Thursday, 4 April 2013

Zak Mir Interviews Vince Stanzione Part 3

Zak Mir: You may not have just one system for taking positions, but of course what kills many a trading account is not the winners but the losers that outpace them. What are your key signs that you
were wrong and it is time to get out? Is it just a matter of a certain amount of money, or are there
other cues that tell you that the factors that brought you into a trade are no longer valid? Do you find it easy to take a loss — something which “bad traders” have great difficulty doing.
Vince Stanzione: Starting out, I hated taking losses, I would hold on and “hope” that those bad short term trades would reverse, of course they largely became bad long term ones! I would cut the winners far too quickly as we all like instant gratification. As I matured, I learned to do the opposite. I do have
a fairly mechanical exit, so if a trade is not making money and falls below a certain point it is cut and in many cases I reverse a trade from long to short and then back again. I have done that a few times with Netflix (NFLX) the last three years.

Zak Mir: I have over the months interviewed several leading figures in the markets, whether trading for themselves or managing funds, and one thing has stood out which I did not expect. In general, it would appear they are successful at trading (a losing game for most retail traders) because they are exceptional — either in discipline, IQ, knowledge or in most cases all of the above. In other words: just as they are winners in trading, they would be in business, the academic world or probably in anything they put their minds to. Is there any point getting involved in the market if you know you are not highly gifted? 

Vince Stanzione: I am very interested in people and psychology.
I made my first million from car phones by watching trends and what the yuppies wanted. I have no real formal qualifications. Yes, exceptional people, be it in sports, business, TV or trading are wired
differently and in many cases have a different emotional make up. We don’t really care about
rejection or being wrong. 

Zak Mir: You have been quoted as saying that your main successes in the markets have not come from day trading, but more from what would be called position trading / trend following.
Are such trades based on technical or fundamental triggers? Is there a typical set up?

Vince Stanzione: Both, it is funny. The so called technicians often quote fundamental issues and I think they should be used together. My typical set up is a stock that is either hated or loved and then I start seeing a trend change — Apple both up and now down is a good example.

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