Episode 124: Predicting the Future and Catching Up With Todd Gordon

by robbooker on February 13, 2013

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While waiting for our dynamic guest to arrive for this interview, your host Rob Booker and the producer Jason Pyles have a preliminary discussion about all the forecasting that’s going on in 2013, which Rob says, is beginning to be a problem. Rob emphasizes how difficult it is to tell the future, and because of this fact, he asserts that dishonesty often enters the equation as a temptation.

Rob suggests that in truth, when you’re down in the trading trenches, you really can’t cheat; you just have to trade what’s in front of you. He believes it’s a fool’s game to wake up every morning and try to predict the direction that something’s going to go, versus simply being ready for the market to go in either direction. Rob talks about the phenomenon of second-guessing yourself when you hear opposing viewpoints, as well as the importance of being able to have your own opinion (and to stand by that opinion).

Later in this episode we are joined by our special guest, Todd Gordon, one of the hosts of CNBC’s television program, “Money in Motion,” which airs on Friday nights. Rob begins by asking Todd about his new business venture, Trading Analysis.com, as well as his new home-office set-up (which is pictured above).

Rob asks Todd if Elliott Wave analysis (one of Todd’s specialties) is so complex that he can’t talk about it on television. Todd reveals the top three best books he’s ever read on the subject of Elliott Wave analysis. Rob talks to Todd about how he still finds time to trade, amid his hectic schedule. Todd explains which financial instruments he uses to help him do his analysis. And Rob asks Todd why the Norwegian currency is a better proxy for oil and what that means for Todd as a trader. Don’t miss this one!

Links for this episode:

Todd Gordon’s Trading Analysis.com

TFL365.com

Rob on Twitter: @RobBooker

The Traders Podcast on Twitter: @TradersPodcast

E-mail us! Producer@TradersPodcast.com

{ 8 comments… read them below or add one }

Scott (theecohouse) February 13, 2013 at 10:15 am

Interesting to hear Todd talk about having to have 500k to trade for a living.
I see the more money you have would give you more confidence….
But do you really need 500k i dont think so.
How much to you think a trader needs for different styles (short term, LT etc) when trading for a living?
cheers

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Tats February 14, 2013 at 10:21 am

I think it depends on what type of living you want. Sure the larger the account size, the more the confidence – no need to worry about short term moves.

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robbooker February 14, 2013 at 2:42 pm

Scott,

I gotta get Todd back on the podcast to explain that better because I think he meant to say something else. Maybe $50,000. Or hmm … Maybe $5,000,000 …

Thank you for writing! And for listening!

Rob

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Brian February 14, 2013 at 6:31 am

I would have to disagree with Scott. How much you need to trade for a living could even be more than $500k. It depends upon what level of income you are replacing, and the level of development you are at in your progress as a trader. Even if you are proficient at trading, you still have to have enough to cover drawdowns, your edge disappearing, mistakes, and time away from the trading table.

Edges can and do disappear. Unless you built into your trading plan another edge, you are going to have stop trading while you develop another. Mistakes cannot be predicted or quantified until it’s too late, so you have to limit exposure and have enough in the bank to absorb them. Finally, and most importantly, you have to have enough stashed away that you don’t feel any pressure to trade. The best cure for bad trading is to walk away, and if you are living on the edge you can’t do that, your undercapitalization sows the seeds for failure.

How much do we need to trade professionally? It usually takes me about twice as long to do some handiwork around the house then I believed possible. The range of what can go wrong in trading is a whole lot wider than with household projects, so I think twice what we expect we need to make a living trading is a good rule of thumb. (at least twice)

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Matt February 14, 2013 at 2:29 pm

This was a fantastic episode guys! The first part of the show, before Todd arrived, especially hit home for me. Rob, isolating myself from the trade ideas of others, was the single biggest factor in me finding success as a trader. I loved your recounting second guessing your EUR short that had already paid out! I can identify more than I like to admit!

All the information available at our fingertips these days comes with a caveat that can bury a trader if they don’t have supreme confidence in their own ideas. Sometimes all I need to get back on track is to turn off Twitter for a while and forget about what everyone else is doing. You are absolutely right about not owing anyone anything for our own opinions. Grading our own opinions based on opinions of others serves only to cloud our judgement.

To add my opinion to Scott’s question: No, you don’t need 250k-500k in your account to trade for a living. The thing is however, what constitutes “a living” is very subjective. I managed to support my family of four (wife and two daughters in high school) with an amount of money in my trading account that would serve as sufficient evidence of insanity in any court of law. Wasn’t much of a living though, I was essentially crapping my pants for 10 months straight. After experiencing this, I agree that 250k – 500k account allows a trader to make a living and actually live. It’s all about realistic expectations. If you’re monthly nut is more than a few percent of the account size, then you’re ability to make a living depends much more on melon-size balls of brass and the ability to actually predict the future, than solid money management and a well defined strategy that wins at least once in a while.

The latter lets me sleep at night, and actually FEEL like I’m trading for a living. The former method was more like running from a street-gang on their own turf: All you care about is making to the next hiding spot. Surviving sucks and with $250k + in your trading account, every trade is not a matter of survival, rather just one in the thousands to come.

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robbooker February 14, 2013 at 2:40 pm

Matt, we could do a whole episode about “realistic expectations.” That comment really hit me over the head – how important it is to not only have goals but goals we can accomplish.

Thanks for listening and for taking the time to write.

Rob

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Brian February 14, 2013 at 5:58 pm

Agree with Rob, we could talk about this forever.

I recant my earlier statement because it’s too long and doesn’t focus. The main problem with inadequate capitalization isn’t you end up taking on too big a position or too much risk, the problem is you just can’t think straight because you have too much skin in the game ALL THE TIME. Nobody can trade when every trade is make it or break it.

Love this episode.

(How the heck can Todd trade with two windows to attract his attention? That would destroy me. Todd’s da Mann!)

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JR February 16, 2013 at 8:05 pm

You can pull the shades down.

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