargon has been overcome. After reading this book the reader will have a good idea what moves the FX market and how to manage FX exposures.

I also wished to show to the general reader that the choice of exchange rate system is extremely important as it determines the process and impact of any economic adjustment. This point has become starkly in focus over the past year.

4. What are some of the pieces of advice that you offer in this book?

If you are thinking of trading make an honest assessment of yourself. Do you have the emotional inclination and resolve to trade? It is important to recognise that the subject matter is not simple; a great deal of expertise is required and it is mentally wearing and time consuming. Not many people actually make money.

For companies and fund managers currency exposure needs to be identified and managed.

5. You have 30 years of FX experience. Have the skill and techniques needed to be successful changed much over the years?

There have been enormous changes in the industry over the past 30 years. I joined with a degree in Economics and a Master of Finance, very rare at the time. Technology has made a huge impact as has the reduction in number of banks actually trading. The quality of traders has gradually improved although a lot of trading now is actually computer driven. That being said I believe the skills and techniques which I outline in the book are still as valid then as now.

6. Many people are reluctant to try FX due to its high volatility. Should they be worried about this?

Volatility is what makes FX so attractive for trading. You cannot trade door numbers.

7. What mistakes cause most people to lose money when trying FX?

It is not always a case of simple lack of ability. A great deal of trading can be learnt and in the book I devote some time on this in a ‘blueprint for trading’. There is though no guarantee for success. The major weakness of poor traders is lack of discipline, an inclination to wishful thinking and for private clients in particular, not devoting enough time to the task at hand.

8. Which currency pairs would you recommend for beginners?

I think beginners should choose liquid currencies and if possible those that they have some connection to. For UK clients GBP/USD, GBP/EUR and EUR/USD would be good starting points.

9. What other authors do you admire?

I admire J K Galbraith for the way he brings economics alive and Sir Roy Harrod and F Hayek for their quiet brilliance.


Maike Currie ‘The Search for Income’ interview

Tuesday, December 13th, 2011

Maike Currie author of The Search for Income talks to www.tradingdiary.co.uk about investing and how to generate more income from your money.

Who are you?

Maike Currie authorI am a financial journalist covering all aspects of personal finance from investing to pensions and tax issues. In short: I write about income for a living. I have worked as a reporter and editor across the Financial Times Group for a number of years – currently I am deputy personal finance editor of Investors Chronicle, one of the oldest magazines in the world, having provided private investors with investment advice since 1860.

What is your new book ‘The Search for Income’ about?

The book is about how to use the financial assets and capital which you have to build an investment portfolio, in line with your risk appetite, with the aim of generating income to supplement your personal needs.

Why did you write this book?

Since the onslaught of the credit crunch, interest rates in much of the developed world have been cut to historical lows and remained at these paltry levels for almost three years. While this is great news for those on a mortgage, savers and investors leaving their money in the bank are receiving little in the form of a return.
Investors today have work much harder to seek out alternative income generating investments as the traditional channels such as bank savings accounts can no longer be relied upon to produce an adequate income. Income investing in the 21st century is not more important than it was in the past but, as the situation since the financial crisis has shown, more thought and planning is now required by investors to secure the income they desire.

What kind of readers would benefit from your book?

Anyone looking to earn an investment income whether a knowledgeable investor or a novice at the investing game. Readers may range from retirees looking for ways to supplement their pensions, parents who want to generate an income stream to fund their child’s education or another family need to individuals seeking to draw an income from their accumulated wealth whether this be to cover basic living costs, a period of redundancy or illness or to improve their overall standard of living.

What are some of the pieces of advice that you offer?

The merits of drip-feeding money into the market, the power of compounding, the role of different investment vehicles in an income portfolio, how to effectively draw income from a portfolio of aggregated investments, and more. Broadly speaking the book delves into the concepts, vehicles and strategies that can be utilised to earn an income from investing. It is about where to find income, how to grow income and of course, once you have income, how to make sure you keep hold of it.

Where are good places to search for income?

Investment Trusts – these vehicles have an advantage in income terms over open-ended funds in the form of a revenue reserve. This enables them to hold back some of their income in reserve during good times which can then be paid out to maintain income levels when markets are struggling.
Listed infrastructure funds are also attractive. Given the long-term nature of the underlying contracts with the public sector the dividends (income payments) from these vehicles look sustainable. Dividends are also fully covered by cash-flows and the majority are index-linked providing inflation protection. This is a good alternative investment as it shares a low correlation to other assets and is not economically sensitive.

There is a lot of economic turmoil right now. Is this a good time for people to invest?

Absolutely – volatility creates opportunities – and with investors running scared many investments, most notably equities, are cheap. As Warren Buffet (arguably the greatest investor of our time) put it: “Be fearful when others are greedy and greedy when others are fearful.” History also shows that in periods of economic weakness and associated equity market volatility, companies that offer a high dividend yield perform well relative to the wider market. Now is a good time to focus on higher-yielding stocks but remember that high yield can be misleading so good stock selection is critical.

Have you always been good with money?

No. Like most people I had an overdrawn credit card and lived beyond my means. But working as a personal finance journalist I have realised the merits of making your money work harder for you. I have since cut up the credit card, live within my means and am a keen investor.

What do you invest in?

A mixture of shares, property, gold and infrastructure all of which I keep safely wrapped within an ISA to avoid my hard-earned money ending up in the taxman’s coffers. I also regularly top-up my pension. Given issues such as longevity my portfolio is definitely higher risk but as a long term investor I believe there is enough time to ride out the ebbs and flows of the markets.

