You are on page 1of 44

My Job:

Trading for a Living

What inspired me?


Author: Michael Lewis
He went from student to trader at
Salomon Brothers in London
I knew I wanted to trade
If he can do it, so can I
Worked for JP Morgan for 3 years
Quit and isolated myself for 18
months studying markets
Ran out of money to live for
Went to work in the city

Tom Hougaard - Bio

10 years on a trading floor


More than 1000 TV interviews
More than 1000 seminars
Expert in calling end of bull
markets and bear markets - as
well as traditional technical
analysis
Called many MAJOR highs and
lows on TV well in advance (2002,
2003, 2009)

Time Discovery simple example

Tom Hougaard Bio After London


Made redundant in 2009 (the whole
company was made redundant after
huge trading loss (not mine )
Started live trading room, first with
trading partner and then alone
Went 38 weeks before we had our first
losing week
Started 2-day workshops with trading
partner, teaching what tools we use in
the live trading room
Closed the room last year for a
sabbatical to study up 137% for the
year
Spent the last 12 months researching
and trading for myself
Manages accounts and do occasional
seminars
Write on my websites tomhougaard.dk

Trading and the FedEx Enigma

YOU ONLY SEE WHAT


YOU HAVE
TRAINED YOUR EYES TO SEE

My Trader Training
1.
2.
3.
4.

Books
Mentors
Courses
On-going development

My Reading List

My Trader Training
1.
2.
3.
4.

Books
Mentors
Courses
On-going development

My Mentors

My first real and only true mentor was Larry Pesavento, a 70something trader with 48 years of experience. He has taught
me more about life than about trading. A remarkable man.
His book Fibonacci Ratios is the one I would recommend (he
has written 9 others).
The book is a superb primer in pattern recognition.

My Trader Training
1.
2.
3.
4.

Books
Mentors
Courses
On-going development

Courses
1. Courses come in all shapes and sizes. Recently in Copenhagen a firm
offered a 2,500 2-day course, which teaches very little of value (which
you could not get from a book or from searching the internet I saw
the course notes).
2. I have never attended a course for beginners, and I only attended one
course, with my mentor Larry Pesavento.
3. I dont recommend people attend beginners courses unless they are no
more than a few hundred pounds. Anything above that is a waste of
money.
4. A book like Edwards & McGee (the bible of technical analysis) will cost
only 25 and teach you more than the above 2500
5. I run two-day workshops with my trading partner, but the courses are
not for beginners. www.whichwaytoday.com
6. Running one-day seminar in Copenhagen Sunday 17th March 2013

lucky or blessed? natural selection or circumstance?


genius or hard work?, talent or training?

Mozart
Perception:
A musical prodigy a marvel of nature
a genius with skills way beyond his
years a boy wonder!!
Reality:
Father Leopold was a musical
composer, performer and teacher
and very domineering
He embarked his son on an intensive
music schooling journey
Researchers have estimated that by
the time young Mozart was 6 years
old, he had clocked up more than
3000 hours of practise.
Source: Genius Explained, Michael Howe,
Exeter University

Tiger Woods
Perception:
was born with a golf talent
a golfing prodigy
a golf genius like no other
Reality:
Earl Woods started training when
Tiger was 1 year old.
Earl was obsessed with the idea that
PRACTISE CREATES GREATNESS.
Tiger got his own coach at age 4.
By mid-teens, Tiger had practised
more than 10,000 hours.

Deliberate Practise
Practise or playing:
Merely performing like a round of
Sunday golf with friends
No feedback
No program or focus on areas
Deliberate Practise leading to expert:
Structured training
Feedback in place
Great vs. Good: 30-120 min more
(extra) deliberate training a day
Circumstances

No Free No short-cuts
Not a fan of the self-help army (Tony Robbins,
The Secret etc.) but some good things have
come from it, such as setting a goal.

I dont believe in short-cuts, but that quality


training will cut down the learning time
Too many people focus on the next 12 months
and over-estimate what they can achieve.
Too few people focus on the next 10 years and
underestimate what they can accomplish

How does Tom Hougaard practise?


Program

Set aside 1 hour a day for Play-BACK


Set aside 2 hours per weekend day for Play-BACK
Friendly rivalry with fellow trader/mentor
Read biographies for inspiration
Play certain computer games to sharpen
focus and concentration

Motivation
Trade bigger, trade better, how good can I be?
Why do I carry on trading? You meet some amazing people in
this industry. It attracts a certain breed, with whom I resonate
well.

