Rudo is part of a rare breed of traders who provide genuine, no-fluff insights into trading, all from hard-earned experience.
He kindly agreed to give us some of his time to discuss his approach to market analysis, building winning strategies, and to share some valuable personal insight.
First thing’s first (we always ask this) – What’s the worst mistake you ever made trading stocks?
There are so many… which one to choose from? The worst mistake I’ve ever made was lying or bargaining with myself. The market has no undo button. In the end your bank balance always tells the truth on how you conducted yourself.
The first step to recovery is admitting there’s a problem – easier said than done.
What are the key variables you look for when analyzing the market? Do you tend to favor Fundamental Analysis, Technical Analysis or a homemade mix of the two? Quant? Voodoo magic?
You can’t just use one or the other. Fundamental analysis creates hodlers. Technical analysis creates gamblers. The art of trading is understanding where these two parties are going to lose and exploiting them. In the end, we all trade against each other. Time/emotional analysis, should be seen as the missing third leg to create a stable trading platform.
I only act on a trade once I know what my opposition is planning to do. I use fundamentals to give me a reason why to buy, and I use technical analysis to manage the risk. Then I wait; timing, as with everything in life, is the key to a success.
The hard part is looking for when to buy rather than where to buy.
What’s been your most successful trade so far? Walk us through it.
The definition of a successful trade is a trade where you stuck to your game plan.
Trading is like playing chess; I am more concerned about my opponent’s moves, than where my pieces are positioned. This is all easier said than done because the market is an organic being and it does not move in a structured set of rules.
The trick is to have a game plan and to know when to execute or when to sit back and allow the market to work itself out.
How do you devise your top performing trading strategies? We’d love it if you could walk us through the logic behind your approach – help our audience level up!
There is no one top strategy. The market goes through cycles, and the key is to understand how the market is reacting and to apply the applicable strategy to the current market conditions. You don’t use a breakout strategy when the market is trending down, just like, you don’t use a lateral trading strategy when the market is trending strong upwards.
This makes it very hard to answer your question.
I only use candles and the way they print to trade. Indicators can be the undoing of most. Take moving averages as an example; it’s like driving your car but you only use your rearview mirrors. How would you be able to react in time to what’s coming from the front. Although you can see whether you’re still on the road or if you need to adjust your direction, it’s always going to be delayed information.
The best advice that I could give, is that should you want to go long in the market, look for a market that creates higher highs and higher lows. The opposite will be true if you want to short. Treat a trend as if it’s going to last forever.
We tend to get all caught up on whether the market will go up or whether it’s going to reverse. Once you start making lower levels it’s over get out. Wait until the market makes a higher high, then you can look to start getting back in.
Your strategy has to be simple; you will need to be able to apply it on the fly, and never second guess your actions.
What do you do to deal with the stressful nature of trading? How do you keep emotions out of it?
I have embraced my emotions; emotions are your best indicator. The key is just to train yourself to act appropriately when a certain emotion is present.
We are hardwired that fear equals “run from a scary animal” or “sell” – where it should mean “buy from a scared person”. The same will be for all the other emotions experienced whilst trading.
Living a balanced life is just as important, you will have to know when to shut down and just walk away. Tired traders are the same as drunk drivers and should not be behind the screen. Taking good care of yourself is key to ensure that you make wise decisions. A well-rested individual will be one more capable in dealing with the stressful natures of trading.
Understand there is a maturity factor that needs to be obtained through experience. Most give up long before they see success, opting to blame rather than to understand. You don’t set out to play a game of tennis against the number one world ranked pro with an expectation to win. Why is it that new traders take to trading with the mindset that they will be able to outsmart the professionals the first time round?
Manage your expectations, be honest with yourself and know that it will take time before you become profitable. Trading is not a get rich quick scheme, it’s a skill that people dedicate their lives too obtaining. Treat it with the appropriate respect and emotions should not be an issue.
Last but not least, give us parting words of wisdom: What are some things you wish you would have known when you started trading?
Making money should not be the goal but instead be the consequences of your actions.
Thanks again for joining us for this interview!
Readers: if you’re interested in more of Rudo’s valuable insights, we highly recommend checking out his feed @TheChartArtist – it’s full of top notch analysis and tons of wisdom!