What other authors do you admire?

Ken Fisher, Jim Slater, currently enjoying fund manager, Gervais William’s new book Slow Finance.


Christopher Grafton ‘Mastering Hurst Cycle Analysis’ interview

Sunday, December 4th, 2011

Christopher Grafton talks about his new book Mastering Hurst Cycle Analysis with www.tradingdiary.co.uk.

Who are you?

Christopher Grafton authorI have worked on the Japanese equity sales desks at a couple of different investment banks, both in London and Tokyo. I was also an analyst and a trader at a small cap value hedge fund based in London. My connection with the Japanese stock market is that I lived in Japan for over 12 years and speak the language, but I have also been involved in global special situations and risk arbitrage. I am a technical analyst by training and hold the Market Technicians Association’s CMT designation. Next year I also expect to have the Master of Financial Technical Analysis (MFTA) designation.

My current project is running an FSA authorised market analysis service which is due to launch in January 2012 at www.vectisma.com . This is aimed at institutional investors and again looks primarily at the Japanese market, although there is enough Asian read across and global macro for it to also appeal to a wider audience. In addition, I am an active programmer and most recently built a grey box trading system for a major US hedge fund. This has already had a strong impact on the fund’s performance and has enabled them to significantly increase their AUM.

What is your new book ‘Mastering Hurst Cycle Analysis’ about?

Mastering Hurst Cycle analysis is effectively a manual on how to perform this particular style of technical analysis. The basic premise of the book is that cycles exist in freely traded financial markets and that these cycles share the same properties as those found in nature. As such, early on the book I explain the physical properties of all cycles and then carry these principals over to the markets. That there are cycles in market data is nothing new, but Hurst’s system allows us to identify them and forecast future price action.

The book is fairly involved and the methodology might seem difficult at first, but once you get the hang of it, it opens your eyes to a whole new way of viewing the markets. More to the point, an experienced Hurst analyst can achieve spectacular accuracy. So I would say that the book, in a way, is all about drawing back the curtain on the underlying mechanics of price action in the market.

Why did Hurst’s original system need updating?

Hurst was an aeronautical engineer by profession and sought to apply a rigorous mathematical approach to market analysis. He put together a course for a limited audience in the 1970s, but back then of course PCs and technical trading software were unavailable. As such the original work is more or less manual and paper based. I think very few traders and analysts today would be willing to go through an analysis in the way Hurst prescribed. Additionally, the original material is quite dense and abstruse and as such I think only a few dedicated souls would be prepared to approach the subject. What I have tried to do is bring the material into the modern idiom, make it current and of course provide the code required to perform analysis on a PC.

Why did you write this book?

I have long thought that traditional technical analysis has limitations. It can often be quite subjective and rules are often scant. What this means is that results can be pretty mixed. Before I studied Hurst, I was a keen student of Elliott Wave theory. What I like about Elliott Wave is that there are rules and guidelines but more importantly there is structure and context. Hurst cycle analysis shares the same concept of market structure and it has well defined rules. This takes a lot of the guess work out of analysis, but of course it requires experience to get results. I wrote this book not only to help people see the market in cyclic terms but also to be able to master the techniques of cycle analysis.

Who is your book aimed at?

Primarily technical analysts who are looking for superior results and are prepared to put in the extra work. Anyone looking for quick superficial answers, for example those who are drawn to statements like “ the 200 day moving average has just broken” or ”RSI is diverging with price” and so on, probably will not be the target market. To my way of thinking, someone who has mastered Elliott Wave for example and wants an add on would be ideal.

Your book includes code for trading indicators. How will these indicators help the reader?

They will help, because you will be able to run the code and put together a full analysis in about 30 minutes. Put it this way, if you do not use the code, you will need a lot of chart paper, a lot of pencils and a lot of patience.

Which indicators do you find most useful when trading?

I like to try to have a very good sense of where price is in the overall structure before I start using indicators. When I think I know where I am, usually through a combination of Hurst and Elliott, I use three indicators. I am a big fan of RSI and use a lot of advanced techniques, negative and positive reversals, hidden signals, RSI derivative and so on. I have also started getting some good results with one of Gann’s original ideas, the Profit Float Indicator, whereby volume is compared to the number of shares available to trade. I also use a proprietary indicator which is a fairly involved combination of smoothed short RSI, Williams%R and Stochastics, which does a great job of calling turns.

What in particular is it that attracts you to Japanese equities?

Nothing in particular other than I am familiar with the market, what drives it, the companies and how they stand in relation to their global and regional peers and supply chain. I am just as happy looking at commodities, currencies and other global equities.

What other authors do you admire?

I like Robert Prechter very much, he is an original thinker and breaks a lot of new ground. I think Jeremy Du Plessis’s work on Point and Figure work is very clear. Thomas Stridsman has written a very good book on systems testing. Tony Plummer is always worth reading as is John Ehlers. I would say my favourite books are those that get to the point and don’t take 120 pages rehashing the basics of technical analysis.


Glenn Martin ‘How to Value Shares and Outperform the Market’ interview

Friday, November 4th, 2011

Glenn Martin, author of the new book ‘How to Value Shares and Outperform the Market’ talks to Trading Diary about investing in the FTSE 100.

1. Who are you?

Glenn Martin author I spent my employed career of 34 years working in Financial Services. The latter part of my career was in Investment Banking, where I was Chief Information Officer for several investment banks.

