Meet Trader Dan https://traderdan.com/?p=66
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Hello Dan . Thanks for the Welcome to Trader Dan’s World :
Q1..Please tell us a little about your self . Family , Hobbies, Lifestyle ?
I am by nature a very private person and thus will keep some of this to myself but I will say that I do need time away from these markets every now and then. Believe it or not, life goes on outside of our trading office and the quote screen.
That is one of the reasons I maintain a very active hobby of raising honeybees. Actually I have been raising bees for more years (35) than I have been trading and that is a long time. The bees remind me of the cycle of life – they could care less what the price of gold or beans or cattle might be. They have no interest in geopolitical developments or financial issues. All they care about is if the weather is warm enough for them to get out and collect nectar and pollen to keep their hive healthy and thriving. Year in and year out, it is a constant reminder to me of the beauty of life.
Along that line I enjoy gardening and growing things. It is sort of neat to go and look at places where we have formerly lived after having been away for many years and see a tree that I planted as a young sapling becoming mature. It is also satisfying to look at a huge area of blooming flowers teeming with bees and butterflies and all manner of various hues of color knowing that you have created that. It is like painting except you are doing it with living things that will last long after you are gone.
History also fascinates me especially the history of past wars. I enjoy the History Channel very much as a result. The Military Channel, which I believe is now renamed to the American Heroes Channel has some incredible series on the World Wars. In watching these things, I have come to realize that we human beings are mostly an incredibly dull lot – we seem to learn nothing from the past as we constantly repeat the same mistakes made by our forerunners. In our arrogance we somehow convince ourselves that we know better or are somehow wiser and smarter than previous generations and therefore can attempt the same things as they did but somehow end up with different results. It would all be a comedy of errors were it not for the fact that the results of this hubris negatively impacts us all as well as our children.
As far as music goes, I like lots of different styles although I detest what is called Hip-Hop and Rap. I love Country Music but the music that I call “County” mostly precedes the year 2000. From that point on, most of it seems to me to sound an awful lot like what we used to call Pop. I guess this is a truism of every generation but today’s music to me is mostly just noise. The one exception I would make is the music or sound score found in our movies. There are still some incredible composers out there who produce exceptional work. Think about the music we have from Hans Zimmer and others. Now, that is music!
Q2…How did you find your way to becoming a Professional Trader ?
I started out part time somewhere back in the late 80’s messing around with the futures as I was always intrigued by the markets, even when I was a young guy trying to find a career. Having run a landscaping company back then, and with a horticultural background among the many areas I was involved with, I found the idea of grains as a natural fit. I could understand the why behind growth, soil, temperatures, rainfall, etc, so it was a natural fit once I learned to understand the demand side of the equation.
Being down in Texas, I also knew some cattle guys and that led me to the livestock markets. From there I branched out into other markets and learned the currencies and metals. I then eventually moved over to dealing with energy markets and bonds.
My first love has always been the ags however and will remain that way as they are the purest fundamentally driven markets in the world in my opinion. I made a lot of mistakes as a part time trader and lost a great deal of my money trying to learn the ropes but I gradually began to learn to think like a trader, which I might add is necessary for anyone to succeed in this very difficult profession.
As you know, the vast majority of people who try their hand at this end up losing quite quickly and become “former” traders. It was a rather unnerving thought for me when I began to contemplate doing this for a living since I realized I had absolutely NOTHING to fall back on for an income if I was not successful. I figured that if I never took the plunge, I was never going to know whether or not I was capable of it however so I dove in. I believe it was those early days and the realization that if I let any single loss get too large, I was going to fail. That taught me very early to keep my losses small and not get too overextended.
Learning to master the emotions of both fear and greed are essential in become a professional trader. The problem with ever trader that I know who failed was in that small area between their two ears. Humility is essential – show me an arrogant, reckless individual and I will show you a failed trader. It may not show for some time, but believe me, eventually they will meet their match in the market and become its victim. This is NOT a business for people with large egos, at least not if you wish to stay in it for any length of time.
Q3…What Markets do you trade and what is your M/O ? (do you day trade?)
I concentrate on certain sectors of the commodity complex, primarily the agricultural markets ( the grains and livestock) but also gold, currencies, bonds and the emini futures. I will also occasionally trade copper, crude oil and the liquid energies as well as cotton. That is more than enough to keep me completely occupied. I have learned that it is best for me to fully understand the fundamentals behind those markets that I trade and to focus on only enough markets that I can keep track of during the trading session without being so overwhelmed that I literally miss important intraday developments within those markets. If I trade to track too many markets, I end up not being able to keep up with them all.
