Q. What’s your name?

Gary Tanashian

Q. What is you website address?

http://www.biiwii.com

Q. Can you give us a little bit of background about how you got involved in Trading and what led you to become such an expert?

Well, I think expert is a strong word because I don’t believe anyone ever masters trading.  I have some things that work for me much more often than not however.

As for my background, it is actually in business as the owner of an American manufacturing company where I developed an interest in macroeconomics while niching the company’s successful place in the world.  From macroeconomics, I began looking at market sectors and the stocks therein.

I do not trade stocks exclusively on technicals, even though TA is probably my strongest area.  A given sector must be in alignment with my view of the macro landscape.  This helps me be a strong holder when necessary.  I find I would be a weak hand when holding something for purely technical reasons and frankly do not have the time to baby sit positions.  So also you can gather that I am more of a swing trader than flipper.

Q. How long did it take to you to become really become proficient at Trading?

About four years.  The bear market of 2000-2003 taught me that I was good at market timing; trading those huge bear rallies and declines.  It was like a meat grinder, but it got me attuned to the market’s rhythm.

Q. What markets do you trade? Is there any reason for choosing them?

At this moment, the gold market.  Specifically the gold miners.  The reason is simple, the gold stocks as represented by the HUI and the EFT GDX, are making what I believe is a historic bottom.  I am not necessarily bearish the US Dollar as measured in competing currencies, so I am not like the gold bugs who can tend to have an us against them mentality.

What I see when I look at gold’s ratio to oil, to industrial metals and to human hopes for prosperity is hockey sticks!  Just like what the USD did in October.  The same forces that drove up the Dollar drove up gold’s ratio to gold miners’ cost inputs!  It is the play of year and likely the start of a new bull markets.

I am also bullish broad markets for an extended trade, not due to fundamentals but rather due to technicals and historically bad sentiment.

Q. Would you view yourself as a fundamental or a technical trader? If both what percent to give to each?

Fundamental 40%, technical 60%.

Q. Are you more a systematic trader or discretionary trader?

Definitely a discretionary trader, using a good dose of instinct.

Q. Is there a certain instrument that you like trading? I.e. options, shares, warrants, CFD’s, futures, forex?

I mostly trade shares and once in a while a few puts and calls.

Q. Are there any specific strategies that you trade? Can you provide any details of them?

I am a bottom feeder, pure and simple.  I see an inverted head and shoulders or massive falling wedge with bullish divergence by indicators like MACD and RSI I get very interested.  I will also look for trend by AROON and confirm with Wm%R and when I see several indicators hinting at reversal, see a bullish pattern and some clear support and resistance points all showing a confluence toward a given outcome, I then pay close attention.  But I must be on board with the fundamentals as well.

If you are in a take-profit situation and your system is telling you to exit rather than hold on, how do you bring yourself to exit even if it’s still running in your favour?

I do not have seller’s regret.  Well, maybe just a little.  But it comes with the territory and emotion should not be part of the equation.

Q. Do you or your systems trade every single day?

No.

Q. How do you react to the winning and losing streaks?

Even keel.  Act like I have been here before.  The market can be very humbling so I may as well make an attempt at humility on my own before it is forced down my throat.

Q. What is the most important part of that discipline? What is your golden rule?

Keep that emotion contained.  I am not the genius I think I am and I am also not as dumb as some trades have made me look.  If you show up with a brittle ego, you are done.

Q. What charting systems do you use?

I use stockcharts.com.  I really do not watch live charts that come with my trading platform.  Again, I try not to micro-manage positions.

Q. What news/broker services do you use?

None, except as contrary indicators.

Q. What portfolio management / trade tracking software do you use?

Fidelity Active Trader Pro

Q. What kind of risk do you take on a position? When if ever would you increase this risk?

It varies.  Throughout the bull market from 2003 to 2007 I was pretty pleased with the fact that I managed risk at ALL times by generally keeping a 50% plus cash position and still doubled the bull market’s performance consistently over that period.

As a bottom feeder, I will increase risk at a time like now for instance, when the crowd is frightened.  Of course the opposite holds true as well and when the herd gets over confident, I decrease risk.