I have always been a private investor in equities. In 1994 I developed my own system for valuing the FTSE100 and individual UK shares. I was inspired to do this by studying the famous Black-Scholes system for valuing equity options (I was Chief Operating Officer for an equity derivatives house at the time). The Black-Scholes system is complex but entirely logical. I thought a similar logical approach could be used for valuing the underlying cash equities.

I retired from my last employed position (JP Morgan Cazenove CIO) in 2005. As the valuations from my system had repeatedly proved to be correct (e.g. it exposed the dot.com boom to be a bubble ready to pop), I set up ShareMaestro Limited to package and market the system (www.sharemaestro.co.uk). The system has received very positive reviews in the main financial journals (e.g. Investors Chronicle, Daily Telegraph, Shares magazine). ShareMaestro valuations are being used in the IC roadshows which are being held this week.

I am also the Chairman of my local tennis club, which is another limited company and effectively another business, as we have to recruit enough members to cover our costs.

2. What is your new book ‘How to Value Shares and Outperform the Market’ about?

The book is about how to use my value-investing systems and strategies to achieve successful long-term investment in UK equities. It explains how private investors can manage their own equity funds and avoid the huge destruction of value which the fees of commercial fund management will bring.

At the heart of the book are instructions on how to build two spreadsheets for valuing the FTSE100 and individual UK shares. These systems are based on the ShareMaestro software. The book then provides strategies for using the systems together with the detailed long-term (27 year) track records. For example the book shows how a 20-year old could enjoy a pension 8 times larger through using these strategies than he could get from the median-performing commercial UK equity fund/annuity approach.

Finally, as I want this book to be a one-stop shop for UK equity investors, I have included all the practical information needed to manage your own UKequity fund (e.g. best service-providers, tax breaks, risk controls etc.)

3. Why did you write this book?

I was asked to write this book by Harriman House after they had read an article which I wrote for the Investors Chronicle.

I decided to write about how private investors can manage their own UK equity funds as I strongly believe that they should. My father was a great believer in unit trusts and I inherited quite a few from him. I experienced first hand the dismal performance which most of these commercial funds deliver (the median real return of commercial UK equity funds over the last 10 years has been just 1.2%).

4. Can you tell us a bit about your system for investing in the FTSE 100?

In simplified form, the system calculates the current value of the FTSE100 in 7 steps. It:

  1. Projects the value of the FTSE100 dividend in 5 years time by applying a growth factor to the current dividend.
  2. Calculates the projected FTSE100 dividend yield in 5 years time by reference to the market’s expectations of inflation in 5 years time.
  3. Projects the FTSE100 price in 5 years time from 1 and 2.
  4. Adds the value of reinvested dividends over the 5 years to project a total investment value.
  5. Reduces this investment value by the Risk Premium (to compensate for the greater risk of holding equities than cash.
  6. Discounts 5 for 5 years back to today’s value by using the gross redemption yield for 5-year gilts.
  7. Expresses this current FTSE100 value as a percentage of the current market price. Over 100% is good value, under 100% is poor value. The greater the gap above or below 100%, the greater the extent of over or under-pricing of the market price.

5. What skills do you need to successfully invest in FTSE 100 companies?

  1. Basic numeracy.
  2. Common sense.
  3. Inquisitiveness as to how companies generate profits. If you like Dragon’s Den, this is a good sign.
  4. Emotional detachment –the ability to ditch shares when they become poor value, even if the price is less than you paid.
  5. Discipline to stick to a preferred strategy.

6. With the current Eurozone crisis (November 2011), is now a good time to buy FTSE 100 shares?

The most critical factor in my valuation system is the assumed rate of dividend growth, which heavily depends on earnings growth. From a long-term perspective many FTSE100 share prices offer very good value. However, if the Euro collapses, earnings and dividend growth are likely to be severely impacted, thereby changing the values. With my system, you can easily stress test to see the impact of your worst case scenario on any current share valuation.

7. What is the ShareMaestro software?

The ShareMaestro software includes FTSE100 and share valuation systems similar to the one included in the book. As the software is packaged, it includes a lot of added value features such as indexed databases for the valuations, help buttons on each input and results field etc. Most importantly ShareMaestro subscribers can import a data file which we produce in association with ShareScope. The enables valuations of all the shares in the FTSE100 (and of the FTSE100 itself) to be produced in a matter of seconds. The facility to export bulk valuation runs to Excel means, for example, that all the shares can be ranked from highest to lowest valuation (or vice-versa). More information is available from our website www.sharemaestro.co.uk.

8. Apart from the FTSE 100 what else do you invest in?

Apart from the FTSE100, I invest in:

  • The FTSE250.
  • Individual UK shares.
  • A smaller companies fund (smaller companies have the greatest potential for long-term growth and the smaller companies funds have had the best returns of UK commercial funds over the last decade). To avoid the high fees, I would prefer to invest in a low-cost UK smaller companies ETF but one does not exist!
  • Fixed-interest cash deposits (not gilts, which are due for a crash when interest rates rise).

Wherever possible, I hold my investments in tax-free wrappers (ISAs and a SIPP for my money-purchase pensions). Where not, I use the tax-saving measures which I describe in my book.

