STA Blog

First nicknamed Mr Serenity by Jack Schwager (while conducting the in-depth interview with Tom over the telephone) Tom says: ‘’Jack, it’s your book [Market Wizards], you can call it whatever you want’’. In turn Tom’s book is called All Weather Trader for his ability to trade successfully come rain or shine, something he’s been doing for an impressive 50 years.

Initially managing money for other people, he retired from that 28 years ago and doesn’t miss it at and now only trades his own money. By doing so he can free himself up, testing and adjusting strategies at will, choosing exactly which markets to cover; he currently looks at 37 different futures markets traded around the world – with consulting on a platform on the side.

He tends to take a long term view, only sometimes day trading which he describes as ‘’picking up pennies’’, adding ‘’in retirement I’m not trying to make 100% returns; 10-15% with no major hits along the way is fine with me’’. He currently runs 7 automated strategies which he updates daily at the close of business, orders and stops (good-till-cancelled) transmitted manually to his broker. This process takes about 40 minutes and he’d like to speed it up because he’s an active person who likes fishing, gardening and golf.

At the core of his strategies are simple moving averages, usually 21 and 50 day ones, with Bollinger, Donchian and Keltner Bands around these. He cautions against using too many variables as you’ll rarely place the 1000 trades you’re aiming for, and reminds us of the value of hedging because it’s ‘’one of the many ways to smooth the equity curve’’. Rather than perfection, he looks for optimal probabilities and after so long in the business ‘’it’s pretty easy for me to spot things that look unusual’’.

His approach to news items is to separate data from opinion; ‘’news is opinion until it becomes data’’ and price is key to his decision-making: ‘’Look at price, ignore the rest, and enjoy the ride!’’ He’s an excellent speaker with a relaxed sensible approach were my concluding notes yesterday evening.