I generally like to take positions with a bit of a longer term view. Many years ago, in my earlier days as a trader, I would put some positions on with a 4-5 month outward looking view. I have since given up on that strategy as the proliferation of the computer algorithms has changed the entire complexion of the futures markets. Moves that once upon a time might take several weeks to develop, can now occur within the span of a single week. Building a large position with a long term view is akin to financial suicide if you ask me. Longer term in my view is a 1-2 month time horizon.
Yes, I do day trade meaning I will move in and out of a position entered during a single day but not that often. instead I try to look for opportunities within the broader time I am working. In other words, if I am bearish and looking to increase the size of the position I am trading, I look for short term rallies to sell into. The reverse is true in bull markets in which I am building a long position.
Q4…Why did you start and how long have you been writing at your Free Blog ?
I started up my site about 4 years ago as I wanted no constraints on what I could write when analyzing a market.
My philosophy as a trader is a very simple one – one is bullish when the chart tells one to be bullish and one is bearish when the chart tells one to be bearish.
I had noticed a tendency among nearly all of the pro-gold websites that moves lower in gold tended to be downplayed with very few willing to actually make a negative comment about the metal at times. It seemed to be axiomatic that gold was always going to move higher in price and when one began to have some reservations about that or began to notice some warning signs that price was encountering some serious opposition to its rise, one was expected to keep those reservations to himself.
I could not in good conscience do so and felt that it was best, if I was indeed going to see a bearish tendency in the gold market, to do that from my own site. That way I would not be at cross purposes with the owner of a pro-gold website. It was not fair to that individual nor to the readers who expect to find an honest opinion on a market. Saying one thing to keep on good terms with the majority of readers at the pro-gold websites is not something that made me feel comfortable.
Ecclesiastes 3:1 says that “there is an appointed time for everything. And there is a time for every event under heaven”. It goes on to list some of these things. I would respectfully add, from the perspective of markets, that there is a time to be bullish and there is a time to be bearish.
Having my own website allowed me that flexibility.
Q5…What is your philosophy with respect to your work and with respect to sharing in on the net ?
I try to keep things as simple as possibly in a profession that by its very nature, can become incredibly complex. One of my favorite expressions is “the paralysis that results from over analysis”. What that essentially means, is that too much information can result in one failing to take action because they cannot make the decision especially when all of the factors that go into making that decision are not saying the same thing.
From the perspective of trading, this means trying to find a few good indicators that have been proven over time and stick with them. It also means coming up with a trading methodology that you are comfortable with and one that suits your disposition and risk tolerance.
Also, I simply will not trade markets that I am not familiar with the fundamentals that impact that market. Perhaps that makes me a bit different in my approach to trading that some as many nowadays will find a technical trading system and then apply that to a host of markets and try to trade them accordingly. That simply does not work for me as I am an old school trader who wants to know the “WHY” behind a move.
I cut my teeth in the trading profession in the agricultural markets, the grains and the livestock, as I could understand the fundamental factors impacting them because of my background. From those I branched out into other markets but every one of them required that I had a good sense of the fundamentals that impact the price in those markets before I committed to trading them.
There are market that I therefore will not touch for that reason. If I cannot understand why something is moving, I will not trade it; I don’t care what it is doing. That is just me however; others might have a different approach that they are comfortable with.
As far as sharing my work on the web, one of the goals I had in mind when I first started up my own website was to teach people HOW TO READ THE MARKETS by the use of price charts. My view is that once an individual learns to master this art, they are well on the way to becoming successful in this difficult profession.
Too many fail because they cannot let go of their preconceived ideas when they approach a market to trade it and as a result, they view everything about that market through a sort of bias which blinds them to the actual state of that market.
There is an old C&W song that contains the lines: ” But these rose colored glasses, that I’m looking through, show only the beauty,cause they hide all the truth”. That makes for a wondrous sentiment when it comes to love but as far as trading goes, it is a death knell for any trader who adopts it or cannot see that he or she possesses it.
“Work at being objective, as much as you can” is my trading adage and one that I firmly believe those who wish to succeed must aspire to.
With that in mind, whenever I receive an email from a reader informing me that he or she has avoided large losses or made some tidy profits because they were able to correctly read a chart and decipher the direction in which to trade it based on something that they noted me say about a chart, or even better, based on something they themselves saw from the principles I have been able to convey to them, it is especially satisfying. They are becoming independent and have no need to go seeking others to tell them what to do with their money as they are able to stand on their own.
Q6..What is your pet peeve in the newsletter writing world.