9. In this time of economic uncertainty what should people be doing to improve their finances?

Employ a three step plan:

  1. Reduce your annual living costs. I wrote a book in 1992, the Personal Prosperity Plan, about how you can do this. Now sites such as moneysavingexpert.com give all the information you need.
  2. Determine according to your personal circumstances how much money you should set aside for an emergency fund. I would opt for 2 years of living expenses. Put this money in easy-access cash deposits, finding the best rates from moneyfacts.co.uk.
  3. When you have got your emergency fund to the size you need, use the strategies in How to Value… to maximise the value of your long-term savings. If you are risk averse, stick to the medium-risk FTSE100/cash strategy.

10. What other authors do you admire?

Some of the investment books which I like are:

Smarter Stock Picking (David Stevenson). This features a section on ShareMaestro.

Simple but not Easy (Richard Oldfield). Full of common sense and has a great chapter demolishing the myth of hedge funds.

The Naked Trader and The Naked Trader’s guide to Spread-betting (Robbie Burns). Both very readable and very shrewd.

I am about to read The Long and the Short of It by John Kay. I think I will enjoy this as, like me, Kay has highlights the high costs of investing through commercial funds.

Glenn Martin’s book ‘How to Value Shares and Outperform the Market’ is available now on Amazon.


Scott Ford ‘Financial Jiu-Jitsu’ interview

Monday, August 22nd, 2011

This is the Trading Diary interview with Scott Ford, author of Financial Jiu-Jitsu: A Fighter’s Guide to Conquering Your Finances.

1. Who are you?

Scott Ford - author I am the president and founder of Cornerstone Wealth Management Group where I provide my clients with proactive investment and wealth management advice based upon my trademarked system Way2Wealth. I was recently named one of “20 Rising Stars of Wealth Management” by Private Asset Management Magazine. I live in Hagerstown Maryland with my wife Angie and children Lakin and Jacob. I study Brazilian Jiu-Jitsu at Clinch Academy in Maryland.

2. What is your new book about?

Financial Jiu-Jitsu: A Fighter’s Guide to Conquering Your Finances is about going back to basics and executing the sound financial principles that allow you to consistently build wealth and master your finances, no matter what the market throws at you. So many smart, intelligent people fail to build the wealth they really want because they neglect some of the key foundational elements to create financial freedom. As with the sport of Jiu-Jitsu, it is by learning to protect what we have and to master certain fundamentals that we can build a lasting financial foundation.

3. Why is your book called Financial Jiu-Jitsu?

Mastering your finances is a lot like mastering a martial art. It has nothing to do with perfecting technically challenging moves, rather mastery is as simple as performing a handful of basic moves thousands of times. What are some basic moves of money management?

  • Establishing an emergency fund
  • Maintaining a budget
  • Setting aside money for education and retirement

Financial Jiu-Jitsu teaches you how to use the guiding principles of finance to build a solid financial foundation that can then be leveraged to help you achieve your long-term financial goals, while building lasting wealth for you and your family.

4. There are a lot of finance books out there, why did you decide to write one? Why should I buy yours?

Financial Jiu-Jitsu is based on taking care of the basics first, using straight-forward, easy-to-understand principles and strategies as a platform and springboard to future success. It acknowledges that not everyone has the same financial goals and that everyone’s financial plan will adapt and evolve over time, but its basic principles are principles that everyone can understand and apply. In this troublesome economy, I feel like it’s more important than ever for people to feel like they have control over their financial situation. My goal with this book was to show that you don’t have to be a financial expert to be financially successful. I use easy-to-understand language and exercises so that anyone can take these principles and apply them to their lives.

5. What simple steps do people need to take to master their finances?

  • Prepare to Win: Paying yourself first, maintaining a cash safety net, managing credit wisely, and never procrastinating.
  • Balance and Base: Determining your specific financial goals, and developing a vision for your life.
  • Closing the Gap: Overcoming your fear of the unknown by creating a personal balance sheet and using it to analyze your current situation.
  • The Power of Respect: Choosing and working with a financial advisor.
  • Timing: Taking advantage of tax-deferred investments, maxing out 401(k) contributions, and contributing to IRAs.
  • Gain Control: The basics of an estate plan, living trust, pourover will, and power of attorney.
  • Position Before Submission: Protecting yourself with insurance
  • Attitude: Planning for your retirement

6. In your book, you mention that it is possible to build real wealth regardless of what the market throws at you. Given today’s volatile market, can you explain how that works?

I believe that there are seasons to investing just like there are seasons in nature. Most investors and professionals helping investors are applying a spring and summer strategy to a fall and winter season which isn’t working. My company has tailored its investment strategies to meet the needs of the investment season. During the spring and summer season we can use a sailing strategy. A modified buy-and-hold approach makes sense and we can take advantage of the bull market and not only enjoy the upswing, but also work hard to beat the markets. A rowing strategy is needed for the fall and winter seasons. The goal is to preserve capital and then make investments that take advantage of what opportunities do exist even during a bear market. Seasonal investing is based on a relatively simple premise: When the sun is shining almost anyone can make hay. When winter comes…it’s not so easy.

7. In Chapter One, you talk about the 9 guiding principles of financial success. Can you say more about these principles and why they’re so important to building wealth?

Scott Ford - authorGive back: How do you succeed if you give away what you hope to accumulate? I believe it’s impossible to get what you are not willing to give. Some people see giving back as a form of tithing. Spirituality is an important part of my life and I tithe regularly, you may also, but even if you don’t relate giving back in spiritual or religious terms, you should plan to give back in a way that is meaningful to you. By giving back you also gain and you make the world a little better place and feel good about it. Maybe what you can give is money, maybe its knowledge or time. Whatever it is, I guarantee you will get back more in return, if not materially, then certainly in terms of knowledge and self-satisfaction.

