Student2trader.com, a group of like-minded trading students and professionals interviews Nick Radge (The Chartist)

1. HTTP://THECHARTIST.COM.AU
INTERVIEW WITH NICK RADGE (BY STUDENT2TRADER.COM)
The Chartist
May 2010
Nick, tell us a bit about your history as a trader?
I originally got the bug after watching someone else plot a 5 and 10 day moving
average crossover system by hand. I could see how and why the strategy worked, at
least in its simplest form. From there I simply progressed through the ranks of
working at various banks, both here in Australia and overseas, and taking on the
passion. I have now been trading for 25-years, from the trading floor of the SFE to
dealing rooms in London and Singapore. I have a passion and work hard at it every
day.
You run a service today called ‘The Chartist’, can you tell us more about it?
The Chartist is a technical analysis newsletter and trading system portal. It’s all
very good to read books that show picture perfect trades where 100% hindsight has
been used, but to see the patterns on the hard right edge, to put a strategy around
that and then manage the trade is what we do. The Chartist covers many facets of
trading but the underlying pretext is always technical analysis. We now run four
systematic trading models that I also personally trade alongside subscribers. The
Chartist offers something for everyone interested in active trading without
hindsight.
For those students who are learning, can you briefly explain what is
technical vs. fundamental analysis?
Technical analysis is the study of price action which is the truth of the markets.
Price activity is driven by fear and greed and because humans tend to operate on
the same level we get to see the same patterns form over and again. Price patterns
come in many distinct forms but added with solid trade management you can create
excellent strategies. Fundamental analysis on the other hand is an attempt to place
a valuation on a particular stock and therefore profit from a deviation away from
that valuation. However, the major flaw in this logic is that deviations away from
valuations are generally extreme – driven by fear and greed which in turns creates
a state of difficult trade management. One only need look at fund manager
performance during 2008 to see that fundamental analysis has some issues to
contend with.
What predominately is your trading style; technical and/or fundamental
analysis?
Without a doubt I’m a technical trader, albeit well versed in economics and
fundamentals. However, there are sub-areas of technical trading such as systematic
and discretionary. I have done both over the life of my career but almost all of what
I do now is systematic. A systematic approach uses computer simulations to dictate
buy and sell signals and tends to remove a lot of emotional input into the decision
making process.

2. Have you always traded with this philosophy or is it something you’ve
developed over time?
The irony is that the first time I saw trading work was with that 5 and 10-day
crossover method when I was 18, and that was a systematic approach, I have
deviated at times but always come back to that style of trading. My philosophy on
trading and how a trader should act has certainly developed over the many years,
but working inside the business for so long has helped that along.
What advice would you give to a student looking to get into trading?
(education & experience)
The first piece of advice is that there is no easy way to make it in this game. Like
any profession it takes passion and years of dedication. It doesn’t take a weekend
course! I not sure how one develops a passion for anything, but if you have the
passion then you will find a way to succeed. On a more practical note I would
suggest that any dreams of trading full time be removed. Find a strategy that can
operate with minimal time each day then stay employed. The power of
compounding and application is what is required more often than not. People are
too quick to want the end result now.
In your opinion, what is the best way a student should aim to enter the
trading world and build a successful career?
Many industry jobs are not what people expect them to be. Many are sales jobs and
today many are not really hands on market related. I know plenty of people who
work in the business but because of electronic trading they really don’t have much
to do in the way we used to do it. Being a stock broker or financial planner is more
being a salesperson. You get paid by commission and funds under management.
The best salesman gets paid the most money, not the best trader. Also to consider is
that many people don’t have the stomach for risk which is why so many fail at this
game. If trading were easy everyone would be doing it rather than working.
What is one thing a student can do to fast-track their learning curve?
There are two core parts to success in trading. The first is the quantitative aspects
of the game – that is those ‘hard wired’ bits that you can follow along with and read
about in books. Things like building a trading plan, using good risk management
etc. Anyone can follow these if they have some discipline. The second is where it all
goes pear shaped – qualitative traits. How to deal with losses. How to accept that
losses and losing streaks are part and parcel of the game. How do you teach a
person to lose? Confidence is another. When things get tough its easier to throw in
the towel, place some blame on someone else or the market, then try something
different. I call this the beginners cycle. Successful trading is quite simple, but
people are their own undoing because they lack the required psychological traits to
make it happen.
Traders will no doubt experience both good and bad days, can you
remember one of your best trading days?
Whenever I execute my strategy I have a good day. After trading for so many years
you need to stay level with emotions. Win or lose its just another day or another
week or another month. If you get euphoric at a big win then by the same token
you’ll get down when it gets tough. Have no emotion or expectation and you’ll be a
lot better off in the long run.

3. Can you recall one of your worst trading periods and how did you handle it?
(risk management & psychologically)
A bad period for me is not really about losing money. A bad period for me is when
the market moves sideways for extended periods of time and we get chopped back
and forth. It’s frustrating and difficult for most people to deal with. I always
emphasize to people that success and profits aren’t linear. They need to think
longer term.
What potential learning tools exist that students who wish to become
traders should know about?
I think it more important that traders think through the maths behind profitability.
They need ask themselves. “Why will this make money?” Let’s face it, we could
place 200 successful traders in a room and we can pretty much guarantee that they
all do different things. A new trader should work out the single common
denominator amongst those 200. The answer is simple, but its absolutely vital to
understand it.
What educational books would you recommend for beginner and
intermediate traders?
I would recommend the first 50-pages of my book Adaptive Analysis for insights into
the answer to the above. Secondly I would recommend reading between the lines of
many of the famous trader interview books such as Market Wizards 1 and 2. Don’t
just read the text. Read it then pnder what is really being said and understand it. I
also highly recommend Complete Turtle Trader by Michael Covel. It doesn’t get any
more real than that.
What are the biggest mistake beginners make when attempting to become
traders?
If it were easy then everyone would never need to work again. The quantitative
traits are easy which is what you’ll learn in books or in courses. Unfortunately you
need to learn and accept the qualitative parts of trading in order to become
successful.
What final advice can you offer aspiring traders?
Rome wasn’t built in a day. Like any other profession, it takes commitment and
passion. It takes psychological fortitude above and beyond what most people can
readily deal with. Much of this stuff can’t be found from a weekend seminar. Latch
on to someone with years of experience to help guide you.
DISCLOSURE; The answers to these questions are 'The Chartist' Copyright and
property of Student 2 Trader. This interview is not to be published elsewhere
without proper authorization to do so.