Very simple – people making predictions as if they are infallible. Also, those who have no background as traders but know a few things about technical analysis which leads them into thinking that they are somehow market experts.
Until one actually trades in the futures markets, gets their teeth kicked in a few times and loses money, they will never understand the respect that professional traders such a myself have for the power of leverage. It can make you look like a veritable genius when you are on the correct side of a market move, but if you are wrong, it can utterly devastate you financially, and oftentimes psychologically as well.
Show me a person who regularly makes this prediction and that prediction and dogmatically gives price levels way out in advance of them happening, and I will show you someone who has never been schooled in the futures market. Recklessness and arrogance are the marks of rookies, novices and fools. Pros are cautious and are very quick to know when they are wrong.
Q6…What was your relationship with Mr Gold , Jim Sinclair and how has it evolved .
Let’s just say that I considered Jim a good friend at one time but we have different views on gold and different views about making market calls and predictions.
Q7…Are you still in demand by the King World News types of websites ?
HA! All one needs to do in order to answer that question is to see my current view on gold as being bearish at this time and you will know right away the answer. I have turned down many opportunities to do radio interviews for several reasons, among them a lack of time since trading occupies so much of it. One thing I can tell you is that I have no intention of ever again lending my name to any website that has been correctly pigeonholed as being too lopsided to be objective.
Q8..How has trading changed from when you first started your career ?
Oh my goodness, I could tell you lots of stories about this since my career as a trader spans 25+ years now. Frankly, I miss the days when trading was done in the pits by means of open outcry. There will be some newbies to this profession who will extol the virtues of screen trade ( electronic) but we will part company for sure on this.
Consider how many people who watch the markets complain, with much justification I might add, about the strange and oftentimes bizarre swings in price that occur nowadays and the sheer size of the price ranges that we get. That was not possible back in the open outcry day.
Everyone in the pit knew the regulars there and whom they represented or for whom they conducted business. If some huge sell or buy order was introduced into that pit, most knew who was behind it. Not all of the time mind you, but with enough certainty that people there knew whether the order was legitimate. If it was meant to push price around only, someone was there to call that bluff quickly.
That is not the case anymore with this screen trade. Huge orders hit the screen coming out of nowhere with no one knowing who is behind the order and/or whether or it is a legitimate order or merely meant to shove price around to start a series of computers all firing in unison.
I believe that screen trade has actually made it EASIER for large speculators to manipulate or influence price than was possible during the open outcry days. Let me state here that when I use the term “manipulate” I am not referring to what many of the gold bugs mean when they use the term in relation to gold. Their claim is that gold is “manipulated” by the bullion banks, acting as agents of the Fed in order to suppress it rise in price thereby discrediting it as a viable investment, especially in relation to the US Dollar.
When I use the term, I am referring to large speculators, be that banks or hedge funds, but more often than not, large hedge funds, who take advantage of illiquid trading conditions or a dearth of news, to push price in the direction in which they are positioned to profit. It has everything to do with them attempting to make profits for THEMSELVES, and not with acting as some supposed agents for the Fed.
We used to see a lot of this sort of thing being done by the large pit locals during the days of open outcry trading when holiday weeks were involved. Many of the regular brokers would be absent from the pit leaving a smaller contingent of players than normal. That, plus the fact that much of the general public, the small traders, would also be taking time off. The pit locals would then often tag team with each other and bid prices higher or offer prices lower in order to hit resting buy stop orders above the market or sell stop orders below the market.
Everyone in the pit however was well aware of what was going on and who was doing it. Price would move, the stops were set off, and the floor locals would all have a very Merry Christmas courtesy of the all the stops!
Now, when these orders come out of the clear blue through the electronic screen, no one has the faintest idea who is behind the move. Unfortunately, once the order is big enough to move the price strongly enough in whatever direction the perp is trying to move it, the computers kick in and they start firing orders off automatically, without any human being thinking about what is going on or even why. It is pretty much an automated response that takes on a life of its own and leaves many of the players scratching their head wondering what the heck just happened and even why.
Another thing is the huge influx of system traders. I am what is referred to in the industry as a DISCRETIONARY TRADER. I like to think through a market’s price movements and based on my understanding of the fundamentals buy or sell accordingly. If I have a bearish view of a market based on my understanding of the fundamentals, I do not like getting long that market because the move higher can abruptly end with little or no warning if has been engineered solely for technical reasons.