Pay Yourself First: Everyone makes enough money to be able to save, even if it’s a few dollars a week. Saving money doesn’t require setting up and living by a budget. No matter how much money you make, over time you’ll find a way to spend it. Instead of budgeting, get started by taking control and paying yourself first before you pay your mortgage, your rent your car insurance. Pick a number, (in my opinion you should pay yourself 10% of your gross but feel free to choose what works for you). If you pay yourself first, you will adjust your spending accordingly.

Automate: The easiest things to do are the ones you don’t have to think about doing. The easiest choices are the ones you don’t have to think about making. Automate the process of saving. Make the choice, weekly or monthly, but set up a system where paying yourself is automatic. A draft from checking into a savings account, money deducted from a paycheck for deposit into a 401(k). With electronic banking and web-based financial services – it’s simpler than ever.

Maintain a Cash Safety Net: Most financial experts feel you should maintain an emergency fund to cover true emergencies (losing a job, unexpected medical expenses, etc.). I agree, not just because an emergency fund makes good financial sense, but because it gives you peace of mind. Instead of worrying about things that might go wrong, prepare for the possibility that things might go wrong. I think three months of expenses is a great goal, but it may be a bit unrealistic for most people. I suggest you take a good look at your expenses and see exactly what you would HAVE to spend in an emergency and come up with an emergency fund number that’s right for you. Then don’t use your emergency fund unless it’s truly an emergency and if it is, replenish it as soon as possible.

Manage Credit Wisely: We all have it. We all use it. We all secretly hate it. Credit is not a necessary evil, credit is actually an incredibly useful financial tool if managed wisely. The key is to ensure that the credit you use fits within your overall financial plan and helps you build wealth. Credit should not be something you fall back on because you want to; credit should be a financial tool employed as the result of an informed and intelligent financial decision.

Get Time on Your Side: Time is arguably the most powerful component of any investing plan – and often the most overlooked. Understand the effect of time and compounding. It’s never too late to take control and make time work for you. Every wealth-building and investment strategy that makes up the Way2Wealth is based on harnessing the power of time and compounding. Think of time as an opportunity, not as a regret and you’ll succeed.

Never Procrastinate: Waiting is the worst approach you can take in terms of building wealth. Procrastinating is the polar opposite of getting time on your side. Time is only on your side when you take action and let time work its magic. Which is worse the pain of discipline or the pain of regret? I’ll take discipline any day. Never look back and say “I wish.” Look forward and say “I will.”

Make Reality Your Perception: Most people say “Perception is Reality.” In many cases that phrasing is true, but in financial terms perception often is not reality. On a daily basis you can get overwhelmed by all the “experts” spouting their financial advice. Most are loud, most are certain, most are wrong. If they weren’t wrong, they would all be rich and we would too! The key is to know reality when you see it and to make decisions based on accurate information and accurate advice. That’s what smart investors do – and over time smart investors tend to become wealthy investors.

Follow a Simple and Comprehensive Strategy: Many people in the financial industry make building wealth and achieving financial freedom seem incredibly difficult when in fact, it really isn’t. The key is to follow a simple strategy that takes into account all aspects of your personal and financial life. Not matter how much money you have, the basic principles are the same: Use strategies that seek to minimize risk, maximize return, and build a smart plan that helps you pursue your individual goals. That’s it. Simple. Comprehensive. Easy to follow.

8. What is True Wealth and how does it relate to reaching our financial goals?

True Wealth is made up of all the things money can’t buy and death cannot take away. By figuring out what True Wealth means to you, you’ll also determine your goals and start to build a blueprint for your own simple, comprehensive financial strategy. Then you can figure out how to get where you want to go, but first you must determine where you want your journey to take you.

9. Many financial experts preach about the importance of budgets, but you say to forget about budgets. Tell us more about budgeting and why it may not be the best use of your time in order to reach your financial goals?

I’m not a big budgeting guy. Sure, my wife and I know our monthly expenses. We know what we spend, know what we save, know what we put aside for a rainy day…but we don’t live by a budget. We spend our money on the things we feel are important, and we save money in order to build our vision for our family and to ensure that we leave the legacy we want to leave. If you want to create a budget and feel like creating and following one will help you, then feel free. Everyone has individual strengths and weaknesses and everyone uses different tools to help them succeed. My point is, that budgets don’t work for everyone. If you don’t want to create a budget, put your effort in other activities instead.

10. What is the Family Benchmark and why is it so important to know in order to create a strong financial foundation?

Your Family Benchmark is not an amount of savings per month. Your Family Benchmark is not what seems like an impossibly high savings target. Your Family Benchmark is the rate of return you need to achieve to reach your goals. You may not always be able to control how much you bring home. You may not always be able to control how much you save. But if you stay focused and get the right people in your corner, you can over time enjoy a fair amount of control over your rate of return. Your Family Benchmark is your “required” rate of return. Not a dollar amount, not an end goal, but what you need to earn on your investments to reach your goals. Focusing on your Family Benchmark makes it easier to adapt to a changing environment, because your Family Benchmark can naturally be more flexible than a fixed rate of pay or a fixed amount of annual savings.