Q. Do you use stop losses and things like that?

Very rarely.

Q. How do you handle your position sizing for each trade?

It varies.  I generally have many positions and each position is weighed against the overall portfolio.

What was your best trading day/week/month? What was going through your head?

I am sorry, I cannot recall to that level of specificity.  But I will tell you what was going through my head; I just KNEW I was a genius, so I sold a bunch of stuff before the market taught me it wasn’t true.

Q. What do you find so good about Trading and the markets?

It allows me to match up against a massive, emotional and sometimes very predictable collection of other human beings.  It allows me to practice something that comes pretty natural for me, a contrarian outlook.

Q. Do you remember your very first major trade/win?

No.

Q. Can you recall your worst trading day? How did you deal with it?

Yes, I was on my way to get a root canal.  I checked the market in the waiting room on my Treo phone.  They called me in and I told them the procedure would be a welcome change from the day I was having.

Q. What do you consider are the characteristics of a successful trader?

1) Keep emotion out of it.

2) Keep emotion out of it.

3) Keep emotion out of it.

Q. If you had one secret to give about Trading, what would it be?

Keep emotion out of it.

Q. Any further comments you would like to add?

Thank you for the opportunity to give one trader’s view.  I realize there is a lot of sharp people out there with good systems that work more often than not.  My thing is basically just a good b/s detector, a firm view on sector fundamentals and charts.  I am actually quite simple as a trader compared to some folks who have really gotten this down to a science.

I would personally like to thank Gary for taking the time to reply and provide some insight into his style of trading.

James Ramsay

Visit www.otrader.com.au for more interviews and a Free 20 trial of our Stock and Option Portfolio management Software

I just had a new user ask how to enter an option trade into OTrader so I made this video to show him (you) how it is done.

This is a quick video I did while speaking to a client about entering covered call trades into OTrader.

It has not been edited or scripted just a straight out recording of your phone conversation.

As always if you have any questions let me know.

With increased market volatility over the last 12 months it seams appropriate to have a look at some written option strategies to benefit from.

Over the coming days I will cover:

• Writing options – Call and Puts
• Spreads including Bull Call Spreads, Bull Put Spreads, Bear Call Spreads and Bear Put Spreads
• Combinations including Long Strangles, Short Strangles, Long Straddles and Short Straddles.

In each strategy I will cover how time decay and volatility affects the strategy.

To start I will go over the basics of how volatility works, how time decay affects you, what effect dividends will have and how an interest rate change can affect your position.

Once the strategies and basics are covered I will go over some advanced options parameters such as Deltas, Option pricing and Options Probability Calculators.

Finally I will finish of with my entire Iron Condor Strategy document.

As always if you have any questions along the way let me know.

#1 Additional Income

Writing covered calls can provide you with an ongoing stream of income from the option premium. This is particularly important when stocks do not pay dividends or pay very small dividends.

The call option premium can also substantially increase total returns in flat or slower growth stock markets.

#2 Income paid up-front

The income from writing covered calls in credited to your account the next day, creating immediate cash flow that can be reinvested, withdrawn from cash management accounts or used to pay interest on margin loans.

Since the call option premium is paid up front it can be reinvested to enhance the total return of your portfolio.

#3 Predetermined Return

In a rising market, the immediate return from call writing can be evaluated prior to initiating the investment position. You will know what the call writing income will be and the maximum additional capital appreciation you may expect from your shares.

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#4 Risk Reduction

If a stock declines in price,(Not that they ever do that…) the call writing income will help to offset some or all of the capital loss. Writing covered calls will provide some downside protection when stock decline in value.

#5 Cash Dividends

As a writer of covered calls you will continue to be entitled to cash dividends so long as you own the shares. Beware dividends can lead to early exercise though.

#6 Novation

Exchange-listed option contracts like shares, are interchangeable with another contract with exactly the same expire month and strike price. This is known as ‘novation’. This enables the covered call option to be initiated through a ’sell to open’ order, but also to close out the position if desired through a ‘buy to close’ order.

Got a question about covered calls? Let me know.