However, traders such as myself are endangered species, or at least it seems that way at times. Modern hedge funds pay enormous sums of money not only to have programmers write them some powerful algorithms that direct their trading, but also to rent server space or even move their operations to shave a few milliseconds off the time it takes an order from their computers to enter the exchange’s pool. There is no “thinking” in the sense of a human being sifting through the latest crop report or payrolls number or Cattle on Feed report or whatever. If the price moves, the computers move with it – no questions asked.
This puts the small trader at a distinct disadvantage because you cannot expect to compete with the speed that these large speculators possess nor the financial muscle power but one can learn how to use their movements to profit. It requires a change in tactics and a different approach than that which I used many years ago but it can be done.
Q9…Why a Paysite and Why Now ?
I have long resisted the idea of ever moving to a pay site for one reason – I make my living as a trader IN the market and enjoy the luxury of being able to rapidly change my view about a market based on its price action. Sometimes I am incorrect about a trade I put on and will end up losing on that trade. I never like to have a losing trade but the simple truth is every single trader has them. Anyone who claims otherwise is a liar.
That being said, while I dislike a losing trade, I can accept it and deal with it as part of the business I am in. However, I am uncomfortable with the possibility that something I say about a market might be proven to be wrong and end up costing SOMEONE ELSE money as a result. That is the reason I have turned down a very large number of requests to manage futures for others. I can handle losing my own money but not the money of others. I guess you can say I have a conscience about this sort of thing as I realize how difficult it is to raise the capital for a trading account for many folks and how quickly one can lose it all in these extremely dangerous markets.
However, I have come to realize over the years, that the knowledge I am freely giving away to others is that which I have accumulated in over 25 years in the markets. Trust me when I say that I have PAID DEARLY to learn these things ( Lose enough in the markets and you will eventually get wise and learn how NOT to do that). That, plus the amount of time I spend at my site, writing what are hopefully informative pieces to educate others in the nature of markets, has convinced me that it is a reasonable thing to ask others to pay a small fee in order to be the beneficiaries of the experience I have garnered throughout my career. Even a small nugget at times, can save them from much greater losses than they might have otherwise incurred.
As an example – I receive occasional emails which I believe are reflective of a broader audience thanking me for helping them get out of the long side in gold some time back and thus having minimized the losses they would have otherwise incurred had they continue to listen to the siren songs of the gold perma-bulls. Also, some have told me that in taking a short position in gold they have been able to recoup much of the losses they had previously suffered. That is most encouraging to me to learn and is personally rewarding in the sense of knowing that your writings and teachings have helped other sincere folks. However, I do think that the “laborer is worthy of his hire” and that asking for a bit of recompense is reasonable.
Q10..There is a void on the Internet with respect to Trading Advice based on News Driven Events and Government and Federal Reserve data points…will you be trying to fill that void with real time commentary on Trader Dan’sWorld ?
I intend to do pretty much what I have been doing the last three years at my current site and that is posting up relevant commentary on various markets and the factors that are impacting those markets. The goal has always been, and will remain, to try to make some sense out of the actual movements in price and what might be altering or reinforcing the current sentiment towards that market by the various players involved in it. When one combines that sort of thing with an analysis of the price chart, the lines on that chart begin to make some sense and take on meaning. There will be times that the nature of the current trading session precludes me from writing too heavily if I am extremely active on any given day, but I generally manage to get a few things posted even on busy days, even if they are brief.
In all honesty, there are some days that nothing much is really taking place and from a trader’s perspective, really need no commenting upon.
Q11…I understand you will be giving all “members” 1 month free trial to see what its all about…is that correct ?
Yes it is. I would like for the folks to try the site and “take it for a test drive, kick the tires, etc.” to see how they like it and whether or not it is something that they wish to receive. I am also attempting to work out some sort of deal whereby those who have been kind enough and considerate enough to have offered a donation at my free site can receive an additional free month as an extra way of my saying, “Thanks!” to them.
Q12..I understand your new website will include a members forum where you will be able to answer questions and interact with your followers Are You looking forward to that aspect ?
Yes, I am. I have come to know many of the posters at my current site over the years. Though we have never met, I think some of us feel as if we know the others quite well. Part of the fun of the internet is being able to meet and get to know some others who are like-minded that we would have never had the opportunity to meet otherwise. Goodness, think about the ability to form friendships from people on the other side of the world who have similar values as yourself and who see many of the same things in the same light as you do. I still amazes me when I think how things were in this business when I first started. A private trader was essentially on his or her own. Now they have an entire complement of fellow traders that they can bounce things around with or complain to or rejoice with.
Thanks for Doing this Trader Dan and best wishes on your new Website . For me your service is a