11. Can you share a few of the common elements that are part of a sound investment strategy?

Build an emergency fund. Determine the size of your emergency fund by really evaluating your expenses. What could be cut in an emergency and what is truly a necessity?

Own your own home. Even in down markets, real estate tends to be a good long-term investment. Understand the tax benefits of owning your home.
Take advantage of tax deferred investments. Understand the basics of a 401(k), the tax advantages and “free money” due to employer matching.

Max out 401(k) Match Contributions. Don’t pass up “free money”. If you can’t max out today take steps to do so as soon as possible by putting a pay increase towards your contribution or cutting monthly expenses.

Contribute to Traditional and Roth IRAs. Understand the advantages and disadvantages of both, compare your options and go with the options that provides the best combination of fees and services.

Determine how to invest your funds: Understand the differences between Stock mutual funds, Bond mutual funds, Stable value accounts, Money market accounts, and endless combinations of the choices above. Spread your investments across different funds to try to maximize your returns and hit your Family Benchmark while only taking on the amount of risk you wish to face.

Diversify into Other Investments: If you are fully funding a 401(k), taking advantage of traditional and Roth IRAs and have more money to invest, make sure those funds work just as hard for you. No matter what, start investing today.

12. How does the Jiu-Jitsu principle of “position before submission” apply to building wealth?

The phrase “position before submission” carries different meanings at different levels of the sport. Like investing, simple principles can become complex; so can the idea of position before submission. For beginners, it is based on protection and security. Great teachers make sure that the beginners focus on the basics. Position for submission, in financial terms, is a lot like insurance. Insurance helps reduce or eliminate some of my concerns or worries about unpredictable or unexpected events.

You can find out more about Scott on his blog at www.scottdford.com. Financial Jiu-Jitsu is available now.


Geraint Anderson ‘Just Business’ interview

Friday, June 17th, 2011

We last interviewed Geraint Anderson in 2010, we caught up with him to find out what he’s been up to since.

What is this new book about?

Geraint Anderson City Boy suitIt’s about a mid-30’s stockbroker who’s doing too much coke and becomes convinced he’s going to get sacked just before bonus time (I don’t know where I get my inspiration from!) He breaks into his boss’ computer to find out if his fears are correct and uncovers a multi-million pound conspiracy. He and his on-off girlfriend have to go on the run abroad after he’s framed for a murder. It’s a humor-filled thriller with enough sex, drugs and rock and roll to keep most people happy! It should be a rip-roaring holiday read.

How much of this book is based on your real experiences?

Geraint Anderson City Boy suitThe central character Steve Jones is a good-looking, charismatic man – men want to be him, women want to be with him … but that’s where the similarity ends! All my experiences in the City are funneled into the book but I never got chased by gun-toting Colombian hit men.

Will you be continuing the adventures of Steve Jones in a future book?

Yep, I’m working on the third one which will see Steve take revenge ….

Other than writing this book what have you been doing since we last interviewed you in June 2010?

I got married, went on a three month honeymoon in SE Asia, moved to a cottage in Wales and am about to have my first baby … not much apart from that.

Do you still take an interest in the world of banking and finance?

Absolutely. I still do the odd bit of TV, radio and write the occasional article about the City so I make sure I keep in touch.

Do you ever wish you could go back into that life again?

Never – life is so much better now. I’m free, doing what I want to do, learning to surf and living a healthier existence. The only things I sometimes miss is the routine that a job gives you, the camaraderie and the regular boozy Michelin-starred meals courtesy of my bank’s shareholders!

Has the banking world changed much since the crash?

It’s not as much fun now … summer/Xmas parties are sombre affairs, expense accounts are minuscule, people are worried about their jobs, bonuses are down, everyone’s being professional and firms are even more bureaucratic. Bubbles are much more fun … I preferred it back in my day!

What do you think will be the cause of the next big crash?

Israel will attack Iran’s nuclear facilities, the Middle East will explode and the price of oil will hit $200 / barrel and we’ll have a serious recession … and if you believe that you’ll believe anything.

What is next for you?

Becoming a father, improving my rubbish surfing and writing new books. That should keep me busy for the next 25 years!

You can buy Just Business by Geraint Anderson from Amazon.

Book
Kindle Edition


Guy Thomas ‘Free Capital’ interview

Monday, April 25th, 2011

Guy Thomas talks to tradingdiary about his new book Free Capital: How 12 private investors made millions in the stock market.

Who are you?

guy thomas free capital suitI am an actuary and investor. I qualified with a firm of consulting actuaries and then spent some years as a university lecturer. I left that job in 1999 in my mid-30s to concentrate full-time on investment, also continuing with some academic research.

What is your new book about?

The book profiles 12 private investors. Each of them has accumulated £1m or more – in most cases considerably more – mainly from stock market investment. Six are ‘ISA millionaires’ who have £1m or more in an ISA – a result which is arithmetically impossible without exceptional investment returns. The profiles cover the 12 investors’ backgrounds, how they made their fortunes, and how they spend their days now.

Why did you choose to write this book?

As a full-time investor myself, I have long been curious about other investors’ methods, literally what they do all day. How much of their time do they spend reading company reports as opposed to talking to company managers or analysing share price data? For many years I hoped that somebody else would write a book like this. Nobody did, so eventually I decided to write it myself.