My Trading Life
1. Preparation
2. Execution
3. Tools

Typical Trading Day - preparation and structure of day


1. Make sure I am well rested
2. Prefer to start day with fresh air morning run/jog
3. Eat at scheduled times
4. Check for news announcements for the day
5. Check for holidays that can affect the day
6. Trade from 8am 12pm, then 2pm 4pm, maybe 8pm
7. After the trading day (& during) I practise by printing out charts
8. I do research
9. I write about the markets (articles book material)
10.I read books that inspire me
11.I go to bed early

My Trading Life
1. Preparation
2. Execution
3. Tools

Execution
1. Execute my trades with ETX Capital very solid and simple
platform
2. Charts run on one internet connection
3. Trading platform runs on another
4. Charting package today is E-signal but less and less as ETX
Capitals charts are every bit as good for my purpose (save 450
a month!).
5. Currency trades falls into two categories: morning trade (a
proprietary trading setup developed by my trading partner
David Paul), and Matrix trades (an analytical framework
designed to capture the currency pairs most likely to move)
6. Stock Index trades: traded using a simple 1-min and 5-min
chart using ETX Capital (but also run tick charts on E-signal)

My Trading Life
1. Preparation
2. Execution
3. Tools

Framework of Trading
1. I scalp trade/day trade FTSE and DAX stock indices
2. I swing trade Forex
NOTES:

I may execute as much as 30-40 trades in a day when I am


trading the FTSE and the DAX. This is due to my aggressive
trading style.
For example, if I have bought the DAX at 7606 and the market
is now trading at 7609, I may buy again, adding to the winning
trade, and then close the whole lot at 7615.

I put swing in brackets because I doubt I truly swing trade,


but I tend to hold a Forex trade a lot longer than an index
trade due to trade size.

Framework of Intra-Day Indices


1. The screens come handy as I run both tick charts and normal
time charts.
2. FTSE and DAX: 89ticks with a 62 MA and a prop Osc.
3. 2 or 3min chart for direction
4. I use support and resistance to place trades (Lost Motion)
5. When market strongly trending, I use harmonics to get into
the market
6. I use pattern recognition
7. VERY IMPORTANT: I gauge strength across indices (see next
chart)
8. The training aspect (having looked at thousands of intra-day
charts) is what I draw my trading decisions on

Framework of Forex Swing Trade


1. In preparation phase I go through the Matrix
2. Use a top-down approach step by step
3. I use 3 major trading setups

Framework of Forex Swing Trade


1. In preparation phase I go through the Matrix
2. Use a top-down approach step by step
3. I use 3 major trading setups

Framework of Top-Down ApproachWeekly Chart

1.
2.
3.
4.
5.
6.
7.

Is the market trending higher or lower? Consolidating?


Is it consolidating after a move higher or a move lower?
Is the market overbought or oversold (using Stochastics)?
What is the high and the low of last week?
Has a major low been hit (support double bottom)?
Has a major high been hit (resistance double top)?
Are there any obvious levels to look out for such as Fibonacci
levels?
8. Are there any obvious pattern or candle formations?
This process may seem lengthy, but with experience it only takes a few minutes
and it can be done just once a week, usually on Sunday night.

Framework of Top-Down ApproachDaily Chart

1. Is the market trending up or down according to 89EMA?


2. Is market below or above the MA?
3. What is the 3-day Trend? (see next slide)
4. Are there any major news out today? What about
tomorrow?

Framework of Top-Down Approach3 Day Trend

Framework of Forex Swing Trade


1. In preparation phase I go through the Matrix
2. Use a top-down approach step by step
3. I use 3 major trading setups

Details of Trading Set-Ups


- 1/ Fractal Approach

Details of Trading Set-Ups


- 1/ Fractal Approach

Details of Trading Set-Ups


- 1/ Fractal Approach

Details of Trading Set-Ups


- 2/ Morning Trades
1.
2.
3.
4.

The morning trade is a proprietary tool


It brackets the Asian trading session from 10pm until 7am
The exact rules is a secret
The rules are mechanical

Details of Trading Set-Ups


- 3/ Reverse Divergence
1.
2.
3.
4.

The Reverse Divergence is a proprietary tool


It trades in the direction of the prevailing trend
It uses Stochastics and an 89 EMA for trend.
The rules are discretionary and makes use of 4-bar fractal

Details of Trading Set-Ups


- 3/ Reverse Divergence

What Truths do I trade with?


1.
2.
3.
4.

Dont argue with the market it really doesnt care!


A market is never so high, it cant go higher!
A market is never so low, it cant go lower (although zero is the limit)
The odds of the trend continuing are HIGHER than the odds of
the trend reversing
5. The Market is occupied by the same people year after year it
means the market tend to repeat itself (humans are creatures
of habit)
6. There are 3 building blocks: TIME, PRICE, VOLUME

PRICE is king

Lets do a live trade!

Conclusion
Contact

admin@whichwaytoday.com

These were the visual notes used by Tom Hougaard on his


recent seminar
For more details on Toms next seminar visit
www.tradertom.com

You might also like