How did you decide who to interview?

guy thomas free capital bookI posted descriptions of the project on investment bulletin boards; I asked stockbrokers, CFD providers and spread bet firms for introductions to their most successful clients; I asked friends and friends of friends. I wanted to include a variety of personality and career backgrounds and investment styles. In general terms, around one-third of the interviewees are ex-City professionals; one-third are other degree-educated professionals; and one-third left school at or before age 18. Most gave up all employed work in their 30s or 40s to be full-time investors.

Are there any common qualities that the successful investors you spoke to share?

The final chapter identifies some common qualities. One is the attitude that money is a source of quiet freedom, rather than ostentatious spending power. They aren’t high spenders: they tend to live very modest lifestyles relative to their accumulated wealth.

Another common factor that they all work alone, with a very strong psychological self-reliance: they prefer to figure things out for themselves rather than seeking advice.

Another commonality is that they seem to enjoy the process of investing, rather than just the proceeds. Several spoke of investment as a game, more like playing poker or chess than working.

Is there anything that surprised you during your interviews?

The variety of approaches which appear to work. In my own investing, I’m a fundamentalist focused exclusively on smallcap equities. I spend a lot of time reading accounts and researching the competitive position of the underlying businesses represented by the shares in which I invest. My time horizon is months or years. But there is at least one person in the book who never looks at a set of accounts, and generally has little idea what a company actually does. His time horizon is minutes to hours, trading mainly on short-term newsflow and price charts. So writing the book opened my eyes to the possibility that for some people, some very different approaches to my own seem to work.

Have you changed your strategy as a result of meeting and interviewing these 12 investors?

In Chapter 9 on Owen, the activist investor in closed-end funds, I wrote that his was the approach I most wished I could emulate. I particularly envy his time efficiency. So yes, I have tried to increase my own focus on closed-end funds. But Owen has more than 20 years experience of this type of investing, and his depth of knowledge is not easy to replicate.

Why are you donating the author royalties from this book to charity?

I didn’t write the book to raise money for charity, I wrote it for fun. But any author of investment books is susceptible to a critique along the lines of those who can, do; those who can’t, teach. Or something like: those who can, make millions in the market; those who can’t, make a few pennies writing books about it. Donating all royalties to the United Nations Stop Tuberculosis Partnership is potentially a way of deflecting this critique. I chose this cause and organisation with help from the charity evaluators Givewell, whose research I strongly recommend.

Are there any finance or investment related books you recommend?

I have always found books of interviews with professional investors are enjoyable and inspiring, albeit somewhat remote from my own activities as a private investor. I enjoyed Jack Schwager’s Market Wizards books and John Train’s Money Masters books; and for an insight into UK professional investors, Jonathan Davis’s Money Makers.

I read many investment books, both academic and professional. But I think anyone looking for a definitive book on investing will be disappointed. Investing is much more a practical craft than a formal discipline. Almost all the people in Free Capital have learnt mainly through their own experience and reading bulletin boards, rather than from textbooks.


Jeffrey Tennant ‘MEJT system’ interview

Monday, February 14th, 2011

Jeffrey Tennant, investor and author of the new book ‘The MEJT System: A New Tool for Day Trading the S&P 500 Index’ talks to www.tradingdiary.co.uk about trading and creating the MEJT system.

1. Who are you?

Jeffrey Tennant MEJT systemI am a private investor who has been interested in technical analysis of the stock market since 1979. I have seen many predictions based on chart patterns, wave counts, bar counts, moving averages, candlesticks, the calendar and probably tea leaves and entrails somewhere along the way. I enjoy studying different approaches.

2. What kind of trading experience do you have?

I began trading for my own account in 1979 as well. There is no greater stimulus to learning than having ones own money at risk.

3. What is your new book about? What is the The MEJT System?

The MEJT system is based on the premise that market action during certain times of the day can both predict future price movement and establish support and resistance levels. The methodology is different than anything else I have seen on the market. It has made numerous accurate calls which I could not duplicate using other approaches. It explains the logic of afternoon trading, which has a reputation as being erratic and unpredictable.

4. How did you create the MEJT system?

Many years ago another trader found that a certain time period acted a support/resistance level. He developed his own method for trading based on that principle. I was unaware of his technique, so I developed my own rules for trading based on that time frame and on another time frame I found myself. The rules were quite different from those which he used, and I believe they have been more accurate.

5. What kind of testing did you do on it? And what kind of results are you getting with the MEJT system?

Jeffrey Tennant MEJT systemWhen there have been unfilled targets at the end of the day, I have posted them online since 2002. Most recently I have posted at timeandcycles.com; the predictions based on the system are clearly marked as mejt predictions.

The system generates about 500 predictions a year. Since I began keeping track of the results in the fall of 2005 there have been 18 targets which have not been satisfied. These targets have tended to occur in bunches around times of impulsive market movements or major changes in trend; it is a question of semantics whether one should consider this a failure or a signal in itself.

At least 90% of the time the target prints within two trading days. Please note that not every signal is tradable (because the target is not far enough away) and that some targets print very long after they are signaled. As with any system, it is good but not perfect. One must use stops.

6. How come you picked the S&P 500 for this system? Would a similar system work on other indices?

The MEJT system does not work on anything but the S and P 500 index. I cannot say why it does not work elsewhere and cannot say with certainty why it works so well with the index for which it was designed.

7. What other kinds of trading systems and investment strategies do you use?

I like the work of Tom DeMark and Rod David. I also find moving averages and Bollinger bands to be helpful.

8. What has writing this book taught you?

It is not enough just to have a good trading methodology. If one writes a book that people will wish to buy, it is important to have it packaged in a way which will be attractive to the prospective purchaser, easy to understand and well-indexed. I am indebted to my publisher, Harriman House, for helping me with these aspects of the book.

9. What simple advice you could give the reader to improve his/her trading success?

I would never rely on just one trading methodology, no matter how good it is, to make predictions. I believe that knowing what the MEJT system predicts will be useful to traders who have the same philosophy.

10. Your author biography lists one of your interests as ‘trivia’. Can you give a few examples?

I like watching Jeopardy and Who Wants to be a Millionaire. I would rarely lose a game of Trivial Pursuit when it was new and before people memorized all the answers.


David Borman interview

Thursday, November 11th, 2010

david borman authorDavid Borman, author of forthcoming book ‘The Everything Guide to Day Trading’ is interviewed by www.tradingdiary.co.uk.

1. Who are you?

I own and manage a company called Chicago Quant Research. I’ve had the opportunity to perform statistical analysis and writing for academic research and financial end users. My current project is to put together a bid for a client who wants data mining done for a trading system he has developed in Ninja Trader. I’ve also written over 100,000 words this year alone on various writing projects including financial and historical research. In the past I’ve held positions in Private Client Wealth Management, Private Client Tax, and the Off Shore Hedge Fund Business. I also Day Trade FX and ETFs for my own account.

2. What is your new book about?

“The Everything Guide to Day Trading” is about getting up to speed to open your first trading account(s) and begin the process of Day Trading as a business. Day Trading as a business is much different than how most people Day Trade. Most people say they Day Trade for profit, but in reality they trade for pleasure. Let’s face it: it’s quite thrilling to Day Trade, but difficult to profit from it (or even make a living at it!). My book is designed to help you anticipate and prepare for trade set-ups. There is also a healthy amount of risk management as well as trading psychology in the book, all with intentions of getting the reader to the point where he is having weekly and monthly average trading gains in his account.

3. There are a lot of day trading book out there. Why did you decide to write one? And why should I buy yours?

the everything guide to day trading david bormanMost of the Day Trading books out there are very technical in nature. Whether they teach Technical Analysis or Fundamentals, the books can be quite daunting to read for the beginner. Also, I’ve noticed that not many of the books speak about what it “feels like” to win and lose at day trading. Believe it or not, that is something that must be experienced firsthand to truly begin the journey of being a Day Trader and Day Trading for a living. That’s where my book is different. Not only have I been witness to hedge funds winning and losing in the market, but I’ve personally had my ups and downs. The book not only includes a healthy dose of technical and fundamentals instruction, it helps the reader with getting to know her thoughts and feelings when she’s have a bad trading day, how she might feel after a huge day in the markets, and the psychology (thrills?) of taking on un-hedged risk: this is why my book, “The Everything Guide to Day Trading” is different.

4. What experience do you have of day trading?

I’ve traded and day traded everything from Mutual Funds, ETFs, Gold, Equities, and FX. I’ve worked in the back office of an off-shore hedge fund administration company that had over 50 Billion USD under management, so I’ve seen every product, market, and hedging style imaginable from the inside. My first trade was buying gold bullion back when it was 510 USD an ounce. Right now I’m focused on the commodity currencies as well as a healthy respect for what is happening to the Swiss Franc.

5. What is your trading style?

I mainly like to focus on overnight holding periods with stops. This way I can wait until the Asian markets open, evaluate, and look for set-ups. Stops are pretty tight, as I’ve learned the hard way that things can happen pretty quickly when you’re not looking. Another thing, I don’t always have money in the market. I might sit on cash for days on end while I look for something interesting to happen. In that respect I am somewhat an opportunist. If the market doesn’t interest me, has no clear direction, or if there is just too much risk I allow myself the ability to walk away and do nothing.

6. Can you give us some quick day trading tips?

Ha! You’ll have to buy the book! Just kidding. Actually, the best advice I can give to anyone who is thinking of getting into Day Trading for a living is that first and foremost your cash is what you want. Don’t get into the situation of being away from your cash for too long. In other words, don’t be in a trade for too long. When looking at trade set ups plan on when you will be getting out of the trade and back into cash AS SOON AS POSSIBLE! Your cash pays the bills, and you can’t pay the bills with a position in an ETF, FX or commodity!

7. Do you worry that you might encourage people to trade away money they can’t afford to lose?

Not really. If done right, and with the proper risk management techniques, losses can be minimized, especially if you master the emotions related to Day Trading. You do need a healthy dose of respect for the markets though. Also, if you think of Day Trading like a business, and each one of your trades as a project to undertake, to “bid on” if you will, your trading business will naturally stay away from the trades that do not have a reasonable expectancy of making a profit.

8. What other finance related books do you like/recommend?

Well to tell you the truth, I’ve read just about every book I could on finance. I’ve read books on M&A accounting, taxation, trading, and financial modelling. The most influential books I’ve read have been Niall Ferguson’s “The House of Rothschild” and the textbook from a class I was taking at Northwestern University on banking and markets. Both gave me the background to look at trading as a business for profit. They also gave me glimpses of how if you treat your financial endeavors as a form of a “financial intermediary” and all of the risks associated with asset transformation, etc., then you will be on the right track to keeping your Day Trading business alive in good times and bad.

Feel free to email David at Chicago.Quant.Research (at) gmail.com or look him up on the web at www.Chicago-Quant-Research.com.

The Everything Guide to Day Trading will be released during January 2011.